Arbitration has increasingly become the more suitable method of dispute resolution in Bangladesh for corporate persons. Arbitration process in Bangladesh is primarily governed by Arbitration Act 2001. The Act is based on UNCITRAL Model Law. As per Section 3(1) of the Arbitration Act 2001, the Act applies whenever the place of arbitration is in Bangladesh. It must be noted, however, that the 2001 Act is not the first Act related to arbitration in Bangladesh. Previously, arbitration in Bangladesh was governed by Arbitration Act 1940.
How does arbitration occur?
Arbitration agreement: The Court would only allow the parties to resolve their dispute by arbitration if it is satisfied that an arbitration agreement exists. An arbitration agreement must be in writing and it may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
When arbitration agreement is void: If the Court finds that the arbitration agreement is void, inoperative or incapable of determination by arbitration, then it will not refer the parties to arbitration. As a reference, an arbitration clause should look something like-“All claims and disputes arising under or relating to this Agreement shall be settled by arbitration”.
Severability of the arbitration agreement/clause: An arbitration agreement which forms part of another agreement shall be deemed to constitute a separate agreement when ruling upon the validity of that arbitration agreement. This means that an arbitration clause in an agreement may be considered as valid even if the rest of the agreement has been deemed invalid or void.
General procedural requirements
Arbitration starts after receiving notice: The arbitral proceedings shall be deemed to have been commenced if a dispute arises which is applicable to arbitration as per the arbitration agreement, and if a party has received an arbitration notice from the other party.
When jurisdiction of the arbitral tribunal questioned: In practice, what often happens is that the parties do not include a clear and unambiguous arbitration clause/agreement. For instance, if parties mention in their agreement that “a dispute ‘may’ be resolved by arbitration” instead of “a dispute ‘shall’ be resolved by arbitration”, then questions could be raised as to the jurisdiction of the arbitral tribunal. This question can be resolved by referring the matter to the High Court Division. The High Court Division may, on the application of any of the parties to the arbitration agreement, after serving notice upon all other parties, determine any question as to the jurisdiction of the arbitral tribunal.
Submission of facts supporting claim: Within the period of time determined by the tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed.
Procedural requirements related to selection and composition of arbitrators
Freedom to choose arbitrators: Parties have a great deal of freedom in the composition of the arbitral tribunal. Section 11(1) of the Arbitration Act 2001 gives them the ability to determine the number of arbitrators. Moreover, the parties are not required to follow a set procedure for appointing the arbitrators. The parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
Appointment of arbitrator by District Judge: If the parties fail to agree on the arbitration within thirty days from receipt of a request by one party from the other party to so agree, the appointment of the arbitrator shall be made upon request of a party by the District Judge. Further, where, under an appointment procedure agreed upon by the parties – (a) a party fails to act as required under such procedure; or (b) the parties, or the arbitrators, fail to reach an agreement under the same procedure; or (c) a person or any third party fails to perform any function assigned to him under that procedure, unless the agreement on the appointment procedure provides other means to take the necessary measure for securing the appointment a party may apply to- (d) the District Judge and the District Judge shall appoint the Chairman of the tribunal along with the other arbitrators.
Challenging the appointment of an arbitrator: There are certain grounds on which an arbitrator may be challenged. An arbitrator may be challenged if circumstances exist that gives rise to justifiable doubts as to his independence or impartiality, or he does not possess the qualifications agreed to by the parties.
Recognition and Enforcement of arbitral award
- Arbitral award final and binding: An arbitral award made by an arbitral tribunal pursuant to an arbitration agreement shall be final and binding on both the parties and on any persons claiming through or under them.
- Appeal against the arbitral award: There are certain recourses that may be taken against the arbitral award. The Court, upon application of a party within sixty days from the receipt of the award, has the authority to set aside an arbitral award. Further, there are various grounds upon which an arbitral award may be set aside. For example, an arbitral award may be set aside if a party to the arbitration agreement was under some incapacity. However, the application for challenging an arbitral award has to be made within sixty days. Once this time period expires, or if such an application has been refused, the award shall be enforced under the Code of Civil Procedure, in the same manner as if it were a decree of the Court. Therefore, the arbitral award has the status of a Court decision, and is binding to the extent a Court decision is.
Recognition and Enforcement of foreign arbitral award
A foreign arbitral award shall, on the application being made to it by any party, be enforced by execution by the Court in the same manner as if it were a decree of the Court. Therefore, a foreign arbitral award is recognized in Bangladesh in the same respect as a national arbitral award.
What documents must be presented: An application for the execution of a foreign arbitral award shall be accompanied by the original or a copy of the arbitral award; the original or a certified copy of the arbitration agreement; and such evidence as may be necessary to prove that the award is a foreign award.
Grounds for refusal of recognition: There are various grounds upon which a foreign arbitral award may be refused by the Court. For example, an arbitral award may not be recognized if the arbitration agreement is not valid under the law to which the parties have subjected it.
Arbitration practice at CLP
The Barristers, Advocates, and lawyers at CLP in Gulshan, Dhaka, Bangladesh are highly experienced at dealing with arbitration. In addition to handling various issues related to arbitration and mediation amongst domestic clients on a regular basis, it also has experience at consulting and assisting numerous international clients with arbitration and mediation. For queries or legal assistance, please reach us at:
Phone: +8801700920980 | +8801947470606
Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka