Year in review: international arbitration in Myanmar

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The year in review

Arbitration practice in Myanmar is in a nascent stage.

Developments affecting international arbitration

In recent years, we have seen the Myanmar courts granting stays of proceedings in favour of arbitration and orders recognising and enforcing foreign arbitral awards. However, these cases are not publicly reported and there is still a lack of local jurisprudence.

Arbitration developments in local courts

Since the enactment of the Arbitration Law, there have not been any known reported cases developing the local jurisprudence in respect of arbitration.

In respect of applications for a stay of proceedings in favour of arbitration, we are aware of a few cases where the stay was not granted on the grounds that the proceedings included parties that were not parties to the arbitration agreement, and a number of cases where the outcomes were inconsistently applied (for example, notwithstanding the grant of a stay, in one arbitration case, a court continued to fix court hearing dates at which the parties were required to turn up and update the court on whether the arbitration was still ongoing or whether it had reached a resolution. Subsequently, after the arbitral award was issued, the Myanmar court resumed proceedings from when the stay was granted. Efforts to get the Myanmar court to recognise and enforce the arbitral award are still under way). However, anecdotally and generally, the Myanmar courts have been granting more stay applications and upholding arbitration as the contractually agreed dispute resolution mechanism.

In respect of applications for the enforcement of arbitral awards, we are aware of a few successful applications and a number of ongoing applications. Notwithstanding the lack of local jurisprudence, the legal position is that foreign arbitral awards from member countries of the New York Convention should be enforced more easily than foreign judgments in Myanmar. As such, parties should consider agreeing to arbitration in a member country of the New York Convention in dealing with parties that are resident in Myanmar or have assets in Myanmar.

Investor–state disputes

There are currently no known investor–state disputes under way in Myanmar.

Myanmar is a member of the Association of Southeast Asian Nations (ASEAN), which has bilateral and multilateral legal instruments signed by Member States. Apart from using ASEAN legal instruments, ASEAN Member States have entered into numerous bilateral investment treaties and investment agreements.

The number of such treaties entered into by ASEAN Member States (including ASEAN agreements) are as follows:

1. Brunei (24);
2. Cambodia (35);
3. Indonesia (78);
4. Laos (39);
5. Malaysia (89);
6. Myanmar (21);
7. Philippines (50);
8. Singapore (67);
9. Thailand (60); and
10. Vietnam (77).

ASEAN as a regional bloc has also entered into several agreements that include an investment chapter, for instance the ASEAN Australia–New Zealand Free Trade Agreement 2009 (AANZFTA), the ASEAN–China Free Trade Area Agreement, the ASEAN–India Free Trade Area Agreement, the ASEAN–Japan Comprehensive Economic Partnership 2008 and the ASEAN–Korea Free Trade Area Agreement. Most recently, in November 2020, ASEAN and its dialogue partners Australia, China, Japan, New Zealand and South Korea signed the Regional Comprehensive Economic Partnership (RCEP), the largest free trade agreement that ASEAN has concluded thus far. While it does not currently include an investor–state dispute resolution mechanism, RCEP provides for discussion of such a mechanism to take place within two years of entry into force of RCEP.

Myanmar has entered into several bilateral investment treaties, including, of note, with China, India, the Philippines, Laos, Thailand and Vietnam.

The most important ASEAN legal instrument to date is the ASEAN Comprehensive Investment Agreement (ACIA), which came into force in March 2012. The ACIA prescribes a detailed dispute resolution mechanism. It provides investors with a list of fora to institute claims via arbitration or through the courts. These include:

1. through the courts or administrative tribunals of the disputing Member State;
2. arbitration under the International Centre for Settlement of Investment Disputes (ICSID) Convention and ICSID Rules of Procedure for Arbitration Proceedings;
3. arbitration under the ICSID Additional Facility Rules;
4. arbitration under the UNCITRAL Arbitration Rules; and
5. recourse to the Asian International Arbitration Centre or any other regional arbitral centre in ASEAN (such as, for instance, the SIAC), or to any other institution that parties may agree on.

Importantly, once an investor resorts to the local courts or tribunals of a Member State with whom a dispute has arisen, the option to institute a claim in arbitration is not available any more.

These developments are important for Myanmar insofar as providing foreign investors with the option to arbitrate their disputes with a government in a neutral forum lends further confidence to investors and the hope that they may be able to hold the government to promises held out by it when an investment was made. Investment treaties offer a host of protections to investors that are crucial to encouraging investment and maintaining the sanctity of those investments without undue interference by governments. Myanmar has previously been at the receiving end of such a claim, the only one to have resulted in a final award, under the 1987 ASEAN Agreement for the Promotion and Protection of Investments. That claim was dismissed, as the tribunal found that certain preconditions under the treaty had not been fulfilled for the investment to receive the protection of the treaty. However, it is not unthinkable that such claims will be contemplated against other Asian countries and Myanmar in the future.

SDGs, Targets, and Indicators

1. SDG 16: Peace, Justice, and Strong Institutions

   • Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.
   • Indicator: The article discusses the development of local jurisprudence in respect of arbitration in Myanmar’s courts, which relates to promoting the rule of law and ensuring equal access to justice for all.

2. SDG 17: Partnerships for the Goals

   • Target 17.14: Enhance policy coherence for sustainable development.
   • Indicator: The article mentions Myanmar’s membership in ASEAN and its participation in bilateral and multilateral legal instruments, such as investment treaties and agreements. This demonstrates efforts to enhance policy coherence for sustainable development through partnerships.

Table: SDGs, Targets, and Indicators

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Source: lexology.com

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