Arbitration Yearbook Myanmar

By: Leng Sun Chan SC1, Jo Delaney2 and Min Min Ayer Naing3

A. Legislation, Trends and Tendencies

A.1 Legislation

Arbitration in Myanmar is now governed by the recently enacted Arbitration Law 2016 (Union Law No. 5/2016) (“Arbitration Law”) which came into force on 5 January 2016. Subsidiary legislation, such as procedural rules, regulations and directives, may be issued by the Union Supreme Court in accordance with this new law. The Arbitration Law repeals the previous Arbitration Act 1944 (“1944 Act”), which was based on the English Arbitration Act 1934 and was closely aligned with the Indian Arbitration Act 1940. The Arbitration Law is based on the UNCITRAL Model Law (“Model Law”).

Myanmar acceded to the New York Convention in July 2013. The Arbitration Law gives effect to the New York Convention and provides for the enforcement of arbitral awards under the New York Convention.

The old enforcement regime was governed by the Arbitration (Protocol and Convention) Act 1937, which applied to awards that were enforceable under the Geneva Convention. However, Article VII of the New York Convention provides that the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention shall cease to have effect when a state becomes party to the New York Convention.

Section 49 of the Arbitration Law expressly excludes the application of the Arbitration (Protocol and Convention) Act 1937.

A.2 Trends and Tendencies

The new Arbitration Law is a major step forward in bringing Myanmar into the fold of modern international arbitration network. Awards made in Myanmar will be enforceable in other New York Convention countries and vice versa. Arbitrations seated in Myanmar now follow the familiar UNCITRAL Model Law regime. Some specific carve-outs have, however, been made for domestic arbitration. A Myanmar Arbitration Center is in the pipeline.

A.3 Significant Provisions of the Arbitration Law

Section 4 of the Arbitration Law provides that the objectives of the Arbitration Law are to:

(a) effectively resolve domestic and international business and commercial disputes;

(b) recognize and enforce international arbitral awards in resolving disputes in arbitration; and

(c) encourage dispute resolution by arbitration.

Section 7 expressly provides that the courts of Myanmar may only intervene in arbitration proceedings in relation to the matters set out in the Arbitration Law. This provision is consistent with the doctrine of minimal curial intervention expressed in Article 5 of the Model Law.

Subject to a few modifications, most of the provisions in the Arbitration Law are the same as those of the Model Law. There are, however, some variations to the Model Law, the most significant of which is the distinction between domestic and international arbitrations. Some noteworthy variations from the Model Law are mentioned below.

International and Domestic Arbitration

Unlike the Model Law, the Arbitration Law provides for international commercial arbitration and domestic arbitration. Section 3 of the Arbitration Law provides that an arbitration is international if:

(a) the commercial business of one of the parties to the arbitration agreement is situated in a country other than Myanmar when the agreement was constructed;

(b) the place designated in the arbitration agreement or the place where arbitration is administered pursuant to the arbitration agreement is outside the state where the business of the parties to the arbitration agreement are situated;

(c) the place where the substantial part of the obligations in a commercial relationship is to be performed or the place most closely related to subject matter of the dispute is outside the country where the businesses of the parties to the agreement are situated; or

(d) the parties to the arbitration expressly agree that the subject matter of the arbitration agreement is related to more than one country.

Section 3 also provides that a domestic arbitration is an arbitration that is not an international arbitration. For domestic arbitrations, parties have the option under Section 39 of the Arbitration Law to request the Court to determine any question of law arising out of the arbitral proceedings. This is comparable to provisions found in the English Arbitration Act 1996 and in the Singapore Arbitration Act 2002 in relation to domestic arbitrations, and is not available in international arbitrations.

Power to Stay Court Proceedings and Interim Measures

Section 10 of the law is similar to Article 8 of the Model Law in that it empowers the courts to stay court proceedings pending the outcome of an arbitration unless the arbitration agreement is null and void, inoperative or incapable of being performed. However, it also provides that a decision of the court to refer to arbitration cannot be appealed, but a decision by the court rejecting the application for reference to arbitration is appealable.

The Arbitration Law includes provisions that empower both the tribunal and the court to order interim measures in certain circumstances. Section 19 empowers the tribunal to order interim measures (similar to Article 17 of the Model Law). However, Section 31 of the Arbitration Law provides for the enforcement of interim measures issued by the arbitral tribunal by the courts in Myanmar. The Myanmar courts will enforce such an interim measure as an order of the court, irrespective of whether the arbitral tribunal is seated in or outside Myanmar, provided that it is the type of interim measure that may be issued by the Myanmar courts.

Section 11, however, also empowers the court to grant certain interim measures (similar to Article 9 of the Model Law). Although the stipulated judicial interim measures are not exactly as the same as those that the tribunal is expressly empowered to make, there is overlap. Section 11(d), however, provides that the court is only to order interim measures if the arbitral tribunal or other persons authorized by the parties cannot effectively order such measures. Accordingly, there is potential for concurrent jurisdiction of the court and the tribunal over interim measures.

Substantive Law

Section 32 provides for the law that is to apply to the substance of the dispute. In domestic arbitration, the tribunal is to decide according to Myanmar law. If it is an international arbitration, the tribunal is to decide the dispute in accordance with the law to which the parties have agreed. If parties have not agreed on a law, the tribunal must decide on the appropriate law to apply. The tribunal may also decide the dispute ex aequo et bono if the parties so empower it.

The Award

Section 35 is similar to Article 31 of the Model Law relating to the form and contents of an award. Section 35(f) has been added and provides for the costs of the arbitration, as described in Section C.

Section 38 provides that the arbitral award is final and binding on the parties, similar to Article 35 of the Model Law.

Recognition and Enforcement of Arbitral Award

Section 40 provides for the enforcement of a domestic arbitral award, which is to be in accordance with the Code of Civil Procedure. The grounds for setting aside a domestic arbitral award are set out in Section 41. They are comparable to those under the Model Law, and to those under the New York Convention for refusal of enforcement of a foreign award.

In addition, there is a right of appeal against a domestic arbitral award on a question of law. The threshold for leave to appeal is similar to that found in England (under the Arbitration Act 1996, which applies to domestic and international arbitrations) or Singapore (under the Arbitration Act 2002, which applies to domestic arbitrations only).

The enforcement of a foreign award is covered in Sections 45 and 46 of the Arbitration Law. A foreign award is to be recognized and enforced unless certain stipulated grounds, similar to those found in the New York Convention, are established.

No separate or distinct provision is made for the enforcement or setting aside of an international arbitration award that is made in Myanmar, namely in an arbitration seated in Myanmar. Such an award would not be a foreign award enforceable under the New York Convention as provided in Sections 45 and 46 of the Arbitration Law.

Supplementary Provisions

Chapter XI (Sections 50 to 58) sets out supplementary provisions. Section 56 provides for the application of the Limitation Act. Section 58 provides that, unless the parties have agreed otherwise, the Arbitration Law will apply to arbitrations commenced after its enactment; that is, the Arbitration Law will apply to arbitrations commenced after 5 January 2016, and the 1944 Act will continue to apply to arbitrations that commenced prior to 5 January 2016.

B. Cases

There were no reported cases related to arbitration in Myanmar in 2015.

C. Costs of the Arbitration

C.1 Allocation of Costs

The 1944 Act provided that in an arbitration without the intervention of a court, the tribunal had a discretion to order who is to pay the costs of the arbitration and in what amount, as well as to tax (fix) the amount of costs to be paid. This was an implied condition of an arbitration agreement set out in the First Schedule, which was to apply pursuant to Section 3 of the 1944 Act. Section 38(3) provided that the court may make orders regarding the costs of the arbitration where it is not sufficiently provided for in the arbitration.

The Arbitration Law adopts a similar approach for all arbitrations. Section 31(f) provides that the costs are to be fixed by the tribunal and that the tribunal shall specify the party entitled to costs, the party who shall pay the costs, the amount of costs or method of determining the amount, and the manner in which the costs are to be paid. The explanation of the Arbitration Law provides that “costs” refers to reasonable costs relating to the fees and expenses of the arbitrators and the witnesses, legal fees and expenses, any administration fees of the arbitral institution and any other expenses incurred in connection with the proceedings. Section 53(b) provides that the courts may make orders in relation to the costs of the arbitration if costs have not been sufficiently provided for in the award.

C.2 Security for Costs

Section 18 of the 1944 Act provided that the court may pass “such interim orders as it deems necessary and just” (in an arbitration without court intervention). It did not specifically refer to security for costs, though this may have been considered as an interim measure.

Section 11 of the Arbitration Law provides that the Courts may grant interim measures in support of an arbitration. It does not expressly provide that the court may grant security for costs. However, Section 19 provides that the arbitral tribunal has the power to order security for costs.

C.3 Recovery of Costs

As the Arbitration Law has only just been enacted, it remains to be seen how tribunals and/or the Myanmar courts will approach the recovery of costs.

  1. Leng Sun Chan SC is the Head of Disputes in Baker & McKenzie.Wong & Leow, Singapore and is Baker & McKenzie’s Asia-Pacific Head of International Arbitration.
  2. Jo Delaney is a special counsel in Baker & McKenzie’s Sydney office. Ms. Delaney has 15 years of experience in commercial, construction and investment arbitrations across a broad range of industries.
  3. Min Min Ayer Naing is a senior associate in Baker & McKenzie’s Yangon office in Myanmar.