For investors, arbitration is one of the most important topics given the fact that a business relationship may change adversely. Thus it is important to know the system and options to enforce its rights. Investors prefer arbitration for dispute resolution because it is generally considered to be faster, non-public and performed by international professionals.
The legislation governing international arbitration in Myanmar is based on the Arbitration Act (1944) as well as the Arbitration Protocol and Convention Act (1937). The Arbitration Act has set forth an agreement between the parties stipulating the terms and conditions, such as the number of arbitrators.On the other hand,the power of the court and the arbitrator is governed under the Arbitration Act of 1944.
Besides the existing laws, Myanmar has no institutional arbitration organisation, such as DIAC in Dubai. The enforcement of the arbitral award has to take place at a local court. Once the arbitration award is enforceable, one of the parties concerned has to start enforcement procedure at the competent court to realise its right under the award. Persons doing international business accept arbitration abroad but of course prefer arbitration in their home country. Nevertheless they agree mostly on arbitration to be held in third countries.
In line with the New York Convention the enforcement of awards rendered abroad in a local court is possible in most signatory countries. In July 2013, Myanmar ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention).
Although under the New York Convention, Myanmar is legally obligated to recognizse arbitration agreements referring to a dispute on international arbitration outside of the country – and as a result enforce the arbitral award – the Arbitration Act does not provide for the recognition of foreign arbitral awards.
There exists nolegal framework in Myanmar that governs the enforcement of foreign court judgments and the national laws still need to be amended on that point.
However, it seems that this problem will be resolved soon. In May, nearly one year after ratification of the New York Convention, the Myanmar parliament published the highly anticipated draft of a new Arbitration Bill. When the bill is enacted, Myanmar will establish a system for the enforcement of foreign arbitral awards. It will also demonstrate the government’s commitment to comply with international standards of arbitration legislation.
The Arbitration Bill is largely based on the Model Law on International Commercial Arbitration 1985 (the Model Law) of the United Nations Commission International Trade Law (UNCITRAL) and is divided into two parts.
Arbitration within Myanmar is covered by the first part, whereas the second part deals with the enforcement of foreign arbitral awards. In support of the arbitration process, local courts will be given the power to grant interim measures, such as preliminary injunctions. Other provisions provide how the local courts should approach insolvency-related claims, the Myanmar courts will have the discretion to refer such insolvency claims to arbitration on application submitted by a party.
Unlike the Model Law, or the International Arbitration Act of Singapore, the Arbitration Bill states that the Myanmar courts shall have the power to extend a contractual time bar to commence arbitration in Myanmar. The local court shall be able to refuse the enforcement of a foreign arbitral award only on the grounds set forth in the Arbitration Bill.
But there are also some variations from international practice. The bill provides inter alia that arbitration seated in Myanmar, but which do not fall within the definition of an “international commercial arbitration,” must adopt Myanmar laws as the substantive law governing the arbitration.
This provision would curtail the parties’ right to choose a foreign law as the substantive law of the arbitration. The bill does not provide for a competent court for the enforcement of the arbitral awards. However, during the process of enacting the law an appointment of a centralised court for arbitration is expected to be set forthalong with a jurisdiction that ensures the enforcement of cases handled by experienced and professional judges.
The Arbitration Law still has to be enacted, and therefore is subject to some amendments.However, it is a major step for the modernisation of Myanmar’s arbitration regime that will reassure and encourage foreign investment in Myanmar. Practice will demonstrate how the new enforcement system will work and the future will show if Myanmar will meet the international standards of arbitration.
Investors now will enjoy the results of this long-awaited news regarding the amendment of the arbitration system in Myanmar. By enacting the Arbitration Bill Myanmar will mark a milestone towards its reform process to make the country more attractive for investors and as a place where international business can be done safely.
Strohal Legal Group (SLG) is a law firm offering highly personalised services specialising in international and cross border business. SLG enjoys a well-established reputation across Europe, Southeast Asia and the Middle East. In Myanmar, SLG provides services under the name U Min Sein& Strohal Associates Law Firm.
The views and opinions expressed here are the author’s own and do not necessarily reflect Myanmar Business Today’s editorial opinion.