MARKET COMMENTARY 39
SET TING THE ARBITRATION SCENE Making way for arbitration inMyanmar is not without its problems. Currently, Myanmar does not have an operating arbitral centre. In addition, national court intervention in arbitral proceedings, a limited pool of specialist arbitrators, general bias towards State-owned entities and enforcement concerns in theMyanmar courts all threaten to deter foreign investment in the country. Despite this, foreign investment and economic growth inMyanmar continues to increase, which has led to significant developments of the country’s arbitration landscape. Over the last fewyears, substantial steps have been taken tomoderniseMyanmar’s current and outdated arbitration framework and to allow for enhanced arbitration practices and investor protection that is consistent with international standards. For one, Myanmar’s accession to the New York Convention in July 2013 has opened its doors to foreign investment, demonstratingMyanmar’s promotion of international arbitration as an effective formof dispute resolution. Despite fairly significant delays inMyanmar’s implementation of the New York Convention into its national law, on 25May 2014 a draft arbitration bill (the Arbitration Bill) was submitted to Myanmar’s Parliament. The Arbitration Bill closely resembles theModel Lawand the principles of recognition and enforcement of foreign arbitral awards enshrined in the New York Convention. When the Arbitration Bill is finally accepted as national law, theModel Lawand the New York Convention (or something similar to them) will apply, creating a developed arbitral landscape, certainty for foreign investors and an avenue to enforce arbitral awards in the jurisdiction. Some notable aspects of the Arbitration Bill include: • the provisions relating to the definition of an arbitration agreement, the procedure for appointing an arbitrator(s) and the ground for setting aside an award, whichmirrors theModel Law; • where an arbitration is not an “international commercial arbitration” and is seated in Myanmar, Myanmar lawmust be the substantive law; • if the arbitral tribunal rules that it has jurisdiction, it may continue the arbitration proceedings andmake an award, despite any party’s objection to jurisdiction, with the disputant’s only recourse being to apply to set aside this award (as opposed to Article 16 of theModel Law which permits a party to apply to a court to determine jurisdiction); • the inclusion of a deeming provision, whereby any awardmade inMyanmar will be enforced when the period for setting aside the award has elapsed or the application to set aside the award had been dismissed; and • that foreign arbitral awardsmay be enforced inMyanmar, provided that they are the result of a commercial dispute, and that theyweremade at a place covered by international conventions connected toMyanmar and as notified in the State Gazette by the President. As the economies of Myanmar’s neighbouring countries in South-East Asia continue to develop, so does competition for foreign investment in the region. Namely, Myanmar’s neighbours Vietnamand Cambodia continue to develop their arbitration legal frameworks, as the three countries compete for investment and strive to provide such investors with safe and effective dispute resolution frameworks. In this respect, we note, Cambodia’s adoption of updated arbitration legislation in 2006, which is largely based on the UNCITRALModel Law on International Commercial Arbitration , and further, the opening of its National Arbitration Centre inMarch 2013.
INVESTMENT L AW AND PROTECTION Foreign investors looking toMyanmar may have certain treaty protections against acts of the Government. Myanmar is a signatory to the ASEAN Comprehensive Investment Agreement (ACIA), which aims to “create a free and open investment regime / environment” for South-East Asian countries, including Singapore, Indonesia, Malaysia and Thailand. The ACIA provides (amongst other things) that Myanmar must afford investors of other Member States treatment no less favourable than it accords to its own national investors, as well as fair and equitable treatment and full protection and security. The ACIA also provides that Myanmar would be required to give non-discriminatory treatment to investors of other Member States, where the investors have suffered losses inMyanmar due to armed conflict or civil strife. The decision in Yaung Chi Oo Trading Pte Ltd v. Government of the Union of Myanmar 10 was one of a few investment disputes under the ACIA, inwhich Yuang Chi, a brewery operator and distributor, alleged that Myanmar had contravened its international treaty obligations under the ACIA (namely, its fair and equitable treatment, full protection and expropriation obligations). However, the arbitral tribunal (administered by a tribunal constituted by the International Centre for the Settlement of Investment Disputes) held that it lacked jurisdiction, and soMyanmar’s adherence to its foreign investment obligations was not tested. Outside of the ASEAN community, foreign investors fromChina, India, Japan, the Philippines, and Thailand benefit from the protection of bilateral investment treaties (BITs) withMyanmar (Myanmar has also entered into BITs with Israel, Laos and Vietnam, but these have not yet entered into force). Most of these BITs permit a dispute between a foreign investor and its host state to be referred to arbitration under the rules provided by the International Centre for Settlement of Investment Disputes (ICSID) (althoughMyanmar is not a signatory to the Washington Convention), or by ad hoc arbitration. However, Myanmar currently lags behind in the number of BITs it has acceded to when comparedwith its neighbouring countries, such as Bangladesh (31), Cambodia (19), Laos (26), Thailand (44) and Vietnam(53), each of which also generally promote recourse to ICSID or ad hoc investment treaty arbitration. FINAL COMMENT Although foreign investors should feel increasingly confident about Myanmar’s economy, and the steps it has taken to develop its legal and arbitration landscape, many of the risks and challenges associatedwith the jurisdiction remain. Myanmar still has a long way to go in terms of implementing best practice arbitral laws. However, with the Government’s continued commitment to the global economic fold, it is only amatter of time beforeMyanmar’s arbitration landscape and investment treaty protections rival those of more developed economies, and in doing so will remove the global perceptions of its chequered past.
10 Case No. ARB/01/1 (31 March 2003), 42 ILM 540 (2003).
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