Colin Ong, Managing Partner, Dr Colin Ong Legal Services; and President, Arbitration Association Brunei Darussalam (AABD), on recent legal developments: Viewpoints

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

Brunei Darussalam is a place of tranquillity and stability, and it has maintained its peaceful and prosperous position due to the wise rule of His Majesty Sultan Hassanal Bolkiah.

Several new pieces of legislation were implemented in 2015 to improve the legal framework and encourage more economic development. This is in line with Brunei’s national strategy, Wawasan (National Vision) 2035, which aims to attract foreign direct investment (FDI) as an independent engine of growth. According to the 2015 World Bank “Ease of Doing Business” report, Brunei Darussalam’s ranking at the end of 2015 improved from 105 to 84 from the previous year, thanks to key reforms implemented in 2015. It is likely that the overall ranking could improve further if key land code reforms are implemented to allow for easier transfer of property amongst its citizens. Its ranking for ease of registering property has remained unchanged at 148 out of 189 countries for the last few years. However, timely reforms from other government ministries involved in “starting a business” have greatly improved Brunei Darussalam’s position by 21 places.

Brunei introduced the Competition Order on January 7, 2015 with an aim to prevent collusion and abuse of dominance in the market and to discourage restrictive business practices. This is aimed at promoting a strong competitive culture throughout the economy in order to benefit consumers and small businesses and to attract FDI. The Miscellaneous Licence Act Order (Amendment) 2015 took effect on January 1, 2015, and aims to establish a business-friendly environment. Under this new amended legislation, certain types of businesses may now be able to operate one day after completing the registration processes and having obtained all necessary certificates. The Plant Varieties Protection Order 2015 was enacted to protect and commercialise local plant varieties to encourage local farmers to develop local strains of rice, so as to promote increased food security in the country. The only legislation that is seen by certain quarters of the small and medium-sized enterprise community as being not particularly useful, in terms of adding more costs, is the Record Keeping ( Business) Order 2015. This legislation requires business enterprises to keep transaction records for at least five years from the date of transaction.

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. Historically, sharia law only regulated the civil affairs of Muslim persons over personal and family issues. However, the implementation of the Sharia Penal Code Order 2013 in April 2014 made Brunei the first South-east Asian country to officially impose Islamic sharia law. Unfortunately, there has been a misunderstanding by international bodies and persons living outside Brunei over the new law. There has been a series of excessive condemnations, from UN human rights officials to celebrities from other countries who were particularly concerned over punishments involving amputations of limbs. Non-Muslims in Brunei have not been concerned over issues of amputations as one who does not intend to commit theft does not need to fear such a punishment. In this sense, foreigners who intend to visit also do not need to fear such punishment, unless they intend to break the law. However, non-Muslims remain concerned about other aspects of the Sharia Penal Code. This concern has been seen to have caused a loss of business for restaurants and those workers involved in restaurants and in meetings, incentives, conferencing and exhibitions enterprises.

These moves have also caused a loss of business for conference organisers and tour operators who cater to foreign non-Muslim visitors. Foreign businessmen found themselves with no place to have their meals and Friday lunches. This has also caused an adjustment in the business community as a whole. They have had to shift meetings involving foreign investors and joint venture partners during those times and are having meetings in neighbouring Malaysian towns like Miri and Kota Kinabalu. However, the advent of the ASEAN Economic Community on December 31 2015, has presented many new business opportunities to both enterprising Bruneians and foreigners wishing to enter into innovative new joint ventures across the border in Miri. There is a growing practice in certain quarters of holding meetings or conferences in Brunei and then adjourning to Miri by chartered coaches for official dinner banquets and entertainment. The opening of the border agencies to midnight has been very helpful in fostering new businesses for enterprising Bruneians who have also set up businesses in Miri and other border towns.

However, as foreign visitors and investors are expected to be law-abiding, they should have nothing to fear from any of the punishments that deal with crimes that are also considered to be crimes in any other civilised country. Perhaps the only part of the country’s code that may have a possible financial impact on small-scale FDI from non-Muslims are the parts which also apply to non-Muslims in Brunei Darussalam. These involve crimes such as zina ( adultery with a Muslim partner) and khalwat (close proximity with a Muslim partner). In the event of adultery between a married Muslim and a married non-Muslim, both parties can be punished by being stoned to death if the offence is proven by confession or by the testimony of four eyewitnesses.

The code has not made it clear whether the testimony has to be from a male Muslim or whether testimony may come from any respectable adult regardless of sex or religion. In situations where investors expect their employees to work overtime and late at night, there has to be a system in place to prevent any likelihood of lone female employees and lone male employees working together (where any one of the two employees working overtime is Muslim) of being accused of khalwat. Larger investors are able to either afford premises that allow some segregation or are able to insist that there are at least a group of employees working together in the same office at all times to avoid situations where a lone male-female Muslim employee couple may be left to work alone. As it is illegal for non-Muslims to utter or use a designated list of Arabic words that are deemed to belong solely to Islam, non-Muslim foreign visitors should show deferential respect to the Sharia Code and should learn to avoid using certain Arabic words (e.g., assalamualaikum, haji, masjid, imam and mufti) when visiting Brunei. Non-Muslims visiting Brunei should also show respect and note that it is forbidden to consume alcohol in public. Anyone convicted of such a crime is liable be fined up to $8000 and also to imprisonment for up to two years In relation to international contractual agreements, the use of arbitration as the main means of dispute resolution has continued to increase since the revision of the Brunei Constitution in 2004, which provided for complete immunity of the government of Brunei Darussalam from being sued before the Brunei courts of law. This has meant that all contractual matters involving the Brunei government and their counterparts are all to be subjected to arbitration. The Arbitration Order 2009 regulates domestic arbitrations and the International Arbitration Order 2009 regulates international arbitration. Both statutes are based on the UNCITRAL Model Law on International Commercial Arbitration, and came into force in February 2010. Under both legislations, the AABD has been statutorily designated by the government as the default appointing body in the event of default or in the event of failure by the parties to appoint an arbitrator or a failure by the two appointed arbitrators to appoint a presiding arbitrator as required.

Anchor text: 
Colin Ong

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The Report: Brunei Darussalam 2016

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