Reform of the Arbitration Law in Myanmar – The Wait Is Over

This post comes to us from Sheila Ahuja of Allen & Overy. Sheila is a Consultant in the International Arbitration Group at Allen & Overy based in Hong Kong. She was part of a team at Allen & Overy that was involved in reviewing the Myanmar Arbitration Bill and suggesting revisions and commentaries with the aim of bringing the Bill in line with the Model Law and legislation in other arbitration friendly jurisdictions.

On 5 January 2016, the Parliament of the Republic of the Union of Myanmar (Myanmar) passed the Arbitration Law, Union Law No. 5/2016 (Arbitration Law).  The Arbitration Law gives effect to Myanmar’s ratification of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention).  This step constitutes a significant development for a territory whose pre-existing arbitral legislation was dated and in compelling need of reform.

The Arbitration Law is currently only available in the Myanmar language (available here), although there are several English translations publicly available.  Myanmar will in due course release an official English version of the Arbitration Law, albeit the Myanmar version would nonetheless prevail (pursuant to the Constitution of Myanmar).

Many provisions of the Arbitration Law can be traced back to the UNCITRAL Model Law on International Commercial Arbitration (the Model Law).  Although it will remain to be seen how it is to be given effect in practice, there are certain salient features of the Arbitration Law which are immediately worthy of discussion, as follows:

1. There is a clear distinction at section 2 between domestic arbitration, to which the whole of the Arbitration Law applies, and foreign arbitration, to which only select provisions apply.  This is crucial as it sets the important starting point for those involved in a foreign-seated arbitration with a Myanmar connection that there should be little room for the Myanmar courts to import domestic provisions of the Arbitration Law into their foreign arbitration proceedings.

2. Another clear distinction is made, in terminology this time, as between the ‘place’ of arbitration and the ‘location’ of arbitration (at sections 3 and 23).  Arbitration specialists who spend days on end fighting arbitration matters in court will understand the significance of this distinction, which is aimed at ensuring that a party’s choice of ‘place’ of arbitration, i.e., the legal seat of arbitration, is not undermined by a judicial finding that such a choice was merely intended to dictate the ‘location’, i.e., the venue, of hearings.

3. One provision to watch out for is the novel “immunity of arbitrator” provision at section 20.  This states that an arbitrator shall be immune from any liability relating to the carrying out of his mandate provided he or she does so with reasonable care.  It is to be expected that such a provision can only be given meaning and effect on a case-by-case basis as it necessary involves determining in each instance whether an arbitrator’s duties were indeed discharged with ‘reasonable care’.

4. Finally, those who are familiar with the Model Law provisions and the New York Convention will know of the ‘public policy ground’, a ground by which an arbitral award can either be set aside (generally at the courts of the seat) or refused enforcement (at a court of enforcement) if such award were contrary to the public policy of the relevant State.  The public policy ground is famous, or infamous, for want of an internationally aligned definition of ‘public policy’; this term alone has generated controversial jurisprudence in various countries.  Interestingly, whilst Myanmar has adopted these provisions, in largely Model Law and New York Convention terms, it has used the term ‘national interests’ (as literally translated from Myanmar language) instead of ‘public policy’.  It remains to be seen whether the term ‘national interests’ would in practice differ in meaning from ‘public policy’.

These are but some of the provisions that invite deliberation; a fuller overview of the Arbitration Law as conducted by Allen & Overy can be found here.

Overall, it must be said that the enactment of the Arbitration Law, which is prospective in effect, brings with it a positive ray of hope in Myanmar and in the arbitration community globally.  It demonstrates Myanmar’s willingness and enthusiasm to position itself as an arbitration-friendly jurisdiction.  Although the precise meaning and effect of these provisions will only be ascertained from being put to practice, foreign investors involved in an arbitration with a Myanmar connection may presently seek reassurance from the non-interventionist theme in the Arbitration Law.