Investment Treaty Arbitration

Investment Treaty Arbitration: Myanmar

Overview of investment treaty programme

1. What are the key features of the investment treaties to which this country is a party?

Myanmar

BIT Contracting Party or MIT

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

China (21 May 2002)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

India (8 February 2009)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Israel (Not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Japan (7 August 2014)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Lao People’s Democratic Republic (Not in force)

Full text unavailable

             

Lao People’s Democratic Republic (Not in force)

Full text unavailable

             

Philippines (11 September 1998)

No

Yes

No

Yes

Incomplete document from page 7

Thailand (8 June 2012)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Vietnam (Not in force)

Full text unavailable

             

ASEAN Comprehensive Investment Agreement (26 February 2009)

Yes

Yes

Yes

Yes

No

180 days

Yes

Yes

FTAs/EPAs

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection and security

Most-favoured-
nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Japan - SEA Nations ( 8 October 2003)

Yes

Yes

Yes

Yes

Yes

90 days

Yes

Yes

Korea
(13 December 2005)

Yes

No

Yes

Yes

No

90 days

No

No

India (8 October 2003)

No

No

Yes

Yes

No

Not stated

No

No

Australia-New Zealand
(1 January 2010)

Yes

Yes

Yes

Yes

No

Not stated

No

Yes

People’s Republic of China
(4 November 2002)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Qualifying criteria - any unique or distinguishing features?

2. What are the distinguishing features of the definition of “investor” in this country’s investment treaties?

Myanmar

Issue

Distinguishing features in relation to the definition of ‘investor’

Seat of the investor/place of business

While most of Myanmar’s investment treaties provide that a juridical person incorporated or duly organised according to the laws of a Contracting Party (ie a country that is party to the treaty) is an ‘investor’, three treaties (China, Philippines, and Thailand BITs) also require that such entities have their ‘place of effective management’, ‘seat’ or ‘real economic activities’ within the territory of a Contracting Party. The Israel BIT requires a juridical person to have a substantial part of its economic activity located in the territory of a Contracting Party.

Control by a
non-national

Most of Myanmar’s BITs do not protect juridical persons that are owned or controlled by investors of a non-party or whose seat is not within the other Contracting Party’s territory. The Japan BIT provides Contracting Parties with a discretion to deny protection to investors which are owned or controlled by investor(s) of the denying Contracting Party (ie a denial of benefits clause).

Permanent residents

The term ‘investor’ is defined to include both citizens or nationals and permanent residents of a Contracting Party under the Israel, China and Japan BITs. However, only citizens or nationals are afforded protection under the Philippines and Thailand BITs.

Dual nationals

The Israel BIT excludes protection to permanent residents of a Contracting Party who are nationals of the other Contracting Party.

3. What are the distinguishing features of the definition of "investment" in this country’s investment treaties?

Myanmar

Issue

Distinguishing features in relation to the concept of ‘investment’

Assets which qualify for protection

Most of Myanmar’s investment treaties define ‘investment’ to include ‘every kind of asset owned or controlled’ by a national. Some treaties expressly include indirect investments (eg Japan BIT). The Japan and Israel BITs include reinvestments of the returns of an investment.

Indirect control of assets

The Japan BIT expressly included in the definition of ‘investment’ assets controlled indirectly by a protected investor.

Exclusion of certain assets

The Israel BIT excludes from the definition of ‘investment’ certain types of assets, such as claims to money, specifically arising solely from commercial contracts for the sale of goods and services by a national or legal entity, as well as government debt instruments.

Commencement of treaty protection

Most of Myanmar’s investment treaties protect all existing investments, whereas the Israel BIT expressly excludes investments subject to a dispute that has arisen before the treaty’s entry into force. The Japan BIT protects investors who are seeking or attempting to make investments (ie where the investor has taken active steps to make an investment, such as through initiating notification or approval process).

Admission/approval of an investment

Most of Myanmar’s investment treaties expressly require investments to have been ‘admitted’ by a Contracting Party subject to that Contracting Party’s laws.

Special formalities

Most of Myanmar’s investment treaties do not prescribe special formalities in connection with covered investments and do not require investors to provide information concerning the investment solely for informational or statistical purposes.

Substantive protections - any unique or distinguishing features?

4. What are the distinguishing features of the fair and equitable treatment standard in this country’s investment treaties?

Myanmar

Issue

Distinguishing features of the fair and equitable treatment standard

Illustrations of the FET standard

Most of Myanmar’s investment treaties simply provide that each Contracting Party shall ensure fair and equitable treatment to investments (eg India, China BIT).

Customary international law

None of Myanmar’s investment treaties expressly equate the obligation to provide fair and equitable treatment with the concept of fair and equitable treatment under customary international law.

5. What are the distinguishing features of the protection against expropriation standard in this country’s investment treaties?

Myanmar

Issue

Distinguishing features of the ‘expropriation’ standard

Right to regulate for a public purpose

None of Myanmar’s investment treaties provide protection against expropriation without adequate compensation. In addition, the value of such compensation shall be determined in accordance with ‘generally recognised principles of valuation’.

Indirect expropriation

None of Myanmar’s BITs expressly protect against indirect expropriation.

Right to judicial review

4 of Myanmar’s BITs (India, Israel, Japan, Thailand) provide for a right, under the law of the Contracting Party making the expropriation, to review, by a judicial or independent authority of that Contracting Party, of his or its case and of the valuation of his or its investments.

Expropriation in accordance with the ‘due process of law’

Most of Myanmar’s investment treaties require that any expropriation of an investment must occur under ‘due process of law’ (eg Philippines, Japan). However, the China BIT simply requires that the expropriation occur in accordance with the laws of the expropriating state.

Fair and equitable compensation

The India BIT expressly provides for fair and equitable compensation of their investment to such investors of the other Contracting Party who are owners of those shares.

6. What are the distinguishing features of the national treatment/most-favoured-nation treatment standard in this country’s investment treaties?

Myanmar

Issue

Distinguishing features of the ‘national treatment’ and/or ‘most favoured nation’ standard

Common Exceptions to MFN treatment

With the exception of the Israel and Japan BITs, all of Myanmar’s BITs expressly provide that the provision of ‘most favoured nation’ treatment to an investment does not extend to the benefits of membership of a customs union, monetary union or free trade area, nor to taxation agreements and/or taxation legislation.

Scope of MFN treatment

Generally, the MFN protection contained within Myanmar’s BITs applies to ‘investments’ (India, China, Israel BITs) and ‘returns on investments (India, Israel, Philippines BITs). The China and Japan BITs also expressly extend protection to activities associated with investments. The Philippines, Israel and Thailand BITs further extend the guarantee of MFN treatment to ‘the management, maintenance, use, enjoyment or disposal of their investments’, whereas the Japan BIT extend protection only to ‘investors’ and ‘investments’.

National treatment

The Japan BIT also guarantees investors ‘national’ treatment in respect of investments where each Contracting Party shall accord to investments treatment that is no less favourable than the treatment it accords, in like circumstances, to its own investors and to their investments with respect to investment activities.

Non-conforming measures

The Japan BIT provides that national treatment does not apply to any existing non-conforming measure that is maintained by a Party at a local level of government or as set out by that Party in its Schedule. National treatment also does not apply to measures adopted with respect to sectors or activities as set out in the Party’s Schedule.

7. What are the distinguishing features of the obligation to provide protection and security to qualifying investments in this country’s investment treaties?

Myanmar

Issue

Distinguishing features of the ‘protection and security’ standard

Scope

The formulation of the standard varies in Myanmar’s investment treaties. Some provide for ‘full protection and security’ (eg Israel, Japan, Philippines, Thailand BITs). Others simply require ‘protection and security’ (eg China BIT).

Customary international law on protection and security

The Japan BIT provides that ‘full protection and security’ requires each Party to provide the level of protection required under customary international law.

8. What are the distinguishing features of the umbrella clauses contained within this country’s investment treaties?

Myanmar

Issue

Distinguishing features of any ‘umbrella clause’

Scope

Only one of Myanmar’s investment treaties (China BIT) contains an umbrella clause.

Qualification of the obligation

The obligation to honour commitments in the China BIT is not limited only to written undertakings, nor only applicable to undertakings given by a person or body that was lawfully entitled to give the undertaking.

9. What are the other most important substantive rights provided to qualifying investors in this country?

Myanmar

Issue

Other substantive protections

Free transfer of payments

All of Myanmar’s investment treaties contain a provision requiring the Contracting Parties to permit investors to transfer investments and investment returns freely.

Non-impairment

With the exception of the China and India BITs, Myanmar’s BITs impose upon Contracting Parties an obligation not to impair the management, maintenance, use, enjoyment or disposal of investments.

Armed conflict/civil unrest

All of Myanmar’s investment treaties guarantee investors of Contracting Parties ‘most favoured nation’ treatment in regards to compensation paid to other investors of other states in the case of armed conflict or civil unrest.

Transparency

The Japan BIT provides that Parties shall seek to facilitate the provision and exchange of investment information and each Party shall, the maximum extent possible, publish in advance any measure that it proposes to adopt and provide interested persons of the other Party with an opportunity to comment on such proposed measures.

General exceptions

The Japan BIT provides general exceptions to substantive protections where the State adopts measures necessary for public order; to protect human, animal or plant life; to comply with laws or regulations; for the protection of national treasures; or relating to the conservation of natural resources.

Procedural rights in this country’s investment treaties

10. Are there any relevant issues related to procedural rights in this country’s investment treaties?

Myanmar

Issue

Procedural rights

Fork-in-the-road

Some of Myanmar’s investment treaties (eg Japan BIT) require that investors must elect either to pursue their claim through the local courts or by international arbitration. They cannot do both.

Waiver of local remedies

Some treaties (eg Japan BIT) condition the right to commence arbitration on an investor having waived its right to pursue any cause of action arising from the same circumstances giving rise to the alleged breach of the treaty in the Contracting Party’s courts or tribunals.

Exhaustion of local remedies

Most of Myanmar’s investment treaties do not require that the exhaustion of local remedies be a condition precedent to the right to commence arbitration. However, arbitration proceedings must commence before judgment by the domestic courts have been developed (eg Israel BIT).

ICSID or ad-hoc arbitration

Most of Myanmar’s investment treaties provide a right of recourse to ICSID and also allow investors to pursue an arbitration claim through: (a) an ad hoc tribunal constituted in accordance with the UNCITRAL rules (eg China, India, Israel, Japan, Philippines); and/or (b) any other tribunal acting in accordance with any other arbitration rules as is mutually agreed by the parties (eg Japan BIT).

Time limits

Some of Myanmar’s investment treaties (eg Japan BIT) require that a claim be commenced within a specified time (often three years) of the investor having first acquired knowledge of the facts giving rise to the alleged breach. With the exception of the Japan BIT, where the cooling-off period specified is 3 months, the common cooling off period specified for Myanmar’s BITs is 6 months from receipt of a written notification of the dispute.

Use of MFN to expand procedural rights

None of Myanmar’s investment treaties expressly provide that MFN treatment does not encompass investor-State dispute settlement procedures or mechanisms.

Applicable law

Myanmar’s investment treaties that provide a right to refer a dispute to ICSID are generally silent as to what law or laws are to govern the parties dispute (an exception to this is the Japan BIT which provides that the tribunal shall decide the dispute in accordance with the treaty and the applicable rules and principles of international law). In such circumstances, the applicable law is likely to be determined in accordance with Article 42 of the ICSID Convention, which provides that in the absence of an agreement between the parties, the tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable. With respect to ad hoc arbitration, Myanmar’s investment treaties generally provide that arbitral tribunals must have regard to the terms of the investment treaty when determining the dispute (eg India BIT).

Confidentiality

While the majority of Myanmar’s investment treaties are silent on the issue of confidentiality, the Japan BIT provides that the parties submissions, the hearing transcript and the arbitration award can be made public under certain conditions (eg with the redaction of confidential business information)

11. What is the status of this country’s investment treaties?

Myanmar

Overall, Myanmar has demonstrated signs that it intends to honour its investment treaties. Section 107 of the draft Myanmar Investment Law (v3) dated 15 january 2016 (Draft MIL) affirms the recognition of investment treaties. If passed, the Draft MIL will be the overarching legal framework for investment protection standards in Myanmar and will supersede two existing investor protection laws in Myanmar, being the Citizens Investment Law 2013 and the Foreign Investment Law 2012. Section 107 of the Draft MIL states that ‘[a]ny international agreement, whether bilateral, regional, or multilateral, having been duly signed, approved and ratified by the Union Government shall prevail over any conflicting provisions in the draft MIL.’ As of the date of this publication, this draft law has not been passed. Thus far, there have also been no publicly available statements by the Myanmar government to suggest that it intends to modify or depart from its existing investment treaties.

Practicalities of commencing an investment treaty claim against this country

12. To which governmental entity should notice of a dispute against this country under an investment treaty be sent? Is there a particular person or office to whom a dispute notice against this country should be addressed?

Myanmar

Government entity to which claim notices are sent

The Notice may be addressed directly to the Government of the Union of Myanmar. Upon receiving the notice of dispute, the Government of the Union of Myanmar will forward a copy of the notice to the Attorney General Office, which is the relevant entity managing investment arbitrations on behalf of the Union of Myanmar.

13. Which government department or departments manage investment treaty arbitrations on behalf of this country?

Myanmar

Government department which manages investment treaty arbitrations

The Attorney General Office manages investment arbitrations on behalf of the government.

14. Are internal or external counsel used, or expected to be used, by the state in investment treaty arbitrations? If external counsel are used, does the state normally go through a formal public procurement process when hiring them?

Myanmar

Internal/external counsel

In Yaung Chi Oo Trading Pte Ltd. v. Government of the Union of Myanmar (ASEAN I.D. Case No. ARB/01/1, 31), the Union of Myanmar appointed a joint committee comprising both foreign external counsel as well as the Attorney General office for its representation in this case. As far as we are aware, there is no formal public procurement process through which external counsel is appointed.

Practicalities of enforcing an investment treaty claim against this country

15. Has the country signed and ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)? Please identify any legislation implementing the Washington Convention.

Myanmar

Washington Convention implementing legislation

No, Myanmar is not a signatory to the Washington Convention.

16. Has the country signed and ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention)? Please identify any legislation implementing the New York Convention.

Myanmar

New York Convention implementing legislation

Yes, Myanmar acceded to the New York Convention without any reservations, and its accession took formal effect on 15 July 2013. On 5 January 2016, the Parliament of Myanmar enacted the Pyidaungsu Hluttaw Law No. 5/2016 (Arbitration Law), which is the domestic legislation implementing the New York Convention.

17. Does the country have legislation governing non-ICSID investment arbitrations seated within its territory?

Myanmar

Legislation governing non-ICSID arbitrations

To the best of our knowledge, Myanmar does not have legislation governing non-ICSID investment arbitrations seated within its territory.

18. Does the state have a history of voluntary compliance with adverse investment treaty awards; or have additional proceedings been necessary to enforce these against the state?

Myanmar

Compliance with adverse awards

There have been no adverse awards delivered against Myanmar.

19. Describe the national government’s attitude towards investment treaty arbitration

Myanmar

Attitude of government towards investment treaty arbitration

It is difficult to state with certainty the position of the Myanmar government towards investment treaty arbitration as there have not been many investment treaty arbitrations commenced against Myanmar.

20. To what extent have local courts been supportive and respectful of investment treaty arbitration, including the enforcement of awards?

Myanmar

Attitude of local courts towards investment treaty arbitration

As there have been no actions relating to investment treaty arbitration before the Myanmar Courts, it is difficult to predict the Myanmar Court’s attitude towards investment arbitration awards.

National legislation protecting inward investments

21. Is there any national legislation that protects inward foreign investment enacted in this country? Describe the content.

Myanmar

National legislation

Substantive protections

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Foreign Investment Law 2012

N/A

No protection against expropriation but section 28 provides that a business with a permit from the Myanmar Investment Commission (MIC Permit) shall not be nationalized within the term of the permit. Additionally, section 29 of the Foreign Investment Law 2012 provides that the government guarantees not to suspend any investment business carried out under an MIC Permit before the expiry of the term without sufficient cause.

Section 30 of the Foreign Investment Law provides that upon the expiry of the term of the MIC Permit, the government guarantees that the investor may retrieve his capital in the currency in which the investment was made.

N/A

N/A

Special Economic Zone Law 2014 (which relates to investments in any of the special economic zones).

N/A

Although the Special Economic Zone Law 2014 does not specifically protect against expropriation, section 89 provides that investment businesses in the special economic zone shall not be nationalized within the permitted period of investment.

Section 83 provides that the assets, profits and other rights owned by the developer or investor shall be recognized

and protected in accordance with the existing laws. Section 84 guarantees that the price of the products, services or exported goods manufactured in an exempted zone or

the promotion zone shall not be restricted and controlled.

N/A

N/A

Draft MIL (which if passed, will supersede the Foreign Investment Law 2012)

Yes1

Yes2

The draft Sections 60, 64, 65 and 73 protect the following rights: equivalent treatment of foreigners and locals, the right to transfer funds out of Myanmar freely and without delay, the right to lease land for a term of 50+10+10 years and the right to employ employees of any nationality.

An investor may submit a dispute to arbitration or ‘other means of dispute resolution’. The Draft MIL is silent on whether ‘other means of dispute resolution’ include the local courts.

Yes.

National legislation protecting outgoing foreign investment

22. Does the country have an investment guarantee scheme or offer political risk insurance that protects local investors when investing abroad? If so, what are the qualifying criteria, substantive protections provided and the means by which an investor can invoke the protections?

Myanmar

Relevant guarantee scheme

Qualifying criteria, substantive protections provided and practical considerations

MIGA

Multilateral Investment Guarantee Agency: this is a collective scheme under the World Bank Group that provides guarantees for qualifying investments, both incoming and outgoing.

Awards

23. Please provide a list of any available arbitration awards or cases initiated involving this country’s investment treaties.

Myanmar

Awards

Yaung Chi Oo Trading Pte Ltd. v. Government of the Union of Myanmar (ASEAN I.D. Case No. ARB/01/1, 31)

Pending proceedings

 

Reading List

24. Please provide a list of any articles or books that discuss this country’s investment treaties.

Myanmar

Article/Book

Jonathan Bonnitcha, ‘Myanmar’s Investment Treaties: A review of legal issues in light of recent trends,’ International Institute for Sustainable Development, June 2014

OECD (2014), OECD Investment Policy Reviews: Myanmar 2014 , OECD Publishing, available at http://dx.doi.org/10.1787/9789264206441-en, at Chapter 3

Notes

1 Section 62 of the Draft MIL guarantees that investors will be treated fairly and equitably. The fair and equitable treatment includes but is not limited to the right to obtain any information of its investment, right to due process and regulations, procedures, rulings and decisions applicable to investments.

2 Section 66 of the Draft MIL guarantees that the government shall neither expropriate nor nationalise, whether directly or indirectly, any investment except for a public purpose, in a non-discriminatory manner, on payment of prompt, fair, adequate and effective compensation and in accordance with due process of law.

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