One of the problems international businesses face in doing business in Myanmar is dispute resolution. The Myanmar court system is opaque and extremely slow, and local litigators charge surprisingly high fees. Arbitration is an obvious solution to this problem, and following the Myanmar Arbitration Law (2016) (AL) almost all commercial contracts of substantial value now contain arbitration clauses, usually for arbitration abroad-most commonly at the Singapore International Arbitration Centre (SIAC). This is because the AL allows for the enforcement of foreign arbitral awards where the award was made in a state that is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), in all but a limited range of circumstances. The AL also paves the way for domestic arbitration, although I would imagine it will be several years before the arbitration centre recently established by the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) finds its feet.
However arbitration, particularly foreign arbitration, can remain an extremely expensive method of dispute resolution. Now, as a result of the Convention, mediation is likely to become a more popular alternative dispute resolution method in many countries.
Mediation is much cheaper and faster than litigation or arbitration, and therefore is worth carefully considering as an option, particularly in relation to smaller disputes. Legal advice is required, as it will not always be appropriate. It works in this way. Following the process of mediation facilitated by a mediator, the parties come to an agreement to settle their dispute. The problem in the past has been that there has been no simple way to enforce such a settlement agreement at the end of the mediation process. The Convention changes this.
Note that under the Convention the settlement agreement must be international, in the sense that at least two parties to the settlement agreement have their places of business in different States, or the State in which the parties to the settlement agreement have their places of business is different from either (i) the State where a substantial part of the obligations under the settlement agreement is performed or (ii) the State with which the subject matter of the settlement agreement is most closely connected.
Forty-six countries have already signed the new Singapore Mediation Convention, including Singapore itself. The Convention provides that a party to the Convention shall enforce a settlement agreement in accordance with its rules of procedure and in accordance with the Convention.
As with foreign arbitral awards, there are limited circumstances in which a settlement agreement may not be enforced. For example, the settlement agreement is not final according to its terms, or there was a serious breach by the mediator of applicable standards without which that party would not have entered into the settlement agreement, or granting relief would be against public policy.
Myanmar has made great progress in terms of arbitration. It should not be left behind with the potential of mediation as another form of alternative dispute resolution.
This article was originally published in the Myanmar Times and is reproduced here with permission and thanks. The original can be viewed on the Myanmar Times website.