International Arbitration 2024 Comparisons

International arbitration is used as a method of resolving disputes in Bangladesh. Domestic parties can resort to the use of international arbitration instead of litigation in local courts. International arbitration can be chosen by domestic parties in contracts as the method of dispute resolution. Local and international parties can have recourse to local courts in support of domestic as well as international arbitrations. This recourse may be made during the pendency of the arbitration to obtain interim protective measures and following the conclusion of the arbitration for the enforcement of the arbitration award including a foreign award.

The Arbitration Act, 2001 (the “Act”) governs arbitration in Bangladesh. It replaced the earlier Arbitration Act, 1940. “Arbitration” is defined in Section 2(m) of the Act as “any arbitration whether or not administered by a permanent arbitration institution.” The Act deals with both domestic and international arbitration. The term “domestic arbitration” is not defined in the Act.

“International commercial arbitration” is defined in Section 2(c) of the Act as “an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in Bangladesh and where at least one of the parties is: (a) an individual who is a national of, or habitually resident in, any country other than Bangladesh; (b) a body corporate which is incorporated in any country other than Bangladesh; (c) a company or an association or a body of individuals whose central management and control is exercised in any country other than Bangladesh; or (d) the government of a foreign country.”

A “foreign arbitral award” is defined in Section 2(k) as “an award, in pursuance of an arbitration agreement, made in the territory of any state other than Bangladesh, but does not include an award made in the territory of a Specified State.” The Act does not define the expression “foreign arbitration”. The High Court Division (the “HCD”) of the Supreme Court of Bangladesh in Southern Solar Power v Bangladesh Power Development Board 2019 (2) 16 ALR (HCD) held that an international commercial arbitration, the seat of which is outside Bangladesh, is a foreign arbitration.

According to Section 3 of the Act the provisions of the Act (except Sections 45 to 47) are not applicable to an arbitration if the place of that arbitration is outside Bangladesh. Sections 45 to 47 of the Act provide for recognition and enforcement of “foreign arbitral awards”.

In Accom Travels and Tours Limited v Oman Air S.A.O.C. 27 BLC (2022) 596 (the “Accom Travels” case) the HCD held that the provisions of the Act, except Sections 45, 46 and 47, are not applicable in respect of foreign arbitrations. Section 7Ka cannot therefore be invoked for obtaining interim measures before or during the continuance of foreign arbitration proceedings. However, this section can be invoked at the stage of enforcement in Bangladesh of a foreign arbitration award. The HCD further held that Section 10 on suspension of court proceedings initiated in violation of an arbitration clause is not applicable regarding foreign arbitration clauses. However, the court should nonetheless suspend local court proceedings under the court’s inherent power provided in Section 151 of the Code of Civil Procedure 1908 (the “CPC”).

The construction, energy and infrastructure industries have experienced notable arbitration activity in recent years. The reasons for recourse to arbitration include delays in completing projects, contractor claims for extensions of time, contractor claims relating to price escalations, non-compliance with design, imposition of tax and VAT expenses on contractors, unforeseen ground conditions, occurrences of force majeure events including delays caused by COVID-19, non-acceptance of projects by the employer on different grounds, issues between joint venture partners and disputes regarding gas and electricity prices.

Parties are free to choose any arbitral institution for international arbitration with a seat in Bangladesh or outside Bangladesh.

The Bangladesh International Arbitration Centre (BIAC) established in 2011 is one of the local international arbitration institutions. There are other local arbitration institutions established by various chambers of commerce.

The International Chamber of Commerce (ICC), International Centre for Settlement of Investment Disputes (ICSID) and the Singapore International Arbitration Centre (SIAC) are commonly chosen by Bangladeshi parties. For ad hoc arbitrations it is common to agree to UNCITRAL Rules.

Under the Act, the HCD has jurisdiction to deal with disputes concerning international commercial arbitration and the District Judge’s Court (the “District Court”) has jurisdiction to deal with disputes regarding other arbitrations.

The District Court or the HCD, as appropriate, can:

• pass interim orders for preservation of the subject matter of the dispute in arbitration, among others (Section 7Ka);
• refer the dispute to the arbitration tribunal and stay the court proceedings (Section 10);
• appoint an arbitrator where a party, or in appropriate circumstances the appointed arbitrators, fail to appoint an arbitrator (Section 12):
• decide an appeal submitted by a party aggrieved by the decision of the arbitral tribunal on the challenge of an arbitrator (Section 14(4), (5));
• decide on termination of mandate of an arbitrator where the arbitrator becomes unable to perform his functions or fails to act without undue delay (Section 15(2));
• decide the jurisdiction of the arbitral tribunal on the application of any of the parties to an arbitration agreement (Section 20);
• enforce an interim order of an arbitration tribunal requiring a party to take any interim protective measures in respect of the subject matter of the dispute (Section 21(4));
• issue summons upon any necessary person on application of the arbitral tribunal or a party to the arbitration proceedings with the approval of the arbitration tribunal (Section 33);
• set aside an arbitration award made in an arbitration held in Bangladesh (Section 42);
• enforce an arbitration award made in an arbitration held in Bangladesh (Section 44);
• enforce an arbitration award made in a foreign arbitration (Section 45);
• hear and decide appeals against an order of a district judge and additional district judge (Section 48):
1. setting aside or refusing to set aside an arbitration award under Section 42;
2. refusing to enforce an arbitration award under Section 44; or
3. refusing to recognise or enforce any foreign arbitral award under Section 45; and
• decide the arbitrators’ remuneration or costs (Section 50).

The Act governs international arbitration in Bangladesh and is substantially based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 (the “Model Law”). However, the Act does not incorporate the 2006 amendments to the Model Law as the Act was passed in 2001 and amendments were made to the Act in 2004. The major deviations from the Model Law are summarised below.

• In defining “international commercial arbitration”, the Act determines the internationality of arbitration in terms of nationality of the parties, whereas the Model Law determines internationality in terms of location of business of the parties or of the subject matter of the dispute. This means that a commercial dispute between two Bangladeshi nationals may not, unlike under the Model Law, fall within the scope of “international commercial arbitration”, even if their places of business are outside Bangladesh.
• Unlike the Model Law, the Act allows the parties to an arbitration agreement to exclude or modify jurisdiction of an arbitration tribunal to determine the validity of an arbitration agreement and competence/jurisdiction of the tribunal in relation to a dispute referred to it.
• In the context of challenge of an arbitrator, the Act deviates from the Model Law in that the Act provides that the concerned arbitral tribunal, in case of such a challenge, has to wait until the challenge is finally disposed of. It is only when a challenge or an appeal against the decision of the arbitral tribunal is unsuccessful, that the arbitral tribunal can continue the arbitral proceedings and make an award. The Model Law allows the concerned arbitral tribunal, including the challenged arbitrator, to continue the arbitral proceedings and to make an award despite the fact that a request on challenge may be pending before a court.
• Under the Model Law, the grounds for setting aside an arbitral award and the grounds for non-recognition of a foreign arbitral award include a ground that the arbitration agreement concerned was not valid under the law to which the parties subjected it. The relevant provisions of the Act on these matters are based on the Model Law (and also the New York Convention). However, in drafting the provisions of the Act, the English language text of the Model Law has been mistranslated into Bangla. As a result, instead of invalidity of the arbitration agreement, invalidity of the governing law of the arbitration agreement (“the law under which the parties entered into arbitration agreement was not a valid law”) has become a ground for setting aside and non-recognition.

According to STX Corporation Ltd. v Meghna Group of Industries Ltd. 64 DLR (2012) 550 and 32 BLD (2012) 400, only those provisions of the UNCITRAL Model Law, which have been enacted in the Act, are binding on Bangladesh courts. Where the Act has deviated from the Model Law, the courts are bound to give effect to such deviation.

The Act was enacted in 2001 and was amended in 2004 to add Section 7Ka conferring powers on the HCD and the District Court to make interim orders in support of an arbitration. There is no pending legislation that may change the arbitration landscape in Bangladesh.

According to Section 2 of the Act, “arbitration agreement” means an agreement by the parties to submit all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, to arbitration.

Section 9(1) of the Act states that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

Section 9(2) of the Act sets out the legal requirements of an enforceable arbitration agreement. An arbitration agreement must be in “writing” and is deemed to be in writing if it is:

• part of a document signed by the parties;
• contained in exchange of letters, telex, telegrams, fax, e-mail or other means of correspondence; or
• contained in an exchange of a statement of claim and a defence in which the existence of the agreement is alleged by one party and not denied by the other.

The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

In K.A. Latif v Olam International Ltd. 13 BLC (2008) (HCD) 457 it was observed that the court has discretion to determine, from the overall circumstances, including documents or evidence, the existence of an arbitration agreement between the parties.

Section 89B of the CPC provides that when parties to a lawsuit apply to the court for withdrawal of the lawsuit on the ground that they will refer the dispute to arbitration, the application is deemed to be an arbitration agreement under Section 9 of the Act.

Section 3(3) of the Act provides that, for the time being, the Act will not affect any other law in force that bars certain disputes from being submitted to arbitration.

Section 43(1)(b)(i) of the Act provides that an arbitral award may be set aside and Section 46(1)(b)(i) of the Act provides that enforcement of a foreign arbitral award may be refused if the court finds that the subject matter of the arbitration award is not capable of settlement by arbitration under the law of Bangladesh. Accordingly, the concept of arbitrability is recognised in the Act. However, the Act does not set out a list of subject matters that are not capable of settlement by arbitration. Usually, in conformity with the practice in various jurisdictions, matters concerning criminal law, competition law, etc, will be regarded as not capable of settlement by arbitration.

Section 40 of the Bangladesh Energy Regulatory Commission Act, 2003 requires any dispute between licensees, or licensees and consumers, to be referred to the Bangladesh Energy Regulatory Commission (BERC), which is a statutory body regulating the energy sector, for settlement under the Bangladesh Energy Regulatory Commission Dispute Settlement Regulations, 2014.

There is no judicial decision in Bangladesh regarding determination of the law governing the arbitration agreement.

If the parties choose a governing law of the arbitration agreement, the courts in Bangladesh will give effect to the choice. In the absence of the parties’ choice of governing law, if the contract in which the arbitration agreement is set out contains a governing law clause for the contract, the courts in Bangladesh would accept the governing law of the contract as the governing law of the arbitration agreement. If there is neither a governing law for the contract nor a governing law for the arbitration agreement, it is likely that the law of the seat of the arbitration will be the governing law of the arbitration agreement.

Arbitration agreements are usually enforced by courts in Bangladesh.

Section 18 of the Act contains provisions regarding severability of an arbitration agreement. Section 18 states that “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 for the purpose of determining the jurisdiction of the arbitral tribunal.”

The Supreme Court of Pakistan in Manzoor Hussain v Wali Mohamad 17 DLR (SC) (1965), 369 (Bangladesh was a part of Pakistan in 1965) discussed the enforceability of an arbitration clause contained in a void contract and observed that if the principal contract was one which was clearly ab initio void or came within mischief under Section 23 of the Contract Act, then the arbitration clause contained in it would be unenforceable and the award would be invalid (para 25).

In Bangladesh Jute Mills Corporation v Maico Jute and Bag Corporation 56 DLR (HCD) (2004) 224, the HCD observed that if the contract itself is void, illegal or fraudulent, then the entire contract along with the arbitration clause would be voidable (para 9).

In Ferdous Alam v PVH Far East Limited 74 DLR (2022) 598, the HCD held that although the arbitration clause is a part of the underlying contract, it has, in a series of decisions, been treated as independent of the other clauses, and the invalidation of the underlying agreement will not invalidate the arbitration clause (paras 17 and 18).

There is no limit on the parties’ autonomy to select arbitrators in Bangladesh. Section 11 of the Act allows parties to determine the number of arbitrators. If the parties fail to determine the number, the default number is three. Unless otherwise agreed by the parties, if parties appoint an even number of arbitrators, the appointed arbitrators are required to appoint an additional arbitrator who acts as a chairman of the tribunal.

Section 12(1) of the Act allows the parties to agree on a procedure for appointing the arbitrator or arbitrators. Parties themselves may agree on the qualifications, nationality and other requirements of the arbitrators.

If the parties’ chosen method for selecting arbitrators fails, there is a default procedure in Section 12(7) of the Act.

Where, under an appointment procedure agreed upon by the parties:

• a party fails to act as required under such procedure;
• the parties, or the arbitrators, fail to reach an agreement under the same procedure; or
• 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, upon an application of a party, the HCD in case of international commercial arbitration, and the relevant District Court in other cases can appoint the arbitrator or the chairman of the tribunal.

Under Section 12(1) of the Act, the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. In the absence of such an agreement:

• in an arbitration tribunal with a sole arbitrator, if the parties fail to agree on the arbitrator within 30 days from receipt of a request made by one party, upon an application of a party, the appointment can be made by the relevant District Court in case of an arbitration other than an international commercial arbitration (Section 12(3)(a)(i)), and by the HCD in case of international commercial arbitration (Section 12(3)(a)(ii)); or
• in an arbitration with three arbitrators, if a party fails to appoint an arbitrator within 30 days of the receipt of a request to do so from the other party or if the party-appointed arbitrators fail to agree on the third arbitrator within 30 days of their appointment, upon an application of a party, the appointment can be made by the HCD in case of international commercial arbitration (Section 12(4)) and by the District Court in other cases.

Section 13 of the Act contains grounds for the challenge of an arbitrator. Under Section 13(3) of the Act, an arbitrator may only be challenged if there are circumstances giving rise to justifiable doubts as to his impartiality or independence, or if he does not possess the qualifications agreed to by the parties. According to Section 13(4) of the Act a party may challenge an arbitrator appointed by him, or in whose appointment he has consented, only for reasons of which the party becomes aware after the appointment has been made.

Section 14 sets out the procedure for challenging an arbitrator. The parties are free to agree on a procedure for challenging an arbitrator (Section 14(1)). Where there is no agreement as to the procedure for challenging an arbitrator, a party who intends to challenge an arbitrator is required to, within 30 days after becoming aware of the circumstances referred to in Section 13(3), send a written statement stating the reasons for the challenge to the arbitral tribunal (Section 14(2)). Section 14(3) provides that unless the arbitrator challenged under Section 14(2) withdraws from his office or the other party agrees or, in case of multiple parties, the other parties agree, to the challenge, the arbitral tribunal will decide on the challenge within 30 days from the date of filing the written statement referred to in Section 14(2).

Any party aggrieved by the decision of the tribunal under the procedure above, may file an appeal to the HCD within 30 days from the date of the decision (Section 14(4)). The HCD is required to decide on the appeal within 90 days from the date on which the appeal is filed (Section 14(5)). If a challenge under any procedure agreed upon by the parties or the procedure set out in Section 14(3) or the appeal preferred under Section 16(4) of the Act is not successful, the arbitral tribunal will continue the arbitral proceedings and make an award (Section 16(6)).

When a person is requested to accept appointment as an arbitrator, he is under an obligation to disclose any circumstances likely to give rise to justifiable doubts as to his independence or impartiality (Section 13(1)). Additionally, every arbitrator is required to, from the time of his appointment and throughout the arbitral proceedings, disclose to the parties and all other arbitrators without delay any circumstances giving rise to doubts about his independence unless they are already aware of such circumstances (Section 13(2)).

Apart from Section 3(3), the Act does not contain any list of subject matters that may not be referred to arbitration. In terms of Section 3(3) of the Act, see 3.2 Arbitrability.

An arbitral tribunal may rule on a party’s challenge to the tribunal’s jurisdiction (ie, the principle of competence-competence is applicable in Bangladesh).

Section 17 of the Act provides that unless parties agree otherwise, the arbitral tribunal may rule on its own jurisdiction on any questions including the following:

• whether a valid arbitration agreement exists;
• whether the arbitral tribunal is properly constituted;
• whether the arbitration agreement is against public policy;
• whether the arbitration agreement is incapable of being performed; and
• what matters have been submitted to arbitration in accordance with the arbitration agreement.

Any objection regarding the tribunal’s jurisdiction has to be raised before or at the time of the submission of the statement of defence (Section 19(1)). The tribunal may admit a later plea if it considers the delay justified (Section 19(2)). Where the arbitral tribunal takes a decision rejecting the plea, it can continue with the arbitral proceedings and make an arbitral award (Section 19(3)).

Section 20 of the Act empowers the HCD to determine the jurisdiction of an arbitral tribunal. The HCD’s jurisdiction to entertain an objection to the jurisdiction of the tribunal is separate to the tribunal’s own jurisdiction to entertain the objection.

The HCD 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 (Section 20(1)).

The HCD must not consider such an application unless it is satisfied that:

• the determination of the question is likely to produce substantial savings in costs;
• the application was submitted without any delay; and
• there is good reason why the matter should be decided by the HCD (Section 20(2)).

The application must state the reasons why the matter should be decided by the HCD (Section 20(3)). Unless the parties agreed otherwise, where an application under this provision is pending before the HCD, the arbitral tribunal can continue with the arbitration proceedings and make an arbitral award (Section 20(4)).

In Bangladesh Power Development Board (BPDB) v Summit Industrial and Mercantile Corporation (Pvt) 19 BLC (2014) 284, the HCD found that the parties to the arbitration agreement excluded in writing the scope of approaching the HCD for determining the jurisdiction of the arbitral tribunal. The HCD accordingly refrained from deciding jurisdiction of the arbitral tribunal.

Section 20 of the Act does not set out a specific timeframe within which a party must go to the HCD to challenge the jurisdiction of the arbitral tribunal. However, the application must be submitted without any delay. A party can usually go to court to challenge the jurisdiction of the arbitral tribunal at any time before submitting the statement of defence.

The Act does not contain any express provision on the standard of judicial review (eg, deferential or de novo) for questions of admissibility and jurisdiction.

Courts in Bangladesh stay any proceedings commenced in breach of an arbitration agreement.

Section 7 of the Act provides that where a party to an arbitration agreement files any legal proceedings in a court against the other party in respect of any matter agreed to be submitted to arbitration, the court will not have jurisdiction in respect of such legal proceedings except insofar as provided by the Act.

Section 10 of the Act allows a party to an arbitration agreement to make an application to the court at any time before filing a written statement (ie, statement of defence) to stay the court proceedings commenced in breach of an arbitration agreement and to refer the parties to arbitration.

Upon receiving an application, the court, if satisfied that an arbitration agreement exists, refers the parties to arbitration and stays the proceedings, unless the court finds that the arbitration agreement is void, inoperative or concerns a matter incapable of determination by arbitration (Section 10(2)).

In Maico Jute and Bag Corporation v Bangladesh Jute Mills Corporation 8 MLR (2003) (AD) 4, it was observed that if an arbitration clause is contained in a contract, the court under Section 10 of the Act does nothing wrong if it stays, either on its own motion or on an application by a party, further lawsuit proceedings and refers the matter to the arbitrator for settlement.

Sections 7 and 10 of the Act should be read together to construe the duty conferred upon the courts to refer matters to arbitration.

According to the Accom Travels case, an application under Section 10 can be made by a party to an arbitration clause for arbitration in Bangladesh. In case of foreign arbitration, where a party initiates local court proceedings in Bangladesh, the other party, who cannot file an application under Section 10, may file an application under Section 151 of the CPC seeking a stay of the local court proceedings and a direction for referring the matter to foreign arbitration.

The Act does not contain any provision on circumstances in which an arbitral tribunal may assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement.

Section 21 of the Act empowers an arbitral tribunal to award preliminary or interim relief. Section 21 states that, unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute, and no appeal would lie against such order.

An interim order passed by an arbitral tribunal is binding and may be enforced by the court on an application by the party requesting the taking of such interim measures (Section 21(4)). An application filed under Section 21(4) cannot be deemed to be incompatible with the arbitration agreement nor a waiver of the agreement (Section 21(5)).

Section 7Ka of the Act empowers the court to pass appropriate interim orders before and after arbitration proceedings or until enforcement of the award. Section 7Ka provides that, unless the parties agree otherwise, upon application of a party to an arbitration agreement, before or during the continuance of arbitration proceedings, or until enforcement of an award, the HCD in the case of international commercial arbitration and the District Court in case of other arbitrations may pass orders in the following matters:

• appointment of guardian for a minor or a person of unsound mind to conduct arbitral proceedings on his/her behalf;
• interim custody of or sale of or other protective measures in respect of goods or property included as the subject matter of an arbitration agreement;
• injunction against transfer or relocation of property with a view to obstructing enforcement of an arbitral award;
• empowering any person to seize, preserve, inspect, take video of, take photograph of, take custody of, collect information and specimen of, observe, examine, take evidence of, any goods or property included as the subject matter of an arbitration agreement, and for that purpose, to enter into the land or building of which a party is in possession;
• ad interim injunction;
• appointment of receiver; and
• any other interim protective measures, which appear reasonable or appropriate to the court.

The court can also cancel, alter or amend an order passed under Section 7Ka.

The HCD observed in Drilltec-Maxwell Joint Venture v Gas Transmission Company Limited 21 BLC (2016) 122 that when a party applies under Section 7Ka of the Act for interim measures, the court will first have to be satisfied that a valid arbitration agreement exists and the applicant intends to take the dispute to arbitration. Once it is so satisfied, the court will have the jurisdiction to pass orders under Section 7Ka.

According to the Accom Travels case, courts in Bangladesh cannot grant interim relief under Section 7Ka before or during continuance of foreign arbitration proceedings. However, at the stage of enforcement of foreign awards interim relief may be granted.

The Act does not contain any provisions on the use of emergency arbitrators.

The District Court or the HCD while passing an interim order may pass an order requiring the applicant to give security for cost of the opposite party (Section 7Ka(2) read with Order 25 of the CPC).

Under Section 21(2) of the Act the arbitral tribunal also has the power to require a party to provide appropriate security in connection with an interim measure ordered under Section 21(1) of the Act.

Parties are free to agree on any rules to govern the procedure of arbitration (Section 25(1)). Some of the rules the parties usually agree on are the ICC Rules of Arbitration, UNCITRAL Arbitration Rules and SIAC Rules. In the absence of any agreement as to the procedure, the arbitral tribunal is required to decide procedural and evidential matters in conducting its proceedings (Section 25(2)).

Section 27 states that unless otherwise agreed by the parties, the arbitration proceedings will be deemed to have commenced if:

• any dispute arises where an arbitration agreement is applicable; and
• any party to the agreement:
1. has received from another party to the agreement a notice requiring that party to refer, or to concur in the reference of, the dispute to arbitration; or
2. has received from another party to the agreement a notice requiring that party to appoint an arbitral tribunal or to join or concur in, or approve the appointment of, an arbitral tribunal in relation to the dispute.

Under the Act, the arbitral tribunal has, among others, the following powers and duties:

• make interim orders (Section 21(1));
• order a party to provide appropriate security in connection with an interim order (Section 21(2));
• appoint experts or legal advisers to report to it on specific issues (Section 32(1));
• appoint assessors to assist the tribunal on technical matters (Section 32(1));
• require a party to give the expert, legal adviser or the assessor, as the case may be, any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his/her inspection (Section 32(1));
• terminate the proceeding where the claimant fails to communicate his statement of claim (Section 35(2));
• continue the proceeding ex parte where the respondent fails to communicate his statement of defence (Section 35(2));
• make an award dismissing the claim of the claimant, where the arbitral tribunal is satisfied that there has been inordinate and inexcusable delay on the part of the claimant in pursuing his claim and that the delay gives rise to or is likely to give rise to a real risk of there being no fair resolution of the dispute, or has caused, or is likely to cause, serious prejudice to the respondent (Section 35(3));
• if, after receiving notice in this regard a party without sufficient cause fails to attend or be represented at an oral hearing, or fails to submit written evidence or make written submissions, the tribunal may continue the proceedings in the absence of that party or, as the case may be, without any written evidence or submissions on his behalf, and may make an award on the basis of the evidence before it (Section 35(4));
• if without showing sufficient cause a party fails to comply with any order or direction issued by the tribunal, the tribunal may make an order requiring compliance with such order or direction within such time as it may deem fit (Section 35(5));
• if a claimant fails to comply with an order of the tribunal requiring a deposit or security for costs, the tribunal may make an award dismissing the claim (Section 35(6)); or
• if a party fails to comply with any other kind of order, then the arbitral tribunal may:
1. direct that the party in default shall not be entitled to rely upon any allegation or material which was the subject matter of the order;
2. draw such adverse inferences against the defaulting party from the act of non-compliance as the circumstances justify;
3. proceed to passing an award on the basis of such materials as have been properly provided to it; or
4. make such order, as it thinks fit, as to the payment of costs incurred in consequence of the non-compliance (Section 35(7)).

Under Section 31 of the Act, unless otherwise agreed by the parties, a party to an arbitration may be represented in the proceedings by a lawyer or other person chosen by him. There are no requirements under the law for the representative to be a lawyer. If a lawyer represents a party in an arbitration, there is also no requirement for the lawyer to be admitted to the local Bar. This applies to both international commercial arbitration and domestic arbitration.

Section 34 of the Act provides that, unless otherwise agreed by the parties:

• evidence may be given before the arbitral tribunal orally or in writing or by affidavit; or
• the arbitral tribunal may administer oath or affirmation to a witness, subject to his consent.

There is no other specific provision in the Act regarding discovery, disclosure, privilege, use of witness statements and cross-examination. These issues can be covered by agreement between the parties or terms of reference or by procedural orders issued by the tribunal.

Section 24 of the Act states that the arbitral tribunal is not bound to follow the Evidence Act 1872 of Bangladesh in disposing of a dispute under the Act.

Parties may agree on the rules of evidence to be applied in the arbitral proceeding. In the absence of parties’ agreement, the tribunal may make an appropriate order upon consultation with the parties.

Section 33 of the Act permits either the tribunal or a party, if permitted by the tribunal, to apply to the court for issuing summons upon any necessary person for examination, or for the production of goods or for appearing before the tribunal for both purposes. However, this person cannot be compelled to answer any question or produce any document, which cannot be compelled in trial before the court. Wilful default to comply with such summons or refusal to perform constitutes contempt of the tribunal and is punishable by the court upon a complaint from the tribunal as if the offence is committed in relation to proceedings before a court.

The Act is silent on the confidentiality of the arbitral proceedings and the award. The parties are free to agree on the confidentiality. Arbitration proceedings and award can also be confidential pursuant to the arbitration rules chosen by the parties. Terms of reference or procedural orders may contain provisions on the confidentiality of the proceedings including pleadings, documents and the award.

In terms of the form and contents of the arbitral award, Section 38(1) of the Act provides that an arbitral award is required to be made in writing and must be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator under Section 38(2), the signatures of a majority of all the members of the arbitral tribunal will be sufficient and the reason for any omitted signature will have to be stated in the award. No reasons would have to be provided by the arbitral tribunal where the parties have agreed to that effect, or the award is an arbitral award on agreed terms under Section 22 (Section 38(3)). The arbitral award must state the date and place of arbitration and the award will be deemed to have been made at that place (Section 38(4)).

After the arbitral award is made, a copy signed by the arbitrator or arbitrators has to be delivered to each party (Section 38(5)).

Section 40 of the Act allows any clerical, computational, typographical or similar errors to be corrected on application of either party or on the tribunal’s own initiative.

There are no time limits specified in the Act for making an arbitral award.

The Act does not contain any limits on the types of remedies that an arbitral tribunal may award.

Parties are entitled to recover interest and legal costs. Section 38(6)(a) of the Act provides that unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money, the arbitral tribunal may include interest in respect of the sum for which the award is made. The interest may be awarded at such rate as the tribunal deems reasonable, either on the whole or on any part of the sum, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

Section 38(6)(b) of the Act provides that unless the award otherwise directs, the interest rate applicable to an arbitration award will be 2% above the interest rate determined by the Central Bank of Bangladesh from time to time.

Under Section 38(7) of the Act, unless the parties agree otherwise, the arbitration tribunal is required to fix the costs of arbitration. With regard to costs, the arbitral tribunal is required to specify the following in an arbitration award:

• the party entitled to costs;
• the party who will pay the costs;
• the amount of costs or method of determining that amount; and
• the manner in which the costs will be paid.

“Arbitration costs” include reasonable costs relating to the fees and expenses of the arbitrators and witnesses, legal fees and expenses, any administration fees of the institution supervising the arbitration and any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

Under Section 39 of the Act, an arbitral award is final and binding. Therefore, there is no right of appeal against an arbitral award. A party wishing to challenge an arbitral award may submit an application for setting aside the award under Section 42 of the Act.

Section 43(1) of the Act lays down the following grounds for setting aside an arbitral award:

• a party to the arbitration agreement was under some incapacity;
• the law under which the parties entered into the arbitration agreement is not a valid law;
• the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable due to some reasonable cause to present his case;
• the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains a decision on matters beyond the scope of the submission to arbitrators, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside;
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or, in the absence of such agreement, was not in accordance with the provisions of the Act;
• the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force in Bangladesh;
• the arbitral award is prima facie opposed to the law for the time being in force in Bangladesh;
• the arbitral award is opposed to the public policy of Bangladesh; or
• the arbitral award is induced or influenced by fraud or corruption.

The Appellate Division of the Supreme Court of Bangladesh in Saudi Arabian Airlines Corporation v Saudi Bangladesh Services Company Ltd. 73 DLR (AD) (2021) 277 interpreted the term “public policy” in Section 43(1)(b)(iii) of the Act as follows:

“The words “public policy” used in Section 43(b)(iii) connote some matters, which concern public good and the public interest. “Public policy” is to be understood in the context of each and every case. The term “public policy” is not defined in the Arbitration Act and it is difficult to derive a straightjacket formula to define and determine the scope of public policy. […] An award would be contrary to public policy if it were “patent illegal”. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. [An] award could be set aside if it is so unfair and unreasonable that it shocks the conscience of the [c]ourt. Such award is opposed to public policy and is required to be adjudged void.”

Under Section 42 of the Act, an application for setting aside an award may be made to the court by a party within 60 days from the receipt of the award. The District Court may set aside the arbitral award in an arbitration other than an international commercial arbitration. The HCD may set aside an arbitral award made in an international commercial arbitration held in Bangladesh.

The Act does not contain any provision allowing parties to agree to exclude or expand the scope of challenge against an award.

Under the Act arbitral awards cannot be reviewed on the merits. The award can only be set aside on the grounds set out in Section 43 of the Act.

In Bangladesh Power Development Board v M/s Arab Contractors (BD) Limited 15 MLR (2010) (HCD) 185 it was held that the award can only be set aside on the grounds set out in Section 43 of the Act.

In Bangladesh Railway v Pamkaya (M) SDN BHD 2 CLR (2014) (HCD) 114, and Jalalabad Gas Transmission and Distribution System Limited v Lafarge Surma Cement Limited 23 BLC (2018) (HCD) 775, the HCD refused to set aside arbitral awards on grounds arising out of the substance of the awards. However, in Gas Transmission Company Limited v Drilltec-Maxwell Joint Venture LEX/BDHC/0039/2021, the HCD departed from the above decisions, re-examined the substance of an arbitration award and eventually set it aside in view of the findings made by the HCD. An appeal against the judgment in this case is currently pending.

Bangladesh is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Bangladesh acceded to the New York Convention on 6 May 1992. The Act has incorporated the principle of recognition and enforcement of foreign arbitral awards, as contained in the New York Convention. The Act does not make a distinction in relation to the recognition and enforcement of a foreign arbitral award between a New York Convention state and a non-New York Convention state.

Sections 45 to 47 of the Act provide for recognition and enforcement of foreign arbitration awards.

Enforcement of Arbitration Award Made in Arbitration Held in Bangladesh

An arbitration award made in an arbitration held in Bangladesh is enforceable under Section 44 of the Act in the same manner as if it were a decree of the court. Section 44 states that where the time for making an application to set aside an arbitration award under Section 42 of the Act has expired, or such application having been made has been refused, the award will be enforced by the court under the CPC in the same manner as if it were a decree of that court. The expression “court” refers to the District Court within the local limits of whose jurisdiction the arbitration award has been finally made and signed.

Enforcement of Foreign Arbitral Award

A foreign arbitral award is enforceable under Section 45 of the Act. Section 45(1)(a) of the Act states that a foreign arbitral award is binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in Bangladesh.

Section 45(1)(b) of the Act states that a foreign arbitral award must, on an application made by any party to it, be enforced by execution by the District Court, Dhaka under the CPC, in the same manner as if it were a decree of a court in Bangladesh.

Section 45(2) of the Act provides that application for the execution has to be accompanied by the original arbitration award or an authenticated copy of the award, original or authenticated copy of the agreement for arbitration and any other evidence proving that the award is a foreign award.

According to Section 45(3) of the Act if the foreign arbitral award to be enforced or the arbitration agreement to be produced is in a language other than English or Bangla, the applicant is required to produce a translation in English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in Bangladesh.

Section 46(1) of the Act lays down the grounds for refusing recognition or execution of foreign arbitral awards. The grounds are identical to those set out in Section 43(1) for setting aside a domestic arbitral award.

Under Section 46(1)(a)(vi), an award that has been set aside by a court in the seat of the arbitration will not be recognised and enforced in Bangladesh.

When an award is subject to ongoing set aside proceedings at the seat, the courts in Bangladesh may stay enforcement proceedings pending a resolution of the proceedings at the seat.

The Act does not contain any provision allowing the state of Bangladesh or a state entity to raise a defence of sovereign immunity at the enforcement stage.

Courts may refuse enforcement of arbitration awards including foreign awards on the limited grounds set out in Sections 44 and 46 of the Act.

Section 46(1)(b)(ii) of the Act states that recognition or enforcement of an arbitral award may be refused on the ground that recognition and execution of the award would be in conflict with the “public policy of Bangladesh”. On Bangladesh courts’ approach towards public policy, see 11.1 Grounds for Appeal.

The Act does not contain any provisions on class action arbitration or group arbitration.

If the counsel or arbitrators are qualified lawyers in Bangladesh, the Bangladesh Bar Council Canons of Professional Conduct and Etiquette will be applicable.

There are no rules or restrictions on third-party funders.

In relation to consolidation of proceedings and concurrent hearings, Section 28 of the Act provides that parties to an arbitration agreement will be free to agree to the consolidation of arbitration proceedings with any other arbitral proceeding, as well as hold concurrent hearings on agreed terms. The arbitral tribunal does not have the power to consolidate the proceedings or hold concurrent hearings unless the parties agree to confer such power on the tribunal.

The Act does not contain any provisions on binding third parties. Third parties cannot be bound by an arbitration agreement or award. Courts are also unlikely to hold third parties to an arbitration agreement or award.