Issue #12 : Blood & Water Don’t Mix
Can you believe that we're now in February?!
Things are heating up in the arbitration space.
Here are the latest 🌶 legal headlines:
Indonesia: 3 charity executives are imprisoned for misappropriating Boeing's USD 7.8 million victims' fund over the 2018 Lion Air crash (read more below)
Philippines: A Philippines casino operator asks a New York federal court to enforce a $329 million foreign arbitration award
South Korea: A South Korean court holds that NFTs aren't protected under local laws due to their speculative nature
Ling Yah
P/S: Know of any interesting seminars happening? Drop us a note at editor@overheard.asia!
Blood & Water Don’t Mix
Mix nuclear, water and neighbours together, and you’ve got the 1960 Indus Water Treaty (”Treaty”).
💦 What Treaty?
The Treaty, brokered by the World Bank after 9 years’ of negotiations, governs the management of 6 cross-border rivers between India and Pakistan.
Each nation gained unrestricted use of the waters in their respective rivers. That said, the other nation can still conduct activities that don’t consume water over rivers belonging to the other. This includes river hyde projects.
🚫 What’s the Point?
But has the Treaty really made a difference?
There was the decade-long conflict over the Balighar dam in the 1990s.
And the objections that Pakistan has raised to many of India’s planned projects, e.g. the 1,000 MW Pakal Dul project, the 48 MW Lower Kalnai project and the 624 MW Kiru project.
Now a conflict over the design of 2 hydroelectric projects (Kishenganga & Ratle) in Jammu & Kashmir has landed in the Permanent Court of Arbitration (“Hearing”).
India is boycotting the Hearing, insisting that the issue be resolved without any third party.
💤 A Stalling Attempt
Yet 2 days before the Hearing, India issued a Notification for Modification of the Treaty. The first attempt at reviewing the Treaty since it was signed in 1960.
Which begs the question(s): Is this a stalling process? And if so, by whom?
Pakistan claims that the 330 MW Kishenganga project will run Pakistan dry.
While India claims that the Treaty permits the construction of Kishenganga & Ratle. Pakistan just wants to drag the process out, cause costs to overrun & jeopardise the prospects of the projects (litigators will be familiar with this tactic, of course 😉).
The only thing that’s clear: these conflicts aren’t drying up any time soon.
Meanwhile, stay hydrated 💦!
Keeping My 👀 On You!
Here’s the thing about donations: Do you really know where your money goes?
It’s a reality that Indonesians are grappling with now, thanks to Aksi Cepat Tanggap (“ACT”).
😮 Who is ACT?
ACT was once one of Indonesia’s largest private charity foundations. They collected ~USD 36 million in public donations from 2018 - 2022! 😱
😳 What Happened?
In 2018, two Boeing 737 MAX 8 planes crashed in the Java Sea and Ethiopia respectively. All were killed.
This sparked global outrage and Boeing established a USD 50 million fund to aid the families of the victims.
ACT was appointed to manage USD 9.2 million on behalf of the victims of the 2018 Lion Air crash in the Java Sea.
😤 However…
Only USD 1.3 million was ever directed towards its intended use. Instead:
ACT executives received exorbitant salaries and perks. E.g. ACT's founder, Ahyudin, had a monthly salary of USD 16,664 (x85 times the average Indonesian monthly salary) and bought several cars using ACT’s funds;
Only 6 out of a proposed 70 social welfare projects were realised (with lots of corner cutting was involved); and
The funds were used to pay outstanding debts on ACT’s sister company.
ACT also admitted to using 13% of its donations for its operational use (Indonesian law states that charities can only use up to 10%).
🤔 So Now
The South Jakarta District Court has just handed down its sentence: 3.5 years for the former ACT founder, and 3 years for ACT’s former President and VP respectively.
The victims’ families are critical: The sentencing is too lenient, given their crime.
What do you think?
And also, do you know how your donations are being used?! Our obligations don't end once the money is given. 👀
It's Mine!
The drama between Malaysia and the alleged heirs of the Sulu sultanate (let’s call them the "Sulu Sultan Heirs") continues.
😮 ICYMI
In 1878, the Sulu sultanate gave Sabah (a Malaysian state) away in exchange for a purported annual rent of RM 5,300 (“1878 Agreement”).
In 2013, over 200 armed militants (believed to be linked to the Sulu Sultan Heirs) invaded Lahad Datu (a town in Sabah). The Malaysian government declared that the armed incursion was a breach of the 1878 Agreement and stopped making its annual payments.
Thereafter, the Sulu Sultan Heirs launched a multi-billion dollar claim against Malaysia:
In 2019, the Sulu Sultan Heirs initiated arbitration in Spain. The High Court of Sabah and Sarawak declared that the Spain-appointed arbitrator, Gonzalo Stampa, had no jurisdiction.
On 29 June 2021, the High Court of Madrid issued a decision to annul Stampa's appointment as an arbitrator ("Annulment Decision").
On 5 November 2021, the Sulu Sultan Heirs filed a constitutional appeal to overturn the Annulment Decision ("Constitutional Appeal")
On 28 February 2022, Stampa nevertheless ordered Malaysia to pay USD 14.92 billion to the Sulu Sultan Heirs (“Arbitration Award”).
On 18 May 2022, Luxembourg recognised the Arbitration Award & issued an ex parte Exequatur Order. Malaysia challenged the ex parte order before the Luxembourg Court of Appeal.
On 11 July 2022, Luxembourg bailiffs seized 2 Petronas subsidiaries & their assets to enforce the arbitration award (“Seizure Order”).
🤷🏻♀️ The Latest in 2023
Barely into 2023, and already we have 2 decisions:
On 24 January, the District Court of Luxembourg agreed to set aside the Seizure Order as the Sulu Sultan Heirs had failed to disclose their real addresses; and
On 2 February, the Spanish Constitutional Court rejected the Constitutional Appeal.
Things are looking up for Malaysia!
But we're sure this won't be the last of the headlines we'll be reporting on.
Spotlight - Cathryn Neo (Partner, PDLegal LLC)
⚒️ What do you do?
I am a partner in PDLegal LLC, a mid-sized full-service firm. I specialise in international commercial disputes and work closely with the China Practice.
I am triple qualified – in Singapore, England & Wales and Australia – and I hope to use this.
I am also the co-chair of the Singapore Institute of Arbitrators’ Young Practitioners Network.
In 2022, I established the Jalan Kayu Legal Clinic, a joint effort between the People’s Association and Law Society’s Pro Bono SG. I work closely with volunteer lawyers and students to assist residents on a range of legal issues.
🏆 What is your proudest achievement?
I try to celebrate small wins with every matter that I work on because it helps to keep me motivated and grateful as I continue in practice. Some of these include finalising a settlement for a long running dispute of over 20 years (which started way before I was admitted to practice!) and giving a presentation on arbitration entirely in Mandarin.
I also mentor children from underprivileged families with Trans Family Services. My proudest achievement was teaching a young girl how to hold a pencil, read the alphabet and then helping her pass an entrance examination to get into a local primary school – she was a foreigner and had no automatic access to local education.
⌛ There are now 25 hours in a day! How do you spend your extra hour?
More time playing with my two cats, Gingy and Lady Grey, whom I constantly feel guilty about not spending enough time with.
I would make cat toys out of recyclable materials (boxes, toilet rolls, ribbons and even paper balls) and they would be very amused by all of it!
Clients can be rest assured that they will not divulge the confidentiality of the contents of each used paper ball!
🚀 If you weren't a lawyer, what would you do?
Run a cat shelter to house, rehabilitate and rehome community cats. I do this on an ad hoc basis now and I feel a huge sense of contentment when I follow up with these rehomed cats and their new lives.
😋 Your favourite food haunt (bonus points if it's off the beaten track!)
Prawn paste chicken from No. 5 at Emerald Hill. This dish is absolutely one of the best I have tried in Singapore – grab them whilst they are freshly fried! To add to that, great music and a vibrant atmosphere.
Note: This interview was edited for clarity and length.
Food Feature
Ah fusion. It used to be a dirty word, but not anymore!
If you're in Singapore & hunting for Malay-Western fusion food, head to the Malayan Council.
They have 4 outlets, including one right next to the historic Sultan Mosque in Bugis and another within the iconic Esplanade Mall.
Try their Sotong Hitam (Squid Ink Pasta) if you want to get your seafood fix with a kick of spiciness. If you prefer something more traditionally Malay, try out their Roti Kirai Beef Ribs.
The best parts of dining at The Malayan Council are their large portions (one main course feeds two!) and friendly service.
Details: Facebook. Google Maps
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Special thanks to Overheard in Asia's sponsor:
David Grief was described as "the Law's Middleman" (Business Times, 2021). You can reach out to him at dg@davidgrief.com if you need help identifying the right lawyer, arbitrator or expert for your matters, or even if you just want to grab a drink 🍵🍺 with someone who has managed and mentored lawyers for almost 5️⃣0️⃣ years!