Legal News & Analysis – Asia Pacific – Myanmar – Dispute Resolution

Introduction

Arbitration has experienced growing popularity as a form of dispute resolution in the Asian region, particularly where the dispute in question has cross-border elements. In light of the mounting importance of international trade and investment, countries within the region have been developing their arbitral infrastructure.

One of the more significant recent developments can be attributed to Myanmar. On 25 May 2014, the Myanmar Parliament published a draft of their new Arbitration Bill (the “Bill”), which has been widely anticipated since Myanmar’s formal accession to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) on 15 July 2013.

The new Bill marks a significant shift in Myanmar’s arbitration regime, bringing its arbitration laws closer in line with Asia’s major arbitration hubs. It perhaps demonstrates the country’s commitment to building a conducive legal infrastructure to nurture greater foreign trade and investment.

Though the Bill is currently only available in the Myanmar language, an English version will be available after the President signs the Bill into law. In this Update, we look at the major provisions of the Bill, as well as its other notable features.

Main Features

The Bill is set to remodel the arbitration regime in Myanmar as a whole, as it applies to both domestic and international arbitration, whether administered or ad hoc. The Bill also demonstrates a move towards alignment with international standards of arbitration legislation. For example, for arbitrations seated in Myanmar, the applicable provisions are largely in line with the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). Similarly, for foreign arbitrations, the Bill will incorporate the New York Convention.

Similar to Article 5 of the Model Law, the Bill states that there shall be no court intervention in arbitrations except as provided for in the Bill. This demonstrates the pro-arbitration approach of the Bill, as it ensures a degree of independence for the arbitration regime.

The Myanmar courts have also been granted powers under the Bill to support the arbitral process. For example, the court may grant interim measures in respect of arbitrations. Mirroring this, arbitral tribunals are also able to grant interim measures in the course of arbitration.

In terms of arbitrators, the Bill does not restrict the number or nationality of arbitrators appointed in an arbitration, nor does it restrict the language or applicable rules of an arbitration. However, the court may remove arbitrators where there are justifiable doubts as to their impartiality.

Finally, the Bill also provides for the default of parties, stating that the respondent’s default will not hinder the continuation of proceedings, but also will not be treated as an admission of the claim.

Other Notable Features

Although the Bill is by and large deferential to the arbitral framework in place across other Asian hubs, there are certain aspects of the Bill which are not strictly in keeping with such practice.

First, we look at the area of the tribunal’s jurisdiction. While the Bill provides that parties may appeal against an order of the tribunal holding that there is no jurisdiction, parties objecting to an order that the tribunal has jurisdiction can only seek to set the order aside under the strict requirements of Article 34 of the Model Law. This deviates from Article 16 of the Model Law, which allows parties objecting to an order that the tribunal has jurisdiction to request the court to decide the matter. This may be seen as an obstacle in objecting to the jurisdiction of the tribunal, and although courts have generally applied Article 34 in such instances in a more lenient manner, it remains to be seen how the Myanmar courts will approach a similar situation.

Second, we look at the parties’ choice of law. While parties to an “international commercial arbitration” are free to select the substantive law of the arbitration, the Bill provides that arbitrations seated in Myanmar which do not fall within this definition must adopt Myanmar law as the substantive law. In such situations, it is thus possible that parties may not even be allowed to agree on the adoption of any foreign law as the substantive law.
Third, we look at the area of enforcement of awards. Instead of following Article 36 of the Model Law, the Bill provides that awards made in Myanmar will be enforced where the court has refused to set aside the award, or where the application to set aside the award has expired. This means that parties objecting to an award must seek to set the award itself aside, rather than challenging the award’s subsequent enforcement.

Nonetheless, the grounds to set aside (for awards rendered in Myanmar) and refuse enforcement (for awards rendered in other New York Convention States) are largely identical under the Bill, which mirrors the Model Law and the New York Convention with regard to the content of these grounds. In order to succeed in setting aside the award or refusing enforcement, a party will have to furnish proof that one of the grounds exists. Some examples of the grounds are: (i) that the arbitration agreement is invalid; (ii) that the party was unable to present its case and; (iii) the arbitral tribunal exceeded its jurisdiction.

Of course, it remains to be seen how the Myanmar courts will interpret the grounds for setting aside and for refusing enforcement.

Concluding Words

Although there are certain deviations from international standard, the Bill largely follows the Model Law. The major overhaul of Myanmar’s arbitration regime signifies a mordernisation in the country’s approach towards alternative dispute resolution, and indeed demonstrates the adoption of a more liberal approach in the sphere of arbitration.

Having been published for public awareness and consultation, it is possible that the Bill will go through certain amendments before gaining force of law. However, the direction of the proposed changes indicates that Myanmar is ready to play its part in the growth of international arbitration in Asia.

For further information, please contact:

Kelvin Poon, Partner, Rajah & Tann
[email protected]

Paul Tan, Partner, Rajah & Tann
[email protected]

Chester Toh, Partner, Rajah & Tann
[email protected]

Jainil Bhandari, Partner, Rajah & Tann
[email protected]

Jawad Ahmad, Rajah & Tann
[email protected]