Introduction

Foreign investors and partners clearly
prefer out-of-court dispute resolution. However, owing to Macau’s current
arbitration regime and the difficulties that it poses, parties typically choose
other jurisdictions to resolve disputes.

Therefore, the government has drafted a
new arbitration bill which aims to:

• promote Macau as a commercial arbitration centre between China and
  Portuguese-speaking countries; and
• take full advantage of Macau’s high number of bilingual
  professionals and its cultural and legal similarities to
  Portuguese-speaking countries.

The bill was approved in general by the
Legislative Assembly on 6 June 2018.

Current
regime

Macau’s dual arbitration system has two
key laws:

• Decree-Law 29/96/M (11 June 1996) regulates internal arbitrations;
  and
• Decree-Law 55/98/M (23 November 1998) regulates external
  arbitrations relating to commercial transactions.

However, the existence of two decree laws
– which apply depending on whether the arbitration qualifies as an internal
arbitration or as an external arbitration with a commercial scope – routinely
causes conflict between parties. Further, as these laws present conflicting
solutions, they are often interpreted and applied inconsistently.

Given that the legislation has been
modified only once in the past 20 years, Macau’s arbitration regime can be
considered outdated.

Moreover, the scope of application of
these laws is difficult to define. Generally, Decree-Law 55/98/M applies to
arbitrations with a commercial nature (contractual or non-contractual) where:

• the parties to the arbitration agreement had, at the time that the
  agreement was concluded, their places of business in different states or
  territories;
• the place of the arbitration (determined in or pursuant to the
  arbitration agreement) is situated outside the state in which the parties
  have their places of business;
• any place where a substantial part of the obligations arising from
  the commercial relationship or the place with which the subject matter of
  the dispute is most closely connected is situated outside the state or
  territory in which the parties have their places of business; or
• the parties have expressly agreed that the subject matter of the
  arbitration agreement relates to more than one state or territory.

On the other hand, Decree-Law 29/96/M
applies to internal arbitrations (ie, arbitrations falling within the scope of
Macau law).

Bearing in mind Macau’s role in the
commercial and trade cooperation service platform between China and
Portuguese-speaking countries, it is essential for Macau to provide a simple
arbitration regime that aligns with current international best practice and is
easy to comprehend and apply.

Therefore, Decree-Laws 29/96/M and 55/98/M
will be revoked when the new arbitration bill enters into force.

New regime

The new arbitration regime replaces the
abovementioned laws with a single law, which will apply to both internal and
external arbitrations in Macau.

The new law is inspired by the United
Nations Commission on International Trade Law Model Law on International
Commercial Arbitration (as amended in 2006) and reflects some of the previous
stipulations of Decree-Law 55/98/M, as well as some good solutions adopted in
other jurisdictions which are compatible with the Macau legal system.

The new law establishes a legal regime of
voluntary arbitrations and the recognition and enforcement of arbitration
awards issued outside Macau (Article 1).

Further, the new regime is based on a
number of principles, including:

• the principle of autonomy – whereby parties are free to choose
  arbitration as an alternative to the courts;
• the principle of contradiction – whereby each party can effectively
  participate in the arbitral proceedings;
• the principle of equality between the parties;
• the principle of secrecy of the proceedings;
• the principle of informality and simplicity;
• the principle of celerity and efficiency of the tribunal;
• the principle of impartiality and independence of the arbitrators;
  and
• the minimal intervention principle – whereby the tribunal may act
  only when specifically entitled to by law.

In terms of its scope of application, the
new law implements the principle of territoriality and generally applies only
to arbitrations taking place in Macau (Article 2).

Comment

Unifying Macau’s arbitration system with a
single law is expected to improve legislative cohesion and application.
Further, such improvements should encourage foreign investors and partners to
choose Macau as their jurisdiction for submitting disputes and strengthen its
arbitration credentials internationally – particularly in Portuguese-speaking
countries.

This update
was first published in the International Law Office Offshore Services
Newsletter – www.internationallawoffice.com.