Your Guide to Arbitration in Bangladesh
Navigate the complexities of domestic and international arbitration, including the enforcement of foreign awards, with our expert legal insights.
The Arbitration Landscape in Bangladesh
This section provides a high-level overview of the legal foundations governing arbitration in Bangladesh, the key institutions, and the most common international venues chosen for disputes. Understanding this legal context is the first step for any party considering arbitration for dispute resolution.
Legal Framework: Arbitration Act 2001
The cornerstone of Bangladesh's arbitration law is the Arbitration Act 2001. It governs both domestic and international commercial arbitration and is based on the UNCITRAL Model Law, ensuring a modern and internationally recognized framework.
- New York Convention Signatory: Guarantees the enforceability of foreign arbitral awards in Bangladesh since 1992.
- Pro-Arbitration Judiciary: The higher courts have demonstrated an increasingly supportive and pro-enforcement approach to arbitration.
- Default Tribunal: Unless parties agree otherwise, the default tribunal size is three arbitrators.
Support for Interim Measures
The legal framework provides robust support for arbitrations. Recent High Court rulings have confirmed that under Section 7A of the Act, courts are competent to grant interim relief (e.g., asset preservation orders) even for foreign-seated arbitrations.
- Enforceable Tribunal Orders: Interim awards and procedural orders from foreign tribunals are directly enforceable in Bangladesh.
- Virtual Hearings Supported: The Act allows for procedural flexibility, and virtual hearings are legally supported, ensuring proceedings can continue efficiently.
Key Arbitral Institution
The Bangladesh International Arbitration Centre (BIAC) is the country's first and primary international arbitration institution. Established in 2011, it provides neutral, efficient dispute resolution services and has its own set of modern arbitration and mediation rules, making it a popular choice for institutional arbitration.
Popular International Arbitration Seats
Enforcement of a Foreign Award: A Step-by-Step Guide
Enforcing a foreign arbitral award in Bangladesh involves a defined legal process. This timeline outlines the key stages from the award to execution. The process requires careful adherence to procedural timelines under the Arbitration Act 2001.
Receive Final Award
The process begins once the arbitral tribunal issues its final, binding award in the foreign jurisdiction.
Wait for Challenge Period to Expire
Under Section 42 of the Act, a party has 60 days from receiving an award to apply to set it aside. Enforcement proceedings can only begin after this period has expired or an application has been refused.
Notarize & Consularize Award
The foreign award must be authenticated by the Bangladesh High Commission or Embassy in the country where the award was made.
File Enforcement Case in Court
An application is made to the Court of the District Judge. Under Section 45, the award is treated as a decree of the court.
Initial Enforcement Phase
This stage typically takes 2 to 3 years as the court examines the application and hears any challenges from the opposing party.
Appeal and Final Resolution
A decision on enforcement can be appealed. With appeals, the entire process can take 5 to 6 years. Many parties also leverage proceedings to negotiate a settlement.
Enforcement Challenges & Best Practices
While Bangladesh is pro-arbitration, enforcement is not automatic. Under Section 46 of the Act, a party can resist enforcement on specific grounds. This section outlines those challenges and provides best practices to maximize success.
Common Grounds for Challenging Enforcement
Public Policy of Bangladesh
The most common ground, arguing that enforcing the award would conflict with the fundamental policy of Bangladesh.
Party Incapacity / Invalid Agreement
Arguments that a party lacked the capacity to agree to arbitration or that the arbitration agreement itself is not valid.
Lack of Proper Notice
Claims that the party against whom the award is invoked was not given proper notice of the arbitrator's appointment or the proceedings.
Exceeding Arbitral Scope
The award deals with a dispute not contemplated by or falling within the terms of the submission to arbitration.
Non-Arbitrable Subject Matter
The subject matter of the dispute is not capable of settlement by arbitration under the laws of Bangladesh.
Appellate Courts' Stance
Despite these challenges, higher appellate courts are generally stern in upholding arbitral awards and are pro-enforcement.
Best Practices for Successful Enforcement
A clear arbitration clause is your first line of defense. Specify the seat, venue, procedural rules (e.g., SIAC, ICC), governing law, and the scope of arbitration. Using standard institutional clauses is highly advisable.
If your dispute involves Bangladeshi law, obtain clear legal opinions from reputable local practitioners during the arbitration. Weak or conflicting opinions can create significant problems at the enforcement stage.
Don't wait. If the opposing party has assets in Bangladesh, use Section 7A of the Arbitration Act to seek interim measures like asset preservation orders from the court while the arbitration is ongoing.
Be mindful of the 60-day period for setting aside an award. Begin preparations for enforcement promptly so you are ready to file as soon as legally permissible. Prompt action can mitigate the impact of other procedural delays.
Future of Arbitration in Bangladesh
The use of arbitration is on a clear upward trajectory in Bangladesh. This section explores the key trends shaping the future, from growing popularity in commercial contracts to strong government support for alternative dispute resolution.
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Shift to Institutional Arbitration: While ad hoc arbitration was common, there is a clear trend towards using institutional rules, particularly from the BIAC, for a more structured process.
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Government Standardization: Arbitration clauses are now standard in government contracts across energy, power, construction, and other key sectors.
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Promotion of Local Arbitration: The government and the BIAC are actively promoting local arbitration for domestic disputes to ease the burden on courts.
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Rise of Mediation: Alongside arbitration, mediation is also gaining traction as a common and effective form of alternative dispute resolution.
Growing Use Across Key Sectors
How LegalSeba LLP Can Help You Succeed
Navigating the arbitration process in Bangladesh requires deep local knowledge and strategic legal expertise. At LegalSeba LLP, we provide comprehensive arbitration services to protect your interests and achieve a successful outcome, from drafting clauses to enforcing awards.
Our Comprehensive Arbitration Services
- Arbitration Clause Drafting: Crafting clear, enforceable arbitration clauses tailored to your specific contracts and needs.
- Representation in Arbitral Proceedings: Acting as your legal counsel in both domestic and international arbitrations.
- Enforcement of Foreign Awards: Expertly handling the entire process of recognizing and enforcing foreign arbitral awards in Bangladeshi courts.
- Challenging Arbitral Awards: Representing clients in setting aside or challenging flawed arbitral awards.
- Interim Relief Applications: Securing urgent court orders, such as asset freezing injunctions, to protect you during proceedings.
- Settlement Negotiation: Providing strategic advice and representation to help you negotiate favorable settlements.
Why Choose LegalSeba LLP?
- Expert Knowledge: Our lawyers have in-depth experience with the Bangladesh Arbitration Act 2001 and a strong track record of success in court.
- Strategic Approach: We understand the common challenges and procedural hurdles, allowing us to build a proactive strategy to safeguard your interests.
- Client-Focused: We provide clear, practical advice and work tirelessly to ensure your commercial objectives are met efficiently and effectively.
- International & Local Experience: We are adept at handling complex cross-border disputes and understand the nuances of both international norms and local court practices.
Get Expert Arbitration Support Today
Contact our team to discuss your case or schedule a consultation.
