The International Arbitration Review: Myanmar
Myanmar formally acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) on 15 July 2013. On 5 January 2016, the Union Parliament of Myanmar enacted the Arbitration Law No. 5/2016 (Arbitration Law), which supersedes the earlier 1944 Act and gives effect to Myanmar's ratification of the New York Convention.
The Arbitration Law is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006 and provides for both domestic and international arbitrations.
An international arbitration is an arbitration in which:2
- any party to an arbitration agreement has, at the time of the conclusion of the agreement, its place of business in any country other than Myanmar;
- the place of arbitration, if determined in or pursuant to an arbitration agreement, is situated outside the country in which the parties have their places of business;
- any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected is situated outside the country in which the parties have their places of business; or
- the parties to the arbitration agreement have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.
A domestic arbitration is an arbitration that is not an international arbitration.3
The key distinctions between domestic and international arbitration in the Arbitration Law are as follows: the grounds for refusing recognition and enforcement; the right of appeal only for domestic awards; and the additional requirements for enforcement of a foreign award. Below is a brief explanation of each.
First, the grounds for refusing the recognition and enforcement of domestic and foreign awards are largely similar, save that there is an additional ground for refusing recognition and enforcement of a foreign award.
The common grounds are as follows:
- a party to the arbitration agreement was under some incapacity;4
- the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;5
- an applicant was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;6
- the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration;7
- the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties and the provisions of the law of the country where the arbitration took place;8 and
- the subject matter of the dispute is not capable of settlement by arbitration under Myanmar law;9 or the enforcement of the award would be contrary to the public policy of Myanmar.10
The additional ground on which a court may refuse to recognise and enforce a foreign award is if the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.11
Second, the Myanmar courts may vary a domestic award, return the award to the arbitral tribunal for reconsideration of the whole or any part of the award, or set aside the whole or any part of the award12 if the court finds that the ruling upon the issue materially prejudices the rights of one party or the parties; the award made by the arbitral tribunal is completely wrong; or both.13 No right of appeal against the substantive decision of a foreign arbitral award exists.
Finally, in the enforcement of a foreign award, the party seeking to enforce must produce to the court:14
- the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;
- the original arbitration agreement or an authorised copy thereof;
- such evidence as may be necessary to prove that the award is a foreign award; and
- where the award or arbitration agreement required to be produced is in a foreign language, a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in Myanmar.
The apex court in the country is the Supreme Court of the Union, which exercises both appellate and revision powers. The Supreme Court also has original jurisdiction, which enables it to hear cases as the court of first instance. There are also high courts of the states or regions, district courts, township courts and other courts (e.g., juvenile courts, municipal courts and traffic courts). There are no specialist tribunals in the Myanmar courts hearing arbitration matters. The pecuniary limits of the Myanmar courts are as follows: township courts up to 10 million kyat and district courts up to 3 billion kyat,15 while no limits apply to the high courts. In addition to pecuniary limits, the geographical location of a local party's assets or place of business or of the performance of the main agreement are also factors to consider in determining which court an action should be instituted in.
Enforcement applications or applications in aid of arbitration may be commenced in the district court or high court of the relevant regions or states having jurisdiction to decide the dispute under arbitration as if the same had been the subject matter of a civil suit. 16
The Myanmar Arbitration Centre was officially launched by the Union of Myanmar Federation of Chambers of Commerce and Industry on 3 August 2019. The Myanmar College of Arbitrators was also established at the same time. The College is intended to select, train and certify industry veterans to become arbitrators. However, it is not clear what level of training and accreditation will be provided, and if they will be in conformity with international qualifications. Notwithstanding the establishment of the Myanmar Arbitration Centre, there is currently still no arbitration institution that serves as a focal point for various arbitration activities in Myanmar. There is also currently no framework that supports the proper accreditation of arbitrators in Myanmar, particularly to comply with international standards.
In the period immediately following the enactment of the Arbitration Law, there were significant efforts by, experts from international and foreign institutions such as the Chartered Institute of Arbitrations (CIArb) and the Singapore International Arbitration Centre (SIAC) to assist in the process of establishing Myanmar's arbitration infrastructure. These included conducting training and workshops (with the opportunity for associate membership with CIArb) in Myanmar. The China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center also organised a specialised seminar in 2018 on arbitration for construction disputes, inviting many foreign industry experts to share their knowledge. We have helped to organise various such training and workshops in conjunction with the institutions.
Since 2018, student bodies have also been involved in organising international moot competitions based on simulated arbitrations, including the national rounds of the Willem C Vis Arbitration Moot.
The Supreme Court is supportive of arbitration, and is working with various partners, including the authors, to raise awareness and knowledge of arbitration through training and workshops. We have organised some of these workshops.
All these initiatives are working towards helping Myanmar achieve a functioning arbitration ecosystem. Unfortunately, there has been a slowdown of these initiatives in the past year with the pandemic and this may also be further impacted in view of the announcement of the State of Emergency on 1 February 2021.
Given the lack of an established arbitration framework and institution, there are currently no available statistics on arbitration in Myanmar.
The year in review
It should be noted that arbitration practice in Myanmar is in a nascent stage.
i Developments affecting international arbitration
There have not been any significant developments affecting international arbitration in the last year.
ii Arbitration developments in local courts
Since the enactment of the Arbitration Law, there have not been any known reported cases developing the local jurisprudence in respect of arbitration.
In respect of applications for a stay of proceedings in favour of arbitration, we are aware of at least one case where a stay was not granted and a number of cases where the outcomes were inconsistently applied (for example, notwithstanding the grant of a stay, in one arbitration case, a court continued to fix court hearing dates at which the parties were required to turn up and update the court on whether the arbitration was still ongoing or whether it had reached a resolution). However, anecdotally and generally, the Myanmar courts have been granting more stay applications and upholding arbitration as the contractually agreed dispute resolution mechanism.
In respect of applications for the enforcement of arbitral awards, we are aware of a successful application and a number of ongoing applications. Notwithstanding the lack of local jurisprudence, the legal position is that foreign arbitral awards from member countries of the New York Convention should be enforced more easily than foreign judgments in Myanmar. As such, parties should consider agreeing to arbitration in a member country of the New York Convention in dealing with parties who are resident in Myanmar or have assets in Myanmar.
iii Investor–state disputes
There are currently no known investor–state disputes underway in Myanmar.
Myanmar is a member of the Association of Southeast Asian Nations (ASEAN), which has bilateral and multilateral legal instruments signed by Member States. Apart from using ASEAN legal instruments, ASEAN Member States have entered into numerous bilateral investment treaties and investment agreements.
The number of such treaties entered into by ASEAN Member States (including ASEAN agreements) are as follows:
- Brunei (24);
- Cambodia (35);
- Indonesia (78);
- Laos (39);
- Malaysia (89);
- Myanmar (21);
- Philippines (50);
- Singapore (67);
- Thailand (60); and
- Vietnam (77).17
ASEAN as a regional bloc has also entered into several agreements that include an investment chapter, for instance the ASEAN Australia–New Zealand free trade agreement 2009 (AANZFTA),18 the ASEAN–China free trade area agreement, the ASEAN–India free trade area agreement, the ASEAN–Japan comprehensive economic partnership 2008 and the ASEAN–Korea free trade area agreement. Most recently, in November 2020, ASEAN and its dialogue partners Australia, China, Japan, New Zealand and South Korea signed the Regional Comprehensive Economic Partnership (RCEP), the largest Free Trade Agreement that ASEAN has concluded thus far. While it does not currently include an investor–state dispute resolution mechanism, the RCEP provides for discussion of such a mechanism to take place within two years of entry into force of the RCEP.
Myanmar has entered into several bilateral investment treaties including, of note, with China, India, the Philippines, Laos, Thailand and Vietnam.
The most important ASEAN legal instrument to date is the ASEAN comprehensive investment agreement (ACIA), which came into force in March 2012. The ACIA prescribes a detailed dispute resolution mechanism. It provides investors with a list of fora to institute claims via arbitration or through the courts. These include:
- through the courts or administrative tribunals of the disputing Member State;
- arbitration under the International Centre for Settlement of Investment Disputes (ICSID) Convention19 and ICSID Rules of Procedure for Arbitration Proceedings;20
- arbitration under the ICSID Additional Facility Rules;21
- arbitration under the UNCITRAL Arbitration Rules; and
- recourse to the Asian International Arbitration Centre or any other regional arbitral centre in ASEAN (such as for instance, the SIAC), or to any other institution that parties may agree on.
Importantly, once an investor resorts to the local courts or tribunals of a Member State with whom a dispute has arisen, the option to institute a claim in arbitration is not available any more.22
These developments are important for Myanmar insofar as providing foreign investors the option to arbitrate their disputes with a government in a neutral forum lends further confidence to investors and the hope that they may be able to hold the government to promises held out by it when an investment was made. Investment treaties offer a host of protections to investors that are crucial to encouraging investment and maintaining the sanctity of those investments without undue interference by governments. Myanmar has previously been at the receiving end of such a claim, the only one to have resulted in a final award, under the 1987 ASEAN Agreement for the Promotion and Protection of Investments. That claim was dismissed, since the tribunal found that certain preconditions under the treaty had not been fulfilled for the investment to receive the protection of the treaty. However, it is not unthinkable that such claims will be contemplated against other Asian countries and Myanmar in the future.
Outlook and conclusions
The outlook for arbitration in Myanmar is conservative while the country remains in a State of Emergency. Nevertheless, there are opportunities for foreign experts to play a role in shaping and developing the arbitration landscape in Myanmar.
The key issues are getting the ball rolling for Myanmar-seated arbitrations to be conducted in Myanmar, and for parties to be willing to commence enforcement proceedings of foreign arbitral awards from a New York Convention Member State in Myanmar. The further education, training and development of local arbitration practitioners and the judiciary will go a long way to developing the strong foundations necessary for the development of local jurisprudence and expertise in this regard. This will in turn give parties more visibility and confidence in resolving their disputes via arbitration.
1 Minn Naing Oo is managing director, Ei Ei Khin is a consultant and Kang Yanyi is a senior foreign associate at Allen & Gledhill (Myanmar) Co, Ltd.
2 Section 3(i) of the Arbitration Law.
3 Section 3(h) of the Arbitration Law.
4 Sections 41(a)(1) (domestic award) and 46(b)(1) (foreign award) of the Arbitration Law.
5 Sections 41(a)(2) (domestic award) and 46(b)(2) (foreign award) of the Arbitration Law.
6 Sections 41(a)(4) (domestic award) and 46(b)(3) (foreign award) of the Arbitration Law.
7 Sections 41(a)(5) (domestic award) and 46(b)(4) (foreign award) of the Arbitration Law.
8 Sections 41(a)(6) (domestic award) and 46(b)(5) (foreign award) of the Arbitration Law.
9 Section 41(a)(7) (domestic award) and 46(c)(1) (foreign award) of the Arbitration Law.
10 Section 46(c)(2) (foreign award) of the Arbitration Law.
11 Section 46(b)(6) of the Arbitration Law.
12 Section 43(b)(3) of the Arbitration Law.
13 Section 43(a) of the Arbitration Law.
14 Section 45 of the Arbitration Law.
15 Notification No. 1030/2020 issued by the Supreme Court of the Union dated 28 December 2020.
16 Para. 45 of the Notification No. 643/2018 issued by the Supreme Court of the Union dated 31 July 2018.
17 See World Investment Report 2014 (United Nations, 2014), pp. 222–5.
18 The AANZFTA came into force on 1 January 2010 for Australia, Brunei, Malaysia, Myanmar, New Zealand, the Philippines, Singapore and Vietnam, on 12 March 2010 for Thailand, on 1 January 2011 for Laos, on 4 January 2011 for Cambodia and on 10 January 2012 for Indonesia.
19 Of the ASEAN Member States, only Laos, Myanmar and Vietnam are not party to the ICSID Convention. Thailand is a signatory but has not ratified the ICSID Convention.
20 Except in respect of the Philippines, the commencement of an arbitration pursuant to the ICSID Rules is subject to a further written agreement among parties once a dispute has arisen.
21 If either the disputing Member State or the Member State to which the investor belongs is party to the ICSID Convention.
22 Article 33(1), ACIA.