Wednesday, 26 March 2014

No room at the table for progress

Outside, the broken sidewalk is splattered bright red from the career betel-nut seller’s eager clients.

Beside him is a narrow doorway with a long-ago etched “121”.

The wooden steps are uneven and, like most stairs in downtown colonial buildings, offer a degree of give that borders on alarming.

A small door frame on the first floor, too short not to bow through, leads into a sweltering 2 metre by 5 metre room. The glue holding the brash blue paisley linoleum has long ago bubbled and disintegrated.

At a small wooden table, with a bottle of water, a roll of loo paper, a pen and paper, sits the man who will decide the fate of K1.2 billion (US$1.24 million).

This is U Maung Maung Ohn Myaing, the arbitrator on a dispute between military-backed Myanmar Economic Holdings Limited (UMEHL) – one of the largest commercial conglomerates in the country – and its commercial partner in its Mon State Padomar Soap factory, TAG Company Limited.

To the arbitrator’s left are three men from TAG Co crowded together on withered plastic chairs. Everyone is wearing their very best and whitest taikpons – a traditional Myanmar garment men don for official occasions. Across from the TAG team, barely half a metre away in the tiny room, is an empty table where UMEHL representatives have been summoned to sit.

“All I can say is we will continue calling them to appear before the Arbitral Tribunal,” U Maung Maung Ohn Myaing said. “I cannot estimate how long we will keep calling them,” he added, in response to being asked what he will do if UMEHL continues refusing to cooperate with the tribunal.

In the messy dispute, TAG Company took an operation contract from UMEHL’s subsidiary Myawaddy Trading Company for the Padomar Soap factory. TAG would pay rental charges and also purchase raw materials from the conglomerate. TAG alleges UMEHL ceased providing the raw materials and enforced distribution restrictions. Consequently TAG stopped paying regular rent to UMEHL.

UMEHL has calculated the dispute, which began in July 2012, to be worth K1.2 billion as of February 2013.

But the arbitrator they appointed to the arbitral panel recused himself seemingly at the behest of UMEHL and the military commercial enterprise declared the proceedings void.

With the case still ongoing, however, the conglomerate have not only failed to comply with summonses to appear before the tribunal, but intentionally sabotaged it by removing furniture from a room where the three parties were expected to meet and on one occasion even went as far as to physically lock the arbitrator and TAG Co representatives out of the hearing chambers.

TAG Company president Than Oo said his was the first local company to bring UMEHL to arbitration.

“These performances of them [UMEHL] are unfair and ugly,” U Maung Maung Ohn Myaing said in a statement obtained by The Myanmar Times and expected to go public on March 24.

UMEHL has also publically accused U Maung Maung Ohn Myaing of bias and unethical behaviour in the local press, accusations the arbitor vehemently denies.

“If all of you do [is] not exercise in accordance with provisions of existing laws naturally and respectfully ... you seem to be force the youths of the next generation toward wrong way so that those youth may take false manners,” U Maung Maung Ohn Myaing said in the statement

The admonishment, while dramatic, goes to the heart of the failed arbitral proceeding’s impact.

As investment increases, the need for a cost-effective, expedient and reliable commercial dispute resolution process will also increase.

In McKinsey Global Initiative’s 2013 report on doing business in Myanmar, the need for reliable arbitration practices was highlighted.

“Our interviews with many investors and embassy trade representatives indicate that concerns about whether the rule of law is fully established and embedded into the business environment in Myanmar is a major source of uncertainty for prospective investors,” the report read.

“Instilling confidence in the sanctity of contracts and ensuring that arbitration is available in the event of disagreements are both important considerations for investors contemplating deals with local partners and the government.”

Worldwide, arbitration is the preferred commercial dispute resolution process, allowing companies to operate in an often opaque arena and, through the oversight of an arbitrator or arbitral panel, negotiate a resolution.

But a lack of experienced arbitrators and legal counsel, coupled with a dearth of arbitration throughout Myanmar’s 20th and 21st century legal and business history and the rebellious actions of UMEHL in the current arbitration, highlight the system’s weaknesses.

The arbitration tribunal at No 121 Anawrahta Road is modest to say the least. There are no computers, there is no board for displaying evidence. No-one has the reams of paperwork that in the West is commonly seen being dragged by hapless junior staffers to tribunals like this. There are no recording devices and there are no filing systems.

Physically – and legally – arbitration tribunals in Myanmar are lacking, experts agree.

U Maung Maung Ohn Myaing, the arbitrator in this dispute, said arbitration in Myanmar faces a rocky road ahead.

“To date, arbitration in the country has been okay, but in the future it will not be sufficient.”

source: The Myanmar Times
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