Myanmar
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. The Court can make a freezing order prohibiting a respondent from dealing with assets (within the jurisdiction) referred to in the order until a specified time (such as until another hearing, judgment or payment) or until a further order of the Court.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. The Court can make additional interim orders in conjunction with the freezing order as it sees fit or upon an application from the applicant. For example, if the assets are likely to degrade, the Court may issue an order assigning the management rights of the assets to an appointed receiver.
3. Briefly what is the relevant legal test?
The applicant must prove by affidavit or other means:
(i) that the asset is in danger of being wasted, damaged or manipulated by the respondent; or
(ii) that the respondent threatens, or intends, to remove or dispose of all or part of its assets from the jurisdiction of the Court.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant must make an application to the Court, setting out in an affidavit. the reasons for the application and the basis upon which the relevant requirements are met. Generally, an application should be made on notice to the respondent, but it can be made without notice if it can be shown that justice would be delayed by giving notice to the respondent. When an application is made without notice, the applicant has a duty of full and frank disclosure and the respondent also has the right to challenge a without notice order in a supplemental proceeding.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Under their inherent powers, the Myanmar Courts may require the applicant to provide a guarantee or security as they deem fit. Further, whilst there is no general requirement for the applicant to commit to compensating the respondent, if the applicant is ultimately unsuccessful, the respondent can apply to the Court for compensation for expenses or for any injury caused (not exceeding MMK 500,000, or roughly US$282).
6. Can it be sought against third parties?
A third party to the underlying proceedings may be made a party to a freezing order, if there is good reason to suppose that their assets are in fact the assets of the respondent. A third party who is not a party to the freezing order (for example, a financial institution holding the defendant’s assets) but who has notice of it, must not knowingly assist the respondent in breaching the terms of the freezing order. Notification to the third party should be provided by way of a letter and acknowledgment should be sought from the third party.
7. What assets are covered by a freezing (or equivalent) order?
All moveable and immovable property (whether tangible or intangible) within the jurisdiction of the Court.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
No.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage of the proceedings, but not prior to commencement of the underlying claim.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Myanmar law does not specify any specific exceptions to the general prohibition, but this may be provided for on a case-by-case basis by the Court. In those circumstances, the order may provide that the respondent may deal with their assets:
(i) above a specified value;
(ii) in the ordinary and proper course of business;
(iii) for ordinary living expenses;
(iv) for legal expenses.
12. What happens after a freezing (or equivalent) order is granted?
The respondent may seek to appeal the order and if successful, the original freezing order may be set aside, discharged, altered or extended until trial. The applicant must also notify any third parties (such as banks holding the respondent’s assets) of the freezing order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
At the final ruling of the underlying litigation, it is usual for the Court to determine whether the applicant or the respondent is to pay the costs of obtaining the freezing order. If the underlying litigation is unsuccessful, it is likely that the applicant will be ordered to pay the costs.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
Third parties are protected by way of a number of provisions, including:
(i) a third party is not prevented from exercising any rights of set-off arising prior to its notification of the freezing order;
(ii) a third party does not need to enquire as to the application of any money withdrawn by the respondent if the withdrawal appears to be permitted by the freezing order;
(iii) a freezing order only affects third parties outside of the jurisdiction in certain circumstances;
(iv) as regards to assets outside of the jurisdiction, a freezing order does not prevent a third party from complying with (a) what it reasonably believes to be its obligations under the law of the country where the assets are located or the law of any contract between itself and the respondent or (b) any orders of the Courts of the country where the assets are located;
(v) applicants generally undertake to pay the reasonable costs of any third party that were incurred as a result of the order, and to compensate them for any loss caused by it.
15. What are the consequences of breach of a freezing (or equivalent) order?
The Court has the power to order the property of the respondent (or third party if party to the order) to be attached and can also order imprisonment for a term not exceeding six months. A third party (who is not a party to the order but who has notice of it) may also be sued by the applicant if they knowingly help or permit the respondent to breach the terms of the order. Furthermore, the Court may pursue such third party for contempt of Court and take due action, which can lead to imprisonment and or fine.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
Such third parties can be sued under general principles of damages. A notified third party is not absolved of contempt for violation of a Court order.
17. Can a freezing (or equivalent) order be enforced abroad?
In principle, yes, although it will be subject to the laws of the relevant jurisdiction in enforcing foreign orders.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
In principle, yes, but there are a number of exceptions to this general rule.
Contact
Nishant Choudhary Partner – Regional Head of Dispute Resolution DFDL Bahan Township, Myanmar myanmar@dfdl.com www.dfdl.com/locations/myanmar
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