On 6 March 2013, Myanmar's Parliament voted in favour of Myanmar becoming a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 ("the New York Convention").

The New York Convention can be signed by any Member State of the United Nations or any State which is a party to the Statute of the International Court of Justice. At present, 148 of the United Nations member countries have signed the New York Convention.

The objective of the New York Convention is to prevent signatory states from discriminating against foreign arbitral awards and to ensure that foreign awards are recognised and capable of being enforced in the same way as domestic arbitration awards.

The New York Convention also allows arbitration awards made in a signatory state to be enforced in any country which is a signatory to the New York Convention.

Clearly, the reason behind Myanmar's decision to accede to the New York Convention is to continue to encourage direct foreign investment into Myanmar following the suspension of sanctions in 2012. When Myanmar accedes to the New York Convention, foreign entities investing in Myanmar can use a neutral arbitration centre such as Singapore or Hong Kong to resolve contractual disputes and enforce a favourable arbitration award obtained outside Myanmar against assets of the opposing party located within Myanmar.

The announcement of the Myanmar Parliament is therefore to be applauded and is a step in the right direction in putting in place means by which the resolution of commercial disputes arising in Myanmar can be dealt with fairly and efficiently. Foreign investment in Myanmar has been adversely affected by concerns about the transparency and impartiality of Myanmar's judicial system. The proposed accession by Myanmar to the New York Convention would go some way to allaying these concerns of foreign entities proposing to invest in Myanmar.

Notwithstanding this welcome news, the timescale for Myanmar's proposed accession to the New York Convention remains unclear and domestic legislation will be required following accession to implement the provisions of the New York Convention. Again, it is unclear what the timetable is likely to be for the required legislation to be enacted.

Other risks also exist, as has been seen in a number of other jurisdictions around the region. Even if a country accedes to the New York Convention and necessary domestic legislation is enacted, there are very often departures from the key provisions of the New York Convention relating to the enforcement of foreign arbitral awards and the grounds upon which domestic courts may refuse to recognise the validity of foreign awards.

Although this recent development is, therefore, to be welcomed, it remains to be seen when and how the principles of the New York Convention will be implemented in Myanmar.