Myanma Economic Holdings Ltd (MEHL), a huge military-linked conglomerate in Myanmar, said it has launched arbitration proceedings against Singapore's Fraser and Neave Ltd over their joint-venture brewery.
Foreign investors have been flocking to Myanmar since the country started to open up after decades of isolation, but news of this dispute has led to a debate in the international press about a lack of legal protection for foreign investments.
MEHL, which rarely issues public statements, said the case is not about investment laws in Myanmar or how foreign investors are treated.
"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," Myint Aung, deputy managing director of the company, said in a statement.
"The fact is that we have a joint venture agreement that protects our rights in the event of a default by F&N. The arbitration speaks for our desire to adhere to proper and due process," he added.
Public relations officials representing F&N declined to comment when contacted on Wednesday. The company, a Singapore property and drinks conglomerate, had earlier said in August that there was no basis for MEHL's action and it intended to vigorously contest the claim.
MEHL, one of two vast holding companies linked to Myanmar's military, claimed a right under a joint venture agreement to buy F&N's 55 percent stake in Myanmar Brewery Ltd after F&N defaulted on a term in the agreement, it said in a statement on Wednesday.
MEHL 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 F&N was taken over by companies linked to Thai billionaire Charoen Sirivadhanabhakdi earlier in the year.
MEHL is on the "Specially Designated Nationals List" of the U.S. Treasury. Assets of individuals and companies on the list are blocked and U.S. persons are generally prohibited from dealing with them, although the United States has waived virtually all of its economic sanctions on the country.
Myanmar Brewery Ltd was set up in 1995 by MEHL with Heineken NV through its Asian arm, Asia Pacific Breweries Ltd (APB), which transferred its 55 percent stake to F&N in 1997.
The arbitration proceeding could take months and is likely to be held in Singapore, a source familiar with the matter said.
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