Myanmar: New arbitration law

Author: | Published: 25 Jan 2016
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Daw-Khin-Cho-Kyi Daw-Thaw-Dar-Sein
Daw Khin Cho Kyi Daw Thaw Dar Sein

Until July 2013, although Myanmar was a party to the Geneva Protocol on Arbitration Clauses of 1923, it was not a party to the International Centre for Settlement of Investment Disputes Convention (the ICSID Convention) or to other international conventions relating to arbitration. Myanmar deposited its instrument of accession without reservation to become a contracting state of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which became effective on July 15 2013.

As a matter of government policy, most contracts between state-owned enterprises and foreign companies specify Myanmar law as the governing law, and prescribe that disputes be settled by the Myanmar courts or by arbitration under the Arbitration Act 1944. With some exceptions, the Attorney General's Office and Myanmar Investment Commission have not allowed foreign arbitration provisions in the past.

The Arbitration Act 1944 did not provide for enforcement of foreign arbitral awards and did not recognise arbitration abroad.

However, on January 5 2016, the parliament enacted a new Arbitration Law, Law Number 5/2016, which repealed the Arbitration Act 1944. Although no English translation of the new law has been published, the following is based on an in-house English translation.

The new law is largely based on the UNCITRAL Model Law on International Commercial Arbitration 1985, with the following notable exceptions:

  • The new law governs both domestic and international arbitration, with specific provisions regarding domestic and international arbitration. The arbitration UNCITRAL Model Law does not address domestic arbitration;
  • The new law appears to limit the choice of arbitrators in domestic arbitration to Myanmar citizens unless otherwise agreed by the parties (section 13(a)). In the case of parties of different nationalities, it provides for the appointment of an arbitrator of a nationality other than that of the parties (section 13(g));
  • The grounds for setting aside an arbitral award and the grounds for refusing recognition or enforcement are separately prescribed in the UNCITRAL Model Law, but are combined in the new law. In general the new law tracks the provisions in the UNCITRAL Model Law.

In view of the repeal of the Arbitration Act 1944, parties to existing contracts for Myanmar projects may wish to review their dispute settlement provisions. An amendment to existing contracts with arbitration provisions to provide for application of the new law should be considered, to ensure application of provisions of the new law and enforcement of arbitral awards by Myanmar courts.

Foreign bank licensing

On December 14 2015 the Central Bank of Myanmar (CBM) announced its intention to initiate a second round of foreign bank licensing in early 2016.

In May 2014 the CBM initiated a process to open the domestic banking market to foreign banks. Nine foreign banks were granted approvals to open branch offices and conduct onshore wholesale banking business. Foreign banks with representative offices in Myanmar, or which are in the process of applying for a representative office, will be permitted to participate in the second round. However, foreign banks with headquarters in jurisdictions of foreign banks which were awarded branch licenses in the first round (Australia, Japan, Malaysia, China, Singapore and Thailand) will not be eligible to participate.

The CBM will apply the same strict selection process and standards as during the first round of licensing. The CBM will issue to eligible banks a request for their expression of interest in early 2016 to initiate the new licensing round. For further information, see CBM@CentralBankofMyanmar.com

Daw Khin Cho Kyi and Daw Thaw Dar Sein