On 5 January 2016, Myanmar enacted its new Arbitration Law. The Arbitration Law provides a comprehensive legal framework for the conduct of domestic and international arbitrations seated in Myanmar, and gives domestic effect to Myanmar’s obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
The Arbitration Law is a significant development for international companies that have included or are considering whether to include an arbitration clause in a contract with a Myanmar counterparty, in two ways.
First, the new law gives domestic effect to the New York Convention’s provisions on recognition and enforcement of arbitral awards. In other words, international companies that obtain an arbitral award against a Myanmar counterparty in an arbitration seated in any of the 156 States Parties to the New York Convention (including all members of ASEAN) can have that award enforced in the Myanmar courts as if it is a judicial decree of those courts.
Second, the new law aligns the rules governing international arbitration proceedings where Myanmar is the seat or legal place of the arbitration with international standards by following closely the provisions of the UNCITRAL Model Law on International Commercial Arbitration (Model Law), which is typically considered to represent international best practices for the conduct of arbitrations.
Although the Arbitration Law represents a significant development, it remains to be seen how the Myanmar courts will apply these new obligations in practice, especially in arbitrations involving the Myanmar government or State-owned enterprises.
Enforcement of Foreign Arbitral Awards
The new legislation gives domestic effect to Myanmar’s obligations under the New York Convention, including its provisions on the recognition and enforcement of arbitral awards. The New York Convention requires States Parties to (a) give effect to private agreements to arbitrate, and (b) recognise and enforce arbitration awards rendered in another State Party as if the award were a judicial decree of its own courts, subject to only a few, limited exceptions.
Moreover, the Arbitration Law ensures that awards rendered in arbitrations seated in Myanmar may be enforced abroad. Article I(3) of the New York Convention allows States Parties to make reservations based on, among other things, reciprocity. States Parties who adopt a reciprocity reservation may choose only to recognise and enforce arbitral awards made in the territories of other States Parties. Seventy-four of the New York Convention States—including Japan, China, Singapore, Malaysia and Indonesia—have made a reciprocity reservation. With the adoption of the Arbitration Law, it will now be possible for an arbitral award rendered by a Myanmar-seated tribunal to be enforced in those jurisdictions.
Although the Arbitration Law represents a significant development, the standards set out in the new law have not been tested in the Myanmar courts. Some uncertainty therefore remains as to how the Myanmar courts will apply these new standards in practice, especially in arbitrations involving the Myanmar government or State-owned enterprises. In addition, there is also some uncertainty about the enforceability of arbitral awards rendered in non-New York Convention States because the Arbitration Law's enforcement provisions only apply to “foreign arbitral awards” which are defined in the new law as awards made in the territory of a State Party to the New York Convention.
Myanmar as the seat or legal place of arbitration
The Arbitration Law also aligns the rules governing the conduct of arbitrations seated in Myanmar, including international arbitrations, with the provisions of the Model Law. Important features of the new regime introduced by the Arbitration Law that are based on the Model Law include:
- Clarifying there shall be no court intervention in arbitrations except as provided for under the Arbitration Law (Section 7).
- Granting the courts of Myanmar the power to support the arbitral process, including in compelling arbitration (Section 10), in relation to the taking of evidence and interim measures (Sections 11, 30 and 31).
- Making the arbitral award final and binding on the parties (Section 38).
- Providing that there shall be no restriction on the number or nationality of arbitrators (Sections 12 and 13), or the language of the arbitration (Section 25).
Although the new Arbitration Law is undoubtedly a positive development, companies should bear the following points in mind when considering whether to include Myanmar as the seat or legal place of an arbitration clause.
First, if an arbitration is seated in Myanmar, the Arbitration Law provides that the substantive law of the arbitration shall be Myanmar law, unless the arbitration satisfies the definition of an “international arbitration”. An arbitration is “international” for the purposes of the Arbitration Law if: (a) at least one party’s place of business is outside of Myanmar; (b) the place of the arbitration is a State different from the parties’ place of business; (c) the place with the closest connection to the subject matter of the dispute is a State different from the parties’ place of business; or (d) the parties expressly agree that the subject matter of the dispute relates to more than one State (Section 3(i)).
Second, the new law does not clarify what types of interim measures are available, the conditions for granting such measures or their modification, suspension and termination. Moreover, the availability of interim measures is further limited by the requirement that in cases where interim measures are not needed urgently, the court will address them only with the approval of the arbitration tribunal or with the written consent of the other party (Section 11(c)).