Australia: Ensuring Contractual Legitimacy In Burma to Avoid Investment Risks

Minerals Matters
Last Updated: 5 January 2013
Article by Mike Pullen

While the use of financial and commercial sanctions has intensified significantly over the last couple of years, with restrictions on trade with a number of countries becoming increasingly strict as tensions mount, the International Community has also shown itself ready to react rapidly where regimes take positive steps towards reform. In Burma, the recent suspension of sanctions has allowed EU and US companies to return in earnest. However, awareness is needed that both the EU and US may take a tougher line than the rest of the World if they do not see the progress they expect in the country. If the recent sectarian violence between Buddhists and Muslim Rohingyas in western Burma have not yet altered Brussels and Washington's views on sanctions, they defiantly took the international community by surprise.

The EU and US were in fact very rapid to reward the long-awaited and welcome elections in Burma earlier this year. On 12 May 2012, the EU agreed a one year suspension of almost all sanctions – including the asset freeze that targeted members of the military regime. At present, only the embargo on arms and equipment that can be used for internal repression remains in force. In welcoming the changes in Burma as opening "a new chapter in our relations", Catherine Ashton, EU High Representative for Foreign Affairs and Security Policy, went as far to say "Now that the sanctions will be effectively suspended, we encourage trade and investment in the country." This can only be taken as a positive endorsement of investment and trade.

Perhaps most importantly for mining companies, the suspension of sanctions removes the ban on financing Burmese companies involved in the key extractive industries. As a result, business is now possible with more than 800 Burmese companies in the sectors of logging, timber processing and mining of precious metals and precious stones. Moreover, investment in about 50 companies previously considered too close to the government is now allowed.

However, notwithstanding the rapidly thawing relations, the EU has been careful only to suspend sanctions. The decision taken in May 2012 only lasts until 30 April 2013. A review of the situation will be undertaken in October this year and by placing a time limit on the suspension, the EU is making it clear that it expects progress in Burma to continue and not roll back.

Undoubtedly, in the past twelve months, the government made significant progress towards a democratic transition while demonstrating a certain level of commitment by the authorities to national reconciliation. The recent decision by the International Labour Organisation (ILO) to suspend their resolution against Burma condemning labour practices in the country confirms this trend.

But there remains many points on which Burma's critics want more progress. European human rights associations regularly condemn the fact that repressive laws remain in force, fear there has been an increase in human rights abuses in the past year rather than a decrease and hundreds of political prisoners are still believed to be in jail. Even the British Prime Minister David Cameron, while welcoming the sanctions' suspension, carefully added "those changes are not yet irreversible, which is why it is right to suspend rather than lift sanctions for good". The message is clear – European companies still face risks when trading with and investing in Burma.

So mining companies that are viewing Burma as a new investment Eldorado should still proceed with extreme caution and make sure they put in place a number of necessary checks.

First of all, companies involved in international transactions with Burmese individuals or companies should get to know their new business partners as well as they can and understand as much as possible about how they came to be where they are now, including whether they were previously subject to sanctions and their current position in respect of the government regime. These are good rules to follow in any international investment and most firms have procedures in place for properly assessing the risks associated with an investment – but in the case of Burma, it is crucial.

In the pre-contractual stage, mining companies should design their relationship with their Burmese counterparts carefully and seek to future-proof the legal paperwork to cover all eventualities. For example, in many cases firms seek to add a sanctions clause to their contracts that would exempt the Parties from any obligation that would bring them into conflict with sanctions adopted under the UN, EU or US. This is useful whether new sanctions are introduced or old ones brought back into force. Such clauses could, for example, help businesses avoid financial liabilities towards listed individuals, or entities that they cannot pay because it is forbidden by an asset freeze or another financial restriction.

Throughout the process of entering the market and concluding a contract, it would be useful for companies to liaise with their own national government agencies and ministries. This will ensure that their interests are known to their own government, establish useful channels of communication for use should the situation deteriorate and also allow companies the chance to make use of diplomatic sources of information in addition to their own assessment of the investment or contract.

Finally, once a contract is concluded and the business is underway, regular monitoring of the political situation and the development of the sanctions list will be crucial. As mentioned before, the European Union has stated that it will review the suspension of the sanctions in October this year. Should there be negative developments, companies that have already entered into contractual engagements in the country will need to keep their eye on the ball and ensure that they take action to avoid falling foul of sanctions if they are reintroduced. It will be important to liaise with diplomatic and government sources very closely in order to monitor political developments around the sanctions regime and put in place key relationships that might be useful should there be changes that could adversely affect the business in question.

Burma represents a fantastic opportunity and the political changes are very positive. However, companies must be ready to do their homework not only on their partners financial promise, but their political connections. While everyone hopes that positive developments will continue, it is only prudent to envisage worst case scenarios and take some simple steps to protect the investment.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.