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Home » Law Review 2017/2018 » Significant Features of Arbitration Laws of Myanmar Before and After Its Accession to New York Convention

Significant Features of Arbitration Laws of Myanmar Before and After Its Accession to New York Convention

Significant Features of Arbitration Laws of Myanmar Before and After Its Accession to New York Convention

 

Nwe Mon Mon Oo

Hanni Win Thein

ALSA National Chapter: Myanmar

Myanmar has formally become one of the members of the New York Convention on 15th July 2013 and adopted the new Arbitration Law on 5th January 2016. Before its accession to the New York Convention, Myanmar practiced Arbitration according to the 1944 Arbitration Act[1]. Significant features of 1944 Arbitration Act included the distinctive role of Courts in Arbitration and the enforceability of awards in Myanmar. In the 1944 Act, a strong influence of Courts in arbitral matters can be seen distinctively. Court are empowered to perform appointment, removal and replacement of arbitrators as well as to discharge the arbitration. On the other hand, the Arbitration Law 2016 has largely adopted the provisions provided in the UNCITRAL Model Law enabling the enforcement of foreign arbitral awards within the country and further advances in the process such as in the appointment of the arbitrators, in the role of courts, in enforcement and setting aside etc.

Comparison of the Arbitration Act 1944 and Myanmar Arbitration Law 2016

 

Arbitral Tribunal

 

Arbitration Agreement

Arbitration agreement plays a vital role in resolving disputes and most importantly in forming a tribunal. A tribunal should be constructed to respect the preferences and differences of parties to the agreement and leave no room to be misconstrued. In the 1944 Arbitration Act, an arbitration agreement is defined as a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not.[2] On the other hand, the 2016 Arbitration Law which repeals the former provides that an arbitration agreement means an agreement in writing by the parties to submit to arbitration all or certain disputes which arise or which may arise between them in respect of legal relationship, whether contractual or not.[3] In comparing the two definitions, it can be understood that the former definition is more concerned with what should be included in an arbitration agreement while the latter is provided in a more conventional way. Such definition is the same with the one provided in the UNCITRAL Model Law.[4] As the definition is universal among the members of the New York Convention, it essentially avoids the potential conflicts that can be arose from the differences in definition. Further analysis of the updated definition can be found in 2016 Arbitration Law whereby an arbitration agreement shall be deemed to be in writing if the document is signed by both parties and arbitration agreement by means of electronic communication shall also be deemed as to be in writing.[5] More detailed provisions for electronic communication can be found in the Model Law.[6] The advancement in technological appliances have made the transaction easier and therefore, the need of recognizance for such advances has been evolved. The Arbitration Law 2016, at this point, adding the more improved definition shows that the country has actually given an effort to keep up with the development around the world. As it regards a wider range, the investors can rest assured about possible disputes regarding the definition.

Appointment of the Arbitrators

In the 1944 Arbitration Act, it is provided that the appointment of the arbitrators has to be according to the arbitration agreement and the standard number of arbitrators must be one. The number of arbitrators must be an odd number and if the parties decide to choose the even number, the arbitrators have to choose an umpire.[7] And if the number of arbitrators in accord with the arbitration agreement is more than three, each party can choose one for each and the chosen arbitrators shall choose an umpire and if the parties provide contrary, the award will be decided by majority.[8] Further details concerning with the appointment of the arbitrators are categorized under the power of the Court. In the same legislation, the power of the tribunal is overshadowed by the Courts and this can be seen through their involvement in many matters such as appointment of the arbitrators.[9] In contrast, the Arbitration Law 2016 covers most factors concerned in appointment of arbitrators particularly the freedom enshrined for parties to appoint arbitrators of their choice.[10] Furthermore, arbitrators can be any nationality and procedures for choosing arbitrators can be according to the consent of the parties.[11] If the parties fail to choose the arbitrator, any party may request the Chief Justice and empower any persons or institutions to appoint an arbitrator.[12] At this point, it can also be noted that institutional arbitration is also allowed in Myanmar.[13] These provisions are more or less similar to the model law.[14]

  • Challenging the Arbitrators

Much difference can be found in the provisions concerning with challenging the arbitrators.  In the Arbitration Act 1944, the power to remove the arbitrators is entrusted in the Courts. The Court not only has the power to remove the arbitrator, on the application of any party, it also has the power to replace one. The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award or has misconducted himself or the proceeding.[15] And when a court removes an arbitrator in accordance with this Act, it may also appoint one in the place of the one removed according to the application of the parties.[16]

On the other hand, in the Arbitration Law 2016, as in other parts above, many provisions from model law can be found. An arbitrator may be challenged only if: (1) circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or (2) he does not possess qualifications agreed to by the parties.[17] It is important to be noted that a party may challenge an arbitrator only for reasons of which he becomes aware after the appointment has been made.[18] The procedures for challenging are provided in section 15. The major difference between the two laws is noted in this part that in Arbitration Law 2016, the parties have the right to challenge the arbitrators first in the tribunal only[19] and if they are not satisfied with the decision they can continue challenging by means of application to the Court[20] and the tribunal may continue with the proceeding even if the application is pending in the Court[21] while in Arbitration Act 1944, the Court only possess such power.

Place or Venue of Arbitration

In arbitration agreement, there is much difference between place and venue of arbitration. In arbitration, if a place is chosen, the arbitration law of such place has to be the governing law of such agreement. The venue of arbitration means a host place where the arbitration takes place. Such difference is not clearly modified in both 1944 and 2016 Arbitration Laws or in the Model Law yet theoretically the former is different from the latter. In illustration, if the parties decide to choose Myanmar as the place of arbitration and Thailand as the venue, the governing law of such tribunal must be Myanmar Arbitration Law although the issue has been heard in Thailand.  This point should be included in Arbitration Laws just in case the problems concerned may arise.

Applicable Law

The law that governs the main agreement is often mentioned as the Seat Law and also known as substantive law. However, the substantive law may not be the procedural law (Lex Arbitri). There was no mention about the applicable law of arbitral tribunal in Arbitration Act 1944 which seems to indicate that the applicable law must only be according to the Law of Myanmar for the disputes in the country. On the other hand, the Myanmar Arbitration Law 2016 provided that parties are free to choose procedural law of arbitration (Lex Arbitri) and if the parties fail to choose, arbitral tribunal may choose the national law of place of arbitration as the procedural law of arbitration.[22] The Arbitration Law 2016 also allows the parties to conduct institutional arbitration and in that case the rule of arbitration (Lex Mercatoria) shall be according to the specified institution[23].

Interim Measures of Arbitral Tribunal

The power to grant interim measure is necessary in arbitration. In looking at provisions for interim measures, such power is granted entirely to the courts in Arbitration Act 1944. On the other hand, in Arbitration Law 2016, the power is entrusted in the Arbitral Tribunal and the role of the Court involve merely in enforcing them. In Arbitration Act 1944, the interim measure can only be granted by the Court only after the filing of the award and only if the court deems that it is necessary.[24]

In contrast in the Arbitration Law 2016, the conditions upon when the measures shall be provided are mentioned in section 19(a). The arbitral tribunal may have power to issue interim orders in the cases for (1) security for costs; (2) discovery of documents and interrogatories; (3) giving of evidence by affidavit; (4) the preservation, interim custody or sale of any property which is part of the subject-matter of the dispute; (5) samples to be taken from, or any observation to be made of or experiment conducted upon, any property which is or forms part of the subject-matter of the dispute; (6) the preservation and interim custody of any evidence for the purposes of the proceedings; (7) securing the amount in dispute; (8) an interim injunction or any other interim measure.[25] The tribunal also has power to adopt inquisitorial procedures such as considering appropriate or to administer oaths to the parties and witnesses. Such measures shall later on be enforced by the Courts.[26]

Role of Court

 

Interim Measures of Court

In the Arbitration Act 1944, the power to issue interim orders is vested in the Courts rather than in the Tribunals.[27] The court is vested with the power for preservation, interim custody or sale of subject-matter of the dispute, securing the amount of difference in reference; detention or preservation or inspection of the subject of the reference or; asking questions upon the subject-matter or any premises in the possession of any party; authorizing or observing which is necessary for obtaining evidence; passing interim injunction or; appointing the receiver; appointing guardian of minor or unsound minded person for arbitration.[28] If it is deemed to be necessary, the court shall pass interim orders for the above-mentioned situations in its jurisdiction.[29]

On the other hand in the Arbitration Law 2016, it is expressly provided that no court shall intervene in arbitral proceedings except where so provided in this law.[30] The exceptions are provided in the law that the court shall intervene in Arbitration to preserve evidence, pass an order, inspect, preserve and sell the subject-matter of the dispute; entry to premises for above purposes if requested by the parties. In doing so, the Court needs to pass notice to the other party and have the written agreement of that party or pass notice to the arbitral tribunal and have permission from arbitral tribunal.[31] But if the interim award is urgent, the court may pass without delivering the proper notice to the party or the arbitral tribunal.[32]

 

Setting Aside

According to Arbitration Act 1944, the award can be set aside if the arbitrator or umpire has misconducted himself or the proceedings or the award is invalid to perform. Moreover, the Court can set aside an award if it has been made after the arbitration was superseded by the court or the arbitration proceedings have been invalid because a legal proceeding is still ongoing upon the subject matter of the reference.[33]

On the other hand, the Arbitration Law 2016 provides grounds for setting aside domestic arbitral award and foreign arbitral award separately.[34] The court may set aside the award if a party is incapable to perform in accordance with the award or; the arbitration agreement is not valid under the law to which the parties are agreed or under the law of the country where the award was made or; a party was not given proper notice of the appointment of arbitrator or of the arbitral proceeding or; a party was unable to present his case during arbitration proceeding or; a dispute does  fall within the scope of arbitration or; non arbitral or; contrary to national interest (public policy) of the Republic of the Union Myanmar.[35] The grounds for setting aside of the award are the same for both domestic and international arbitration. The court shall not accept the request to set aside the award if three months have lapsed since the date when the parties received the application of the award.[36] Again, the grounds for setting aside in the Arbitration Law 2016 are similar to the provisions of the UNICITRAL Model Law of International Commercial Arbitration.[37]

It can be seen that grounds for setting aside in The Arbitration Act 1944 are mostly influenced by the powers of court. On the other hands, setting aside in Myanmar Arbitration Law 2016 is based on jurisdictional challenges, procedural challenges and challenges based on the merits of the award.

  • Appeal

The provisions for appeal are found in both 1944 Act and 2016 Law. The followings are appealable orders under 1944 Act.[38] An order superseding an arbitration[39], if such order is on an award stated in the form of a special case; if it is for modifying or correcting an award[40]; if it is for filing or refusing to file an arbitration agreement[41], staying or refusing to stay legal proceedings where there is an arbitration agreement[42], or for setting aside or refusing to set aside an award.[43] It is important to note that such appealable power as provided under 1944 Act can be applied only to the original decree of the court.

The right to appeal can also be found in the Arbitration Law 2016 that the parties may apply to the Court to appeal on the issue of law arising from the award. It must essentially be noted that the right to appeal in the 2016 Arbitration Law is only entitled to the domestic arbitration.  As it provides, if it is expressly mentioned in the arbitration agreement that no appeal shall be made, the parties cannot enjoy such right.[44] The Court shall accept the appeal if the decision of the arbitral tribunal of the issue in dispute is substantially concerned with the rights of a party or upon the parties or if the decision of the arbitral tribunal on the issue in dispute is obviously wrong[45] and while filing appeal, the Court can approve the award, amend the award, return the decision of the arbitral tribunal to review and set aside the whole or part of domestic arbitral award.[46] Appealable orders are separated as the appealable orders of the competent court and the appealable orders of the arbitral tribunal.[47] Second appeal is not permitted in both The Arbitration Act 1944 and Arbitration Law 2016. [48]

Although the award shall be final and binding and shall not be appealable under the UNICITRAL Model Law of International Commercial Arbitration, it is found that both Arbitration Act 1944 and Arbitration Law 2016 allow parties to appeal on the issues of law against an award.

Enforcement

In enforcing the award, after the arbitrator or umpire signed the award and notice the parties in writing, parties may request to submit the arbitral award to competent court under Arbitration Act 1944.[49] If the court finds no fault in arbitral award to modify or; to remit or; to reconsider for setting aside, the court shall pronounce judgement according to the award[50]. The decree is the same as the ordinary decree from the court.

If the parties have not claimed for setting aside or the award does not meet the grounds for setting aside or appeal even a party claimed, Courts shall enforce – interim order of arbitral tribunal, domestic arbitral award, and foreign arbitral award under Myanmar Arbitration Law 2016.[51]

Whereas Arbitration Act 1944 have not provided for foreign arbitral award and not likely to enforce foreign arbitral award in Myanmar, vice versa, foreign country may refuse to enforce arbitral awards in Myanmar. The foreign arbitral award can only be enforceable in countries that had signed the Geneva Protocol on Arbitration Clauses 1923 or the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. However, the Arbitration Law 2016 has included provisions for enforcing foreign arbitral awards and as Myanmar has become one of the member of the New York Convention, arbitral awards made according to Arbitration Law 2016 are enforceable in all of the member states of New York Convention.

Conclusion

In conclusion, after Myanmar’s accession to the New York Convention, we can see the concepts of the UNCITRAL model law in the Arbitration Law 2016 which is internationalized, recognized and acceptable by many states. There are improvements in enforcing foreign arbitral awards, the role of courts in arbitration, and in the constitution of arbitral tribunals compared to the 1944 Act which is welcomed by countries around the world as it provides easier and more effective dispute resolution mechanism. Although it has theoretically improved, there have been concerns about the actual practice by the Myanmar Courts. The lack of experience of the lawyers in Myanmar in arbitration may lead to unnecessary delays. In order to solve this problem, there has been training events and seminars for the judges in Myanmar to expand their knowledge in Arbitration. The Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) had formed an arbitration committee to look into the formation of a Myanmar Arbitration Centre. This committee is conducting the necessary trainings and seminars to senior local lawyers and other interested administrative personnel, with the assistance of the International Chamber of Commerce and other regional and international arbitration institutions. [52]  Despite the needs for reformation, the enactment of the Arbitration Law 2016 is a great step into further economic reformation of Myanmar which is much welcomed by the world.

[1] The Arbitration Act, 1944.

[2] Section 2(a), Arbitration Act, 1944.

[3] Section 3(b), Arbitration Act, 1944.

[4] Article 7(1), UNCITRAL Model Law.

[5] Section 9(a), Arbitration Law, 2016.

[6] Article 7(4), UNCITRAL Model Law.

[7] First Schedule, Arbitration Act, 1944.

[8] Section 10, Arbitration Act, 1944

[9] Section 8,9,10, Arbitration Act, 1944

[10] Section 13, Arbitration Law, 2016.

[11] Section 13(a) (b), Arbitration Law, 2016.

[12] Section 13(d), Arbitration Law, 2016.

[13] Section 13(h), Arbitration Law, 2016.

[14] Article 11, UNCITRAL Model Law.

[15] Section 11, Arbitration Act, 1944.

[16] Section 12, Arbitration Act, 1944.

[17] Section 14, Arbitration Law, 2016.

[18] Section 14(d), Arbitration Law, 2016.

[19] Section 15(b), Arbitration Law, 2016.

[20] Section 15(d), Arbitration Law, 2016.

[21] Section 15(e), Arbitration Law, 2016.

[22] Section 22, Arbitration Law, 2016.

[23] Section 8, Arbitration Law, 2016.

[24] Section 18, Arbitration Act, 1944.

[25] Section 19(a), Arbitration Law, 2016.

[26] Section 31, Arbitration Law, 2016.

[27] Section 41(b), Arbitration Act, 1944.

[28] THE SECOND SCHEDULE (THE POWER OF COURT), Arbitration Act, 1944.

[29] Section 18(2), Arbitration Act, 1944.

[30] Section 7, Arbitration Law, 2016.

[31] Section 11(c), Arbitration Law, 2016.

[32] Section 11(b), Arbitration Law, 2016.

[33] Section 30, Arbitration Act, 1944.

[34] Section 41 and 46, Arbitration Law, 2016.

[35] Section 41(a), Arbitration Law, 2016.

[36] Section 41(b), Arbitration Law, 2016.

[37] Article 34, UNCITRAL Model Law.

[38] Section 39, Arbitration Act, 1944.

[39] Section 19, Arbitration Act, 1944.

[40] Section 15, Arbitration Act, 1944.

[41] Section 20, Arbitration Act, 1944.

[42] Section 34, Arbitration Act, 1944.

[43] Section 30, Arbitration Act, 1944.

[44] Section 42, Arbitration Law, 2016.

[45] Section 43(a), Arbitration Law, 2016.

[46] Section 43(b), Arbitration Law, 2016.

[47] Section 47, Arbitration Law, 2016.

[48] Section 42(f), Arbitration Law, 2016.

[49] Section 14, Arbitration Act, 1944.

[50] Section 15, 16 and 17, Arbitration Act, 1944.

[51] Section 31, 40, 45 and 46, Arbitration Law, 2016.

[52] The Baker McKenzie International Arbitration Yearbook Myanmar (10th Anniversary Edition 2016-2017).


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