16 February 2016
Up until very recently, the legislation that governed arbitrations in Myanmar was the antiquated Arbitration Act 1944. The 1944 Act mirrored India's Arbitration Act 1940 and was generally regarded as outdated and defunct. Reform of Myanmar's arbitration regime was urgently required. In the last few years, as the country has become more accessible to foreign investors with the implementation of political and market reforms, Myanmar has seen a number of changes which will dramatically impact the conduct of arbitrations in the country. It will also affect how arbitral awards can be enforced, recently culminating in the enactment and coming into force of Myanmar's Arbitration Law (Union Law 5/2016) on 5 January 2016.
Enforcement of Foreign Arbitral Awards in Myanmar
As previously reported, Myanmar formally acceded to the New York Convention in April 2013, coming into force in Myanmar on 15 July 2013. The New York Convention supports the enforceability of awards from other contracting states and provides a supportive environment for arbitrations in Myanmar. However until now, the domestic legislation required for the enforcement of foreign awards had not been passed, resulting in significant uncertainty as to the domestic procedure by which a foreign arbitral award could be enforced in Myanmar.
Previously, the only way a foreign arbitral award was capable of being enforced in Myanmar was under the Myanmar Arbitration (Protocol and Convention) Act 1937 (1937 Act) which governed the enforcement of awards made under the Geneva Protocol on Arbitration Clauses (1923) (Geneva Protocol) and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 (Geneva Convention). These outmoded procedures presented serious obstacles to international investors who tended to opt for arbitration agreements which required arbitrations to be conducted in Hong Kong or Singapore. The other limitation with the Geneva Protocol and Geneva Convention was that few other states were actually signatories to them. The issue regarding enforceability of foreign arbitral awards was further complicated by Myanmar's accession to the New York Convention which basically rendered the Geneva Convention and Geneva Protocol irrelevant, and consequently, created uncertainty regarding the extent to which the 1937 Act would then be applied in Myanmar.
In response to these concerns, the Myanmar Parliament published a draft of a new Arbitration Bill to address these lacunae in Myanmar's laws in May 2014 for consultation. The Arbitration Bill largely followed the UNCITRAL Model Law and dealt with the potential vacuum in relation to the enforcement of foreign awards in Myanmar.
Enactment of the New Arbitration Law (Union Law 5/2016)
It will come as comfort to international investors operating in Myanmar, that on 5 January 2016, the Myanmar Parliament passed its new, long awaited and much anticipated Arbitration Law. Much like the Arbitration Bill, the new Arbitration Law largely follows the language of the UNCITRAL Model Law, bringing its approach closer to internationally accepted norms, and gives legislative effect to Myanmar's ratification of the New York Convention in 2013. Whilst the ability to enforce foreign arbitral awards in Myanmar will be welcomed by foreign investors, there remains an uncertainty as to the approach which will be adopted by the Myanmar judiciary, in particular with regards to the enforcement of foreign arbitral awards against Myanmar entities. Nonetheless, the enactment of the Arbitration Law and the adoption of the UNCITRAL Model Law shows that Myanmar is willing to be seen to embrace modern arbitration practices which, in time, will encourage a greater flow of foreign direct investment into the country.