Burma/Myanmar Legal Update: Accession to the New York Convention

by Orrick, Herrington & Sutcliffe LLP
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Introduction

On 16 April 2013 the Republic of the Union of Myanmar (also known as Burma) acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) by depositing an instrument of accession with the Secretary-General of the United Nations. This followed approval by Myanmar’s Parliament on 6 March 2013 (click here to read Orrick's commentary on that development.)

The context: attracting foreign investment to Myanmar

With the suspension of sanctions by the West and the enactment of Myanmar’s new Foreign Investment Law (“FIL”) on 2 November 2012, Myanmar has become an exciting emerging market. The FIL has been viewed as being broad brush and vague in nature. However, it gives contracting parties autonomy to agree how they will resolve any disputes that might arise between them.

The New York Convention enables contracting parties to resolve a dispute through arbitration in a neutral country and to enforce arbitral awards in any country that is a signatory to the convention. The grounds upon which an enforcing court may decline to enforce a foreign arbitral award are limited. Prior to Myanmar’s accession, there were already 148 signatories to the New York Convention, a reflection of its importance and success.

Myanmar’s status as a signatory to the New York Convention

As stipulated in Article XII(1) of the New York Convention, Myanmar's accession will take effect on the ninetieth day following the date of deposit of the third instrument of ratification or accession. Accordingly, the New York Convention will be in force in Myanmar as of 15 July 2013.

Generally, upon ratification, a country indicates its intent either to implement the New York Convention wholesale or to adopt various reservations. A common reservation is that of reciprocity - only recognizing and enforcing awards made in another country that is a contracting state. China, France and the United States, among others, are countries that subscribe to this reservation.

To date, Myanmar’s reservations and declarations, if any, remain undisclosed. Official publication by the United Nations Secretary-General of Myanmar’s terms of accession is crucial to understand fully the effect accession to the New York Convention will have on the investment environment in the country.

Moving Forward: legislative reform and training of the judiciary are critical

It is now vital that Myanmar takes the following steps:

1. enacts domestic implementing legislation; and

2. ensures that a group of senior judges receive training on dealing with New York Convention awards.

The first of the above steps should be relatively straightforward. The second promises to be more challenging and time-consuming. However, it has the potential not only to enhance the Myanmar investment environment, but also to contribute to improving rule of law in the country.

Conclusion

Myanmar’s accession to the New York Convention is a significant positive step but much remains to be done to give effect to it.

For Further information, please contact Robert San Pe or your usual contact at Orrick.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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