Arbitration Process in Bangladesh

Arbitration has become the preferred method of dispute resolution for corporate parties in Bangladesh. Arbitration in Bangladesh is governed primarily by the Arbitration Act of 2001. The legislation is based on the UNCITRAL Model Law. According to Section 3(1) of the Arbitration Act of 2001, the Act applies whenever the arbitration takes place in Bangladesh. However, it must be noted that the 2001 Act is not the first arbitration-related law in Bangladesh. Previously, the Arbitration Act of 1940 governed arbitration in Bangladesh.

How does arbitration take place?

Legal Requirements

Arbitration Agreement: The court will only permit the parties to settle their dispute through arbitration if it is convinced that an arbitration agreement exists. A written arbitration agreement may take the form of an arbitration clause in a contract or a separate agreement.

When arbitration agreement is void: If the court determines that the arbitration clause is invalid, ineffective, or incapable of being resolved through arbitration, it will not refer the parties to arbitration. As a reference, an arbitration clause should read as follows: “All claims and disputes arising out of or relating to this Agreement will be resolved through arbitration.”

Separability of the arbitration agreement/clause: An arbitration agreement that is contained within another agreement shall be considered a separate agreement when determining the arbitration agreement’s validity. This means that an agreement’s arbitration clause may be considered valid even if the rest of the agreement has been ruled invalid or null.

Procedural requirements

General procedural requirements

The arbitral proceedings shall be deemed to have commenced if a dispute arises that is subject to arbitration under the terms of the arbitration agreement and if a party has received an arbitration notice from the opposing party.

When the arbitral tribunal’s authority is contested: In practice, parties frequently fail to include a clear and unambiguous arbitration clause or agreement. For instance, if the parties’ agreement states that “a dispute’may’ be resolved by arbitration” rather than “a dispute’shall’ be resolved by arbitration,” then questions may be raised regarding the arbitral tribunal’s jurisdiction. This issue can be resolved by submitting it to the High Court Division. On the application of any party to the arbitration agreement and after service of notice on all other parties, the High Court Division may determine the arbitral tribunal’s jurisdiction.

Submission of facts supporting claim: Within the time allotted by the tribunal, the claimant shall state the facts supporting his claim, the issues in dispute, and the relief or remedy sought, and the respondent shall state his defense in relation to these particulars, unless the parties have agreed otherwise.

Specifications regarding the selection and composition of arbitrators

Freedom to choose arbitrators: Parties have a great deal of discretion in selecting arbitrators. The Arbitration Act of 2001, Section 11(1), gives them the authority to determine the number of arbitrators. In addition, the parties are not required to follow a particular procedure when selecting arbitrators. The parties are free to agree on a procedure for selecting the arbitrator(s).

Appointment of arbitrator by District Judge: If the parties fail to agree on the arbitration within thirty days of receiving a request from one party to the other to do so, the District Judge shall appoint the arbitrator at the request of a party.

Moreover, if, under an appointment procedure agreed upon by the parties:

• (a) a party fails to act as required under such procedure;
• (b) the parties or 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 measures for securing the appointment, a party may rescind the agreement on the appointment procedure

There are specific grounds for which an arbitrator’s appointment can be contested. An arbitrator may be challenged if there are circumstances that raise reasonable doubts about his independence or impartiality, or if he lacks the qualifications agreed upon by the parties.

Award Recognition and Enforcement

Arbitral award is final and enforceable: An arbitral award rendered by an arbitral tribunal pursuant to an arbitration agreement is final and enforceable for both parties and anyone claiming through or under them.

Contesting the arbitral award:

There are several available options for appealing the arbitral award. On the application of a party within sixty days of receiving the award, the Court has the authority to vacate an arbitral award. In addition, there are numerous grounds for setting aside an arbitral award. For instance, an arbitral award may be vacated if one of the parties to the arbitration agreement was incapacitated.

However, the request to contest an arbitral award must be submitted within sixty days. The award shall be enforced in accordance with the Code of Civil Procedure, in the same manner as if it were a court order, once this time period expires or if such an application has been denied. Therefore, the arbitral award has the status of a court ruling and is enforceable to the same extent.
Recognition and Enforcement of an international arbitral award

Upon application by a party, the Court shall execute a foreign arbitral award in the same manner as if it were a Court decree. A foreign arbitral award is therefore recognized in Bangladesh in the same manner as a domestic award.

Documents required: A request for the execution of a foreign arbitral award must be accompanied by the original or a copy of the award, the original or a certified copy of the arbitration agreement, and any evidence deemed necessary to establish that the award is foreign.

The Court may refuse to recognize a foreign arbitral award for a number of different reasons. For instance, an arbitral award may not be recognized if the parties’ arbitration agreement is invalid under the applicable law.

Do you intend to engage in arbitration or are you seeking alternative dispute resolution options in Bangladesh?
Tahmidur Rahman Remura TLS is a full-service law firm that has been involved in a wide range of international and domestic arbitration matters. We have British barristers with expertise in international commercial arbitration and civil-commercial mediators with accreditation.

If you require assistance or consultation, please visit our office, call us at +8801779127165 or +8801847220062 (WhatsApp), or send us an email at info@trfirm.com.

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