Gavin Howe
Myanmar's investment dispute settlement system has been the subject of reform in recent years, with the country passing a new Arbitration Law in 2016 to provide a comprehensive legal framework for domestic and international arbitration. This law gives effect to Myanmar's ratification of the New York Convention, assuring foreign investors of the country's positive intentions and commitment to arbitration. The Myanmar Investment Law also includes a dispute resolution mechanism, which requires disputing parties to attempt to settle disputes amicably before bringing them to court or arbitration. While the law appears to be a step forward for arbitration in Myanmar, there are concerns that the exclusion of express references to arbitration and the government's refusal to give advanced consent to court proceedings or arbitration may hinder its effectiveness in settling investment dispute cases.
| Characteristics | Values |
|---|---|
| Myanmar's commitment to arbitration | Positive intentions assured by the country's formal accession to the New York Convention |
| Myanmar Investment Law 2016 | Dispute resolution mechanism requires parties to attempt to settle disputes amicably before reaching legal disputes |
| Dispute settlement mechanism must be stipulated in the relevant agreement | |
| Dispute settlement mechanism must be carried out in accordance with the applicable laws | |
| Myanmar government's sovereign immunity | Dispute must be 'between the investor and the Union' |
| Where the government or its entities have agreed to arbitration, the government cannot invoke or rely on the defence of sovereign immunity | |
| Section 83 allows the dispute to be brought to 'any ... arbitral tribunal' | |
| Section 84(b) allows parties to stipulate the dispute settlement mechanism in their agreements without any restriction | |
| Investor-State Dispute Settlement (ISDS) | UNCTAD's ISDS Navigator contains information about known international arbitration cases initiated by investors against States |
| Cases are deemed concluded if the tribunal dismissed the case on jurisdiction or finds no breach of the IIA | |
| Procedural orders issued by arbitral tribunals are not included | |
| Amount claimed refers to the amount of monetary compensation claimed by the investor | |
| Amount awarded refers to the amount of monetary compensation awarded by the arbitral tribunal to the claimant |
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What You'll Learn
Myanmar's new Arbitration Law
The new law gives effect to Myanmar's ratification of the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards" in April 2013, also known as the New York Convention. This signals Myanmar's positive intentions and commitment to arbitration, assuring foreign investors.
The Myanmar Investment Law 2016 includes a dispute resolution mechanism in its Chapter XIX clauses. This mechanism requires that before any investment dispute between investors or between an investor and the Union (the Myanmar government) is brought to court or an arbitral tribunal, all parties must first attempt to settle disputes amicably. If disputes cannot be settled in this way, they are then taken to a competent court or arbitral tribunal, depending on the agreement and applicable laws.
The Chapter XIX clauses have been criticised as a step backward for Myanmar's arbitration framework. This is because the clauses do not include express references to arbitration as a dispute resolution mechanism, nor do they include the government's advanced consent to dispute settlement procedures, including arbitration. Despite this, section 83 of the law, which states that the dispute must be 'between the investor and the Union', indicates that the government is unlikely to be able to invoke sovereign immunity where arbitration is agreed upon or required by law. Furthermore, section 83's allowance for disputes to be brought to 'any... arbitral tribunal' can be interpreted as including international arbitration.
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Investor-state dispute settlement
Myanmar's transition from a military government to an elected civilian government in 2016 brought about a reform in its investment policy and law. The new Myanmar Investment Law (MIL) includes an investor grievance mechanism (IGM), which is an early conflict and dispute avoidance system. This is a notable shift, as Myanmar had previously experienced an investor-state dispute settlement (ISDS) case: Yaung Chi Oo Trading Pte Ltd v. The Government of the Union of Myanmar.
The dispute resolution mechanism in the Myanmar Investment Law 2016 (Chapter XIX clauses) outlines a process for resolving investment issues. It requires all disputing parties to first attempt to settle disputes amicably before bringing them to court or an arbitral tribunal. This marks a step back from the previous draft law, which expressly provided investors with access to arbitration against the government and government entities.
The Myanmar Investment Law 2016 also addresses sovereign immunity, stating that disputes must be "between the investor and the Union" (the Myanmar government). While the law does not explicitly refer to international arbitration, it allows disputes to be brought to any "arbitral tribunal," potentially including international arbitration. Additionally, it gives parties the flexibility to stipulate the dispute settlement mechanism in their agreements without restriction.
Myanmar has also passed a new Arbitration Law (Law No. 5/2016), which provides a comprehensive legal framework for domestic and international arbitration. This law implements Myanmar's ratification of the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards," also known as the New York Convention. This signals Myanmar's commitment to arbitration and positive intentions towards foreign investors.
In conclusion, while Myanmar's recent investment laws do not explicitly refer to investor-state dispute settlement, they provide mechanisms for resolving investment disputes, including arbitration. The new Arbitration Law, in particular, demonstrates Myanmar's recognition of the importance of arbitration in attracting foreign investment.
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Myanmar Investment Law 2016
The Myanmar Investment Law 2016 ("MIL") was enacted on 18 October 2016. It consolidates the Myanmar Citizen Investment Law (2013) and the Myanmar Foreign Investment Law (2012), which were repealed with its enactment. The MIL was approved by Parliament after the transition to an elected civilian government in 2016.
The MIL establishes a grievance mechanism to resolve, prevent, and address investment issues before they reach the stage of legal disputes. Before any investment dispute between an investor and the Union (the Myanmar government) or between investors is brought to court or an arbitral tribunal, all disputing parties must attempt to settle disputes amicably. If disputes cannot be settled amicably, they may be settled in a competent court or arbitral tribunal in accordance with applicable laws.
The MIL also sets out certain investments that are restricted and prohibited, including businesses deemed detrimental and harmful to Myanmar. It retains the long-term land lease provision of previous investment laws, allowing investors to lease land for 50 years with the option for two 10-year extensions. The MIL also provides that the government may grant longer periods for leasing land or buildings to investors who invest in less developed and remote regions.
The law includes tax benefits and exemptions for promoted sectors, and the government may provide subsidies, funding, capacity building, and training to Myanmar citizen investors and citizen-owned small and medium-sized enterprises. The MIL also removed the requirement for appointing a specified percentage of skilled employees, but employers should arrange for capacity-building programs to appoint citizens to positions of management, technical and operational experts, and advisors. For non-skilled work, only citizens shall be appointed.
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The role of the Union Government
The law states that in the event of a dispute between an investor and the Union Government, all parties must first attempt to settle the dispute amicably. This is a shift from the previous Foreign Investment Law of 2012, which did not expressly refer to arbitration but allowed it to be provided as a dispute resolution mechanism in contracts.
If the dispute cannot be settled amicably, it is then taken to a competent court or arbitral tribunal, which can include international arbitration. The law allows parties to stipulate the dispute settlement mechanism in their agreements without restriction, which gives investors access to arbitration as a dispute resolution mechanism against the government. This is a positive step towards assuring foreign investors of Myanmar's commitment to arbitration, especially with its formal accession to the New York Convention.
Myanmar's Union Supreme Court has also introduced alternative dispute resolution (ADR) methods, including a court-led mediation programme implemented nationwide in 2022. This programme has shown positive outcomes, with 789 cases resulting in successful mediation out of 4,956 mediation attempts, according to the 2023 Annual Report.
The enforcement of foreign arbitral awards in Myanmar has been limited due to political instability and the pandemic, which has potentially led to prolonged delays. However, both domestic and international arbitral awards are recognised and enforced through the Myanmar courts. The primary issue with arbitration methods in Myanmar is the lengthy timeframe, which can take over a year for acceptance and up to three years for final enforcement.
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International arbitration
Myanmar's investment law has undergone several changes in recent years, with the country taking steps to improve its arbitration framework. The Myanmar Investment Law of 2016 includes a dispute resolution mechanism that encourages amicable settlements between investors and the government or other investors before legal disputes arise. This mechanism, outlined in Chapter XIX clauses, represents a shift from the previous draft law, which expressly provided for arbitration as a dispute resolution option for investors.
The current law does not explicitly refer to arbitration, international or otherwise, and the government has not given advanced consent to court proceedings or arbitration in the event of disputes under the 2016 law. However, it is important to note that Section 83 of the law states that disputes must be "between the investor and the Union" (the Myanmar government). This indicates that the government is open to arbitration when it is agreed upon in the relevant agreement or required by applicable laws.
Section 83 also allows disputes to be brought before any "'arbitral tribunal', which could potentially include international arbitration. Additionally, Section 84(b) grants parties the freedom to stipulate their preferred dispute settlement mechanism without restriction, implying that international arbitration is permissible under the Chapter XIX clauses. These provisions provide a comprehensive legal framework for domestic and international arbitration in Myanmar, in line with the country's ratification of the New York Convention, or the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards."
Myanmar's transition to an elected civilian government in 2016 brought about significant reforms in investment policy and law, including the establishment of an investor grievance mechanism (IGM) for early conflict and dispute avoidance. This mechanism seeks to prevent cases under the investor-state dispute settlement system (ISDS), such as the case of Yaung Chi Oo Trading Pte Ltd v. The Government of the Union of Myanmar.
In conclusion, while Myanmar's investment law does not explicitly mention international arbitration, it does allow for disputes to be brought before arbitral tribunals and provides flexibility for parties to choose their dispute settlement mechanism. This, along with Myanmar's adherence to the New York Convention, suggests that international arbitration is a viable option for settling investment dispute cases in the country.
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Frequently asked questions
Yes, Myanmar's 2016 Arbitration Law provides a comprehensive legal framework for the conduct of domestic and international arbitration.
Yes, Myanmar's 2016 Arbitration Law provides a comprehensive legal framework for the conduct of domestic and international arbitration. The law also sets up an Investor Grievance Mechanism (IGM) to avoid disputes between investors and the state.
Yes, the 2016 Myanmar Investment Law states that before any dispute between two investors is brought to court, all disputing parties must attempt to settle their disputes amicably.
Yes, the 2016 Myanmar Investment Law states that disputes between an investor and any party can be brought to an arbitral tribunal, which is wide enough in scope to include international organisations.
