GAR-myanmar

The Asia-Pacific Arbitration Review 2016 MyanmarThe Asia-Pacibc ArtioraoiRn vewieG 2016 Written exclusively by leading arbitrators and legal counsel, this edition covers hot topics and developments in Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Nepal, New Zealand, Pakistan and Singapore. deneraoe:N 4Rwemter ,2 050S The information contained in this report is indicative only. Law Business Research is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this report and in no event shall be liable for any damages resulting from reliance on or use of this information. Copyright 2006 - 2025 Law Business Research Explore on dAvRETURN TO UYMMAvC Myanmar phrisoRuher phWah and dRh janginB WongPartnership LLP UWmmary AvIOTvATO14 ApT 9E,, PvVLAODO4d ATTOTYHVU TFV jALVU 1? pFA4dV ?vAUVv A4H 4VALV pAUV jFVvV H1VU MCA4MAv d1 ?v1M FVvVf Myanmar Explore on dAvRETURN TO UYMMAvC With the implementation of market-oriented reforms and foreign investment pouring into Myanmar over the past few years, reform of the arbitration regime and legislation was inevitable and necessary. Over the last two years, Myanmar has acceded to the New York Convention on the Recognition and Enforcement of Arbitral Awards 1958 and issued a draft Arbitration Bill based on the UNCITRAL Model Law. Further, the latest draft Investment Law speciGcally provides that when a dispute arises between the Union 4overnment of Myanmar or a government entity and a foreign investor, it can be referred to arbitration. These are the developments in Myanmar, bringing it closer to international investment and arbitration standards. AvIOTvATO14 ApT 9E,, As the starting point, we will look at the key features of the arbitration law currently applicable in Myanmar. The Myanmar legal system is largely common law-based and the current law of arbitration is the Arbitration Act 19:: (Arbitration Act), which mirrors the Indian Arbitration Act, 19:0. The Arbitration Act applies to domestic arbitrations, which includes arbitrations entered into between Myanmar companies as well as those involving one or more foreign parties. The Arbitration Act also applies to statutory arbitration. Reference to arbitration can be made in three ways• ; arbitration without the intervention of a courtq ; arbitration with the intervention of court where there is no suit pendingq ; arbitration in suits. Arbitration Agreement An arbitration agreement is a written agreement to submit present or future differences to arbitration, whether or not an arbitrator is named therein. 1 There is no special form of agreement prescribed in the Arbitration Act and it may include terms as agreed between the parties. Unless otherwise provided for in the arbitration agreement, the following terms will apply to the arbitration• 2 ; the reference will be to a sole arbitratorq ; if the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire within one month of their appointmentq ; the award must be made within four months of the reference to the arbitratorsq ; if the award is not made within four months, the matter will be referred to an umpire who must make an award within a further two monthsq ; the parties to the arbitration will submit to examination under oath or ajrmation and produce all re3uested documents within their possession or powerq ; the award will be Gnal and binding on the partiesq ; the cost of the arbitration will be at the discretion of the arbitrators. Myanmar Explore on dAvRETURN TO UYMMAvC Arbitrability Of Dispute The Arbitration Act does not specify which kinds of disputes are arbitrable. In general, any matter in respect of which a civil suit can be Gled in court can be referred to arbitration. However, some matters are exclusively within the ’urisdiction of a court. For example, the ad’udication of a person as an insolvent under the Insolvency Act, the winding up of a company under the Myanmar Companies Act and the appointment of a guardian for a minor under the 4uardian and Wards Act cannot be the sub’ect matter of reference to arbitration. 7 For certain contracts, there are also restrictions on the parties– ability to choose the governing law and forum for dispute resolution. For example, the Myanmar Export and Import Rules and Regulations re3uire trade disputes under sales contracts with foreign companies to be arbitrated in Myanmar under the Arbitration Act, with no option for dispute resolution outside Myanmar. Substantive Law The Arbitration Act is silent on the governing law. However, the Myanmar courts have accepted one of the principles of English private international law, which is that the intention of the parties must Grst be determined before deciding which law is applicable to their dispute. : In theory then, parties are free to select the substantive law. However, there appears to be no precedent or case law to date which explains how such choice of foreign law would be applied by the arbitral tribunal or the Myanmar courts. Where a case involves a foreign element, in the absence of expressed choice by the parties, the substantive law would be determined in accordance with Myanmar law. If there is no enactment in force on the issue at hand, the decision must be according to ’ustice, e3uity and good conscience. 5 Procedural Law If the arbitration is seated in Myanmar, Myanmar law will be the procedural law for the arbitration. 6 The procedural laws will govern the following• D ; the constitution of the arbitral tribunalq ; removal of an arbitratorq ; powers of arbitratorsq ; powers of the courtq ; the arbitration proceedings and hearingq ; duration of the arbitration proceedingsq ; limitationq and ; grounds for setting aside an award. Constituting The Tribunal In Myanmar, there is no ojcial list of arbitrators and there are no restrictions or re3uirements as to who can be appointed by parties as an arbitrator. Lawyers, ’udges and government ojcials have been appointed as arbitrators in previous cases, but their ability to handle Myanmar Explore on dAvRETURN TO UYMMAvC complex commercial disputes is 3uestionable due to the lack of awareness and experience in arbitration practice. Parties are at liberty to decide on the number of arbitrators and to each appoint their own arbitrators. 8 If parties wish to challenge an arbitrator, they may apply to the court and the court may remove the arbitrator 9 and appoint persons to Gll the vacancies. 10 Powers Of The Arbitral Tribunal Unless a contrary intention is expressed in the arbitration agreement, the arbitrator or umpire has the power under the Arbitration Act to• 11 ; obtain the opinion of the court on any point or, if necessary on the whole sub’ect of the awardq ; correct any clerical mistakes or errors arising from any accidental slip or omission in an awardq ; administer interrogatories and oaths to all parties appearing in the arbitrationq ; make interim awards and grant interim measuresq and ; award costs. The Role Of The Court The court retains a wide supervisory role under the Arbitration Act and an arbitration agreement that ousts the ’urisdiction of the court is deemed to be invalid. The expansive powers of the court are a key area in which the Arbitration Act differs widely from international arbitration laws and rules. The Act empowers the court to exercise various powers once the tribunal is constituted, such powers including (although without pre’udice to any power that may be vested in the arbitrator in respect of these matters)• 12 ; the preservation, interim custody or sale of any goods which are the sub’ect matter of the referenceq ; securing the amount in difference in the referenceq ; the detention, preservation or inspection of any property or thing which is the sub’ect of the reference or as to which any 3uestion may arise thereinq ; authorising persons to enter on or into any land or building in the possession of any party to the reference for the aforesaid purposesq ; authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidenceq ; interim in’unctions or the appointment of a receiverq ; the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings. 17 Apart from the above, the court also has ’urisdiction in the following areas• ; revocation of the authority of an arbitratorq 1: ; Myanmar Explore on dAvRETURN TO UYMMAvC appointment of arbitrators or umpire if the parties cannot agree on the appointmentq- 15 ; appointment of arbitrators or umpire to replace the original persons if they had failed to actq 16 ; remove arbitrators or umpires who have failed to use all reasonable dispatch in proceeding with the reference and making an award or have misconducted themselves or the proceedingsq 1D ; order the arbitration agreement to cease to have effect if all the arbitrators or umpire are removed for failure to act or misconductq 18 ; answer 3uestions of law if re3uested to do so by the arbitrators or the umpireq 19 ; remit an award back to the arbitratorsq the award will become void if the award is remitted and the arbitrators or umpire fail to reconsider and submit their decision within the time Gxedq 20 and ; set aside an award. 21 In relation to misconduct, the following would be sujcient to warrant the revocation of an arbitrator–s authority• 22 ; the arbitrator had failed to act impartially or has an interest or bias in the result of the proceedingsq ; the arbitrator had breached the principles of natural ’ustice by, for example, failing to give one of the parties to the arbitration the opportunity to be heard before the arbitratorq ; the arbitrator had mishandled the arbitration such that it is likely to amount to some substantial miscarriage of ’ustice. The court may also stay legal proceedings where there is an arbitration agreement. However, the relevant party must Gle the stay application before Gling a written statement or taking any other steps in the legal proceedings. If the court is satisGed that there is no sujcient reason why the matter should not be referred in accordance with the arbitration agreement, the court may make an order staying the proceedings. The Award The arbitral tribunal can make Gnal and interim awards. 27 There are no prescribed re3uirements for constituting an award, except that the award must be signed by the arbitrators and the parties informed of it by written notice. 2: Unless a different intention is expressed in the arbitration agreement, a Gnal award must be made within four months of entering on the reference or after having been called on by notice in writing from any party to the arbitration agreement. The court may also allow an extended period for the arbitrators to make the award. 25 The arbitral tribunal has the power to correct in an award any clerical mistake or error arising from any accidental slip or omission. 26 Either party also may re3uest the arbitrators or the umpire to submit the award to a competent court. 2D The court will then check whether the award should be modiGed or corrected, 28 remitted to the arbitrators or umpire for reconsideration 29 or set aside. 70 Myanmar Explore on dAvRETURN TO UYMMAvC If the court Gnds no fault with the arbitral award, it pronounces the ’udgment according to the award and a decree is issued. 71 Such court decree has the same effect and can be enforced like an ordinary decree from the court. Setting Aside An application to set aside must be made to court 72 within 70 days of the date of the service of the notice Gling the award. 77 The grounds for setting aside an award are• 7: ; the arbitrators or the umpire misconducted themselves or the proceedingsq ; the award was made either after the issue of an order by the court superseding the arbitration or after arbitration have become invalid under section 75q ; the award was improperly procured or is otherwise invalid. As the courts appear to have wide discretion in deciding whether to set aside an arbitral award, this raises the likelihood that an award may be set aside (at the re3uest of the losing party), resulting in a re-litigation of the entire matter. If the court refuses to set aside an award, the award may be challenged in an appeal. 75 Enforcement Of Award For awards made in Myanmar, the arbitrators must, at the re3uest of any party to the arbitration agreement, Gle the award together with depositions and documents at a court. Such application must be Gled within 90 days of the date of service of the notice of the making of an award. 76 If the court sees no cause to remit or set aside the award, the court shall, after the time for making an application to set aside has expired or such application has been dismissed, proceed to pronounce ’udgment according to the award. 7D A decree shall follow and can be executed as any other decree in a civil court. Accordingly, there appears to be no procedure for a party to resist enforcement of the award. If they are not satisGed with the award, their recourse would be in applying to set aside the award. If they fail to do so, the court may not refuse to recognise and enforce an award accordingly. As to foreign awards, prior to acceding to the New York Convention on Recognition and Enforcement of Foreign Awards 1958 (New York Convention), Myanmar was party to the 4eneva Convention on the Execution of Foreign Arbitral Awards (192D) (4eneva Convention). However, there were obstacles present in the 4eneva Convention such as the limited number of signatories and those which had reciprocal arrangements with Myanmar, as well as a convoluted enforcement process. In any event, there appears to be no reported cases of enforcement of foreign awards in Myanmar, which would have to be enforced in compliance with the Arbitration (Protocol and Conventions Act) 1979 (Protocol and Conventions Act). As Myanmar is now party to the New York Convention, the application of the 4eneva Convention is not material. While there have been developments in Myanmar–s future enforcement of foreign awards, which will be discussed below, there remains a lot of work to be done in a wholly untested area. Myanmar Explore on dAvRETURN TO UYMMAvC Agreements And Treaties Myanmar is an ASEAN member state and has acceded to the ASEAN Comprehensive Investment Agreement 2009, which provides investor protections as well as a dispute resolution mechanism, including referral to foreign arbitration, for commercial activities in certain economic sectors (eg, manufacturing and agriculture). There are also several bilateral investment treaties in effect (eg, with China, India and Japan). For example, the settlement of disputes clause in the Myanmar‘China BIT provides that any legal dispute between an investor of one contracting party and the other contracting party shall Grst be settled amicably through negotiations. If the dispute cannot be settled within six months, the dispute must be submitted at the re3uest of either party to the International Centre for Settlement of Investment zisputes (ICSIz) (under the Convention of the Settlement of Investment zisputes between States and Nationals of Other States (ICSIz Convention) or an ad hoc tribunal. 78 Accordingly, there are agreements which provide for the comfort of neutral arbitration of investor-state disputes, should Myanmar and an investor from another contracting country need to resolve certain issues. PvVLAODO4d ATTOTYHVU As seen above, the Arbitration Act is in need of an overhaul and the enforcement of foreign awards is still untested. In Myanmar, dispute resolution is handled mainly in the courts and local users have very little experience or inclination toward arbitration. The local party would generally prefer dispute resolution in Myanmar as they have little knowledge of arbitration procedures and costs of the same, whether domestically or abroad. Without the entry of foreign investors, arbitration would not be the preferred choice. Further, the institutional infrastructure for arbitration is weak ‘ there are no domestic or international arbitration centres in Myanmar or procedural rules in place. As a result, international institutional arbitration outside of Myanmar is more popular than arbitrating in Myanmar itself. In this regard, the UNCITRAL Arbitration Rules, SIAC Rules and ICC rules are popular choices for international arbitrations. There is, however, a process in which commercial and Gnancial disputes can be resolved at the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The UMFCCI has a duty to conciliate disputes between its members and between its members and other individuals and organisations. However, there is no written procedure of conciliation. A subcommittee is formed to conciliate for a speciGc dispute and to call experts and see their opinions if re3uired. Some parties in local disputes seek the help of the committee to reach a settlement before they proceed to court, however this does not occur with international disputes. The Gndings of the subcommittee with the approval of the Central Executive Committee are pronounced and the parties who do not comply with the Gndings are blacklisted. 79 This conciliation procedure, however, does not appear to be in line with international practices. TFV jALVU 1? pFA4dV However, in the last few years, Myanmar has seen a number of changes which will shape the tra’ectory of arbitration here in time to come. The New York Convention Myanmar Explore on dAvRETURN TO UYMMAvC Myanmar formally acceded to the New York Convention on 16 April 2017, with the Convention entering into force in Myanmar on 15 July 2017. This accession has been years in the making, and reaching this milestone is an important piece in Myanmar–s legal and investment framework. The New York Convention currently has 15: signatories, :0 and re3uires the contracting states to give effect to arbitration agreements and recognise and enforce arbitration awards from other states. By signing on to the New York Convention, the 4eneva Convention will cease to have effect between the contracting states on their becoming bound and to the extent that they become bound, by the New York Convention. :1 This would eradicate issues with the process of enforcement present in the 4eneva Convention, wherein the enforcing party must Grst obtain recognition of the award from the courts in the country of origin before making an application for enforcement in the ’urisdiction where enforcement is to follow. The New York Convention supports ready enforceability of awards from other contracting states without re-litigation in the courts, and offers a supportive environment for the arbitration process in Myanmar. However, the domestic legislation for the enforcement of foreign awards has not been passed and enforcement therefore remains theoretical. A draft Arbitration Bill has since been published, of which we will consider the key points, but as long as this Bill is not passed, there remains no domestic procedure to enforce a foreign arbitral award. Draft Arbitration Bill 2014 On 25 May 201:, the Myanmar Parliament published a draft of the new Arbitration Bill, which, when passed into law, will supersede the Arbitration Act and Protocol and Convention Act. The Arbitration Bill had been widely anticipated and sets the domestic tone and framework for arbitration on Myanmar, as well as the enforcement of foreign arbitral awards pursuant to Myanmar–s accession to the New York Convention. The Arbitration Bill is based on the UNCITRAL Model Law (Model Law), with the Grst part applying to arbitration in Myanmar and the second to the enforcement of a foreign award in Myanmar. For example, the provisions relating to the deGnition of an arbitration agreement,- :2 the procedure of appointing arbitrator(s) :7 and the grounds for setting aside an award :: are mirrored in the Arbitration Bill and the Model Law. However, there are differences between the Arbitration Bill and Model Law. First, while parties are free to decide on the substantive law in an ?international commercial arbitration ?, the Arbitration Bill provides that arbitrations seated in Myanmar must adopt Myanmar law as the substantive law if those arbitrations do not fall within this deGnition. :5 This creates uncertainty as to what can be deGned as an international commercial dispute, such that parties are allowed to adopt any foreign law as substantive law under this provision. Next, in relation to the ’urisdiction of the arbitral tribunal, article 16 of the Model Law allows parties who ob’ect to an order that the tribunal has ’urisdiction to re3uest for the court to decide on the matter. In the Arbitration Bill, if the arbitral tribunal rules that it has ’urisdiction, it may continue the arbitration proceedings and make an award, with the disputant–s only recourse being to apply to set aside this award under section 7:. :6 This presents a more onerous process in ob’ecting to the ’urisdiction of the tribunal, and much will depend on how the Myanmar courts would apply the provisions under section 7:. Myanmar Explore on dAv