MYANMAR

MYANMAR Resolving disputes arising in Myanmar - challenges and opportunities

March 2013

There has been a great deal of recent interest in Myanmar, with a large number of law firms following their clients to investigate the opportunities Myanmar presents at an exciting time in its history. However, for every company which proceeds to invest there is another which comes away with reservations, perceiving the undoubted opportunities to be outweighed by risk levels assessed as higher than those faced in other emerging jurisdictions. One concern often cited for this is lack of a fair and efficient dispute resolution framework. Investors do not welcome the prospect of having disputes resolved in local courts. In Myanmar - as elsewhere there is no framework in place for enforcement of foreign court judgments. However, unlike many emerging jurisdictions, the working assumption (the point is not tested) is that international arbitral awards will probably not be enforceable in Myanmar. Myanmar has many competing priorities for legislative reform, but making international arbitration a candidate for early legislative attention would help in the following ways: (a) increase the geographical spread of investors, decreasing Myanmar’s dependence on a relatively small number of countries in the region currently providing much of the investment;

(b) widen the scope of sectors which attract investment beyond extraction and associated industries; (c) have a favourable effect on the terms of investments made as investors begin to price Myanmar as having risk levels similar to those presented by other, more established emerging jurisdictions with which they are comfortable. In addressing these concerns Myanmar is in the happy position of being able to avoid the mistakes of other emerging jurisdictions. It has an opportunity to build a framework which reflects international standards and gives investors and counterparties confidence in their dealings with business in Myanmar.

For further information or to discuss this article please get in touch.

Kent Phillips Partner T: +65 6571 6616 [email protected]

On a recent visit we spoke at a workshop convened by the Office of the AttorneyGeneral to consider reform of international arbitration law. We were struck by the willingness to promote international arbitration, and recognition of its importance in a developing economy. There are several items on the agenda for international arbitration related reform: (i) Arbitration legislation. The legislation governing international arbitration - Arbitration Act 1944 and Arbitration (Protocol and Convention Act) 1937 - dates from the colonial era. It refers to long forgotten treaties - the 1923 Geneva Protocol on Arbitration

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Clauses and 1927 Geneva Convention on Execution of Foreign Arbitral Awards. This obviously calls for comprehensive updating, but a ready made solution exists in the UNCITRAL Model Law, the availability of which helps make arbitration a priority candidate for reform. Myanmar’s objectives would be best achieved by enacting legislation which keeps as closely as possible to the Model Law. (ii) New York Convention 1958. The New York Convention requires signatories to implement procedures to ensure international awards made in any of the 148 signatory countries are readily enforceable without being effectively re-litigated in local courts. Signing this would send a strong signal that Myanmar intends to create a supportive environment for arbitration. In early March, Parliament approved the President’s earlier recommendation for Myanmar to become the 149th signatory to the Convention. After signature, the next step will be for the Convention to be implemented in legislation. This requirement means that there is still some way to go and no timescales have been discussed, but Parliament’s intention to sign the Convention should be seen as a positive step in the eyes of foreign investors. (iii) Investor-state treaties. Myanmar is party to ASEAN Comprehensive Investment Agreement (ACIA), which provides investors in signatory states (and possibly those outside who invest through vehicles within member states) with some welcome protection. There are several bi-lateral investment treaties in effect (China, India, Philippines) but this could usefully grow to reach out to a wider pool of investors and open Myanmar to interest from a broader group of jurisdictions. These should provide for ICSID arbitration, allowing the comfort of neutral arbitration of investor-state disputes. Signing the Washington (ICSID) Convention 1965 would also assist.

matters would usefully be directed automatically to higher courts, and concentrated in a panel of specialist judges experienced in commercial matters. Experience from other countries is that local courts are more tempted to intervene in a dispute. In the longer term wider reform of the Court process in terms of transparency, efficiency and perceived neutrality is vital. Some early proarbitration pronouncements from senior judges - in papers or at conferences - may also assist. (v) Government owned entities using international arbitration in its own contracts. The FIL already recognises the parties’ freedom to choose dispute resolution procedure. However, it would be better again to see this reflected in practice by government owned entities accepting international arbitration clauses (particularly institutional ones, if not also foreign law) as a viable method of resolving disputes rather than insisting on resolution in Myanmar Courts. If - as we understand - this may already be happening, it puts Myanmar ahead of some of its rivals in the region which routinely insist on local law/courts. (vi) Awareness. Promotion of international arbitration within the profession in Myanmar with seminars and events. We noted real interest in setting up an international arbitration centre in Myanmar. Although it is difficult to see that this will have significant case load in the short term this initiative is to be encouraged. It is encouraging that Myanmar seems willing to take steps in the direction of reform of its arbitration laws, though given the competing priorities for legislative attention there appears to be no time frame in place to do so. It has much to gain by progressing this.

(iv) Court procedures. Court rules will need to be amended in light of new legislation. As a matter of practice all international arbitration

This Briefing Paper does not constitute advice on the laws of Myanmar or any other jurisdiction. The information in general, and legal advice should always be sought (from local advisers as appropriate).

Getting in touch Please get in touch if you would like further information. Kent Phillips Tel: +65 6571 6601 [email protected]

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