Arbitration In Bangladesh

Barrister Remura Mahbub
Director, Tahmidur Remura TLS, Law Firm in Bangladesh

15 Oct 2022

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This article will aim to encapsulate all the information you need to know about arbitration in Bangladesh.  It will cover  international commercial arbitration, composition, recognition and enforcement of foreign arbitral awards, costs of arbitration, and appeals in arbitration.

 

What is ADR or Arbitration in Bangladesh?

In order to explain ADR or Arbitration in Bangladesh, it is essential to define alternative dispute resolution also known as ADR. Alternative Dispute Resolution (ADR) is a spectrum of less expensive and quicker alternative to litigation in which a neutral third party aids the disputing parties in finding a resolution. ADR allows for more collaborative and diverse solutions than traditional litigation.

They are increasingly used in issues that might otherwise result in litigation, such as high-profile labor disputes, contractual and commercial disputes, divorce proceedings, and personal injury claims.

ADR can be divided into four categories: arbitration; mediation; conciliation; court resolution, including Lok Adalat settlement.

Arbitration In Bangladesh_Dispute Resolution

                                       

What is Arbitration?

Section 89B of the Code of Civil Procedure, 1908 and the Arbitration Act 2001 are the central provisions of arbitration in Bangladesh.

Arbitration is a non-court alternative for settling disputes in which a single arbitrator or a panel of arbitrators is appointed by the parties to render a binding decision that is very difficult to reverse as it has few grounds of challenge.  

Arbitration in Bangladesh can be either ad hoc in which the parties determine whatever rules they deem appropriate or administered where its arbitration is conducted under the auspices of one of several arbitral organisations, such as the International Chamber of Commerce (ICC), International Centre for Dispute Resolution (ICDR), or the London Court of International Arbitration (LCIA)

Other legitimate arbitral support from local level can be taken from Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), The Chittagong Chamber of Commerce & Industry (CCCI), or Sylhet Chamber of Commerce and Industry (SCCI).

As arbitrations are typically confidential, this encourages parties to settle their issue through arbitration, which is also a faster process than litigation. Arbitration is appropriate for international conflicts because the outcomes are internationally binding.

Typically, the arbitration clause is governed by the same law as the rest of the contract, and its validity is evaluated under the law of that country. As an arbitration clause is distinct and independent from the contract, various laws may be applied throughout the arbitration procedure.

Therefore, where a party wants the law applicable to the arbitration provision to differ from the law applicable to the contract, the arbitration clause must specifically indicate this demand.

 

                 

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 Arbitration in Bangladesh clauses are essential in commercial contracts  because it binds the parties and precludes court interference in the resolution of a dispute, at least prior to the issuance of the award. Thus, the agreement must be in written and signed by both parties, and the institution must have the authority to settle disputes or oversee the process of settlement.

In addition the Arbitration in Bangladesh offers arbitrators the authority to resolve conflicts between the parties and facilitates efficient proceedings and a legally enforceable award.

It should be noted that a dispute can also be settled without an arbitration provision by a separate agreement of arbitration between the parties, containing the entire arbitration procedure outlined in chapter III of the Arbitration Act, 2001.

                

  Composition and Proceedings of Arbitration

The disputing parties will be entitled to determine the location of the arbitration, people who  will comprise the arbitration panel, what procedure will govern the arbitration and how the arbitral panel will be assembled.  Also, the party may seek resolution from any of the arbitral institution mentioned above .  According to  section 3 of the First Schedule of the Arbitration Act, arbitration proceedings should normally be concluded in four months 

  A body of a three-member arbitral tribunal and a single arbitrator of any nationality can often serve as arbitrators.  One or three arbitrators are used in commercial arbitrations subject to  discretion of the parties.

In the instance of a single arbitrator, the parties have the option of appointing the arbitrator either in advance or when a disagreement occurs. Typically, when a dispute arises, one arbitrator is assigned. The parties should agree on how the arbitrator will be selected and how he will carry out his duties. Additionally, an arbitration institution is able to make the appointment.

In case of multiple arbitrators,  there are usually three arbitrators. Each party picks an arbitrator, and the two arbitrators nominated by the parties appoint the third arbitrator who serves as the tribunal’s chair. In the event that none of the arbitrators are appointed, an appointing authority shall be designated to appoint the arbitrators.

Regarding the selection of each arbitrator, the requesting party must notify the responding party of its request for arbitration in writing and by registered mail or courier, and immediately nominate an arbitrator. The responding party must respond in writing and by registered mail or courier service within fourteen days of receiving the request for arbitration, naming an arbitrator  in the response.

As arbitration is an informal process, the arbitrator proceeds in this manner as he or she sees proper.

The Arbitration in Bangladesh begins with the submission of a request by the applicant; the sessions may be oral, but is typically written. Evidence and witnesses may be presented orally or in writing, as the arbitrator sees suitable. Under the Arbitration Act of 2001, evidence must be presented in accordance with the Evidence Act of 1870.

 

Arbitration In Bangladesh_Dispute Resolution

          Arbitral Awards and Enforcement 

If the parties obtain a settlement agreement during the arbitration, they may seek that the arbitral tribunal record the terms in the arbitral award. 

In general, an Arbitration in Bangladesh tribunal renders a ruling based on the arbitrators’ majority vote, or if that fails, as per the president of the panel and  c oncerning a single arbitrator, the president can also render the award.

In order to execute the award, the prevailing party may petition the national court of the losing party. It should be noted that the award is enforceable by the parties.

In rare circumstances, the award may be appealed, and the party may also seek that the award be set aside under the Arbitration Act of 2001.

In accordance with the Arbitration Act of 2001, a party may petition the High Court Division to set aside an arbitral award rendered in an international commercial arbitration proceeding in Bangladesh within sixty days of receiving the award.

In the case of Nurul Abser vs. Golam Rabbani, for instance, 68 DLR (AD) (2016) stipulates that an application to set aside an arbitral judgement must be filed within 60 days, after which the award becomes enforceable.

In this instance, the petitioning party failed to contest the award within the allotted time period; hence, the award has become final and enforceable.

Chapter IX of the Arbitration Act of 2001 addresses the enforcement of arbitration awards. The request for enforcement of an arbitral award shall be made in accordance with the Code of Civil Procedure, as if it were a court decision, if the time limit for filing an application to vacate the award has elapsed or if such an application has been denied.

The enforcement of the international arbitral award shall follow the same procedure and be executed by the court as if it were a court order.

 

 

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                           Arbitration Costs

      The number of arbitrators has an impact on the arbitration’s costs.  If the number of arbitrators increase, costs will increase inevitably.   Additionally, the parties may negotiate the cost prior to the arbitration process. Regarding arbitration by the institution, the institution fixes the cost. Another factor that might determine the cost is the difficulty of the issue at hand. More complications equals to higher quotation.  

 

             

                       Appeals in Arbitration

An appeal under the Arbitration Act of 2001 must be filed with the High Court Division concerning the following issues:

a) Setting aside or refusing to se aside  an arbitral award,

(a) Refusing to comply with the arbitral award,

(c) Refusing to acknowledge or enforce foreign arbitral proceedings or award

As mentioned above, a party must apply to set aside the arbitral award within sixty days after receiving the award. If the party successfully makes the application within the stipulated time. the Court has the power to set aside the arbitral award. 

                        

 Are you planning to do arbitration or  looking for alternative dispute resolution remedies in Bangladesh?

Tahmidur Rahman Remura TLS is a full-service law firm that has been dealing with arbitration consisting of a wide range of topics at both international and local level. We have barristers that have specialised in  international commercial arbitration from the United Kingdom and accredited civil-commercial mediators. 

If you require any assistance or consultation, please visit our office or contact us at +8801779127165 or +8801847220062 (WhatsApp) or by email- [email protected]

E-mail: [email protected]
Phone: +8801847220062 or +8801779127165 or +8801708080817

Address: House 410, Road 29, Mohakhali DOHS, Dhaka 1206

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FAQ

How much money is required for company registration in Bangladesh?

The governmental fees for registering a company are determined by the amount of authorized capital. Government fees for the issuance of an Incorporation Certificate shall be BDT 1000.

How long does it take to register a company in Bangladesh?

Once the aforementioned formalities have been completed, RJSC will usually issue the certificate of incorporation (Company registration certificate) within 6-8 working days.

It usually takes 2-3 weeks from the date of submission of all documents to RJSC to register a company.

What is BIDA?

Bangladesh Investment Development Authority (BIDA) is in charge of facilitating foreign investments in the country.

BIDA's responsibilities include issuing work permits for foreign employees, visas for foreign investors, processing loans from foreign sources, approving remittance of royalties and technical fees, assisting in the acquisition of industrial plots, facilitating utility connections, approving foreign loans, suppliers credit, and providing assistance and advice on a variety of investment-related issues.

Foreign investors with industrial projects are strongly advised to register with BIDA after forming their limited company. However, there is no requirement for a commercial or trading company to register with BIDA. The average time frame for obtaining registration is 7-10 working days.

What documents are needed to set up a private limited company in Bangladesh?

1. Memorandum of Association
2. Article of Association
3. Certificate of Incorporation
4. Trade License
5. TIN
6. VAT Registration Certificate
7. Name Clearance
8. Environmental Clearance Certificate
9. Fire Certificate

What is the minimum capital required for a private limited company in Bangladesh?

In Bangladesh, there is no minimum or maximum authorised capital for a local company.

However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50,000/- must be invested in the Company.

Can a single person start a company in Bangladesh?

 Bangladesh does not allow a single person to open a private limited company or One Person Company (OPC).

A private limited company must have at least two shareholders. In the case of a public limited company, however, the total number of shareholders required is seven.

Can a private limited company have one director in Bangladesh?

A private limited company must have at least two directors. Local or foreign nationals may serve as directors.

Directors must be at least 18 years old and have never been bankrupt or convicted of a crime. A director is required by law to own the qualification shares specified in the Articles of Association.

What is the difference between authorised capital and paid-up capital?

- Authorised capital: The amount of authorised capital must be specified in the Memorandum of Association and Articles of Association. It is the maximum amount of share capital that a company may allocate to shareholders.  

In Bangladesh, there is no minimum or maximum authorised capital for a local company. However, for practical reasons and to obtain complete flexibility in terms of expatriation and bringing in foreign expatriates, a minimum of USD 50000/- must be invested in the Company.

-Paid-Up Capital : The minimum paid-up capital for registering a Bangladeshi company is Taka 1 (for local companies) and USD 50000 (for foreign companies).

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Author’s Bio
About Meheruba Mahbub | One of the most innovative young lawyers in Bangladesh

Meheruba Mahbub is a finance partner and one of the Bangladesh's market leading international lawyers. She is head of the firm's Mergers and Acquisitions practice, which advises corporates and financial institutions on outbound and inbound investments, projects and financings.

Meheruba has a diverse finance practice , representing large banks, financial sponsors, and corporations. She specializes in acquisition and structured financings, loan portfolio purchase and financing, real estate financings, and inbound and outbound transactions. She has extensive expertise in the energy and infrastructure industries.
Work highlights

Meheruba has acted on many high-profile Finance and Commercial deals in Bangladesh and India. These include advising:

⦾ Standard Chartered Bank on the sale of a portfolio of loans in Bangladesh, the first in a series of similar deals in Bangladesh as part of the government’s directive to banks to focus on the robustness of their balance sheets.

⦾ the lending and underwriting banks on the refinancing of US$6.9bn worth of debt uninsured by the Summit Group

⦾ Brookfield Property Partners on the acquisition and financing of Unitech’s real estate portfolio

⦾ Enron on the US$3bn Dhabol power project (since renamed Ratnagiri Gas and Power), the first ever inward investment into the power sector

⦾ the sponsor and borrowers on the Sakhalin LNG project, the world’s largest integrated oil and gas project and the largest LNG financing in Russia

Email: [email protected]

Address: 2 Turner Street, Canning Town, E16 1FH, United Kingdom

Gender: Female

Job Title: Barrister and Senior Associate

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