Draft arbitration legislation laid before Parliament in Myanmar

As previously reported, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) entered into force with respect to Myanmar on Monday 15 July 2013. At the time, we noted that a necessary next step was the introduction of new domestic legislation to implement the Convention, in particular toprovide for the enforcement of foreign arbitral awards and arbitration agreements.

An Arbitration Bill was submitted to Myanmar's Parliament on 25 May 2014. While no official English translation of the Arbitration Bill has been produced at this point, it has been reported that the proposed legislation is closely based on the provisions of the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law").

The Model Law provides for the recognition and enforcement of arbitration agreements (national courts must refer to arbitration any dispute arising under a contract containing a valid arbitration agreement) and also for the recognition and enforcement of foreign arbitration awards. Under the Model Law, recognition and enforcement of arbitration agreements and awards may only be refused on limited grounds as prescribed in the New York Convention. The Model Law also limits the scope for national courts to interfere in arbitration proceedings.

The publication of the Arbitration Bill is a very welcome development for foreign investors into Myanmarand Myanmar companies seeking to trade internationally. That said, it remains to be seen whether the provisions of the Arbitration Bill deviate from the UNCITRAL Model Law in ways that could make enforcement of arbitration agreements and awards problematic.

Until the Arbitration Bill is approved by Parliament the legal framework for arbitration and enforcement of foreign arbitration agreements and awards in the country will continue to be provided by legislation pre-dating Myanmar's independence, namely the Arbitration (Protocol and Convention) Act 1937 and the Arbitration Act 1944.

The Arbitration (Protocol and Convention) Act 1937 implements the 1923 Geneva Protocol on Arbitration Clauses and the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards. The Act only applies in relation to a very small number of foreign countries which continue to adhere to these treaties and we are not aware of any recent case where awards or arbitration agreements have been recognised or enforced pursuant to this legislation. The Arbitration Act 1944 creates a legal framework for domestic arbitration but does not provide for the enforcement of agreements to submit disputes to arbitration outside Myanmar or the enforcement of foreign awards.

For further information please contact Alastair Henderson, Partner, Antony Crockett, Senior Associate or your usual Herbert Smith Freehills contact.

Herbert Smith Freehills has also published a Myanmar Investment Guide, please email asia.publications@hsf.com if you would like to receive a copy.