Debt collection in Myanmar

The procedure for debt collection in Myanmar begins with a legal and practical assessment of the debtor, the debt documents and the most realistic recovery route. At this stage, it is important to verify the debtor’s legal identity, business activity, registered office, available company information, payment history, current court cases, enforcement measures, insolvency indicators, possible objections to the debt and the documents confirming the creditor’s claim. If the debtor is a Myanmar company, preliminary checks may include information available through Myanmar Companies Online, where companies can be searched by company name or registration number.

For an international creditor, debtor analysis in Myanmar also includes a compliance review of the payment route. Myanmar is treated as a high-risk jurisdiction for anti-money laundering and counter-terrorist financing purposes, and transactions involving Myanmar may also be affected by sanctions, bank compliance checks, foreign exchange controls and restrictions connected with particular persons, entities, sectors or payment channels. These factors influence whether a negotiated settlement, court recovery, enforcement or insolvency-related strategy can be implemented in practice.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and continues to conduct commercial activity, the creditor may first use out-of-court debt collection in Myanmar. This stage is appropriate where the debt is documented, the debtor can be contacted and there is a realistic possibility of obtaining voluntary payment, a payment schedule, return of goods, transfer of the debt to a third party, set-off, replacement performance or another commercially acceptable settlement.

Communication with the debtor may be carried out by post, email, telephone or instant messaging, depending on the available contact details and the nature of the debt. The creditor should keep evidence of each demand, response, settlement proposal, payment promise and refusal to pay, because these materials may later support the court claim, enforcement strategy or insolvency petition.

If the debtor refuses to pay, ignores the demand, delays the case without a realistic settlement proposal, transfers assets, stops business activity or the initial assessment shows that voluntary recovery is unlikely, the strategy should move to judicial debt collection in Myanmar without losing procedural time.

Before initiating court recovery, the creditor should assess the limitation period for debt collection in Myanmar. For ordinary contractual debt claims, the general limitation period is usually 3 years, calculated from the date when the cause of action arises, for example from the due date for payment, the date of breach of contract, the date of delivery of goods where the price became payable, or another legally relevant date depending on the nature of the obligation. The running of time may be affected by a written acknowledgment of the debt or by partial payment made in a legally relevant manner before the claim becomes time-barred. After such acknowledgment or payment, the limitation period starts to run again from the applicable new date.

Myanmar law provides for judicial debt collection in Myanmar through ordinary civil proceedings and, for certain categories of claims, through a summary procedure.

Civil cases are heard within the court system that includes the Union Supreme Court, High Courts of the Regions or States, Courts of Self-Administered Division and Zone, District Courts and Township Courts. For civil suits, Township Judges and Additional Township Judges have original jurisdiction where the value of the subject matter does not exceed 50,000,000 kyats, while Deputy Township Judges have jurisdiction where the value does not exceed 20,000,000 kyats. Judges of Courts of Self-Administered Division and Zone, District Judges and Additional District Judges have original jurisdiction over suits valued up to 5,000,000,000 kyats, and Deputy Judges of Self-Administered Division and Zone and Deputy District Judges have original jurisdiction over suits valued up to 3,000,000,000 kyats.

The ordinary judicial procedure begins by filing a complaint with the competent court of first instance. The complaint should identify the parties, state the claim and relief sought, indicate the value of the suit, describe when the cause of action arose, confirm that the claim is filed within the limitation period and attach the documents on which the creditor relies. The plaintiff must also pay the applicable ad valorem court-fee stamps and summons fees.

After the complaint and supporting documents are submitted, the court registry checks the filing, opens the civil suit and the case is assigned to the appropriate judge according to the value of the claim and the court’s jurisdiction. The court then issues a summons to the defendant. The summons is served together with a copy of the complaint, and the defendant may appear personally, through a recognized agent or through a lawyer.

The defendant must state the defense in writing and respond to the factual allegations made by the plaintiff. Denials should be specific and directed to the relevant facts. Allegations that are not expressly denied may be treated as admitted. If the defendant relies on several separate grounds of defense, those grounds should be set out separately and clearly. The defendant may also file a counterclaim where the procedural requirements are met.

If the defendant fails to submit a defense or does not appear in court on the appointed date, the court may proceed with the case and enter judgment if the claim is supported by sufficient evidence. If both parties appear, the court examines the parties’ positions, determines which facts and legal issues are disputed, frames the issues of fact or law and proceeds to the evidentiary stage.

During the trial, the parties submit documents, witness statements and other evidence. The court may also deal with applications for provisional remedies, discovery, inspection of documents and written questions connected with the facts of the case. The burden of proof remains on the plaintiff, who must establish the claim on the balance of probabilities. After the hearing and closing arguments, the court pronounces judgment and decree. If there is no real dispute on the material questions of fact or law, the court may decide the case without a full evidentiary trial.

The summary procedure applies to suits based on bills of exchange, hundis and promissory notes. This procedure is designed for claims supported by negotiable instruments and is conducted more quickly than the ordinary civil process, because the defendant’s ability to resist the claim depends on the procedural grounds and evidence submitted in response to the creditor’s claim.

Civil appeals and revisions in Myanmar are submitted step by step to the nearest competent superior court. A party dissatisfied with a decision of a Township Court may appeal or apply for revision to the relevant Court of Self-Administered Division, Court of Self-Administered Zone or District Court, and further appellate review may proceed through the court hierarchy where the law allows it. Under the limitation rules for civil appeals, the time limit is generally 90 days for an appeal to the High Court and 30 days for an appeal to another court, calculated from the date of the decree or order appealed from. Appeals or applications connected with the Union Supreme Court are governed by the applicable appeal route and the relevant limitation category. Judgments of the Union Supreme Court are final and conclusive, subject to special appeal mechanisms provided by the Union Judiciary Law.

Before starting enforcement in Myanmar based on a decision rendered outside Myanmar, the creditor must determine whether the decision is a foreign money judgment. Under Section 44A of the Code of Civil Procedure, a certified copy of a decree from a superior court of a reciprocating territory may be filed in a District Court and executed in Myanmar as if it had been passed by that District Court. The creditor must also file a certificate showing the extent to which the decree has been satisfied or adjusted.

A foreign judgment is not conclusive in Myanmar if it falls within the exceptions under Section 13 of the Code of Civil Procedure, including lack of jurisdiction, absence of a decision on the merits, breach of natural justice, fraud, an incorrect approach to international law or a claim founded on a breach of Myanmar law. The Limitation Act provides a 6-year period for an application based on a foreign judgment.

At present, Myanmar has no reciprocating territory for the purposes of Section 44A. As a result, recognition and enforcement of foreign court decisions in Myanmar usually requires the creditor to rely on the foreign judgment as the basis for obtaining a Myanmar court decree before enforcement can proceed against assets in Myanmar.

After a Myanmar court judgment or decree comes into legal force, the creditor should initiate the enforcement procedure in Myanmar. A domestic decree may be presented for execution within 12 years from the date when it becomes enforceable.

As part of enforcement proceedings, the creditor’s claims may be satisfied through attachment and sale of the debtor’s movable and immovable property, recovery from funds held by the debtor, attachment of securities, attachment of company shares and other legally available execution measures. The decree-holder usually institutes an execution case before the court that issued the judgment or decree. That court may enforce the decree itself or transfer it to another competent court where the debtor resides, carries on business, works for gain or where the debtor’s property is located.

If the debtor shows signs of insolvency, liquidation may become a separate recovery route in addition to ordinary court proceedings and enforcement. For a Myanmar company, the court may presume insolvency if the company is indebted to the creditor in an amount exceeding the statutory minimum prescribed by the Insolvency Rules and the creditor has served a written demand in the prescribed form at the company’s registered office.

The creditor’s statutory demand is made in Form-9. The demand requires the company, within 21 days after service, to pay the debt, secure the debt or compound for the amount of the debt to the creditor’s reasonable satisfaction. Under the current Form-9 notes, the amount demanded, or the total of several debts demanded, must exceed the statutory minimum of 500,000 kyats. If the company does not comply with the demand within the statutory period, the creditor may rely on that failure as grounds for a winding-up application.

A company may also be presumed insolvent if an execution or other process issued on a judgment, decree or order in favour of the creditor is returned unsatisfied in whole or in part. This route is especially relevant where the creditor has already obtained a judgment but enforcement has not produced payment.

If, during the liquidation of a company, it appears that the company’s business was carried on with intent to defraud creditors or for another fraudulent purpose, the court may apply the rules on fraudulent trading. Persons who knowingly participated in such conduct may be ordered to contribute to the company’s property in an amount the court considers appropriate.

The Insolvency Law also provides consequences for fraud and misconduct before or during winding up. These may include fraudulent removal or concealment of company property, concealment of debts due to or from the company, destruction or falsification of books and records, failure to disclose comprehensive details of the company’s property to the liquidator, failure to deliver property or records to the liquidator, and false representations made to creditors in connection with the company’s affairs or winding up. Depending on the offence, the court may impose imprisonment and pecuniary penalties on responsible officers.

In liquidation, rehabilitation and bankruptcy, the office-holder may also apply for orders concerning prior transactions. These include transactions at an undervalue, transactions intended to defeat, hinder or delay creditors, transactions giving an unsecured creditor more than it would receive if the transaction were set aside, and extortionate credit transactions. The court may restore the position of the insolvent entity, vest transferred property back in the company or bankruptcy estate, release or discharge security, require repayment of benefits received from the insolvent entity, revive obligations of guarantors or make other orders available under the Insolvency Law.

Where the debtor is an individual, personal insolvency rules may also be relevant if assets were concealed or transferred to avoid payment. In such cases, the recovery strategy may combine evidence of the debt, asset tracing, challenge of prior transactions and insolvency remedies aimed at increasing the estate available for creditor claims.

Grandliga provides support with international debt collection in Myanmar at every practical stage of the case: assessment of the debtor and documents, pre-court communication, settlement strategy, selection of the court route, preparation for litigation, recognition of foreign judgments, enforcement planning, insolvency analysis and work with fraud-related risks where the debtor’s conduct affects the creditor’s recovery prospects. Each case is assessed by the documents, the debtor’s status, the available assets, the payment route and the realistic legal remedies available in Myanmar.

15.10.2024

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