DOF: PH, China highly unlikely to reach arbitration over Chico River project loan
MANILA, Philippines — Department of Finance (DOF) officials on Wednesday claimed that it is “highly unlikely” for the Philippines and China to reach the arbitration process over the heavily contested Chico River Pump Irrigation Project loan contract as the country has always been a responsible borrower.
Under the agreement, the two countries will have to undergo an arbitration process should the Philippines defaults on its loan, which the DOF officials called a “remote possibility” considering the country’s credit history and its law that automatically appropriates funds for debt servicing.
“Just look at our credit history, if ever we reneged. Our obligations we’ve always paid for it,” Finance Undersecretary Bayani Agabin said in a Palace briefing.
“It’s never happened before, and it’s highly unlikely (to happen)…because again the Philippine law requires automatic appropriation for our debt obligations,” Finance Assistant Secretary Tony Lambino added.
Even if the two countries undergo an arbitration process, Agabin assured that the Philippines is protected from any unfair treatment during the process.
Though the arbitration venue for the $62-million Chinese loan deal is set in Beijing, Agabin added that any decision of the international tribunal must first pass through a Philippine court for it to be enforceable.
“Anumang desisyon ng arbitral tribunal ay kinakailangang dalhin ng counter-party [China] sa isang hukuman sa Pilipinas upang mabigyan ng bisa ito – ito ‘yung tinatawag na enforcement of an arbitral award,” he said.
(Any decision of the arbitral tribunal needs to be taken to a Philippine court by the counter-party for it to become valid. This is what we call enforcement of an arbitral award.)
“Sa ganitong paraan, tayo ay mananatiling protektado mula sa posibilidad ng anumang hindi patas na pagtrato sa arbitration (This way, we remain protected against the possibility of unfair treatment in arbitration),” he added.
Earlier, Supreme Court Senior Associate Justice Antonio Carpio warned that China could seize the Reed Bank if the Philippines fails to pay the loan.
Carpio said that under the agreement, China can seize to satisfy any arbitral award in its favor, “patrimonial assets and assets dedicated to commercial use” of the Philippine government.
The Supreme Court magistrate noted that these patrimonial assets and assets dedicated to commercial use include the oil-rich Reed Bank, which is both being claimed by the Philippines and China. /ee
READ: China could seize gas in Reed Bank if PH can’t pay loans — Carpio
