Straits Law Practice LLC acts for Myanmar (MEHL) in a dispute with F&N regarding its joint venture, Myanmar Brewery Limited

Straits Law Practice LLC acted for Myanma Economic Holdings Limited (MEHL) in a dispute regarding its joint venture with Fraser & Neave Limited (“F&N”) to operate a brewery in Myanmar, known as Myanmar Brewery Limited (“MBL”).

MEHL held 45% of the shares in MBL and F&N held 55%.

The dispute between the parties arose from the operation of a change of control clause in the Joint Venture Agreement (“JVA“) that stipulated that a party is obliged to seek prior written approval from the other party in the event of a situation where a third party acquires a direct or indirect controlling interest of more than 50% in either party to the JVA. The event of default entitled a Non-Defaulting party to enforce its legal rights against the Defaulting Party to sell all of its shares in the Joint Venture Company to the Non-Defaulting Party or its nominee.

Sometime in January 2013, there was an offer from a third party for all the shares in F&N with no prior written approval sought from MEHL before the sale was completed. The dispute related to the operation of the change of control clause i.e. whether MEHL was entitled to buy out F&N’s shares in MBL, the post-default procedures and the valuation to be used for the consequent buy-out.

F&N’s position was that MEHL had no basis to give notice of its intention to buy out F&N’s shares in MBL pursuant to the JVA.

MEHL commenced arbitration against F&N in accordance with the terms of the JVA. F&N vigorously contested the claim.

Mr N. Sreenivasan, Managing Partner together with Ms Valerie Ang, Director of Straits Law Practice led the arbitration.

The JVA and other associated agreements which were the subject matter of the dispute were governed by Myanmar Law. The arbitration was conducted in accordance with the Arbitration Act 1944 (Myanmar Act No. IV of 1944).

After the arbitration hearing that lasted 11 days in Singapore, the arbitral tribunal released its decision on 31 October 2014, affirming MEHL’s right under the JVA to acquire F&N’s 55% stake in MBL at a fair value to be determined by an independent valuer to be appointed by both parties.

On 20 August 2015, the transaction was finally completed when F&N’s 55% stake in MBL was transferred to MEHL’s nominee, Kirin Holdings Co. for a sum of USD560 million.

For more details on the case above, click on the links to the press articles below:

http://www.nationmultimedia.com/breakingnews/F&N-loses-fight-over-Myanmar-brewery-30246875.html

http://business.asiaone.com/news/fn-stock-falls-investors-swallow-bitter-news

http://www.straitstimes.com/asia/se-asia/myanmar-army-seeks-to-calm-investors-after-winning-brewery-row-with-singapores-fn

http://www.businesstimes.com.sg/companies-markets/myanmar-brewery-stake-arbitrators-rule-against-fn

http://sbr.com.sg/food-beverage/news/fraser-and-neave-bids-its-cash-cow-goodbye-after-losing-battle-myanmar-brewery

http://www.just-drinks.com/news/fraser-neave-to-lose-myanmar-brewery-stake-after-legal-defeat_id115298.aspx

http://www.mmtimes.com/index.php/national-news/12137-military-firm-wins-arbitration-battle-with-fraser-neave.html