Gavin Howe
Myanmar's transition from a military government to an elected civilian government in 2016 brought about a new era of reform for the country's investment policy and law. The new Myanmar Investment Law (MIL) includes an investor grievance mechanism (IGM), which serves as an early conflict and dispute avoidance system. This mechanism is designed to prevent investment disputes from escalating into legal battles. The law also encourages disputing parties to attempt to settle their differences amicably before bringing a case to court or an arbitral tribunal. While the law does not expressly refer to arbitration as a dispute resolution mechanism, it does allow parties to stipulate their preferred dispute settlement method in their agreements, potentially including international arbitration. Myanmar's Arbitration Law provides a comprehensive framework for domestic and international arbitration, giving effect to the country's ratification of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This law also allows parties to apply for interim injunctions to preserve assets or evidence during arbitration proceedings.
| Characteristics | Values |
|---|---|
| Myanmar Arbitration Law | Comprehensive legal framework for the conduct of domestic and international arbitration |
| Myanmar Investment Law | Grievance mechanism to resolve, prevent disputes, and carry out inquiries for investment issues |
| Investor-State Dispute Settlement | Includes claims concerning expropriation and procedural orders issued by arbitral tribunals |
| Bilateral Investment Treaties | Provide mutual protection and fair treatment of investments, enabling investors to resolve disputes through arbitration in Myanmar |
| Arbitral Tribunal | Can issue orders regarding preservation, custody, or sale of disputed property, evidence, and injunctions |
| Enforcement of Judgments and Awards | Domestic awards, foreign arbitral awards, decrees, and foreign judgments |
| International Arbitration | Defined under Arbitration Law as arbitration with at least one party outside of Myanmar |
| Investor Grievance Mechanism | Early conflict and dispute avoidance system to prevent investor-state dispute settlement cases |
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What You'll Learn
The Myanmar Investment Law 2016
The Myanmar Investment Law of 2016 (MIL) was approved by Parliament after the transition to an elected civilian government in 2016. The law combines the Myanmar Citizen's Investment Law (2013) with the Foreign Investment Law (2012). The Myanmar government treats foreign and local investment projects equally in terms of expansion, management, operation, and sale of direct investments.
The MIL outlines two types of processes to obtain approval from the Myanmar Investment Commission ("MIC"): the permit application process and the endorsement application process. The law also makes a clear distinction between prohibited and restricted investment types.
One of the key elements of the MIL is the establishment of the Investor Grievance Mechanism (IGM), which serves as an early conflict and dispute avoidance system. The dispute resolution mechanism, outlined in Chapter XIX of the law, mandates that the Commission establish and manage a grievance mechanism to resolve, prevent, and address investment issues before they escalate into legal disputes.
Before any investment dispute between an investor and the Union (Myanmar government) or between investors is brought to a court or arbitral tribunal, all parties must attempt to settle the dispute amicably. If a dispute cannot be settled amicably, it is then addressed by a competent court or arbitral tribunal according to the applicable laws or stipulated dispute settlement mechanisms in the relevant agreements.
While Chapter XIX of the MIL does not explicitly refer to arbitration as a dispute resolution mechanism, it does allow for disputes to be brought to an "arbitral tribunal", which can be interpreted to include international arbitration. Additionally, the chapter provides flexibility for parties to stipulate their preferred dispute settlement mechanism without restriction, potentially including international arbitration.
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Investor-State Dispute Settlement System
The Investor-State Dispute Settlement (ISDS) system is a set of rules that allow foreign investors to sue sovereign nations for certain state actions that negatively impact their foreign direct investments (FDIs). This often takes the form of international arbitration between the foreign investor and the state.
ISDS claims are often brought under the rules of various international arbitration centres, such as the International Centre for Settlement of Investment Disputes (ICSID) and the London Court of International Arbitration (LCIA). For a dispute to be brought before an arbitral tribunal, both the home state of the investor and the state where the investment was made must have agreed to ISDS. Additionally, the investor must have an investment in a foreign state and must claim that the state has violated rights granted under a treaty or agreement.
Myanmar has had experience with the ISDS system through the case of Yaung Chi Oo Trading Pte Ltd v. The Government of the Union of Myanmar. In 2016, Myanmar passed a new Arbitration Law, providing a comprehensive legal framework for domestic and international arbitration in the country. This law implemented the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards," also known as the New York Convention, which Myanmar ratified in 2013.
The Myanmar Investment Law (MIL) includes the setting up of the Investor Grievance Mechanism (IGM), which is an early conflict and dispute avoidance system. Myanmar seeks to avoid another case under the ISDS system, which can be costly and time-consuming for an emerging economy. The dispute resolution mechanism in the MIL requires parties to attempt to settle disputes amicably before bringing them to court or arbitration. While this can be seen as a positive step towards arbitration, critics note that the law excludes express references to arbitration and the government's advanced consent to dispute settlement procedures.
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Foreign Investment Law
Myanmar's new Foreign Investment Law (FIL) was approved by President Thein Sein in November 2012 and came into force in 2013. The law revises the framework for foreign investment in Myanmar, which had been in place since a military coup in 1988. The key features of the new law include:
- An extended tax grace period of five years (up from three)
- The ability to lease land for up to 70 years (increased from 40 years)
- Freedom for foreign investors to agree on the ratio of foreign/local capital when setting up partnerships with local partners
- A relatively low investment threshold of USD 300,000 to USD 500,000
- A requirement for Myanmar citizens to make up at least 25% of skilled workers in the first two years of investment, increasing to 50% in years three and four, and 75% in years five and six
- Provisions for the payment of wages, stipulating that investors may not pay Myanmar workers less than expat workers of the same expertise level
One notable aspect of the FIL is its approach to dispute resolution. Unlike many other foreign investment acts and bilateral investment treaties, the FIL does not explicitly provide for the government's consent to settle disputes with foreign investors through international arbitration. Instead, it stipulates that disputes will be settled in accordance with the dispute settlement mechanism agreed upon by the parties. This could include international arbitration if both parties agree to it.
In terms of arbitration, Myanmar has taken steps to establish a comprehensive legal framework. In 2016, Myanmar passed a new Arbitration Law (Law No. 5/2016), which gives effect to the country's ratification of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This law provides a framework for the conduct of domestic and international arbitration in Myanmar.
Myanmar's investment law also includes the establishment of an investor grievance mechanism (IGM), which serves as an early conflict and dispute avoidance system. This mechanism aims to prevent disputes from escalating into legal proceedings and is designed to improve upon the previous investor-state dispute settlement system (ISDS) experience in Myanmar.
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International arbitration
Myanmar's transition from military to civilian rule in 2016 brought about a new era of reform in its investment policy and law. The country's new Foreign Investment Law (FIL) was approved by Parliament after the civilian government took over. One of the key elements of the MIL is the establishment of an investor grievance mechanism (IGM), which serves as an early conflict and dispute avoidance system.
The Myanmar Investment Law 2016 outlines a dispute resolution mechanism that encourages disputing parties to settle their differences amicably before bringing them to court or an arbitral tribunal. While the law does not explicitly refer to international arbitration as a dispute resolution mechanism, it does allow for disputes to be brought to any arbitral tribunal, which could potentially include international arbitration.
The Arbitration Law of 2016 provides a comprehensive legal framework for the conduct of domestic and international arbitration in Myanmar. This law gives effect to Myanmar's ratification of the New York Convention, which assures foreign investors of the country's positive intentions and commitment to arbitration.
Despite these reforms, Myanmar's arbitration framework still faces challenges. There have been concerns about enforcement delays, the need for improved arbitrator training, and political instability impacting the enforcement of foreign arbitral awards. Additionally, the FIL does not provide for the government's consent to settle disputes with foreign investors through international arbitration under specific rules.
However, the FIL does stipulate that disputes will be settled according to the dispute settlement mechanism agreed upon in the relevant contract. This means that if a foreign investor contractually agrees with a local partner or a government entity to settle disputes through international arbitration, this choice should be respected.
In conclusion, while Myanmar has made significant progress in its arbitration framework, particularly with the implementation of the MIL and the Arbitration Law, there are still areas for improvement to ensure effective and efficient dispute resolution, especially in the context of international arbitration.
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Arbitral tribunal
The Union Parliament of Myanmar passed a new Arbitration Law (Law No. 5/2016) on 5 January 2016. This law provides a comprehensive legal framework for the conduct of domestic and international arbitration in Myanmar and gives effect to the country's ratification of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.
The Arbitration Law 2016 covers the appointment of the arbitral tribunal, the conduct of arbitral proceedings, the making of an arbitral award, and the costs of the proceedings. The law does not contain any express provision regarding the confidentiality of arbitrations, which would instead be outlined in a contract between parties or the relevant arbitration rules.
Section 32 of the Arbitration Law 2016 states that in all domestic arbitrations in Myanmar, the arbitral tribunal must decide the dispute in accordance with the substantive law in force in Myanmar. In international commercial arbitrations, the tribunal decides the dispute according to the rules of law chosen by the parties.
The Myanmar Investment Law 2016 states that before any investment dispute between an investor and the Union (the Myanmar government) or between investors is brought to a court or arbitral tribunal, all disputing parties must attempt to settle the disputes amicably. If disputes cannot be settled in this way, they are to be settled in a competent court or arbitral tribunal in accordance with the relevant laws.
The Arbitration Law also permits a party to apply to the court for an interim injunction in arbitration proceedings to preserve assets, evidence, or prevent actions that could delay the process. The Arbitral Tribunal can issue orders regarding the preservation, custody, or sale of disputed property, evidence, interim injunctions, or other measures.
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Frequently asked questions
The Myanmar Investment Law (MIL) was approved by Parliament in 2016, marking a transition to an elected civilian government. One of the key elements of the MIL is the setting up of the investor grievance mechanism (IGM), which is an early conflict and dispute avoidance system.
The Myanmar Investment Law 2016 states that before any investment dispute is brought to court or an arbitral tribunal, all disputing parties must attempt to settle disputes amicably. If the dispute cannot be settled amicably, it should be settled in a competent court or tribunal in accordance with the relevant laws.
Yes, the Myanmar Investment Law 2015 draft expressly provided that foreign investors have access to arbitration as a dispute resolution mechanism against the government and government entities. However, the final law does not include any express references to arbitration as a dispute resolution mechanism.
Myanmar passed a new Arbitration Law in 2016, providing a comprehensive legal framework for the conduct of domestic and international arbitration in the country. This law gives effect to Myanmar's ratification of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
