Myanmar firm takes F&N to arbitration

THE FIRST Thai-Myanmar corporate dispute has emerged, with a Myanmar company having launched arbitration proceedings against Fraser & Neave, the Singapore-based company that is now owned by Thai tycoon Charoen Sirivadhanabhakdi.

The dispute involves Myanmar Brewery, formerly owned by Asia Pacific Brewery (APB) and later by F&N, which was taken over Charoen's group early this year.

Myanmar Economic Holdings Limited (MEHL), a military-backed conglomerate, announced yesterday that it has begun arbitration with F&N over the dispute.

MEHL said in a statement that it had a clear right under their joint-venture (JV) agreement to buy F&N's stake in Myanmar Brewery.

"We are now going to arbitration after months of failing to resolve the situation bilaterally," Myint Aung, deputy managing director of MEHL, was quoted as saying.

Since MEHL sought to exercise its right to buy F&N's stake in April, there have been a number of media reports suggesting that the dispute was a test case for Myanmar's investment laws and that foreign investors should be concerned about the development.

However, MEHL denies such an assumption of politicisation, which it describes as "erroneous".
It also emphasises that the dispute will not affect foreign investment in Myanmar because it does not concern the country's investment laws or how foreign investors are treated, the company said in the statement.

"We know it will serve the interest of some parties to politicise the dispute, but doing so does no justice to the case or to anyone interested in investing in Myanmar," said Myint Aung.

Contractual rights

"We believe that allowing parties to exercise their contractual rights, including the right to arbitrate a dispute, will strengthen and not weaken foreign investors' confidence in Myanmar," he added.
In a rare public announcement, MEHL mentioned its belief that contractual rights should be protected, whether the aggrieved party was a foreign or local entity, private- or state-owned.

Myint Aung said the JV agreement protected MEHL's rights in the event of a default by F&N. "The arbitration speaks for our desire to adhere to proper and due process," he insisted.

MEHL said it had entered into a JV with Dutch brewing giant Heineken through its Asian arm, APB, in 1995 to set up Myanmar Brewery. Under the agreement, MEHL owns 45 per cent of the brewer and APB, the balance of 55 per cent. APB, however, transferred its shareholding to F&N in 1997.

F&N held a 50-per-cent stake in APB. However, in December last year, it divested its entire shareholding in APB. Following this, on January 30, an offer by TCC Assets - part of Charoen's business empire - for all the shares in F&N turned unconditional, resulting in TCC Assets and concerted parties controlling more than 50 per cent of F&N's issued capital.

On April 24, MEHL exercised its rights under the JV agreement to serve notice on F&N to sell its stake to MEHL or its nominee. It served notice of arbitration on September 9.

F&N said in a statement to the Singapore exchange on August 29 that there was no basis to the claim, which would be vigorously resisted. "The matter is in the hands of the company's lawyers," it said.

source: Eleven Myanmar
http://elevenmyanmar.com/business/3983-myanmar-firm-takes-f-n-to-arbitration