Bangladesh

1.1 Advantages

Dispute resolution through arbitration is a less time-consuming and cost-effective method in comparison to conducting litigation in court.

1.2 Disadvantages and common pitfalls

Arbitration awards have to go through an additional process of execution through the court which can be time consuming due to delaying tactics employed by the other party.

1.3 Distinctive features

One distinctive feature of the Bangladeshi arbitration regime is the interim relief provisions for international commercial arbitration, where parties can go straight to the High Court Division of the Supreme Court of Bangladesh by “jumping the queue” and avoiding the judicial process in the court of first instance (the district court).

2.1 Legal framework

The primary legislation governing arbitration in Bangladesh is the Arbitration Act 2001. There are no special courts/chambers that hear arbitration matters in Bangladesh.

2.2 What qualifies under domestic law as “international arbitration”? Is there a specific statute?

Under section 2(c) of the Arbitration Act 2001, “International Commercial Arbitration” means 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:

• an individual who is a national of or habitually resident in any country other than Bangladesh;
• a body corporate which is incorporated in any country other than Bangladesh;
• a company or an association or a body of individuals whose central management and control is exercised in any country other than Bangladesh; or
• the government of a foreign country.

2.3 Ratification of the New York Convention

Bangladesh is a party by way of accession to the New York Convention. Unlike some other jurisdictions, the Arbitration Act 2001 does not officially capture Bangladesh’s accession to the Convention but some of the statutes features are inspired by it (see Commentaries on the Law of Arbitration in Bangladesh (with bilingual annotations), Junayed Ahmed Chowdhury, University Press Limited, 2024, at paragraph 3.4).

2.4 Ratification of the ICSID Convention

Bangladesh is a party to the International Centre for Settlement of Investment Disputes (ICSID) Convention.

2.5 Other treaties relating to arbitration

Bangladesh is a party to the South Asian Association for Regional Cooperation (SAARC) Arbitration Council.

2.6 Choice of forum for intra-EU dispute settlement

The Arbitration Act 2001 does not contain any provision in this regard.

2.7 Is the municipal law governing arbitration based on UNCITRAL Model Law?

The Arbitration Act 2001 does not adopt the UNCITRAL Model Law but is generally based on it. The absence of adoption means that the UNCITRAL Model Law or its principles do not automatically apply to the Arbitration Act 2001. However, despite this lack of official adoption, the courts tend to take guidance from the UNCITRAL Model Law or the explanatory note issued by the UNCITRAL secretariat (Explanatory Note by the UNCITRAL secretariat on the 1985 Model Law on International Commercial Arbitration as amended in 2006) in interpreting provisions of the Arbitration Act 2001 (see Commentaries on the Law of Arbitration in Bangladesh (with bilingual annotations), Junayed Ahmed Chowdhury, 2024, at paragraph 3.2).

2.8 Recent amendments or reforms in arbitration laws

The Arbitration Act 2001 was amended in 2004 to add section 7A conferring powers to the High Court Division and the district court to make interim orders in support of foreign and local arbitration.

3.1 Presence of local arbitration institutions

Bangladesh has several arbitral institutions, including, among others the Bangladesh International Arbitration Centre (BIAC), and the Bangladesh Institute of Arbitration (BIArb). There is no official data about the number of times these institutions’ rules were amended (if at all). In 2019, the BIAC Rules, 2011 were replaced by the BIAC Rules, 2019.

3.2 Does the London Court of International Arbitration (LCIA) have a local office?

No.

3.3 Does the Permanent Court of Arbitration (PCA) have a local office?

No.

3.4 Does the ICC International Court of Arbitration have a local office?

No.

3.5 Does the International Centre for Dispute Resolution (ICDR) have a local office?

No.

3.6 Agreement entered into with local offices of international arbitration institutions

There is no publicly available data regarding such agreement.

4.1 Requirements as to content and form

An arbitration agreement may be in the form of an arbitration clause in a contract or a separate agreement (section 9(1)). An arbitration agreement shall be in writing and an arbitration agreement shall be deemed to be in writing if it is contained in:

• a document signed by the parties;
• an exchange of letters, telex, telegrams, fax, email or other means of telecommunication which provide a record of the agreement; or
• an exchange of statement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other (section 9(2)).

4.2 Validity of arbitration agreements

There are no other factors affecting the substantive validity of arbitration agreements.

4.3 Special formalities

Not applicable.

4.4 Governing law

The arbitral tribunal shall decide the dispute in accordance with the the parties as applicable to the substance of the dispute (section 36(1)). Failing any designation of the law by the parties, under section 36(1) of the Arbitration Act 2001, the arbitral tribunal, in case of conflict of laws, shall apply the rules of law which it considers appropriate (section 36(2)). The arbitral tribunal shall decide the dispute in accordance with the terms of the contract, taking into account the usages of the concerned matter, if any, for ends of justice (section 36(3)). Where a contract (containing the arbitration clause) with a non-resident foreign national is governed by the laws of Bangladesh, and if the contract does not stipulate the rules of procedure or the seat or place of arbitration, then the provisions of the Arbitration Act 2001 shall apply as if the arbitration is an international commercial arbitration seated in Bangladesh (Frigo Mekanik v. BD Milk Producers, 2019 (2) 16 ALR 357).

5.1 Applicable restrictions

The Arbitration Act 2001 shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration (section 3(3)). An arbitral award may be set aside and a foreign arbitral award may be refused recognition or execution if the district judge’s court or the High Court Division, as the case may be, is satisfied that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force in Bangladesh (sections 43(1)(b)(i) and 46(1)(b)(i)). , anti-trust and competition disputes, securities transactions, insolvency matters, matters related to tax, and consumer disputes, among others, are held to be non-arbitrable. Also, as of now, banking loan-related disputes are non-arbitrable.

6.1 Stay of proceedings

Where any party to an arbitration agreement commences any legal proceedings against any other party to the agreement in respect of any matter agreed to be referred to arbitration, any party to such legal proceedings may, at any time before filing a written statement, apply to the relevant court to refer the matter to arbitration (section 10(1)). However, criminal proceedings cannot be stayed under section 10 of the Act on the grounds that there is an arbitration clause or agreement (Shahnawaz Akhand v. The State, 16 BLC 438).

6.2 Anti-suit injunctions

Generally, anti-suit and/or anti-arbitration injunctions from a foreign court are enforceable within the provisions of the Code of Civil Procedure 1908. However, there are some legal uncertainties about the extent of anti-arbitration injunctions from Bangladeshi courts on foreign-seated arbitrations. Two recent cases have taken the position that Bangladeshi courts have the jurisdiction to issue anti-arbitration injunctions on foreign-seated arbitrations. However, there is some practitioner’s commentary that has questioned the soundness of these judgments (see Commentaries on the Law of Arbitration in Bangladesh (with bilingual annotations), Junayed Ahmed Chowdhury, University Press Limited, 2024, Chapter 10).

7.1 Restrictions on the parties’ freedom to choose arbitrators

The law of Bangladesh does not impose any restrictions on the parties’ freedom to choose arbitrators..

7.2 Requirement of arbitrator independence and impartiality

When a person is requested to accept appointment as an arbitrator, they shall first disclose any circumstances likely to give rise to justifiable doubt as to their independence or impartiality (section 13(1)). This duty to disclose shall continue throughout the arbitral proceedings (section 13(2)).

7.3 Mandatory rules applicable to the appointment process

The parties to arbitration proceedings are free to agree on a procedure for appointing the arbitrator or arbitrators (section 12(1)) and have autonomy to determine the number of arbitrators (section 11(1)). However, in the case of an even number of arbitrators being selected, the appointed arbitrators must jointly appoint an additional arbitrator who shall act as a chairman of the arbitral tribunal (section 11(3)).

7.4 Appointment mechanism in the absence of party agreement or applicable institutional rules

Under section 12(1), the parties have full autonomy to agree on a procedure for appointing the arbitrator. In the following situations, upon the request of a party, the district judge (in the case of arbitration other than international commercial arbitration) or the chief justice or his designated Supreme Court judge (in the case of international commercial arbitration) shall make the appointment of arbitrators and chairman:

• in the case of a sole arbitrator tribunal, if the parties have not agreed on an appointment procedure and if the parties fail to agree on the arbitrator within 30 days from receipt of a request by one party from the other party to so agree;
• in a three-member arbitral tribunal, if the parties have not agreed on an appointment procedure and 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 appointed arbitrators fail to agree on the third arbitrator within 30 days of their appointment;
• if the parties agreed on a procedure, but one or both the parties fail to act as required, or the parties or the arbitrators have been unable to reach the agreement expected of them, or a person or any third party fails to perform any function assigned to him under the agreed procedure, and the agreement on the appointment procedure does not provide other means to take the necessary measure for securing the appointment; and
• if more than one arbitrator is appointed, then one person from among the said arbitrators shall be appointed to be the chairman of the arbitral tribunal.

7.5 Mandatory rules applicable to the replacement process

The mandate of an arbitrator shall terminate if he withdraws himself from office (section 15(1)(a)). Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the provisions applicable to the appointment to the arbitrator whose mandate has been terminated (section 16(1)).

7.6 Mandatory disclosure obligations

When a person is requested to accept appointment as an arbitrator, they shall first disclose any circumstances likely to give rise to justifiable doubt as to their independence or impartiality (section 13(1)). This duty to disclose shall continue throughout the arbitral proceedings.

7.7 Grounds for challenge

An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to their independence or impartiality, or they do not possess the qualifications agreed to by the parties (section 13(3)).

7.8 Mandatory rules governing the challenge of arbitrators

Subject to section 14(6) of the Arbitration Act 2001, the parties shall be free to agree on a procedure for challenging an arbitrator (section 14(1)).

Failing any agreement referred to in section 14(1) of the Arbitration Act 2001, a party who intends to challenge an arbitrator shall, within 30 days after becoming aware of the circumstances referred to in section 13(3) of the Arbitration Act 2001, send a written statement of the reasons for the challenge to the arbitral tribunal (section 14(2)).

Unless the arbitrator challenged under section 14(2) of the Arbitration Act 2001 withdraws from their office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge within 30 days from the date of filing the written statement (section 14(3)).

Any party aggrieved by the decision of the arbitral tribunal under section 14(3) of the Arbitration Act, 2001, may prefer an appeal to the High Court Division within 30 days from the date of the said decision (section 14(4)).

The High Court Division shall decide the matter within 90 days from the date on which it is filed (section 14(5)). There are no consequences provided for the event when the appeal is decided beyond the 90-day period. It is submitted that any appeal decided by the High Court Division under section 14(5) beyond the 90-day period shall be and can be set aside (see Commentaries on the Law of Arbitration in Bangladesh (with bilingual annotations), Junayed Ahmed Chowdhury, University Press Limited, 2024, at paragraph 4.20).

If a challenge under any procedure agreed upon by the parties or under the procedures under section 14(3) of the Arbitration Act, 2001 or the appeal preferred against the decision is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an award (section 14(6)).

7.9 Removal

The mandate of an arbitrator shall terminate if:

• they withdraw themselves from office;
• they die;
• all the parties agree on the termination of their mandate; or
• they are unable to perform the functions of their office or for other reasons fail to act without undue delay and withdraw from their office or the parties agree on the termination of their mandate (section 15(1)).

7.10 Liability and immunity of arbitrators

There is no provision in the Arbitration Act 2001 which deals with liability or immunity of arbitrators.

8.1 Interim measures

8.1.1 Overview of interim measures

Unless the parties agree otherwise, pass interim orders including interim injunctions (section 7A).

8.1.2 Relevance of availability of emergency arbitrator mechanism

Section 21 empowers an arbitral tribunal to grant interim measures unless otherwise agreed by the parties. An order of an arbitral tribunal for taking interim measures may be enforced by the court upon an application by the party that requested such interim measures (section 21(4)).

8.2 Taking of evidence

The arbitral tribunal has a wide latitude in deciding the matters of procedure and evidence in conducting the arbitration in the absence of the parties’ agreement under section 25(1) (section 25(3)).

8.3 Appointment or challenge of arbitrators

See above, Section 7.

8.4 Other available assistance

No other types of assistance to arbitrations are commonly available

9.1 Domestic scope of sovereign immunity from jurisdiction

The Diplomatic Immunities (Commonwealth Countries Representatives) Act, 1957 confers immunity on representatives of commonwealth countries in Bangladesh. Under this law, the “chief representative” is defined as a person who, for the time being, is recognised by the Government of Bangladesh as the chief representative in Bangladesh of a commonwealth country, whether known by the title of High Commissioner or by any other title. A chief representative is entitled to the immunity from suit and legal process, and to the inviolability of residence, official premises and official archives, to which they would be entitled if they were the envoy of a foreign sovereign power duly accredited in Bangladesh. The family members of the chief representative, their staff and the family members of their official staff are also entitled to immunity from suit and legal process.

Furthermore, under section 86A(1) of the Code of Civil Procedure, 1908, no proceeding in any court shall lie against a diplomatic agent except in a case relating to:

• any private immovable property situated in Bangladesh held by them in their private capacity and not on behalf of the sending State for the purpose of the mission;
• a succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending State;
• any professional or commercial activity exercised by the diplomatic agent in Bangladesh outside their official functions.

Also, in 1978, Bangladesh succeeded the Vienna Convention on Diplomatic Relations (VCDR) 1961.

9.2 Immunity from execution

The Arbitration Act, 2001 does not stipulate anything that deals with immunity from execution of arbitral awards in disputes arising out of commercial or other business transactions.

The arbitral tribunal has a wide latitude in deciding the matters of procedure and evidence in conducting the arbitration in the absence of the parties’ agreement under section 25(1) (section 25(3)). In practical terms, virtual hearings of arbitral proceedings are regularly conducted.

The Arbitration Act, 2001 does not contain any provision under which a respondent can be compelled to participate in the arbitration. However, if without showing sufficient cause a party fails to attend or be represented at a hearing (oral or written) of which due notice was given, then the arbitral tribunal may continue the proceedings in the absence of that party and may make an award on the basis of the evidence before it (section 35(4)).

In Bangladesh, there are no rules with respect to the confidentiality of arbitration proceedings.

12.1 Requirements as to content and form

An arbitral award shall be in writing and shall be signed by the arbitrator or arbitrators (section 38(1)). In arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated (section 38(2)). The arbitral award shall state its date and the place of arbitration, and the award shall 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 shall be delivered to each party (section 38(5)).

12.2 Time limit

The law of Bangladesh does not impose a time limit for rendering an award, but the arbitral tribunal must deal with a dispute submitted to it as quickly as possible (section 23(2)).

12.3 Remedies

Arbitrators have the authority to grant any form of remedy. The Arbitration Act, 2001 does not impose limits on available remedies.

13.1 Interpretation and correction of awards

Within 14 days from the receipt of the arbitral award, either party may, with notice to the other party, request the arbitral tribunal to correct any computation errors, clerical or typographical errors or any other errors of a similar nature occurring in the award (section 40(1)(a)(i)). Subject to agreement between the parties, either party may, by notice to the other party, request the arbitral tribunal to explain any part of the award or any point of clarification (section 40(1)(b)). If the arbitral tribunal considers the request to be justified, then it shall make the correction or give the interpretation within 14 days from the receipt of the request or a longer period of time as agreed between the parties (section 40(2)).

13.2 Challenge of an award

The courts may set aside a domestic award or a Bangladesh-seated arbitral award in an international commercial arbitration on the application of a party within 60 days from the receipt of the award (section 42). In the case of the former, the application for setting aside the award should be made to the district judge’s court within the local limits of whose jurisdiction the arbitral award has been finally made and signed, and in the case of the latter, the application should be made to the High Court Division (section 42 read with section 43 Explanation). The grounds for setting aside such an award are (section 43(1)):

• incapacity of the parties;
• invalidity of the arbitration agreement;
• non-service of notice of the appointment of an arbitrator or of the arbitral proceedings or inability to present the case due to some reasonable causes;
• the arbitral award dealing with non-arbitrable disputes or disputes that are outside or in excess of the arbitral tribunal’s jurisdiction;
• non-arbitrable subject matter; or
• the arbitral award is prima facie opposed to the law of Bangladesh or is in conflict with the public policy of Bangladesh or is induced or affected by fraud or corruption.

13.3 Recognition and enforcement proceedings

A domestic arbitral award may be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court within the local limits of whose jurisdiction the arbitral award was finally made and signed (section 44 read with the Explanation). With regard to enforcement, a foreign arbitral award may, on application by any party, be enforced by execution by the district judge’s court exercising jurisdiction within the district of Dhaka (section 45(1)(b) read with the Explanation). The foreign arbitral award may be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the district judge’s court exercising jurisdiction within the district of Dhaka. An application for execution of a foreign arbitral award must be accompanied by:

• the original arbitral award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;
• the original agreement for arbitration or a duly certified copy thereof; and
• such evidence as may be necessary to prove that the award is a foreign award (section 45(2)).

13.4 Cost of enforcement

Stamp duty is payable for any award depending on the amount or value of the property to which the award relates. If the arbitral award does not exceed BDT in value, the stamp duty is BDT 1,000, and if the arbitral award exceeds BDT in value, the stamp duty will be 0.5% of the total value of the award, subject to a maximum stamp duty of BDT 40,000.

13.5 Enforcement of orders of emergency arbitrators

Section 21 empowers an arbitral tribunal to grant interim measures unless otherwise agreed by the parties. An order of an arbitral tribunal for taking interim measures may be enforced by the court upon an application by the party that requested such interim measures (section 21(4)).

14.1 Process for enforcing New York Convention awards

The process of enforcing New York Convention awards will be the same as any foreign arbitral award under the Arbitration Act, 2001 and not on the basis of reciprocity.

14.2 Grounds for resisting enforcement of New York Convention awards

The grounds for resisting enforcement of New York Convention awards will be the same as any foreign arbitral award under section 46(1):

• incapacity of the parties;
• invalidity of the arbitration agreement;
• non-service of notice of the appointment of an arbitrator or of the arbitral proceedings or inability to present the case due to some reasonable causes;
• the arbitral award dealing with disputes that are outside or in excess of the arbitral tribunal’s jurisdiction;
• composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, in absence of such agreement, was not in accordance with the law of the country where the arbitration took place;
• the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made;
• non-arbitrable subject matter; or
• the arbitral award is in conflict with the public policy of Bangladesh.

14.3 Enforcing non-Convention awards

The process of enforcing non-Convention awards will be the same as any foreign arbitral award under the Arbitration Act, 2001.

15.1 Applicable to counsel

The Arbitration Act, 2001 does not impose any professional and ethical obligations on the counsel.

15.2 Applicable to arbitrators

When a person is requested to accept appointment as an arbitrator, they shall first disclose any circumstances likely to give rise to justifiable doubt as to their independence or impartiality (section 13(1)). This duty to disclose shall continue throughout the arbitral proceedings. The arbitral tribunal shall deal with a dispute submitted to it as quickly as possible (section 23(2)). The arbitral tribunal shall act fairly and impartially in deciding procedure and evidence and in exercising other powers conferred on it (section 23(3)).

16.1 Applicable regulatory requirements

In Bangladesh, the Arbitration Act, 2001 is silent on third-party funding in connection with arbitration proceedings.

16.2 Overview of the third-party funding market

In Bangladesh, the Arbitration Act, 2001 is silent on third-party funding in connection with arbitration proceedings.

17.1 Types of specialist arbitration

Not applicable.

17.2 Key legal principles

Not applicable.

17.3 Types of claim and defences typically brought in that area

Not applicable.

17.4 Issues and strategic considerations to take note of

Not applicable.

None at the moment.