Arbitration in Myanmar Sebastian Pawlita, Wint Thandar Oo 27 and 28 August 2014
Distinctive features of arbitration in Myanmar: No arbitration centre Important role of the ordinary courts Enforcement in Myanmar difficult Foreign arbitral awards (probably) cannot be enforced in Myanmar, and Myanmar arbitral awards (probably) cannot be enforced abroad
Usually, foreign investors prefer arbitration over dispute resolution by the courts: The foreign party fears that the judge may be inherently biased towards the local party or even corrupt; worries about the length of time that it may take until the case is finally decided; worries that in court, the case may be decided by a judge who knows nothing about the business; worries (if it is ahigh-profile h case) thatt the case may get press coverage; wants proceedings to be conducted in English.
However, foreign investors also distrust arbitration in Myanmar and usually prefer arbitration in their home jurisdiction or a neutral jurisdiction (e.g. in Singapore): The foreign party doubts that there are suitable arbitrators in Myanmar as there is no arbitration centre in Myanmar; worries about court intervention in the selection of arbitrators, the arbitration procedure and the enforcement of arbitral awards; worries that the arbitral tribunal is biased against him if the locall party is astate t entity; worries that he cannot enforce a winning award against a state entity.
The local party usually prefers dispute resolution in Myanmar: The local party is worried about unknown arbitration procedures abroad; worries about the costs if arbitration is done abroad.
Arbitration Act 1944 A typical arbitration clause according to the Arbitration Act 1944 (abbreviated): Any dispute arising out of this Agreement shall be settled in the Republic of the Union of Myanmar by arbitration in accordance with the provisions of the Arbitration Act, 1944. The tribunal shall consist of two arbitrators, one to be appointed by each Party. Should the arbitrators fail to reach an agreement, the dispute shall be referred to an umpire nominated by the two arbitrators. The venue of the arbitration shall be in Yangon. The language of the arbitration shall be English.
Can one side foil arbitration by simply py not appointing an arbitrator? Section 9 lit. b Arbitration Act (simplified): "If party B does not appoint an arbitrator within 15 days after party A has notified party B that party A has appointed an arbitrator, then party A may appoint his arbitrator to decide on the case as sole arbitrator. However, the competent court may set aside this appointment."
What happens if the two arbitrators cannot agree on the award? The two arbitrators must appoint, within one month after their appointment, a third person ("umpire") (umpire)to decide the case if the two arbitrators disagree (section 2 First Schedule). If the two arbitrators do not appoint an umpire, the umpire is ultimately appointed by the competent court at the request of either party (section 8 para. 2 Arbitration Act). The two arbitrators have to render their award within 4 months after their appointment (section 3 First Schedule).
What happens if the two arbitrators cannot agree on the award? (continued) The umpire has to render the award within 2 months after either (i) the 4 months period has elapsed or (ii) the arbitrators have notified him that they cannot agree (section 5 First Schedule). If the umpire fails to act, he may ultimately be replaced by an umpire appointed by the competent court at the request of either party (section 8 para. 2 Arbitration Act).
Strong position of the ordinary courts in arbitration proceedings: The competent court may at the request of either party appoint arbitrators or an umpire if the parties cannot agree on the appointment (section 8 para. 2 Arbitration Act); appoint arbitrators or an umpire to replace the original persons if they failed to act (section 11 para. 1 Arbitration Act); remove arbitrators or an umpire who have "misconducted" themselves (section 11 para. 2 Arbitration Act); order the arbitration ti agreement to cease to have effect if all the arbitrators or the umpire are removed for failure to act or misconduct (section 12 para. 2 lit. b Arbitration Act);
Strong position of the ordinary courts in arbitration proceedings (continued): The competent court may furthermore, amongst others answer questions of law if requested to do so by the arbitrators or the umpire (section 13 lit. b Arbitration Act; the award may even be stated in the form of a question to the court); remit an award back to the arbitrators where "an objection to the legality of the award is apparent on the face of it" and fix a period of time for the arbitrators or the umpire to reconsider the award; the award becomes void if this time period lapses without the award being changed (section 16 para. 3 Arbitration Act)
set aside an award for the following reasons (section 30 Arbitration Act): The arbitrators or the umpire misconducted themselves or the proceedings; the award was made after either (i) a court order superseding the arbitration had been issued or (ii) the subject-matter had become pending at an ordinary court, the arbitrators or the umpire had been informed about this fact and the ordinary court had not granted a stay of the court proceedings; the award was improperly procured or is otherwise invalid.
Enforcement of an arbitral award in Myanmar: When the arbitrators or the umpire have made the award, they shall sign it and inform the parties in writing accordingly (section 14 para. 1 Arbitration Act). Either party may request the arbitrators or the umpire to submit the award to the competent court (section 14 para. 2 Arbitration Act). The court checks whether the award should be (i) modified or corrected (section 15 Arbitration Act), (ii) remitted to the arbitrators or the umpire for reconsideration (section 16 Arbitration Act) or (iii) set aside (section 30 Arbitration Act).
Enforcement of an arbitral award in Myanmar (continued): If the court finds no fault with the arbitral award, it pronounces judgment according to the award and a decree (section 17 Arbitration Act). The decree can be enforced like an "ordinary" decree from a court.
Problem: Courts in Myanmar seem to assume wide discretion in setting aside arbitral awards If the losing side does not want to follow the arbitral award, it will request the court to set it aside. Courts are apparently likely to heed such a request. Consequently, the whole case has to be litigated again before the ordinary court the arbitration proceedings were a waste of time and money. Local businesspeople are therefore wary about going to arbitration if they have business dealings amongst themselves.
Can a Myanmar arbitral award be enforced abroad? The Myanmar party has won arbitration according to the Myanmar Arbitration Act against the foreign party. Can the Myanmar party enforce the arbitral award? If the foreign party has assets in Myanmar: Yes, enforcement is possible by seizing the assets in Myanmar. If all the assets of the foreign party are abroad: No, a Myanmar arbitral award can (in all likelihood) not be enforced abroad as reciprocity is missing: Myanmar does not enforce foreign arbitral awards, so foreign jurisdictions also do not enforce Myanmar awards.
Arbitration ti (Protocol and Convention) Act 1937 Can a foreign arbitral award be enforced in Myanmar? In all likelihood, no. There have been no reported cased over many decades. Enforcement is (theoretically) only possible if the award was rendered in a country that signed the (long-forgotten) Geneva Protocol on Arbitration Clauses (1923) or the (likewise long- forgotten) Geneva Convention on the Execution of Foreign Arbitral Awards (1927). E.g. neither Singapore nor Hong Kong have signed the Protocol or Convention.
New York Convention 1958 Arbitration ti Bill 2014 What is the New York Convention? The New York "Convention on the Recognition and Enforcement of Foreign Arbitral Awards" requires contracting states to give effect to private arbitration agreements and to recognize and enforce arbitration awards from other contracting states. Myanmar acceded with effect as of 15 July 2013. Once the New York Convention is implemented in Myanmar, it should be possible to enforce Myanmar Arbitral Awards abroad and enforce foreign arbitral award in Myanmar. Presently, implementing legislation only exists as a draft ("Arbitration Bill").
Arbitration Bill 2014 The Arbitration Bill is, to a large extent, based on a model text provided by UNCITRAL (United Nations Commission on Trade Law); is divided into two parts: The first part applies if the place of arbitration is in Myanmar, and the second part applies to the enforcement of foreign arbitral awards; will, if enacted, replace the 1944 Arbitration Act and the 1937 Arbitration (Protocol and Convention) Act.
Arbitration Bill 2014 Enforcement of foreign arbitral awards: According to the Bill foreign arbitral awards can be enforced if they are the result of a commercial dispute and were made at a place "covered by a listed international convention and notified in the State Gazette by the President" (section 46); the party seeking enforcement has to apply to the competent court in Myanmar; if the court does not find fault with the award, it has to enforce it as if it were a decree of a Myanmar court (section 51); the court may refuse enforcement only on the grounds set forth in the Bill (section 50 which is a literal translation of the UNCITRAL model text).
Myanmar sebastian@pwplegal.com wint@pwplegal.com +95 (9) 420003004 www.pwplegal.com