Arbitration Law in Bangladesh
Arbitration Law in Bangladesh
Bangladesh has made significant strides in improving its legal framework for arbitration. The country has established a modern arbitration law that aligns closely with international standards, particularly the UNCITRAL Model Law on International Commercial Arbitration (1985). Arbitration in Bangladesh has gained prominence as an alternative dispute resolution mechanism, especially in commercial, construction, and international trade disputes.
1. Legal Framework
- Arbitration Act, 2001
- The primary law governing arbitration in Bangladesh is the Arbitration Act, 2001. This Act is largely based on the UNCITRAL Model Law, and it covers both domestic and international arbitration.
- The Arbitration Act of 2001 applies to arbitrations where the place of arbitration is Bangladesh. For international arbitrations, the provisions of the Act apply unless the parties agree to a different procedure.
- UNCITRAL Model Law
- Bangladesh’s Arbitration Act (2001) is aligned with the UNCITRAL Model Law, providing a flexible and modern framework for arbitration. This alignment ensures that Bangladesh’s arbitration laws are compatible with international practices, thus making it an attractive destination for arbitration in South Asia.
- The New York Convention (1958)
- Bangladesh is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which ensures that arbitral awards made in other countries that are also signatories can be recognized and enforced in Bangladesh, subject to limited grounds for refusal.
2. Key Features of Arbitration in Bangladesh
Arbitration Agreement
- An arbitration agreement must be in writing to be valid and enforceable under the Arbitration Act of 2001. This agreement can either be a stand-alone clause or part of a broader contract. A written agreement is essential for initiating arbitration proceedings in Bangladesh.
- The arbitration agreement can specify the rules, procedures, number of arbitrators, and the seat (location) of the arbitration.
Party Autonomy
- As with many jurisdictions that adopt the UNCITRAL Model Law, Bangladesh provides significant party autonomy in arbitration. The parties are free to decide the procedural aspects of the arbitration, including:
- The number of arbitrators (usually one or three).
- The rules of procedure (such as UNCITRAL, ICC, or other institutional rules).
- The location (seat) of arbitration.
- The choice of law (substantive and procedural).
Arbitral Tribunal
- The Arbitration Act, 2001 provides for the appointment of one or more arbitrators. In the absence of agreement between the parties, the courts may intervene to appoint the arbitrators. The arbitrators must be independent and impartial, and they must disclose any potential conflicts of interest.
Judicial Intervention
- Bangladesh's courts are generally supportive of arbitration and only intervene in limited circumstances. Courts may:
- Compel arbitration if a party refuses to comply with an arbitration agreement.
- Assist in appointing arbitrators if the parties fail to agree.
- Enforce arbitral awards or set aside an award on limited grounds.
Confidentiality
- While the Arbitration Act, 2001 does not explicitly mandate confidentiality, arbitration proceedings are generally treated as confidential. This means that the details of the dispute, the proceedings, and the arbitral award are typically kept private unless the parties agree otherwise or if the award is enforced in court.
3. Enforcement of Arbitral Awards
- Domestic Awards
- Domestic arbitral awards are enforceable in Bangladesh in accordance with the provisions of the Arbitration Act, 2001. The court has the power to enforce awards unless the award is challenged or found to be in violation of public policy.
- Foreign Awards
- As a signatory to the New York Convention, Bangladesh provides a legal framework for the recognition and enforcement of foreign arbitral awards. A foreign award made in a New York Convention signatory country can be enforced in Bangladesh, subject to limited grounds for refusal such as:
- The award is in conflict with Bangladeshi public policy.
- The party seeking enforcement was not given proper notice or the opportunity to present their case.
- The arbitration was conducted in a manner that did not comply with the parties' agreement or the relevant procedures.
- The process of enforcing foreign awards is generally efficient, as long as the grounds for refusal are not applicable.
- As a signatory to the New York Convention, Bangladesh provides a legal framework for the recognition and enforcement of foreign arbitral awards. A foreign award made in a New York Convention signatory country can be enforced in Bangladesh, subject to limited grounds for refusal such as:
4. Arbitration Institutions in Bangladesh
The Bangladesh International Arbitration Centre (BIAC)
- The Bangladesh International Arbitration Centre (BIAC) is a key institution for managing both domestic and international arbitration proceedings in Bangladesh. Established in 2011, BIAC offers a modern and professional environment for dispute resolution, supporting arbitration, mediation, and other forms of alternative dispute resolution.
- BIAC provides its own set of arbitration rules, which are aligned with international standards, and it offers services for resolving disputes in sectors such as construction, banking, finance, energy, and international trade.
International Arbitration Institutions
- In addition to BIAC, parties can also opt for well-established international arbitration institutions such as the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), or UNCITRAL rules. These institutions provide global arbitration services and are often used in complex international disputes involving parties from Bangladesh.
Ad Hoc Arbitration
- As in other jurisdictions that adopt the UNCITRAL Model Law, ad hoc arbitration is allowed in Bangladesh. Parties can agree on the procedures for ad hoc arbitration and may opt for UNCITRAL Arbitration Rules or other procedural frameworks. Ad hoc arbitration may be beneficial in cases where the parties prefer flexibility over institutional support.
5. Challenges and Considerations
Limited Grounds for Appeal
- In line with the pro-arbitration stance, the grounds for challenging or appealing an arbitral award in Bangladesh are limited. A party may challenge an award only on very narrow grounds such as:
- Procedural irregularities.
- Violation of public policy.
- Lack of jurisdiction or authority of the arbitrators.
- Courts are reluctant to intervene in the merits of the arbitration and will generally uphold the finality of the arbitral award.
Pro-Arbitration Legal Environment
- Bangladesh is generally seen as an arbitration-friendly jurisdiction. Courts are supportive of arbitration agreements and are quick to enforce them. The judiciary also respects the finality of arbitral awards, with limited intervention in the process.
Time and Cost
- Arbitration in Bangladesh is often considered a faster and more cost-effective alternative to litigation. The presence of institutions like BIAC further enhances the efficiency of arbitration proceedings. However, the overall cost and duration of arbitration depend on the complexity of the case, the arbitrators' fees, and the institutional rules used.
6. Arbitration in Bangladesh for International Disputes
Strategic Location for South Asian Disputes
- Bangladesh's location in South Asia makes it an ideal forum for resolving disputes involving parties from neighboring countries such as India, China, and Southeast Asia. The country's modern legal framework and commitment to international conventions such as the New York Convention make it an attractive arbitration hub in the region.
Sectors of Dispute
- Arbitration in Bangladesh is commonly used to resolve disputes in sectors like construction, energy, banking, finance, and international trade. Given the country's growing role in international trade and commerce, arbitration plays an increasingly important role in resolving cross-border disputes.
Conclusion
Bangladesh's Arbitration Act of 2001, which is based on the UNCITRAL Model Law, provides a comprehensive framework for arbitration that aligns with international practices. The Bangladesh International Arbitration Centre (BIAC) offers an efficient institutional platform for resolving disputes, while the country's commitment to the New York Convention ensures that foreign arbitral awards are recognized and enforced. Bangladesh’s legal system is generally supportive of arbitration, making it a favorable jurisdiction for both domestic and international arbitration.
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