Supreme Court Associate Justice Antonio Carpio is apprehensive over the Chico River irrigation loan agreement between the Philippines and China, saying the latter could seize oil and gas-rich Philippine assets in the West Philippine Sea if the former defaulted on payment.
“In case of default by the Philippines in the repayment of the loan, China can seize, to satisfy any arbitral award in favor of China, patrimonial assets and assets dedicated to commercial use of the Philippine government,” Carpio told reporters.
There was no immediate reaction from Malacañang or any government agency that has anything to do with the 20-year loan, signed by Finance Secretary Carlos Dominguez and Ambassador to the Philippines Zhao Jian Jua on April 10, 2018.
Carpio said this was expected to be the “template” for all other loans to the Philippines.
Citing paragraph 8.1 of the Loan Agreement, Carpio said the Philippines “expressedly waived any sovereign immunity” over all its assets except for some, including “public or governmental use as
distinguished from patrimonial assets and assets dedicated to commercial use.”
He explained that the term “patrimonial assets and assets dedicated to commercial use” included oil and gas within the Philippines’ exclusive economic zone in the West Philippine Sea.
“This includes the rich gas fields in Reed Bank,” he said.
As the P3.6-billion agreement is “governed by Chinese Law,” Carpio said that, in case of a dispute, “arbitration shall be conducted by the China International Economic Trade Arbitration Commission (CIETAC) under CIETAC arbitration rules.”
Carpio noted that the award of CIETAC was “final and binding” and that the arbitration shall be held in Beijing.
According to Carpio, the term “patrimonial assets and assets dedicated to commercial use” was “defined under Chinese law, interpreted by a Chinese-majority tribunal in Beijing, and enforced by the Chinese Government in the Philippines.”
He added that “China will always have a majority in the arbitral panel,” citing CIETAC rules.
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