Myanmar Now | 5 April 2024
Telenor seeking payout from Myanmar junta in secret arbitration
Norwegian telecoms giant Telenor Group has launched arbitration proceedings against Myanmar in Singapore to seek compensation under the Myanmar Singapore Bilateral Investment Treaty for funds lost in its hasty and controversial exit from the country following the 2021 military coup.
The details were first reported by IA Reporter, a website that tracks investment arbitration.
According to IA Reporter, Telenor is arguing that it could not conduct a normal sales process. An arbitration tribunal has reportedly been established in Singapore to hear the case, with lawyer Marinn Carlson appointed chair by the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
ICSID and Telenor have both appointed a member to the tribunal, while the junta, which Myanmar Now understands is acting as the government of Myanmar in the proceedings, refused to nominate anyone.
As is standard practice with international investment arbitration, the hearings and outcomes are secret, despite the potentially large public funds at stake should the tribunal rule in Telenor’s favour.
Telenor did not directly respond to questions regarding its claims against Myanmar.
“We do not comment on speculation or rumours related to our business,” a spokesperson for the company told Myanmar Now. “Telenor is in continuous dialogue with a broad set of stakeholders, and we will continue to explore ways we can support the people of Myanmar going forward.”
Telenor Group’s majority owner is the Norwegian government. Tore O. Sandvik, Norway’s state secretary at the Ministry of Trade, Industry and Fisheries, said that Norway condemned the Myanmar military’s human rights violations and had suspended government-to-government aid, but refused to comment on Telenor’s arbitration in accordance with the division of roles and responsibilities between companies and their state owners under Norwegian company law.
“The management of the company falls within the authority of the board of directors and the general manager,” Sandvik said. “It is up to Telenor itself to assess the situation and consider the best available options. Telenor is a listed, commercial company and makes its own decisions independently of the Norwegian government.”
A World Bank spokesperson said, “we remain committed to the people of Myanmar and to their development aspirations” and directed questions to ICSID, who did not respond to emails.
Kaj Hober, a lawyer and professor at Sweden’s Uppsala University nominated to the tribunal by Telenor Myanmar, declined to comment.
Telenor’s use of international arbitration has been sharply criticised by the interim democratic National Unity Government (NUG) and civil society groups.
Kyaw Zaw, a spokesperson for the NUG President’s Office, told Myanmar Now that the junta—which calls itself the State Administration Council, or SAC—should be barred from representing Myanmar in arbitration in Singapore as it is an unlawful and illegitimate regime. He also pointed to the fact that the UN Credentials Committee has rejected the junta’s representation at the UN and that Kyaw Moe Tun continues to represent Myanmar.
“The NUG, as the legitimate government, does not accept as binding any decision where the SAC acts as the government or representative of Myanmar against the will of the people of Myanmar.”
Bart-Jaap Verbeek, an international trade and investment governance researcher at the Netherlands-based Centre for Research on Multinational Corporations (SOMO), told Myanmar Now that it is Telenor that should be compensating the Myanmar people it put at risk in its sale, rather than seeking compensation from the Myanmar people through the military junta.
“If it proceeds, the arbitration will take place behind closed doors, with only the company and the military junta at the table and handled by specialised investment arbitrators that will likely not have human rights expertise,” he said.
“The people of Myanmar have no legal standing in the arbitration and are left in the dark on both the process and the outcome. This raises serious concerns about how the arbitration will deal with the severe human rights impacts associated with Telenor’s exit from Myanmar.”
Activist group Justice For Myanmar, which raised concerns about Telenor Myanmar’s buyers at the time, said that Telenor’s arbitration legitimised the junta and undermined democracy.
“The junta is not a legitimate government and has no standing to represent Myanmar in arbitration. Any attempt by Telenor to ‘win’ compensation against Myanmar by engaging with the junta can breach international law.”
Freya Baetens, a professor of public international law at Oxford University who is listed on the ICSID panel of arbitrators and conciliators, noted that the junta is allowed to represent Myanmar in the case filed by the Gambia at the International Court of Justice and that it is unlikely that an ICSID investor-state arbitral tribunal would take a different approach.
Under the ICSID arbitration rules, parties have to provide the ICSID Secretary-General with the names and “proof of authority” of their representatives, Professor Baetens explained. This includes the representatives for the government of Myanmar and it is up to the ICSID Secretary-General to assess whether to accept that proof.
Telenor’s costly Myanmar fire sale
Telenor entered into a sales agreement with M1 Group in July 2021, just five months after the military coup in February. However, the junta blocked the sale, demanding the inclusion of a local partner, leading to the takeover of Telenor Myanmar by the crony company Shwe Byain Phyu Group, with M1 Group remaining a minority shareholder.
The sale caused an outcry because of the transfer of personal call data to Shwe Byain Phyu, with civil society groups arguing that the junta could use such data in its brutal crackdown. In July 2021, SOMO submitted a complaint against Telenor on behalf of 474 Myanmar civil society groups alleging the sale breached OECD standards outlining the requirements for a responsible exit.
Telenor sold its Myanmar business for US$105 million based on a valuation of US$600 million, with $55m as a deferred payment. In its 2022 annual report, Telenor disclosed that it received $28m from M1 Group as a final settlement that represented the then value of the remaining $55m final payment.
The company also paid a $4m transaction cost and was set to transfer $100m of earnings held in a Myanmar bank to the new owners, according to Reuters.
The sale followed a $783m loss Telenor booked for its Myanmar business in the first quarter of 2021.