SINGAPORE — A military-linked Burmese conglomerate said it has won an arbitration case against Singapore’s Fraser and Neave Ltd (F&N) that will give it the right to buy the latter’s stake in Burma’s biggest brewery.
Union of Myanma Economic Holdings Limited (UMEHL) said in a statement on Friday that a panel of two unnamed Singapore arbitrators heard the case in the city state from late June to early July. MEHL said the panel released a ruling earlier on Friday which says MEHL is entitled to buy F&N’s shares in Myanmar Brewery.
Analysts initially saw the case as an example of the lack of legal protection for foreign investors in Burma and the pitfalls of doing business with an institution closely linked to the country’s military.
However UMEHL argued that there had been a clear default by F&N on their joint venture agreement and that taking the matter to arbitration in Singapore showed they were dealing with the matter using proper legal channels.
“It is very important for Myanmar that foreign investors have confidence in the way we do business,” said Myint Aung, UMEHL’s Deputy Managing Director, in the statement.
“The conduct of this arbitration shows our commitment to the rule of law and that we will always adhere to due process.”
Myanmar Brewery manufactures brands such as Myanmar Beer, Myanmar Double Strong and Andaman Gold. It has an 83 percent share of the country’s beer market, according to an F&N presentation in May.
Myanmar Brewery was set up in 1995 by UMEHL with Heineken NV through the latter’s Asian arm, Asia Pacific Breweries Ltd (APB), which transferred its 55 percent stake to F&N in 1997.
Last year, F&N was taken over by two companies controlled by Thai billionaire Charoen Sirivadhanabhakdi, including Thai Beverage PCL.
UMEHL claimed the right under a joint venture agreement to buy F&N’s 55 percent stake in Myanmar Brewery after F&N defaulted on a term in the agreement.
It declined to comment on the term on which it said F&N had defaulted, but sources with knowledge of the case said it was related to the change of shareholding structure of F&N after the takeover.
F&N and its parent company, Thai Beverage PCL, on Friday submitted a request to the Singapore Exchange for a halt in trading of their shares. Officials at F&N were not immediately available to comment.