Colin Ong, Managing Partner, Dr Colin Ong Legal Services, and President, Arbitration Association Brunei Darussalam (AABD), on new developments

Colin Ong, Managing Partner, Dr Colin Ong Legal Services, and President, Arbitration Association Brunei Darussalam (AABD)

A series of important new laws have been introduced and put into effect over the course of 2013 and 2014. Brunei Darussalam is a place of tranquillity, and it has maintained its peaceful and prosperous position on account of the wise rule of His Majesty Sultan Hassanal Bolkiah.

Following the successful implementation of the Patents Order, 2011, which greatly improved intellectual property law in order to protect fledgling industries and inventors, the government updated the Copyright Order in 2013, increasing the powers of enforcement agencies and setting higher penalties for copyright infringement. The government established the Brunei Darussalam Intellectual Property Office in June 2013. As Brunei Darussalam has signed up to the major international conventions regarding intellectual property, one can conclude that the Sultanate has a very advanced legislation in this area, among the most well-developed legal instruments in the ASEAN region.

In July 2013 the government implemented the Securities Market Order to update and improve the legal and regulatory framework for capital markets. This new law replaced the Securities Order, 2001 and the Mutual Funds Order, 2001, as well as providing regulation and supervision of a broader range of capital market activities, including financial products. Brunei Darussalam is generally considered to be one of the safest and most peaceful countries in the Asia-Pacific region, and its population is blessed with a high standard of living.

Traditionally, sharia law only regulated the civil affairs of Muslims in the area of personal and family issues. However, the implementation of the Sharia Penal Code Order, 2013 in April 2014 made Brunei Darussalam the first South-east Asian country to legislate for the adoption of a sharia criminal law.

Unfortunately, international bodies and persons living outside of the country have misunderstood the effects of the law. There have been condemnations from a number of human rights organisations and various celebrities from other countries expressing concern about the type and scale of punishments for breach of the criminal code, such as amputation of limbs. Non-Muslims living in Brunei Darussalam have not been much concerned over this issue as those who do not intend to commit offences have no reason to fear the risk of such possible punishments. Foreigners who intend to visit the country also do not need to fear any such punishment unless they choose to break the law.

Non-Muslims have expressed concern about some other aspects of the Sharia Penal Code, which appear to restrict their personal freedoms. For instance, there were concerns expressed as to whether non-Muslims would be allowed to eat at non-halal restaurants during the fasting month of Ramadan. It remains to be seen whether the relevant authorities will adopt entirely the liberal practices of other countries that employ sharia law, such as the UAE, compared with other nations, such as Saudi Arabia, that enforce sharia practices very strictly.

Similarly, as visitors and foreign investors would expect to be law abiding, they should have nothing to fear from any of the punishments that deal with crimes that are also considered crimes in all other civilised country. Drug smuggling is, for example, dealt with as a very serious crime in Brunei.

Perhaps the only parts of the Sharia Penal Code that may have a possible financial impact on small time direct foreign investment from non-Muslims are stipulations that also apply to non-Muslims and khalwat, which is the act of being alone with a Muslim of the opposite sex who is a non-relative.

If employers expect that their employees will have to work overtime or at night, they should also be able to ensure that Muslim female and male employees are not left alone while working together. This would mitigate against accusations of khalwat. Larger investors are able to either afford premises that allow for segregation or are able to insist that there are at least a group of employees working in the same office at all times in order to avoid male and female Muslim employees being left alone together. It is also illegal for non-Muslims to utter or use a designated list of 19 Arabic words that are deemed to be solely for Islamic religious use. Non-Muslim foreign visitors would be expected to respect the code when visiting Brunei Darussalam.

It is too early to know how the Sharia Penal Code Order, 2013 will impact the economy and investments, but presumably the Sultanate will continue to benefit from Middle Eastern investors, who understand sharia law, and from investors who take the trouble to learn the practical effects of sharia.

In relation to international contractual agreements, the use of arbitration as the main means of dispute resolution has steadily increased. The Bruneian Constitution, which was written in 1959 and amended in 2004. While revisions largely focused on changes to the Legislative Council, they also provided for complete immunity of the government from being sued in any Bruneian court. The effect is that all contractual matters involving the Bruneian government and any government institution must therefore be resolved through arbitration instead.

Brunei Darussalam is a signatory to a number of international agreements regarding dispute resolution. The Sultanate has ratified both the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Washington Convention of 1965. The Arbitration Order, 2009 regulates domestic arbitrations, while the International Arbitration Order, 2009 regulates international arbitration. Both statutes are based on the 1985 UN Commission on International Trade Law Model Law on International Commercial Arbitration and came into force in February 2010.

The arbitration orders are based on the principle that Bruneian courts may only support, though not interfere with, the arbitration process. Under the legislation, the AABD has been statutorily designated as the default appointing body in the event of default or failure by the parties to appoint an arbitrator or a failure by the two appointed arbitrators to appoint a presiding arbitrator.

In addition to regulating the standards of arbitrators, one of the objectives of the AABD is to assist Brunei Darussalam in developing and providing advisory and support in the field of dispute resolution so as to give confidence to foreign and local investors who may wish to invest in the country.

The AABD continues to improve upon arbitration standards and the organisation is working hard to contribute to promoting the continued growth and well-being of the Bruneian economy. Approval of a one-off fund from the government is currently pending, however, once granted it will enable the AABD to build a new arbitration centre. Currently, all arbitrations taking place in Brunei Darussalam are held at business hotels or law offices. The vast majority of law firms in Brunei Darussalam tend to deal with all areas of practice, including civil and criminal issues, as well as cases related to family law. A number of offices have specialists in sharia law. The larger law firms in the country are accustomed to dealing with standard form conveyance matters, as well as debt collection for national and international organisations, such as banks.

In debt-collection cases, defendants tend to be unrepresented by lawyers and these cases are almost exclusively heard before a Magistrate Court or an Intermediate Court. The smaller and medium-sized law firms tend to be more specialised in niche segments, such as traffic accidents, third-party claims, divorce, land development litigation, disputes over inheritance and succession issues. A small number of law firms specialise solely in corporate and commercial law activities, disputes over intellectual property law, commercial litigation as well as arbitration.

Anchor text: 
Colin Ong

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The Report: Brunei Darussalam 2014

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