1. Bangladesh

1.1 Which laws apply to arbitration in Bangladesh?

The Arbitration Act, 2001 (Act No. I of 2001) (the “Act” or the “2001 Act”), which came into effect on 24 January 2001, governs arbitration in Bangladesh. It replaced the earlier Arbitration Act, 1940. The Act has been enacted in the Bangla language, and hence, its official name is also in Bangla, which is “Salish Ain, 2001.” There is no official English translation of the Act, and the translation of various provisions of the Act referred to in this report is an unofficial translation. The Act relates to both domestic and international arbitration.

1.2 Is the Bangladesh Arbitration Law based on the UNCITRAL Model Law?

The Act 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. There are certain departures from the Model Law. The major deviations are summarized below:

i.

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. In effect, 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.

ii.

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.

iii.

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 challenged matter is finally disposed of. It is only when such a challenge or the appeal against the decision of the arbitral tribunal is not successful, the arbitral tribunal shall 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.

iv.

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. This anomaly needs to be corrected by way of an amendment of the Act.

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

1.3 Are there different laws applicable for domestic and international arbitration?

“Arbitration” is defined in section 2(m) of the 2001 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 follows:

“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; or

• a body corporate which is incorporated in any country other than Bangladesh; or

• 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.”

Section 3 of the Act states that 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”. 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”. However, the Act does not define the expression “foreign arbitration”.

The High Court Division (“HCD”) of the Supreme Court of Bangladesh in Southern Solar Power v. Bangladesh Power Development Board 2019 (2) 16 ALR (HCD) has held that an international commercial arbitration, the seat of which is outside Bangladesh, is to be regarded as foreign arbitration.

Since there were conflicting decisions of the HCD regarding the applicability of the Arbitration Act (apart from sections 45–47 on recognition and enforcement of foreign arbitral awards) to foreign arbitrations, this issue was referred to a three-member bench of the HCD in Accom Travels and Tours Limited v. Oman Air S.A.O.C. and Ors. 27 BLC (2022) 596 (“Accom Travels”).

The HCD held that the provisions of the Arbitration Act, except sections 45, 46 and 47, are not applicable in respect of foreign arbitrations. However, section 7A regarding interim protective measures, may be invoked in respect of foreign arbitral awards when application for enforcement of such an award is filed before a court in Bangladesh. Thus, in respect of foreign arbitrations, section 7A cannot be invoked for obtaining interim measures, except at the stage of enforcement of the award in Bangladesh. 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 as set out in section 151 of the Code of Civil Procedure, 1908. Accordingly, where a party to a foreign arbitration clause initiates local court proceedings in Bangladesh, the other party may file an application under section 151 of the Code of Civil Procedure seeking stay of the local court proceedings and a direction for referring the matter to foreign arbitration.

1.4 Has Bangladesh acceded to the New York Convention?

Bangladesh is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“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 embodied 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. These provisions are discussed in 1.19 below.

1.5 Can parties agree on foreign arbitration institutions (i) if both parties are domiciled in the country, (ii) if one party is domiciled in the country and the other party abroad?

Parties can agree on foreign arbitration institutions (i) if both parties are domiciled in the country, (ii) if one party is domiciled in the country and the other party abroad.