ARBITRATING THE GOLD RUSH: THE CHALLENGES OF PROTECTING INVESTMENTS IN MYANMAR’S FRONTIER MARKET
With the slight relaxation of control by the government of Myanmar in 2011 and the subsequent political, economic and legal reforms, foreign companies have been able to consider investing in one of the final Asian frontiers. Taking advantage of the opportunity, the government of Myanmar has attempted to attract foreign investors by promoting the sudden international interest in the country’s open market as a ‘gold rush’. When considering whether to immediately invest in Myanmar, a prevailing issue facing foreign investors is to what degree investments are protected if a dispute arises. One method of protection is enforceable arbitration.
When the process of reforming the country’s financial sector began, the central aim was to significantly increase foreign investment. This resulted in Myanmar enacting a new Foreign Investment Law (FIL) in November 2012 to provide a legal framework for foreign investment. Chapter XIX of the FIL identifies ways in which investment disputes may be settled and expressly gives investors the right to contractually agree on a method to resolve disputes, including offshore arbitration. At the time the FIL was enacted, however, Myanmar still lacked reliable legal mechanisms for enforcing arbitral awards through Myanmarese courts and for enforcing arbitral awards made in other countries. From the perspective of sophisticated investors, the initial reforms represented an encouraging departure from decades of a closed economy, but the market was still viewed as rather primitive and legal recourse remained lacking.
It is important for foreign investors to be aware of the bilateral investment treaties (BITs) and conventions Myanmar has ratified. Myanmar currently has BITs with China, India and the Philippines and is party to the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Agreement, giving these countries preferences to facilitate trade and investment with Myanmar. Most importantly, Myanmar is a party to the ASEAN Comprehensive Investment Agreement (ACIA). The ACIA aims to develop a free and open investment setting by consolidating the expanding existing agreements between ASEAN Member States, thus allowing Member State citizens to protect eligible investments. The ACIA protections require Myanmar to provide compensation to aggrieved parties if it fails to uphold its obligations to foster a free and competitive investment environment. (ACIA, Article 12.)
Jan-Mar 2014 issue
Association for International Arbitration