Chinese arbitration body’s standards questioned amid Philippine loans

MANILA, Philippines — The government must find out whether the arbitration body in Beijing that will resolve possible disagreements between the Philippines and China over the loans extended will follow international standards in handling such disputes, Sen. Sherwin Gatchalian said yesterday.

Gatchalian, chairman of the Senate economic affairs committee, made the pronouncement amid fears of a lopsided ruling from a Beijing-based arbitration body in the event the two countries get into a dispute over the huge loans from China.

“We must find out if the arbitration entity in Beijing follow international standards in resolving disputes, how they are different from internationally recognized arbitration bodies,” Gatchalian told dzBB.

Supreme Court Associate Justice Antonio Carpio has warned that the country could lose its natural resources, particularly its huge natural gas deposits in Recto Bank, if it defaults in its loan payments to China.

Experts said the loan agreements are governed by Chinese laws, and any dispute arising from contracts will have to be resolved by arbitration bodies in Beijing.

Carpio warned the Philippines is not assured of fair proceedings under the China International Economic and Trade Arbitration Commission that will use its own rules to resolve disputes.

Gatchalian said it was the first time that the country agreed to submit to an arbitration body based in Beijing.

He said the loan contracts, official development assistance, and other financing agreements entered into by the Philippines with other countries and multilateral institutions have designated the respected and independent arbitration bodies such as the Singapore International Arbitration Centre; International Centre for Settlement of Investment Disputes in Washington; Hong Kong International Arbitration Centre, or the New York International Arbitration Center.

President Duterte earlier ordered a review of all foreign loan agreements entered into by the country even as senators asked that this should be done carefully so as not to discourage investors.