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Withdrawal of cases in Bangladesh

Withdrawal of cases in Bangladesh

Withdrawal of Cases: Civil and Criminal Case withdrawal in Bangladesh

What exactly is the problem?

Issues arise when you consider withdrawing from representing a defendant or accepting a transferred case near or during the trial.

Once the criminal trial process begins, you have professional obligations to both the defendant(s) for whom you act and the court.

Reasons for withdrawal

If there are compelling reasons, you may withdraw from representing a client in a criminal case, whether during the trial or during the preparation for trial.
Who decides whether compelling reasons exist?

You must determine if there are compelling reasons to withdraw.

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Withdrawal Of Cases In Bangladesh 4

The court in R v Ulcay agreed with Rose LJ’s observations in R v G and B, saying at paragraph 14: “We think it right, both in principle and pragmatically, that whether a solicitor or barrister can properly continue to act is a matter for him or her, not the court, although of course the court can properly make observations on the matter.”

At paragraph 30 of R v Ulcay, Judge LJ stated: “The principle… remains clear.” The court cannot compel a lawyer to continue acting after he has made a professional decision that he must withdraw from the case for compelling reasons.”

What are the compelling arguments?

You must withdraw from a case if you believe that continuing to act will cause you professional embarrassment, in accordance with the Principles and Code of Conduct for Solicitors in the SRA Standards and Regulations 2019, and the professional obligations you owe to your client and/or the court.

This is to avoid violating the code and also to avoid court punishment, such as a wasted costs order or, in more serious cases, prosecution for an offense against public justice.

Exemplifications of compelling reasons

Client obligations

A conflict of interest may arise if you represent two defendants.

You must withdraw from at least one client if this occurs. Continuing to act would be a violation of SRA Code on conflicts of interest.

You must withdraw from both clients if continuing to act for the remaining client would breach your duty of confidentiality to your former client in violation of SRA on confidentiality and disclosure.

Judicial obligations

If a client changes instructions in such a way that continuing would involve you misleading the court, you must withdraw from the case, according to paragraph 1.4 of the SRA Code of Conduct.

Can a law suit/case be withdrawn after it has been filed? (both civil and criminal)

Criminal Proceedings

Criminal cases are classified into two types: CR and GR.

GR cases are typically reported to the police. The criminal court must hear the CR case.

In the GR case, public prosecutors (PPs) are appointed by the state to represent the plaintiffs. In CR cases, the complainant must appoint a lawyer to handle the case.

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A case may be withdrawn due to a lack of sufficient evidence or a compromise between the parties to the case. In the criminal procedure, there are two types of provisions for case withdrawal.

In cases where the state is a party to the GR case, the public prosecutor may request that the case be dismissed under Section 494 of the Criminal Procedure Code.

Section 247 of the Criminal Procedure Code allows the complainant or a lawyer appointed on his behalf to request the withdrawal of a CR case.

The public prosecutor has withdrawn the case.

Section 494 of the Code of Criminal Procedure states that a state prosecutor or public prosecutor may withdraw from the prosecution of a person in any one or more of the offenses for which he is generally being tried with the permission of a court. The government, as plaintiff, will persuade the court that it is appropriate to withdraw from handling the case.

The court will not grant permission based solely on an order from the government to withdraw from the case.

In withdrawing the case under Section 494, the court has been asked to consider a number of issues.

Case of Complaint Withdrawal (CR Cases)

According to Section 247 of the Criminal Procedure Code, if the plaintiff can convince the magistrate that there is sufficient reason to allow him to withdraw the complaint before the case’s final order, the magistrate will allow him to withdraw the complaint and acquit the accused.

This section only applies to disposable cases, as defined in Criminal Procedure Code Section 345. Under this section, the complainant may withdraw the complaint.

For example, only the public prosecutor may file a request for the case to be withdrawn. The case cannot be withdrawn on the petitioner’s or the accused’s request, or by any order of the government.

Second, the prosecutor must explain to the court why the case is being withdrawn. The court will not dismiss the case solely on the basis of the government’s decision.

The court’s decision to dismiss the case is final. As a result, if the court is not satisfied with the reason for the withdrawal, it will order the case to be heard without allowing the withdrawal.

If the victim, plaintiff, or plaintiff in the case believes that the state voluntarily withdrawn their case, they may file a revision in the Sessions Judge Court or the High Court Division.

Case of Civil suit is being withdrawn:

The plaintiff may withdraw the case against all or any of the defendants at any time after the civil suit has been filed, according to Rule 1 of Rule 23 of the Civil Procedure Code, or give up part of the claim.

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When the court is satisfied that the lawsuit is doomed to fail due to a procedural error and there is sufficient reason to allow the plaintiff to sue again for the content of the lawsuit or a portion of a claim, the court withdraws the plaintiff’s suit on appropriate terms or in part.

You may grant permission to dismiss the claim and re-litigation of the lawsuit’s or similar partial claim’s content.

If the plaintiff withdraws the lawsuit or abandons the partial claim without the court’s permission, the plaintiff is liable for the costs of the lawsuit as determined by the court and loses the right to file a new lawsuit on that content or partial claim.

A court may not allow one of the few plaintiffs to withdraw the suit without the consent of the other plaintiffs under this rule.

The same matter cannot be sued again after the withdrawal.

If a case is withdrawn in accordance with the prescribed procedure, it cannot be re-filed. In civil cases, such cases are barred by the ‘Res Judicata’ or Dobara policy, and in criminal cases by the ‘Double Geopardy’ or Dobara punishment policy. If the court is satisfied by filing a revision in a higher court, the court may order reconsideration or re-investigation in the interest of justice.

Example of Res Judicata

‘A’ sued ‘B’ for failure to pay rent. ‘B’ requested that the rent be reduced because the land’s area was less than that specified in the lease. The Court determined that the area was larger than indicated in the lease. The area was excessive, and the res judicata principles will not be applied.

In one case, ‘A’ new lawsuit was filed, and the defendants requested that the Court dismiss the lawsuit with a plea of res judicata.

She was barred from bringing a res judicata claim because her previous claim had been dismissed for fraud. The Court stated that the res judicata defense must be proven through evidence.

The Res Judicata principle

The principle of res judicata seeks to promote fair administration of justice and honesty, as well as to prevent abuse of the law.

When a litigant attempts to file a subsequent lawsuit on the same matter after receiving a judgment in a previous case involving the same parties, the principle of res judicata applies.

This applies not only to the specific claims made in the first case, but also to claims that could have been made during the same case in many jurisdictions.

Under the inherent power of the High Court Division, such an order could be made.

Hire the best litigation law firm in Bangladesh for your civil or criminal proceedings:

Tahmidur Rahman Remura Wahid is one of Bangladesh’s most experienced law firms, representing the world’s largest business houses and collaborating with the world’s largest international law firms.

With top-ranked transactional capabilities and a strong litigation practice, the firm is regarded as one of the region’s best chambers of advocates, barristers, and solicitors.

The law firm has extensive experience in M&A, Project Finance, PPP and Infrastructure Project Development, Intellectual Property, Tax, and Employment.

The firm’s litigation practice has a track record of dealing with various types of disputes. Businesses’ enforcement and litigation concerns grow as they pursue strategies.

Many clients consider enforcement and litigation to be forms of risk management. It is particularly skilled at handling complex, multi-faceted cases involving multiple claims and parties.The firm represents clients in some of the most important and high-profile cases, particularly in intellectual property, construction, banking, and energy.

The firm has a successful track record in constitutional petitions challenging the actions of administrative and regulatory authorities as well as the enforcement of government contracts. It also has extensive experience in judicial review of governmental administrative decisions.

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Land grabbing law or laws for unlawful possession in Bangladesh

Land grabbing law or laws for unlawful possession in Bangladesh

Land grabbing law or unlawful possession in Bangladesh

In Bangladesh, land grabbing is a major source of concern. Obviously, a tremendous amount of land is illegally taken. Approximately 1,3 million hectares of government-owned land are currently being seized by influential elites, according to the Land Ministry.

Influential individuals illegally appropriated government-owned lands in char areas, riverbanks, roadways, forests, and other regions. However, it is difficult to determine precisely how many private lands have been illegally seized due to a lack of documentation of illegally seized private lands. Consequently, the majority of land disputes remained unresolved and the majority of government and private lands illegally taken by land-grabbers remained unrecovered.

Types of Land Grabbing in Bangladesh:

There are four different categories of land grabbing.

Which are:

(1) Using physical force to seize land;

(2) using force to indirectly grab land;

(3) Taking direct control of land without using force; and

(4) The non-violent indirect grabbing of land. The first category includes state land purchases, grabbing by the state for securitization, and grabbing by private organizations.

Commercial companies involved in agribusiness and agro-fisheries, such as shrimp farms, are the main perpetrators of the second category. This type of land grabbing is also caused by conflicts, violence, and riots that sow fear among socially vulnerable communities and classes as well as religious or racial minorities.

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The third category includes acquiring land without the owner’s consent or through agreements; examples include obtaining a lease or the right to possession through false registration.

The fourth category results from various natural and man-made disasters, where crises arise due to damages caused as well as the severe problem of sustaining livelihood; the affected people are compelled to sell off their homesteads and land in order to survive.


All parties involved in disputes over land believe and declare their position to be correct, and they attempt to establish their rights in this way. The battling parties are still engaged in a conflict over the legitimacy of land rights.

These factors make the social and ideological dimensions, in addition to the political and economic ones, crucial when analyzing conflicts involving land. The state has been involved in the land grabbing process in a variety of different ways.

The state’s three branches—executive, legislative, and judicial—can also adopt opposing positions on these issues. A significant factor in the process is also the influence of power structures in the state, society, and classes. In layman’s terms, the more influential someone is politically or socially, the more likely it is that they will be successful in acquiring land.

Numerous methods and procedures used in land grabbing are found to be unethical. The morality and ethical issues are relevant, particularly when grabbing is accomplished through fraud, corruption, or deceit.

The state’s function exhibits a lack of ethics, too. When land is given to private profit-seeking organizations after being acquired in the name of the “public interest,” contradictions in the organization’s behavior become clear.

The land that was taken under the guise of securitization occasionally demonstrates discrimination against specific ethnic or religious communities, which is wrong and violates the constitution of the nation.

When land is taken by force and party cadres and goons are used in conjunction with the security forces, the state does not distinguish between right and wrong. By making false promises and using enticements, various private organizations and businesses are also stealing land.

Obviously, land grabbing has been an ongoing process in Bangladesh for decades. Land appropriation can be both legal and unlawful. It is legal and commonly referred to as land acquisition when the government and national or international companies or organizations acquire land through the voluntary transfer of ownership from the landowner(s).

In the sense that government or private companies sometimes acquire land without the consent of the landowner(s), land acquisition is arguably legal. In the strictest sense, land grabs involve the use of force to coerce or coerce individuals into relinquishing their land, as well as the illegal dispossession of land through any other exploitative means, such as the forgery of legal documents.

Causes of illegal land grabbing in Bangladesh:

Notable causes of illegal land grabbing in rural, urban, and other areas include an inadequate system for the settlement of land disputes and legal loopholes, a lack of deserved attention from concerned authorities including the ministry of land, widespread corrupt practices, the culture of might-makes-right, the culture of impunity of powerful persons (even though powerful individuals are increasingly held accountable), and political influence in the land dispute settler system.

Several factors, such as the scarcity of land, the increase in the social and economic value of land, unbridled greed, and the ability to seize land, certainly contribute to land grabbing.

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Furthermore, it is undeniable that land grabbers are politically, socially, and economically powerful. Due to the involvement of powerful individuals or groups in illegal land grabbing, land grabbers are able to manipulate the relevant authorities in a variety of ways, including the manipulation of registration, lease, transfer, and other land-related legal documents.

Obviously, an unscrupulous network consisting of land grabbers, concerned officials, and others facilitates such efforts. Therefore, the prevention of illegal land grabs and the recovery of illegally grabbed lands, both private and public, appears to be a difficult task, and land grabbers can often remain unreachable in Bangladesh’s urban, semi-urban, rural, remote, and hilly regions.

Illegal land grabs violate both Article 42 of the National Constitution of Bangladesh and Article 17 of the Universal Declaration of Human Rights concerning the right to land and property. In addition, the land grab has enormous social, economic, and environmental consequences. Land disputes and illegal land appropriation frequently result in violence and criminal activity. A substantial number of people are killed as a result of land disputes and grabs.

Crimes and Land Disputes in Bangladesh:

According to various sources, more than seventy percent of all crimes stem from land disputes. In addition, the loss of land can trap many individuals in a vicious cycle. Unquestionably, many former private landowners do not invest enough in education, health care, and other areas that can improve their social standing and well-being. These factors increase their economic, social, and other vulnerabilities.

There are numerous legal, policy-based, and other efforts that can prevent illegal land grabs and recover government and private lands that have been illegally taken. However, the land administration is criticized for being based on an antiquated or conventional regulatory structure.

Unquestionably, the processing of land ownership, registration, relocation, mapping, tax payment, wills and other legal documents is subject to significant criticism. Land recording or registration systems are frequently viewed as a time-consuming and expensive endeavor.

There are more than 3.2 million pending land-related cases in the country, and a significant number of aggrieved parties lack the capacity to approach the courts for litigation. It is also criticised that the legal system is still too expensive, with few government incentives, and that justice is frequently denied to the poor and marginalized, including indigenous people, in land disputes.

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Recently, the Law Commission of Bangladesh proposed a new Land Act of Bangladesh, which would codify and consolidate land-related laws into a single document with the goal of resolving land disputes expeditiously.

It proposes a land Tribunal in each district and grants judicial powers to the Additional Deputy Commissioner, Assistant Commissioner (of land), and Assistant Settlement Officer in order to spearhead the settlement of land disputes involving the wrong record, partition, boundary disputes, unlawful possession, and forced possession.

There are also criticisms that such efforts are sometimes thwarted by influential individuals and are primarily focused on the recovery of government land, as opposed to private land. Consequently, eviction campaigns do not produce the desired results, despite their enormous potential in the effort to recover illegally seized lands.

Land Dispute Remedies Available Under Criminal Law of Bangladesh

Land grabbing or unlawful possession of properties is a common occurrence in Bangladesh, where individuals lose access to lands that they once used.

A victim in such a traumatic situation must seek redress under Section 145 of the Code of Criminal Procedure, 1898. The remedy must be sought in the court of the first executive magistrate, according to this section.

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Land grabbing or unlawful possession of property cases must be filed within two months of being threatened with eviction or evicted.

Later, the magistrate will issue summons to the opponent, hear statements from both parties, accept evidence, and determine who owns the disputed property.

The victim may also request that the local police investigate the matter, and the executive magistrate will determine the legitimate occupier based on their findings. The majority of victims are unaware that section 145 of the Code of Criminal Procedure of 1898 only determines the occupant, not the ownership of the property.

Steps to seek legal protection for land grabbing remedies

In the case of land grabbing or unlawful possession, a victim can also file a petition or complaint to the District Magistrate through a lawyer under Section 145 of the Code of Criminal Procedure, 1898; however, all original documents related to the land must be produced for filing a law suit.

The magistrate will review the documents, examine the facts of the case, and direct the officer in charge of the relevant police station to conduct an investigation. The District Magistrate will order the opponents to refrain from all types of activities based on the investigation report.

Remediation for eviction threat

If a person is threatened with eviction, he or she must file a general diary at the relevant police station, which will allow him to file a case with the Executive Magistrate under Section 106 of the Code of Criminal Procedure, 1898 through a lawyer.

Property Law Firm in Dhaka Bangladesh

Until acquiring land or long-term lease for commercial purposes, customers also need a detailed due diligence report on several complex issues including land transfer validity, ownership, possession and background.

Legal procedures are carried out in Bangladesh while putting in a lot of effort and commitment. Our service standards are the ones that are internationally recognized and highly valued in the industry, and we are recognized as a leading law firm in Dhaka for handling land matters with absolute certainty.Tahmidur Rahman TRW Team is a trustworthy name in proprety law in Bangladesh.

Contact the best land and property law firm in Bangladesh:

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Arbitration Process in Bangladesh – Basic Steps and Procedure

Arbitration Process in Bangladesh – Basic Steps and Procedure

Arbitration Process in Bangladesh

The Legal regime of Commercial Arbitration in Bangladesh

Humans are gregarious, and life in society necessitates constant interaction with others, which frequently results in conflicts and disputes in personal, commercial, and professional relationships.

To preserve social harmony, peace, development, and progress, business and commercial disputes must be resolved rapidly.
Rapid growth in trade and business within and outside the country led to an explosion in the number of disputes, the majority of which required prompt resolution.

The legal framework for international arbitration in Bangladesh, with a focus on Bangladesh’s role as an international arbitration seat Already, it has been argued that the relationship between the court and the arbitral tribunal is crucial for the efficient resolution of a transnational dispute.

Before discussing the law that governs international arbitration in Bangladesh, a brief description of the country’s court system is necessary to comprehend the relationship between national courts and arbitral tribunals.

National courts and arbitral tribunals in Bangladesh

The Bangladesh Supreme Court consists of the High Court Division (HC Division) and the Appellate Division (AD). The court’s authority is derived from the Bangladeshi constitution. The Appellate Division hears appeals against the decisions of the High Court Division on constitutionally mandated matters or by granting leave.

No original jurisdiction exists. In contrast, the HC has original, appellate, and other jurisdictions under the constitution and other statutes. Notably, the law declared by the AD is binding on the HC, and the law declared by either division is binding on all courts and tribunals subordinate to it.

The HC is vested with matters involving international commercial arbitration, excluding the enforcement of awards. In the hierarchy of courts with civil jurisdiction, the court of the district judge comes next to the HC. It ensures the award’s enforcement within its territorial jurisdiction.

In arbitration law, Bangladesh inherited the colonial inheritance. During the British regime, the Bengal Regulation of 1772 governed arbitration in this region under the presidency of the then-government. Later, the Civil Procedure Code of 1908 included arbitration regulations.

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The Arbitration (Protocol and Convention) Act of 1937 and the Arbitration Act of 1940 existed at the time of the partition of British-ruled India in 1947.

Both acts continued into Bangladesh’s post-independence period. Bangladesh, a signatory to the New York Convention,156 enacted the Arbitration Act, 2001, based on the UNCITRAL Model Law, By adopting the Act 2001, Bangladesh accepts the jurisdictional theory of international arbitration to a large extent.

Nevertheless, the Act diverges significantly from the Model Law in numerous ways. This chapter focuses primarily on the deviations from the Act and their effects on Bangladesh-based arbitration.


The 2001 Act repealed the 1937 and 1940 Acts. The most recent amendments to the Act regarding court-issued interim measures were made in 2004. Although the Act gives the government and the Supreme Court the authority to establish rules for carrying out the Act’s purposes, neither the government nor the Supreme Court have done so as of yet.

The original language of the statute is Bangla. The official English text has not yet been released. This research utilized a non-official English version of the statute.

According to the preamble, the Act enacts the law regarding international commercial arbitration, the recognition and enforcement of foreign arbitral awards, and other arbitrations.

Although the Act of 2001 makes specific reference to international commercial arbitration in its preamble, it essentially established a single, unified arbitral regime applicable to both domestic and international arbitration.

The first international arbitration institution in Bangladesh is called the Bangladesh International Arbitration Centre (BIAC). It began operating in April 2011 with permission from the government and is registered as a non-profit organization.

Sponsors of BIAC include the Metropolitan Chamber of Commerce & Industry (MCCI), Dhaka Chamber of Commerce & Industry (DCCI), and International Chamber of Commerce-Bangladesh (ICC-B). Under a cooperation agreement, the World Bank’s private sector arm, the International Finance Corporation (IFC), supported BIAC in its early stages with funding from the European Union and UK Aid.

New York Convention or Model Law

In contrast to many preferred jurisdictions for international arbitration, neither the preamble nor the text of the Act 2001 made any reference to the New York Convention or Model Law.

According to Bangladesh’s international obligation under the New York Convention, this reference is essential. In Saipem v. Bangladesh, it was asserted that Bangladesh violated its international obligation by not respecting Article II of the New York Convention by issuing an anti-arbitration injunction against an ICC tribunal seated in Bangladesh.

In response, Bangladesh stated that the country had not yet passed an act of parliament pursuant to its obligations under the Convention. 163 Consequently, the court was not required to recognize an arbitration agreement.

Notably, Bangladesh’s approach to enforcing international law on its territory is dualistic. In the Saipem case, the ICSID tribunal ruled that Saipem had the right to arbitrate the dispute in Bangladesh in accordance with the International Chamber of Commerce Arbitration Rules.

had been expropriated by Bangladesh through the improper intervention of its courts. 164 The tribunal reasoned that Bangladesh had not disputed that it was not bound by the Convention, even though the Convention might not be binding on its courts.

Saipem’s decision is a landmark in the jurisprudence of investment arbitration, marking the first time an ICSID tribunal held a state accountable for the conduct of its judiciary. Evidently, if this case is any indication, a reference to the Convention in the preamble of the Act would bind the court.

The breadth of the Arbitration Act in Bangladesh

The Act of 2001 has limited application in commercial arbitration, despite the fact that the laws of many preferred seats expand its scope of application. There are only a few provisions in the Act of 2001 that pertain specifically to international commercial arbitration. In its scope, the law states that it shall apply only if the seat of arbitration is within Bangladesh.

In other words, the statute restricts its application to arbitrations seated within Bangladesh. Evidently, the Act of 2001 follows the English Arbitration Act of 1996 on a variety of issues, but it fails to broaden its application in the same way. The Act of 2011 adopts the Indian approach to the applicability of the statute.

According to Section 3(1) of the Act, the Act applies when the place of arbitration is in Bangladesh. The Act also specifies that sections 45, 46, and 47 of the Act shall apply if the place of arbitration is outside of Bangladesh. Therefore, it is reasonable to conclude that the Act has no application to arbitrations seated outside the United States, with the exception of award recognition and enforcement.

Already overburdened with heavy caseloads, the courts were unable to handle the additional cases. The resulting backlog significantly slowed down the legal system in Bangladesh.

Without a corresponding rate of conflict resolution, there was a veritable blockade of development, which negatively impacted the economy of the country. This prompted the development of an ADR (alternative dispute resolution) mechanism.

Mediation, conciliation, and arbitration comprise ADR. In contrast to the first two, which involve party-identified solutions accepted by consensus, the third involves a neutrally-identified resolution that is binding on the disputants.

Consensus and party autonomy serve as the basis for the arbitral process, which begins with the agreement to arbitrate and concludes with the award of the arbitral tribunal and its enforcement.

Arbitration was originally a non-formal process, but it has since evolved into a specialized area of law. Achieving the objective of a fair, legal, and enforceable award necessitates dexterous maneuvering through a number of tricky situations in order to navigate the path and reach the destination of an award that is fair, legal, and enforceable.

There are numerous pitfalls on the path of domestic or international commercial arbitrations and those under bilateral investment treaties for the unwary and inexperienced.


The evaluation of a party’s preparedness for the dispute is the most undervalued yet crucial phase of any arbitration proceeding. Once a party has determined that a valid dispute exists, the first step for a practitioner is to examine the arbitration agreement.

Given that some of the disputes stem from contracts executed prior to the 1996 Arbitration Act or the 2001 or 2019 Amendment, it is essential to determine the fundamental characteristics of all proceedings, as well as the applicable law and the location of the dispute.

Determine the governing law and location

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Typically, in domestic arbitrations, Bangladeshi law will govern, but the location of the arbitration must be specified. Rarely do pathological clauses specify the legal seat of the arbitration. In such situations, one can rely on case law stating that if an agreement contains an exclusive jurisdiction clause, that clause can be interpreted as the seat of arbitration.

There are still a number of disputes in Bangladesh regarding the interpretation of the seat and venue of arbitration; therefore, it is essential to determine the location of the seat, as the courts at the seat oversee the arbitration.

Institutional or Ad Hoc Arbitration

Arbitral institutions have their own procedures, timelines, and rules. As a result, parties must assess their financial capabilities prior to initiating the proceedings and pay certain administration fees. In addition to considering the benefits and drawbacks of relying on a third-party funder when assessing financial capacity, parties may wish to consider the advantages and disadvantages of a third-party funder.

In instances where the arbitration is conducted in accordance with institutional rules, the start of the proceedings may depend on when the request for arbitration was submitted to the institution. This may be significant when limitation issues are involved.

Document Evaluation and Method

Prior to initiating arbitration proceedings, assess the merits of the case (based on documents and associated testimony) and ensure that findings and recommendations are communicated to the client in a clear and timely manner.

Need for court-ordered interim relief

Determine the need for interim relief prior to initiating arbitral proceedings. In urgent cases of bank guarantee invocation,’ removal of rigs from territorial waters,’ unloading of goods, and all other appropriate cases, one may approach the court of the principal jurisdiction and seek interim relief under Section 9 of the 2001 Arbitration Act.

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Interim Compensation from Emergency Arbitrators

Emergency arbitrators may also provide interim relief prior to the initiation of a lawsuit. Practitioners should evaluate Section 9 of the Arbitration Act versus requesting that the institution appoint an emergency arbitrator.


An increasingly advantageous trend in larger disputes that require an expert for the valuation of claims and assessment of damages is to retain experts at the outset in order to get a sense of the claims to be asserted. Experts can also assist with the preparation of the claim if a forensic audit of emails, data, or documents is required.

Selection of Arbitrator

For technical disputes, arbitrators should ideally be suitably qualified. Similarly, there are procedural outlines in certain cases, and only empanelled arbitrators can be appointed therein. In Bangladesh, one typically sees this in engineering and infrastructure arbitrations, in which technical (non-legally qualified) experts are sought to be appointed as arbitrators.

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Statute of Limitations and Pre-Arbitration Steps

Consider any mandatory pre-arbitration steps (such as mediation) or informal dispute resolution before filing a claim.


The notice of arbitration (NOA) is a crucial document. It outlines the initial parameters of the dispute to be adjudicated by the tribunal and often includes proposals for the party-appointed arbitrator. Most arbitral institutions require the claimant to provide a summary of the dispute and the claims being sought, as well as a valuation of the claims.

The 1996 Arbitration Act states that an arbitration begins when the counterparty receives the Notice of Arbitration (NOA). Relevant documents should be attached to the NOA, and the person issuing and serving the NOA must have the authority and capacity to do so.


Depending on the facts and circumstances, either the opposing party or the institution may participate in the selection of arbitrator(s). In accordance with its rules, the institution deems the tribunal to be constituted upon nomination, necessary declarations and disclosures, and the absence of objection from the parties.

  • It is imperative that potential arbitrators disclose all potential conflicts, i.e., any reasons for a lack of independence or impartiality, at the outset.
  • Understanding the preferences and biases of the arbitrator(s) can play a significant role in guiding the proceedings in the most advantageous direction for the clients. Typical components of pre-appointment arbitrator due diligence include:
  • awards and decisions pertinent to the immediate dispute;
  • counsel or expert witness testimony and positions taken;
  • publications and addresses;
  • current and previous professional affiliations that could pose a conflict of interest with the parties, counsel, or experts.


The preliminary meeting is the initial phase of any arbitration procedure. It typically occurs after the tribunal has been appointed but prior to the issuance of the first procedural order. If a party must raise jurisdictional objections or challenges to the tribunal’s composition, it is preferable to do so at this stage (if not already done).

The preliminary meeting gives the tribunal, parties, and counsel discretion over the procedural aspects of the arbitration. Typically, at this stage, an attempt is made to establish a broad roadmap for how the arbitration should proceed.
The following is a typical list of topics discussed at preliminary meetings:

(i) clauses on dispute resolution and choice of law, if required;
(ii) disagreements between the parties;
(iii) approach to documents: whether submitted with proposals or later; paper versus electronic filings; translation
(iv) a schedule of hearings on the merits;
language used in proceedings;
(vi) witness evidence: whether expert statements are filed with submissions or later; the number of rounds; simultaneous as opposed to sequential;
(vii) deadlines for filings and pleadings;
(viii) the time, place, and logistics associated with the pre-hearing and hearings;
(ix) attorney ethics and privilege: applicable rules;
(x) administrative secretary: usage considerations; and
(xi) tribunal fees in ad hoc arbitration proceedings


Witnesses are central to the initial hearing’s discussion. In addition to other aspects of witness testimony, the submission of witness or expert statements alongside submissions and the necessity of translations are considered.

The tribunal may determine the scope of witness testimony if the parties have disclosed the number of witnesses they intend to produce.
This can be difficult in multiparty arbitrations, and we will discuss the relevant considerations later on in this chapter.

Foreign Counsel 

Specifically, in international commercial arbitrations, the disputing parties are frequently represented by counsel from different jurisdictions, and there may be varying approaches to procedural aspects in their respective countries. In such circumstances, a thorough initial hearing is essential for the smooth progression of the arbitration.

Regarding domestic or Bangladeshi-seated hearings, it is commonly believed that international counsels face issues with some unique procedural requirements, such as the marking of documents and affidavits of admission and denial, which are essentially an overlap of the Code of Civil Procedure, 1909 (CPC) in the arbitration proceedings in Bangladesh.


This step invariably entails an evaluation of the claimant’s legal position, evidence, and key witnesses, as well as a familiarization with the client’s ultimate goals.

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Concluding a Deal with the Opposing Party

Unlike national adjudication in front of a court, arbitration is based on party autonomy. Therefore, it is best to agree on procedural, venue, and cost aspects at the outset. A lot of discussions revolve around venues if the choice has to vary from each hearing to the next, and a fixed venue goes a long way in stabilizing the same.

Procedures and Schedules

A practitioner’s primary objective should always be to complete an arbitration proceeding in a timely and efficient manner without disregarding due process rights. Instead of multiple hearings spread out over time, a week of continuous hearings followed by post-hearing briefs is recommended.

Planning for Procedures

Occasionally, tribunals prefer to hold a pre-hearing conference to ensure that all logistics are in place for the hearing. At this stage, the tribunal determines the breakdown of the hearing’s schedule, and if the hearing is held virtually, emergency contact persons for the parties are designated and network connections for everyone dialing in are verified.

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Unforeseen events and any other force majeure circumstances can necessitate the use of technology and virtual hearings. Additionally, international commercial arbitration frequently involves participants residing in different countries, which should encourage parties to prefer online arbitration using video conferencing facilities.

Given the time-sensitive nature of proceedings, if one disrupts a hearing due to logistical issues or witness unavailability, it may cause more damage to the proceedings. Likewise, neutrality and no prompting of responses from witnesses must be maintained in such situations.

It would be prudent to conduct a trial run of the facilities prior to the actual hearing and to have opposing counsel present during the cross-examination of the witness.


Arbitration proceedings are not court hearings, and the pleadings must be drafted in a very different manner. Arbitrators appreciate concise, to-the-point drafting in plain English.

Delineate issues, address claims, reference exhibits, and include the methodology on which valuation is done. Even in cases where liquidated damages have been provided, a valuation by experts or a basic computation of damages is required.

Frequently, applications and responses for requests for time, submissions, and the discovery of documents are submitted via email.

The general rule is that denied or disputed documents do not need to be proven by oral evidence.’ Witnesses must be carefully selected based on a number of factors, such as their position within the organization, their role in contract negotiations and the alleged dispute, and their knowledge of relevant documents.

Discovery and Rules of Evidence

In ad hoc proceedings, cross-examination of witnesses may not be time-limited as strictly as it is in institutional arbitrations; however, in all such cases, strict adherence to the rules adopted or determined by the tribunal is required.

In international arbitrations, the IBA Rules of Evidence govern, among other things, the relevance, materiality, and admissibility of documents; the mode of requesting documents; the request of documents in the possession or custody of the opposing party; etc. These rules may be adopted.

The ‘Redfern Schedule’ organizes the request for the production of documents. *” The Redfern Schedule contains four rows or headings that must be contributed to by the parties, their counsels, and the arbitral tribunal, namely:

a) the request to disclose;

b) the reason for the request;

c) the objecting party’s response; and

d) the arbitral tribunal’s ruling with brief explanations thereof. This is primarily due to the fact that the vast majority of these requests are merely fishing expeditions, thereby increasing the tribunal’s unnecessary workload and the cost of arbitration.


Opening Statement 

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In the opening statement, the attorneys make their first substantive arguments in the arbitration. At this stage, the party or advocate should also address all jurisdictional issues and, depending on the facts of the case, seek a preliminary ruling on the same.

A good opening statement typically includes a concise summary of the relevant facts and issues, highlighting subtly that both the best-case and worst-case scenarios favor their party. This must utilize the evidence and documentation used to reach these conclusions in an effective manner.

In addition, it must be followed by an explanation of the party’s key legal positions, with the option of including case law. At this time, the most defensible arguments are those that are sector-specific and generally commercially sensible. This may be combined with a rebuttal or preemption of the opposing counsel’s arguments.” 

The tribunal will have reviewed the submissions of the parties. Therefore, it is unnecessary to reiterate every aspect of the written phase.

Important decisions must be made regarding which claims to pursue, as the record at this stage includes the written pleadings, evidence, and supporting documents. In order to make an impression on the tribunal, some attorneys drop some of their claims immediately.


In arbitration, as opposed to a civil lawsuit, the issues framed are heavily claim-centric and not always declaratory or interpretive. In such a scenario, the primary evidence consists of documents. Thus, the purpose of an appropriate cross-examination in an arbitration is to demonstrate that the witness statement is inconsistent with the records or that the witness lacks knowledge of the pertinent facts.

Generally, you should avoid the court trial procedure of asking multiple questions on the same point if you have received a favorable response that can be linked to the document at hand and have decided to move on. Continuing to question the witness in the hope of eliciting a positive response may allow the witness to add additional damaging information to the record.

Before beginning cross-examination, it is essential to carefully review all relevant witness statements. Attempt to understand the witness as a person.

The following are some additional considerations for cross-examination:

To Cross-Examine or Not?

Contrary to popular belief, there is no rule requiring adverse counsel to cross-examine a witness. In fact, cross-examining a knowledgeable and articulate opposition witness can be extremely detrimental when attempting to build a strong case. Witnesses frequently have vested interests at stake.

The following factors must be considered when making this determination:

(i) the significance of the topics addressed by the witness;
(ii) the nature and admissibility of the witness’ written testimony.
harm the attorney;
(iii) the significance of the omitted arguments and the importance
tance of bringing to light these omissions;
(iv) the presence of unexplained gaps between the witness’s account and the physical evidence.
relevance of these gaps therebetween; and
(v) witness credibility.

There may be times when opposing witnesses delay and stall the cross-examination. In such situations, be prepared to cut the testimony short. Similarly, if time is limited, be prepared to exclude a witness from cross-examination. This phenomenon is particularly prevalent in international arbitration proceedings.

Witness Conduct and Remedy

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In situations involving uninterested or excessively laborious and verbose witnesses, it is of the utmost importance that attorneys suppress any trace of frustration. Instead, they must maintain composure and direct the uncooperative witness to the main point being made.

Despite the general prohibition against it, witnesses are sometimes prepared and repeat answers that they have deemed appropriate for each type of question. In such situations, break the chain and ask unrelated, difficult-to-anticipate questions.

Similarly, when examining experts, it is essential to note whether they are independent experts or professionals who are following instructions. It is ineffective to harass or coerce them into speaking. The majority of experts testify multiple times per year; therefore, they are frequently better prepared than fact witnesses.

Questions pertaining to the experts’ report, instructions received, and/or assumptions made are pertinent. It is prudent to enlist the aid of one’s own experts during cross-examination or even to suggest hot tubbing if deemed appropriate.

Organization and Presentation

The structuring and formulation of the written submissions in an effective and, more importantly, persuasive manner is a very admirable quality. The written arguments must be written in such a way that the tribunal remains interested and comprehends the case the attorney is attempting to build.

The written arguments must ensure that the tribunal appreciates and is persuaded by the arguments presented by the attorney. Several guidelines are detailed below:

(i) Submissions must be concise and accurate;
(ii) Do not stray from the case theory and the goal of persuading the judge.
court to adopt it;
(iii) provide a concise but thorough outline of how the submissions (both
Oral and written skills will improve.
(iv) provide a concise and comprehensive summary of the arguments;
(v) use clearly delineated sections and subsections that follow a logical progression;
(vi) create an exhaustive index or table of contents; and (vii) utilize tables, annexures, schedules, and diagrams effectively.

Cost Submissions

In addition to the foregoing, one must also file cost submissions, which include legal fees, tribunal fees, travel, lodging, and all other types of costs incurred as a result of the proceeding, as required by Section 31A of the 2001 Act. Proof of such expenses must be provided alongside the cost schedule, along with an explanation of why the applicant is entitled to reimbursement. Parties can recover substantial sums if their cost submissions are well-written.


The second chair’ is the team member who sits next to the lead counsel (first chair) and serves as second-in-command throughout the proceedings. The second chair must always be prepared to argue the case if necessary. The primary function of a second chair is to serve as the first chair’s eyes and ears.

Some Important characteristics include:

(i) be well-versed in the relevant facts and case law cited in the argument;
(ii) are very familiar with the annexures and common core bundle. Frequently, the attorneys arguing remember the document, whereas the appropriate
Preferably, reference should be made thereto;
(iii) Examine the transcripts and call attention to any admissions and/or misrepresentations.

Organization and Presentation

The structuring and formulation of the written submissions in an effective and, more importantly, persuasive manner is a very admirable quality. The written arguments must be written in such a way that the tribunal remains interested and comprehends the case the attorney is attempting to build.

The written arguments must ensure that the tribunal appreciates and is persuaded by the arguments presented by the attorney. Several guidelines are detailed below:

(i) Submissions must be concise and accurate;
(ii) Do not stray from the case theory and the goal of persuading the judge.
court to adopt it;
(iii) provide a concise but thorough outline of how the submissions (both
Oral and written skills will improve.
(iv) provide a concise and comprehensive summary of the arguments;
(v) use clearly delineated sections and subsections that follow a logical progression;
(vi) create an exhaustive index or table of contents; and (vii) utilize tables, annexures, schedules, and diagrams effectively.

Cost Submissions

In addition to the foregoing, one must also file cost submissions, which include legal fees, tribunal fees, travel, lodging, and all other types of costs incurred as a result of the proceeding, as required by Section 31A of the 2001 Act.

Proof of such expenses must be provided alongside the cost schedule, along with an explanation of why the applicant is entitled to reimbursement. Parties can recover substantial sums if their cost submissions are well-written.


Some Important characteristics include:

The second chair’ is the team member who sits next to the lead counsel (first chair) and serves as second-in-command throughout the proceedings. The second chair must always be prepared to argue the case if necessary. The primary function of a second chair is to serve as the first chair’s eyes and ears.

(i) be well-versed in the relevant facts and case law cited in the argument;
(ii) are very familiar with the annexures and common core bundle. Frequently, the attorneys arguing remember the document, whereas the appropriate
Preferably, reference should be made thereto;
(iii) Examine the transcripts and call attention to any admissions and/or misrepresentations.
(iv) take note of the reaction of the tribunal members and the body language of the witnesses during the cross-examination and provide useful feedback.
Arbitration and the court system are intertwined. This chapter has emphasized the importance of planning for interim orders. In accordance with the 1996 Arbitration Act and its 2001 Amendment, courts may be consulted for assistance with other matters. Section 5 of the 1996 Arbitration Act limits the involvement of the courts to the extent permitted by the Act,

which includes:

(i) application under Section 44 or Section 45 of the 1996 Arbitration Act, as applicable, to refer parties from court or tribunal proceedings initiated by any party to arbitration. Inaction may constitute a waiver under Section 4 of the Act.
(ii) selection of an arbitrator pursuant to Section 11(6);
(iii) requesting the court’s assistance in taking a deposition under Section 27; (iv) requesting the annulment of an arbitral award under Section 34;
(v) appeal a ruling issued under Section 34 through Section 37.

In addition to the foregoing, one may be confronted with anti-arbitration injunction suits in the Bangladeshi context if one observes that interim orders have been granted in the past restraining arbitrations. In such situations, it is crucial to file the necessary applications in the appropriate court or to immediately appeal the said order to a higher forum in order to set it aside.

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

Tahmidur Rahman Remura Wahid TRW 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].

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State to State Arbitration Process and Foreign Investment Dispute Settlement

State to State Arbitration Process and Foreign Investment Dispute Settlement

State to State Arbitration Process

Arbitration has been defined as “a third-party dispute resolution mechanism that typically results in an award binding on the arbitration parties.” State-to-state arbitration is based on the parties’ mutual will and has been defined as “the resolution of differences between States by judges of their own choosing and on the basis of respect for law.”

It is similar to international court proceedings in that it requires the parties’ consent, though the time at which consent is provided and the scope of the consent can vary significantly.

An undertaking to arbitrate can result from an agreement to arbitrate before or after a dispute arises, and it is based on legal obligations that must be fulfilled in good faith. State-to-state arbitrations differ from general commercial arbitrations in that they may include political considerations as well as purely commercial issues.

Arbitration is similar to the court system in some ways. Similarly to the Court, an arbitrator is a judge who participates in the arbitration process. However, an arbitrator is a neutral third party chosen by both parties who is primarily responsible for resolving the dispute between the parties.


After hearing the claims and scrutinizing the supporting documents, the arbitrator renders a decision on the disputed matter. To avoid unintended consequences, the parties involved can file their claim on their own or hire an expert in this field.

The numerous benefits are the primary reasons for Arbitration’s growing popularity. Some of the key benefits of hiring an arbitrator in Bangladesh and choosing arbitration for dispute resolution are as follows:

Arbitrator Selection:

The parties involved in the dispute can choose an impartial person from the panel of arbitrators to serve as the arbitrator.
Convenient forum of hearing: The seat for arbitration can be chosen by the parties at their discretion.

Practical adaptability:

The parties or their lawyers can submit the necessary documents or evidence to support their claim in any pre-agreed-upon manner.
Confidentiality is one of the most important aspects of arbitration. Many parties are hesitant to settle a dispute in open court. Arbitration allows a small number of people to resolve a dispute, ensuring that the parties’ privacy is protected.

Quick: The arbitration process is much faster than the traditional court system.
Less expensive: The arbitration process is less expensive than traditional litigation.

In some ways, arbitration is like the court system. An arbitrator is a judge who takes part in the arbitration process, much like the court does. The primary responsibility for resolving the conflict between the parties, however, rests with an arbitrator, a neutral third party chosen by both parties.

The arbitrator makes a determination regarding the dispute after hearing the claims and reviewing the supporting documentation. The parties involved can file their claim on their own or hire a specialist in this field to avoid unintended consequences.

The main factors influencing arbitration’s rising popularity are its many advantages. The following are some of the main advantages of using arbitration to resolve disputes in Bangladesh:

Selection of the Arbitrator:

From the panel of arbitrators, the parties to the dispute may select an impartial individual to serve as the arbitrator.
Convenient place of hearing: The parties are free to choose the location of the arbitration.

Practical flexibility:

The parties or their attorneys may submit the required paperwork or proof of their case in any prearranged manner.

One of the most crucial aspects of arbitration is confidentiality. In open court, many parties are reluctant to reach a resolution. A dispute can be arbitrated by a small group of individuals, protecting the parties’ privacy.

Quick: Compared to the conventional court system, the arbitration process moves much more quickly.
Less expensive: Compared to traditional litigation, arbitration is more affordable.

The use of arbitration for resolving disputes involving foreign investments dates back to the time before investor-state arbitration under BITs gained popularity.

However, at the time, it may not have been the most popular method of dispute resolution because, given the size of the sums at stake, a court or judge would have preferred the parties to resolve the cases privately between themselves.

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In the latter half of the eighteenth century, a number of ad hoc claims commissions and arbitral tribunals made decisions regarding the status of property owned by foreign nationals. Positive developments in this direction include a push for the idea of equal treatment for visitors and a commitment to refraining from meddling in the internal affairs of the host nation.

Even though the League of Nations made efforts, it wasn’t until the end of World War II that a significant international legal framework for the protection of investor rights was developed.

In documents like the OECD’s Draft Convention on the Protection of Foreign Property and the Havana Charter for an International Trade Organization, which failed to win international acceptance and did not go into effect after the Second World War, efforts were made to systematize the field of international economic law.

Through the 1959 Draft Convention on Investments Abroad, which sparked debate but never went into effect, efforts were also made outside of the government.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 158 and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 159 were both signed in the interim, and among other significant developments, the UN General Assembly adopted the Charter of Economic Rights and Duties of States in 1974.

Expansion of IIA

The expansion of IIAs globally has encouraged research into the IIAs’ provisions. Numerous researchers have claimed that IIAs, especially BITs, exhibit a uniform nature and that a BIT’s provisions are set in stone.

However, opposing viewpoints point out that IIAs are frequently bilateral and that negotiations are conducted clause-by-clause, with significant portions of the IIAs having undergone new negotiations. As a result, the treaties that the parties negotiate differ significantly.

Even the dispute resolution provisions, which are regarded by some as the IIA’s most significant provision overall (163), differ from treaty to treaty by relatively small but significant margins.

While some treaties permit direct access to international arbitration, others are more conservative and demand that disputes be first resolved in domestic courts before being brought before investor-state arbitration. Another significant difference is whether a given treaty permits arbitration under the ICSID Convention, one of the most popular methods for resolving investment disputes.

Several trade agreements and other agreements with provisions for investment protection have been signed in recent years. The signing of trade agreements with an investment chapter, like the North American Free Trade Agreement (NAFTA) or a sector-specific agreement like the Energy Charter Treaty (ECT), is a growing trend among nations.

An indication of a potential return to the old Freedom, Commerce, and Navigation (FCN) treaty framework, which contained treaties with a broad scope, is the general increase in complexity of IIAs in the latter part of the twenty-first century as a result of the shift from straightforward BITs to trade and investment agreements.

Another trend is the development of particular BIT models that have been mandated by various nations and international organizations like the OECD.

Minor parameters such as liberalization, minimum standards under international law, and an emphasis on the individual also differ between the two main BIT models, the American and European BITs.

168 BITs have also been modified to include specific provisions or explanations, such as explicit provisions governing the application of the MFN Clause in dispute resolution clauses, among other things, in the UK-Ethiopia BIT of 2009169 and the annexure on the definition of indirect expropriation.

State to State Arbitration Under IIAs as a Dispute Resolution Mechanism

Arbitration and adjudication are the two most popular legal methods of dispute resolution. State-to-state arbitration and investor-state arbitration are both possible forms of arbitration in IIAs; however, the study primarily focuses on state-to-state arbitration.

State to State Arbitration in IIAs: Its History

One of the earliest references to arbitration can be found in the 1794 Amity, Commerce, and Navigation Treaty, which is where the compromissory clauses establishing state-to-state arbitration as a method of dispute settlement in modern IIAs have their roots.

The FCN treaties were mainly signed by the USA and mostly concerned business-related issues. The first FCN treaty was signed between the USA and France in 1778, and their history dates back to the eighteenth century.

The process of signing these treaties continued, with examples including the USA-Brazil FCN treaty in 1828, the USA-Germany FCC treaty in 1923 and later after the Second World War, the USA-Italy FCN treaty in 1948, the USA-Ireland FCN treaty in 1950, and the USA-Belgium Friendship, Establishment, and Navigation (FEN) treaty in 1961, to name a few.

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State To State Arbitration Process And Foreign Investment Dispute Settlement 41

After the Second World War, the FCN treaties expanded to include investment protection. They served as a model for the 1959 Draft Convention on Foreign Investments, which later became the modern BITs.

FCN treaties can still be used for investment claims, as demonstrated by the ELSI case, which was brought before the ICJ based on a breach of an FCN treaty based on the compromissory clause in the treaty. More than 40 FCN treaties are still in force, making them important on their own. Even in the midst of the discussion on investment arbitration based on IIAs.

The lessons learned from FCN treaties can also be applied to future investment treaty negotiations because they shed light on how to include a variety of topics in a single treaty and perhaps even non-economic issues like human rights.

They served as the American alternative to European BIT programs until the 1960s, with a much wider area of coverage than BITs, including human rights, intellectual property rights, and navigation rights.

The FCN treaty program was finally abandoned by the USA in 1968 as Europe advanced due to the competitive advantages provided by the BITs. 186 state-to-state arbitration clauses, now known as the compromissory clause, came to be integrated into BITs as a legacy from the FCN treaty program.

Since the first BIT was signed between Germany and Pakistan, state-to-state arbitration has been included in IIAs through compromissory clauses; as of now, all German BITs do as well.

The 1959 Draft Convention on Investments Abroad, also known as the Hermann-Shawcross Convention, contained a similar compromissory clause. Long after the first BIT with investor-state arbitration was concluded in 1968, a compromissory clause with state-to-state arbitration served as the only method of third-party dispute resolution in some IIAs until 1984–192.

However, the said compromissory clause has rarely drawn attention, a fact that can be attributed to the provision’s limited success and a common belief that it could only cover institutional issues of BIT interpretation or issues of racial discrimination.

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State-to-state arbitration is a dispute resolution option in the WTO as well as most IIAs at the time of this study (occasionally as an option alongside other dispute resolution options like consultation, negotiation, or referral to international courts and tribunals). State-to-state arbitration (or litigation) is frequently the only means of binding dispute resolution in investment treaties, especially for nations with a large number of older treaties, like Germany or Switzerland.

In fact, state-to-state arbitration as a ‘binding’ form of dispute resolution is currently experiencing a resurgence with support from both states and investors, but as previously mentioned, very few investment treaties actually provide for recourse to ISDS. However, states parties to an IIA who have agreed to a compromissory clause with recourse to arbitration are required by law to conduct the arbitration in good faith as and when any disputes arise.

How the State to State Arbitration Process Works

The establishment of the state-to-state arbitral tribunal is a crucial step in the use of the compromissory clause under an IIA. The establishment of the SSAT marks the start of the second phase of the arbitration process, which consists of three phases: the execution of the agreement to arbitrate; the proceedings before the arbitrator; and the enforcement proceedings.

An arbitral tribunal established under international law is based on some instrument of international law, such as a treaty, which governs its operation. 61 The formation of the SSAT marks the start of the second phase.

The conclusion of an IIA with a compromissory clause mandating state-to-state arbitration already completes the first phase of an interstate arbitral process, and the third phase is largely outside the scope of this study. The second phase and main topic of this study, the operation of the arbitral tribunals, is covered in the following section.

Arbitrability as a Crucial Component of Arbitration

The word “arbitrability” is typically used to refer to the conditions or prerequisites that must be met in order for arbitration to proceed. The term refers to a number of matters, including inquiries regarding the existence of an arbitration agreement, its legality, and the scope of the dispute covered by the agreement.

The criteria for determining arbitrability are frequently used to highlight the challenges to arbitral jurisdiction that courts may take into account.

When it comes to international arbitration, it is up to the arbitral tribunal to decide whether a specific dispute can be arbitrated based on the law governing the contract and the arguments put forth by the parties.

Arbitration conducted in accordance with the Model Rules, which mandate that the ICJ determine whether a dispute can be arbitrated in the absence of a tribunal, is an exception to this rule. Due to increased recognition of the parties’ autonomy and the arbitral tribunal’s authority to make its own decisions, it is not anticipated that this provision will be used anytime soon.

Principles Relating to an Arbitral Tribunal’s Jurisdiction

The definition of jurisdiction is the “ability of a particular forum to hear a case.” The question of “who decides” whether an arbitral tribunal has jurisdiction in a particular case is debatable and is based on two doctrines: separability and competence-competence.

It is an assessment of whether the court or tribunal has the authority to decide on a case and render a decision that will be binding on the parties. Both of these tenets stem from the parties’ desire to advance arbitration as a method of resolving disputes.

The issue of whether an arbitral tribunal has jurisdiction over a dispute is typically resolved in three steps in cases of commercial international arbitration.

The first phase of the process may involve court proceedings with a request to refer the dispute to arbitration from one party; the second phase involves the arbitral tribunal determining its own jurisdiction; and the third phase involves a court’s determination of the tribunal’s jurisdiction in the event that the tribunal’s decision is challenged in a competent court.

When neither party chooses to use the first stage, the parties frequently go straight to the second phase.

The jurisdiction of the arbitral tribunal is typically decided in the second stage of state-to-state dispute arbitration under IIAs. As the jurisdiction of an arbitral tribunal is based on the arbitration agreement, this is based on the provisions of the IIAs.

In addition to determining its subject matter (rationae materiae) and temporal (rationae temporis) jurisdiction, the SSAT must also determine whether a dispute exists and whether the state has given its consent. The “intention of the parties” to arbitrate a specific dispute must also be established.

Arbitration Clause Separability:

The separability doctrine holds that the arbitration agreement can be regarded as an agreement separate from the main contract, preventing a situation where the obligation to arbitrate would not exist if the main contract were found to be invalid.

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State To State Arbitration Process And Foreign Investment Dispute Settlement 45

The principle is reflected in domestic laws and is known as the “who decides” question, holding, in essence, that when parties enter into a main contract and include an arbitration clause, the arbitration agreement is deemed to be part of that main contract.

In state-to-state arbitration, the arbitral tribunal itself has the authority to judge whether the treaty is valid, rather than a court. Although it is a rare occurrence, the award will be automatically void if a compromissory clause of a treaty is found to be invalid.

The arbitration clause for such a determination will be considered independent of the treaty, and an arbitral tribunal is given the authority to decide whether the treaty is valid. The arbitration clause itself will not be rendered invalid by a ruling that the treaty is void.

The contract’s arbitration provision may also be contested under the separability doctrine. It is important to do this in order to ensure that the arbitration clause on which the parties’ consent to the arbitration is based can be carefully examined before the entire dispute is referred to arbitrationtion is based can be carefully examined before the entire dispute is referred to arbitration.

In state-to-state arbitration, the arbitral tribunal is given the authority to consider any challenges to the validity of the clause, whereas in domestic arbitration, this function is typically carried out by a court.

Challenges to the Tribunal’s Jurisdiction

Any international tribunal’s authority to hear a case involving state parties is based on the delegation of authority by “the parties in dispute” and “only to the extent that the states have accepted it.”

The terms of the agreement between the parties to confer the jurisdiction thus limit the tribunal’s authority.

The parties carefully consider the actual scope and the authority that the jurisdictional clauses in the treaties give the tribunal.

In most cases, a challenge to a state-to-state arbitral tribunal’s jurisdiction “must be raised not later than in the statement of defense or, with respect to a counterclaim, in the reply to the counterclaim”

The arbitral tribunal may decide to address the jurisdictional issue as a preliminary question or, in some cases, directly in the final award. It can be argued that a jurisdictional challenge should typically be raised at the first hearing.99 In any case, a challenge to jurisdiction may cause the proceedings to be delayed100, and in those situations where its jurisdiction is contested, the SSAT may need to address the problem.

State Parties’ Mutual Consent to Arbitration

A key factor in determining jurisdiction is the states’ agreement to arbitrate, and no outside party can compel a state to participate in arbitration proceedings. Not only is consent required for establishment, but it is also necessary for the tribunal’s jurisdiction.

States are typically free to decide how to give their consent to arbitration, and no state may be forced to use arbitration or any other dispute resolution method without their consent. The treaty that the parties sign as a commitment to arbitrate or the treaty that creates the arbitrating institution is what governs state-to-state arbitrations the most.

A treaty, protocol, declaration, or other type of agreement wherein the parties agree to submit the disputes before the tribunal without requiring further consent from the other party in the future may be used to express the consent at an earlier stage before the dispute is submitted to the tribunal.

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State To State Arbitration Process And Foreign Investment Dispute Settlement 46

The most common way for states to give their consent for investor-state arbitration is through IIAs. The IIAs typically contain a “compromissory clause” that, as previously stated, “is a provision in a treaty which provides for the settlement by arbitration of all or part of the disputes which may arise regarding the interpretation or application of that treaty.”

This clause pertains to consent for state-to-state arbitration.109 As seen in the USA-Ecuador BIT, some treaties also include additional clauses that state the parties “prior consent to arbitration.”

Explicit consent is also common in many IIAs that Brazil has signed with nations in Latin America, usually through a separate clause that only applies to state-to-state arbitration.

However, there is no explicit advance consent for state-to-state arbitration in the form of a compromissory clause or an explicit consent clause in a few extremely uncommon treaties, such as the Brazil-Malawi ICFA or the new South African investment act.

Before beginning any arbitration proceedings in these situations, it might be necessary to obtain consent through a new agreement.

A state-to-state arbitration may also be started between the parties through an ad hoc agreement reached later on by the parties, which may be in the form of a compromis, even though compromissory clauses may be a common practice in treaties.

Procedures Must Support Arbitration as a Dispute Resolution Method Arbitration as a Dispute Resolution Method Needs to Be Supported by Procedural Provisions.

While compromissory clauses express the parties’ agreement to arbitrate, they frequently contain no information about the specifics of how the arbitration will be conducted, such as the applicable law or the rules of the arbitral tribunal. While some treaties contain in-depth information about the rules of procedure and method, relevant law, and the administrative aspects of the tribunal, others may call for the conclusion of a special agreement (compromis) to address these matters.

The state parties have a great deal of discretion over how the arbitration will be conducted, including choosing the rules and laws that will apply as well as determining the parameters of the award.191 Even then, a compromis or the treaty itself may not address these matters and result in perplexing circumstances, some of which are covered below.

Relevant Law for State to State Arbitration

State-to-state arbitration is typically governed by rules of public international law (lex arbitri193 and lex causae194), and in the absence of an express choice of law, tribunals have used international law as the applicable law.195 State Parties to the Agreement are free to choose the laws that will govern state-to-state arbitration and may do so in place of any applicable customary international law.

Due to the principle of jurisdictional immunity, the generally accepted rule that the law of the seat applies to arbitration is not always true for a state-to-state arbitration, and the IIA may specify the applicable law even when mentioning a seat of jurisdiction. In accordance with their preferences, the parties may also choose to alter the applicable customary international law principles governing state-to-state disputes.

They may also, in exceptional circumstances, give the SSAT express authority to decide a dispute ex aequo et bono199, but a tribunal may not apply this principle without express permission.200
IIAs’ compromissory clauses make references to various sources of relevant law.

For instance, the Australia-Uruguay BIT, 2019, refers to the BIT, other international agreements between the parties, and generally acknowledged principles of international law as the applicable law, whereas the US Model BIT from 2012 refers to “applicable rules of international law.”

The compromissory clause commonly refers to international law in some way as the applicable law, but there may be other sources of law attached to it that the SSAT must also take into account.

These clauses that list “international law” as the applicable law generally imply that the dispute resolution process will be governed by international law and that it must be possible to resolve the dispute in accordance with international law.

In any case, the VCLT’s rules for treaty interpretation and application, which are regarded as embodying primary international law, must be included in and followed by these rules of international law.

Now that international law lacks a legislative body like that of nations, it derives its “legal norms” from a variety of sources, including treaties, judicial rulings, treatises, and academic articles.

As a result, there might be some misunderstanding as to the sources that a tribunal that has been requested to resolve a dispute based on “relevant rules of international law” under Art. 31 (3)(c) VCLT may consider. If further clarification is not provided by the IIA itself, such conflicts may be resolved by the tribunal through a procedural order following consultation with the parties.

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As was the case in the IUSCT, where the parties agreed that the legal system of a third country, the Netherlands, governed certain aspects of the arbitration, the parties to a dispute may choose to change the law governing the arbitration and may “waive their sovereignty.” In exceptional circumstances, state-to-state arbitration may also be governed by local or domestic law of a state, but only to the extent that is agreed upon by the parties.

When it comes to the applicable law, agreements sometimes only choose to mention the rules that may govern the arbitration. For guidance on the appropriate law in these situations, the arbitration rules are assessed.

According to the PCA Optional Rules on Arbitration between Two States, for instance, disputes would be resolved in accordance with international law by applying:

(a) International conventions, whether general or specific, establishing rules expressly recognized by the contesting States;
(b) International custom, as proof of a general practice accepted as law; and
(c) The general principles of law recognized by civili

Additionally, PCA Optional Rules make clear that the tribunal must use the legal authorities listed in Art. 38 of the Statute of the ICJ when no special agreement has been made between the parties or when there is no rule that applies to the dispute. The Model Rules also include similar provisions regarding the applicable law to be applied in a dispute in the absence of guidance.214 If both parties agree, tribunals may also rule on a case ex aequo et bono.

However, choosing a set of rules does not guarantee that the applicable law guidance in those rules will be followed; alternatively, separate applicable law guidance may be specified.

Additionally, although choosing a particular forum or institution may indicate a preference for the applicable law, this is not an absolute rule, and the parties may agree to modify the applicable law.

As a result, the parties may in some circumstances decide to grant the tribunal broad discretion over the law, rules, and procedure.

The Iran-US Claims Tribunal (IUSCT), which serves as a state-to-state arbitration tribunal, is one example where no opinion was given regarding the legal framework for the state-to-state interpretative disputes.219 If a dispute relates to a claim for protection under a treaty, the parties to the treaty “may be deemed” to have made an implicit choice for the determination of the dispute under international law.

However, if the parties to an IIA are not recognized as states, as in the case of some Taiwanese BITs, where the parties have reserved the right to decide the terms and conditions later, or have not specified the applicable law, this implicit choice may not be applicable. Before the start of the proceedings, clarification from the parties may be necessary in this case regarding the applicable law.

Applying Rules

The arbitral tribunals must decide disputes in accordance with the applicable arbitration rules, and these rules also have an impact on how the arbitration proceedings are conducted. State-to-state arbitration rules are either (a) established by the tribunal, (b) outlined in the treaty or created through an agreement between the parties, or (c) referred to in pre-existing rules like the Model Rules, UNCITRAL Rules, or PCA Rules.

When a treaty names an institution—such as the SCC, the LCIA, or even an international tribunal like the IUSCT—the state-to-state arbitration proceedings may also be governed by the rules of that institution.

The state parties have the freedom to choose the rules of procedure, and they are free to specify an institutional location for arbitration at their discretion. The tribunal, meanwhile, is free to choose its own procedure and may even set alternative rules.

To fulfill its obligations under the 19581 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), Bangladesh enacted the Arbitration Act in 2001. For both domestic and international arbitration with a seat in Bangladesh, the Act established a single, unified regime.

The Act contains provisions for the enforcement of foreign arbitral awards as well as rules governing the oversight of international arbitration.

The Act is largely based on the UNCITRAL’s (United Nations Commission on International Trade Law) Model Law recommendation for commercial dispute resolution through arbitration and enforcement award, which has been adopted in 80 States and a total of 111 jurisdictions. Bangladesh is unquestionably included by this statute in the current global commercial arbitration trend.

Since the Act was passed in 2001, almost 22 years have elapsed. Bangladesh has yet to be successful in establishing itself as a desirable location for international arbitration. Despite the Act 2001 being based on the Model Law, there are many significant areas where it departs from the Model Law. In many instances, these departures from the Model Law have an impact on Bangladesh’s potential to serve as a preferred venue for international arbitration.

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For instance, Bangladesh designated the High Court Division (HCD) of the Supreme Court of Bangladesh to oversee the operations of an arbitration tribunal with a seat in Bangladesh in accordance with the Model Law’s recommendation.

The ability to intervene in the efficient operation of the international arbitral tribunal was expanded by the HCD’s designation, among other things. The current Act broadens the scope of judicial intervention, contrary to the Model Law’s goal of minimizing judicial interference with the operations of the international tribunal.

In addition, Bangladesh’s legal system, which is based on common law and has a written constitution, gives it broad supervisory authority over the operations of any international arbitration with a Bangladeshi seat.

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

Tahmidur Rahman Remura Wahid TRW 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].

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Payments Trends in 2023

Payments Trends in 2023

Payments Trends and Cross-border transactions

Each transaction consists of two components: receipts and payments. This is the accounting golden rule. The same applies to international transactions. For example, a buyer makes payments to a seller, who then receives payment for the transaction. On the other hand, an importer transfers funds to a bank for international transfer to the supplier. Thus, a transaction occurs.

It is commonly believed that hundi circumvents legal transactions. In order to conceal money laundering, formal channels can also facilitate illicit transactions by over-invoicing imports and under-invoicing exports. It is possible to conduct international transactions without the assistance of banking channels.

These are accomplished through two channels: current transfers and financial or capital transfers.

Foreign Exchange Regulation Act of the country defines current account transactions as –

(i) receipts and payments due in connection with foreign trade, other current business including services, and normal short-term banking and credit facilities in the ordinary course of business;
(ii) receipts and payments due as interest on loans and as net income from investments; and
(iii) moderate amounts of amortisation of loans or for depreciation of direct investments.

Capital account transaction is a transaction for the creation, modification, transfer, or liquidation of a capital asset, including but not limited to securities issued in capital and money markets, negotiable instruments, non-securitised claims, units of mutual fund or collective investment securities, commercial credits and loans, financial credits, surety bonds, guarantees, deposit account operations, life insurance, personal capital movements, and real estate.

The taka is theoretically freely convertible for current account transactions. It means that regulator approval is not required for transactions on current accounts. However, insiders hold differing opinions; under general authority, banks are permitted to execute transactions within the indicative limit.

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To exceed the authorization, central bank approval is required. Despite the fact that ease of doing business is a topic that is frequently discussed, discord is caused by contradictory perspectives in business transactions.

Open are transactions under capital account for inward investments such as direct investments and portfolio investments. Other transactions require government authorization.

As Taka is not convertible for outward remittances on capital account transactions, the central bank monitors every transaction under current account. Every import payment is subject to documentary proof by the entry of corresponding goods; each export shipment must be accompanied by incoming payments.

Every outbound transfer must be reported to the central bank. All of these measures are intended to prevent capital transfers disguised as current payments. It is debatable whether the monitoring system produces effective results.

Ongoing international efforts are made to address obstacles and frictions in cross-border payments.

For the next phase of work under the G20 Roadmap for Enhancing Cross-Border Payments, the Financial Stability Board (FSB) published a report in February 2023 detailing actions to be taken on payment system interoperability, legal, regulatory, and supervisory frameworks, and cross-border data exchange.

Prior to the G20 Roadmap’s 2027 deadline, the FSB makes it clear that much work remains to be done to improve the cost, speed, accessibility, and transparency of cross-border payments.

What to expect in future about cross border transactions

The Taka is presumed to be fully convertible for capital account transactions. In this situation, it is questionable whether a monitoring framework is required. Such a monitoring mechanism is disregarded by the central banks of countries with a convertible capital account framework. They simply gather data to generate various macroeconomic reports.

If current account transactions were fully convertible in the true sense and capital account transactions were partially convertible, the demand for shadow transactions would have decreased. Consequently, a framework for monitoring cross-border transactions would have been superfluous.

For money to be transferred under the guise of current accounts through banking channels or shadow channels, foreign currency inflows are required. Balance of payments displays incoming and outgoing funds. Exports account for more than fifty percent of total inflows, followed by wage remittances.

Exporters are required to submit regulatory declarations regarding their exports of goods, for which payments must be repatriated within four months of shipment date. In the absence of repatriation, exporters may face regulatory actions and be denied policy supports such as cash incentives, bond facilities, low-interest loans, etc. The use of autopilot for the repatriation of export profits is effective.

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In addition to the export of physical goods, international service delivery according to mode 1 of the GATS is considered an export of services.

Consultancy, law, engineering, accounting, and information technology are a few examples. The central bank permits service exporters to retain a significant portion of their foreign currency inflows to cover expenses, as the service industry is deemed a promising sector.

Despite this, the sector has yet to demonstrate a significant position in international transactions.
There are complaints that service exporters do not properly repatriate earnings. According to industry insiders, the underlying reason is that service exporters require outward remittances for which required tax payments impose an additional cost burden.

Sendings from Bangladeshi expatriates are the second largest source of foreign income. It is not required that non-residents send their earnings abroad. Non-residents may use the income in their home country. We are all aware that the majority of residents in megacities like Dhaka come from rural and urban areas.

There are white collar, blue collar, and red collar jobs, among others. People who fall under the white category typically save money and invest in capital goods, such as real estate. They occasionally send money to their village of origin. Frequently, others send money. But income generated in megacities is not required to return to its earners’ origins.

The same is true for non-residents, who send modest amounts of money home. Only blue collar workers consistently send money home.

The demand for international transactions conducted through shady channels generates alternative foreign exchange markets. The foreign exchange rate for incoming remittances is higher than that for export receipts. A higher rate for wage receipts indicates that the remittances are exchanged for transfer in another manner.

Now comes the question of which fund is sent overseas by adjusting wage remittances. Unquestionably, restrictions on outward remittances and relevant formalities result in shadow markets.

Not generally permissible for which specific approval is required are payments of this nature. It is true that where there is a demand, a market will form. If demand is eliminated, the market will cease to exist.

If we see other countries alongside Bangladesh, in Europe, changes will be compelled by regulators, such as instant euro payments in the EU. In light of the slow market adoption of technology to process instant euro payments, the Commission proposes to implement the so-called Instant Payments Regulation.

This would require payment service providers that offer euro credit transfers to offer instant euro payments at the same or a lower fee than that applicable to euro credit transfers that are not instant.

In accordance with the G20 Roadmap’s priorities, global regulators and market participants will work to advance payment system interoperability, including interlinking arrangements for payment systems that reduce reliance on intermediaries by allowing banks and other payment service providers to transact directly.

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Additionally, domestic advancements will allow the focus to shift abroad. For instance, in the United States, the Federal Reserve anticipates launching the FedNow Service, a new instant payment service that would allow consumers and businesses to settle payments almost instantly through deposit accounts with banks that maintain a master account at a Federal Reserve Bank.

The Federal Reserve has stated that, at launch, the FedNow Service will only support domestic payments between US depository institutions; however, if access is expanded to non-US financial institutions in the future, the service could be used to facilitate cross-border payments.

Central bank digital currencies

More than 114 countries, representing over 95% of global GDP, are examining the potential benefits of central bank digital currencies (CBDCs) – a digital representation of fiat currency issued by a central bank. A few nations, including the Bahamas and Jamaica, have already implemented CBDCs, whereas the majority are still in pilot or research stages.

Despite the fact that some CBDCs are based on blockchain or distributed ledger technology (DLT), many jurisdictions are investigating a variety of alternative technologies.

What are the implications of these developments for Bangladesh? A digital taka (e-taka) could make the payment system more efficient and affordable. Currently, it takes 30 minutes and a surcharge of 100 taka to transfer 1 lac taka via the real-time gross settlement service between 10 a.m. and 3 p.m.

In Europe, payment processing takes only 10 seconds and costs €0.002 per transaction (equivalent to 20 paisa in Bangladesh). An e-taka will also save hundreds of billions of taka in printing costs. For instance, it costs eight taka to print a one thousand taka note and nearly two taka to mint a five taka coin.

The most significant advantage of e-taka, however, is that it will enable the government to track its expenditures for development and other operational services.

Therefore, it will be extremely difficult, if not impossible, for public officials who take advantage of stealing and accumulate physical money because it takes the government time to identify them (often they are identified right after their retirement) to steal public e-money.

Similarly to how the introduction of the electronic government procurement (E-GP) system has increased the quality and competitiveness of public project bidding, the mandatory use of e-taka in public works will make the system more transparent and combat corruption.

Concept of Digital Taka

A digital taka can provide unanticipated benefits in our personal lives.

For instance, parents will be able to track where their children spent their money, thereby reducing misuse. In addition, digital currency can be programmed to exclude certain transactions. A diabetic patient, for instance, may not be able to purchase unhealthy food with digital taka or digital currency. We can also track the expenditure of our zakat and sadaqah contributions.

All these advantages come at the expense of our highly valued privacy in Bangladesh. As a result, it is believed that the CBDC will be most successful in China, where Chinese citizens are most accustomed to being monitored by their government.

In conclusion, CBDCs can theoretically be extremely potent in the sense that they can displace credit cards and banks. However, this will defeat the purpose of the system.

Despite the fact that the new competition from CBDCs is likely to make banking services cheaper, faster, and more equitable. Whether digital currency is administered by private banks or a central bank, the greater concentration of digital currency will make the system more susceptible to cyberattacks.

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China invented paper currency in the seventh century and monopolized the issuance of currency in the eleventh century. It is therefore not surprising that the People’s Bank of China is the first major central bank to introduce an e-currency.

In the coming years, the Fed, the ECB, and other central banks will likely issue their own CBDCs. CBDCs could serve as an effective countermeasure to cryptocurrencies and have the potential to become the predominant medium of exchange.

Numerous CBDC projects emphasize domestic retail. However, international standard-setting organizations such as the Bank for International Settlements (BIS) are promoting the use of CBDCs to facilitate international payments. Solving the interoperability problem between initiatives is crucial.

What to expect form Central bank digital currencies in 2023

Changes will be compelled by regulators, such as instant euro payments in the EU. In light of the slow market adoption of technology to process instant euro payments, the Commission proposes to implement the so-called Instant Payments Regulation.

This would require payment service providers that offer euro credit transfers to offer instant euro payments at the same or a lower fee than that applicable to euro credit transfers that are not instant.

In accordance with the G20 Roadmap’s priorities, global regulators and market participants will work to advance payment system interoperability, including interlinking arrangements for payment systems that reduce reliance on intermediaries by allowing banks and other payment service providers to transact directly.

Additionally, domestic advancements will allow the focus to shift abroad. For instance, in the United States, the Federal Reserve anticipates launching the FedNow Service, a new instant payment service that would allow consumers and businesses to settle payments almost instantly through deposit accounts with banks that maintain a master account at a Federal Reserve Bank.

The Federal Reserve has stated that, at launch, the FedNow Service will only support domestic payments between US depository institutions; however, if access is expanded to non-US financial institutions in the future, the service could be used to facilitate cross-border payments.


Stablecoins, in contrast to CBDCs, are privately issued DLT-based cryptoassets that include a mechanism to minimize price fluctuations and “stabilize” their value.

Their objective is to create an alternative form of low-risk digital unit that businesses and consumers can use directly. The most prevalent potential stabilisation method is the collateralised stablecoin model, which achieves stability by linking the currency to a reserve of stable real assets, such as fiat currencies or commodities.

Alternate options include crypto-collateralized stablecoins (where a reserve is comprised of other cryptocurrencies) and uncollateralized stablecoins (which do not have any reserve but instead use central bank-like monetary policy to maintain a fixed price by controlling supply with algorithms which respond to market conditions).

Since the failure of Libra/Diem, global regulators have been closely monitoring stablecoin market developments, and the collapse of USD Terra last year has heightened their concerns.

This has prompted several jurisdictions, including the United Kingdom, to prioritize the creation of a regulatory framework for stablecoins over other cryptoassets in their draft Financial Services and Markets Bill.

In addition to the regulatory framework for cryptoassets and security tokens that will be implemented in 2020, Japan is currently implementing a framework for the issuance and distribution of stablecoins.

In contrast, the EU’s new Markets in Crypto-Assets Regulation (MiCA) will introduce a comprehensive new regulatory framework for the issuance and sale of all cryptoassets, as well as significant additional requirements for the sale of stablecoins.

In the United States, a number of bills to regulate stablecoin issuers have been proposed, each imposing variations of bank-like requirements (such as FDIC insurance, chartering framework, and liquidity requirements), but none have reached the floor of the US Congress for a vote.

What follows?

The EU’s MiCA will be formally adopted in 2023, with some of its provisions becoming applicable in 2024. It is also anticipated that the Financial Services and Markets Bill will be passed in 2023. With the introduction of these regimes, stablecoins can be utilized in more conventional consumer and wholesale settings.

Additionally, there will be additional legislative and regulatory changes in additional jurisdictions.

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In the United States, we anticipate the introduction of new legislation and the continuation of debate on the appropriate regulatory framework for stablecoin issuers, including how to address uncollateralized or algorithmically-stabilized stablecoins such as USD Terra and the extent to which stablecoin issuers may be regulated like banks.

Operational resilience

Increasing digitalization of customer experiences, increased automation of internal processes, and increased use of third-party service providers all make businesses more susceptible to technological disruptions and hence Operational resilience is extremely important for companies in 2023.

Due to the financial, reputational, and societal consequences of high-profile IT failures, operational resilience (or ensuring the continuity of essential business services) remains a top priority for boards, regulators, and customers.

Bangladesh’s achievements over the course of this 50-year partnership with World Bank have vastly surpassed the initial World Bank assessments conducted in the early 1970s.

Since this initial emergency credit, the World Bank has committed approximately $39 billion in funding from the International Development Association (IDA) in the form of grants, interest-free loans, and concessional credits to assist the country in developing its indigenous strategies to address its most pressing development challenges.

With approximately $15 billion in ongoing programs, Bangladesh has the largest IDA program in the world at the present time. The World Bank is also the largest development partner for Bangladesh.

Bangladesh has made remarkable progress in numerous areas, but three strategic development decisions it has made over the years have yielded the greatest returns: investing in people, empowering women, and preparing for disasters and adapting to climate change.

Bangladesh quickly realized that investing in people is equally as important as investing in infrastructure. In 1972, the life expectancy was less than 50 years, whereas a newborn today is expected to live over 70 years. The fertility rate has decreased from 6,1 births in 1971 to merely 2,1 births in 2018. The vast majority of children attend school.

The strategy for reducing poverty in Bangladesh centered on the empowerment of women.

In 1991, Bangladesh had one of the lowest levels of female education attainment. Bangladesh was one of the first developing nations to achieve gender parity in secondary school enrollment, thanks to a pioneering school stipend program for poor rural girls, which was replicated in Mexico, Cambodia, and other nations.

In 1970, only 17 percent of lower secondary school enrollment was made up of females; this number has since increased to more than half. Hundreds of thousands of rural women were employed by its thriving ready-made garment industry. The female labor force participation rate rose from 21 percent in 1990 to 35 percent in 2021, an increase of 73 percent.

Bangladesh has met the challenges of being severely impacted by natural disasters and climate change by becoming a leader in climate adaptation and disaster preparedness.

Since independence, a network of embankments, cyclone shelters that function as primary schools during normal weather, early warning systems, and forestation have reduced cyclone-related fatalities by a factor of one hundred.

The numbers tell the tale: More than 300,000 people were killed by Cyclone Bhola in 1970, while Cyclone Sidr in 2007 claimed 3,363 lives and Cyclone Mora in 2017 claimed only 18 lives.

In response to a request from the G20, the FSB published a consultation in October 2022 titled Achieving Greater Convergence in Cyber Incident Reporting.

1. What is Open Finance?Open Finance is a financial services ecosystem that uses open APIs (Application Programming Interfaces) to enable third-party developers to build applications and services around financial institutions. It aims to increase competition, innovation, and access to financial services for consumers and businesses.
2. How is Open Finance related to cross-border transactions?Open Finance can facilitate cross-border transactions by providing a seamless and secure platform for exchanging funds across different currencies and countries. By leveraging open APIs, financial institutions can connect with each other to offer new and innovative cross-border payment services.
3. What are some of the challenges that Bangladesh faces in adopting Open Finance?Bangladesh faces several challenges in adopting Open Finance, including a lack of digital infrastructure, limited financial literacy, and regulatory constraints. Additionally, there may be concerns around data privacy and security, which must be addressed to build trust in the system.
4. What are the benefits of Open Finance for Bangladesh?Open Finance can bring several benefits to Bangladesh, including increased financial inclusion, greater competition and innovation in the financial sector, and improved efficiency in cross-border transactions. Additionally, it can help to reduce transaction costs and improve access to credit for small and medium-sized enterprises.
5. What role can fintech companies play in advancing Open Finance in Bangladesh?Fintech companies can play a critical role in advancing Open Finance in Bangladesh by developing new applications and services that leverage open APIs to provide innovative solutions for consumers and businesses. They can also help to educate the public about the benefits of Open Finance and work with policymakers to create a supportive regulatory environment.
6. What are some of the key regulatory considerations for Open Finance in Bangladesh?Regulatory considerations for Open Finance in Bangladesh include data privacy and security, consumer protection, and anti-money laundering (AML) and know-your-customer (KYC) requirements. The regulatory framework must balance innovation and competition with the need for safeguards to protect consumers and maintain the integrity of the financial system.
7. What are some examples of Open Finance initiatives in Bangladesh?Some examples of Open Finance initiatives in Bangladesh include the use of mobile wallets for peer-to-peer transactions and the adoption of blockchain technology for cross-border remittances. Additionally, the central bank of Bangladesh has established a fintech innovation lab to promote the development of innovative financial services solutions.
8. How can cross-border transactions be made more efficient in Bangladesh?Cross-border transactions can be made more efficient in Bangladesh by leveraging digital technologies such as blockchain and open APIs. Additionally, streamlining regulatory processes and reducing transaction costs can help to facilitate cross-border transactions and increase their volume.
9. How can Open Finance contribute to financial inclusion in Bangladesh?Open Finance can contribute to financial inclusion in Bangladesh by providing new and innovative financial services that are accessible to underserved populations. For example, mobile banking and digital wallets can provide low-cost and convenient financial services to those who may not have access to traditional banking services.
10. What is the outlook for Open Finance in Bangladesh?The outlook for Open Finance in Bangladesh is positive, as the government and financial sector stakeholders recognize the potential benefits of the ecosystem. However, there are still challenges to be overcome, including regulatory barriers and the need for greater investment in digital infrastructure. With the right policies and investments in place, Open Finance has the potential to transform the financial sector in Bangladesh and improve the lives of millions of people.

The FSB’s proposals include recommendations to address the obstacles to achieving greater international convergence in cyber incident reporting, work on establishing common terminologies related to cyber incidents, and a proposal to develop a standard format for exchanging incident reports.

The purpose of the EU’s new Digital Operational Resilience Act (DORA) is to establish uniform requirements for the security of network and information systems of companies operating in the financial sector, including cryptoasset service providers, as well as any critical third parties that provide them with information communication technologies services.

Following its exit from the EU, the United Kingdom has introduced the Financial Services and Markets Bill, which includes provisions to regulate cloud service providers and other critical third parties that provide services to UK-regulated firms and financial market infrastructures.

Under the proposed legislation, HM Treasury would have the authority to designate certain service providers as “critical,” and UK regulators would be granted new direct oversight authority over designated service providers, who would be subject to new minimum resilience standards.

In the absence of a general election, the Bill should be passed and signed into law by the end of the current session of Congress (expected to be in May 2023). While the United Kingdom’s proposals and DORA’s requirements share the same objectives, there are a number of differences between them, including with respect to the “critical” designation criteria and the enforcement regime.

What to expect in Operational resilience in 2023 around the globe?

Efforts to harmonize global standards at the national level will continue. The FSB is scheduled to release a revised report to the G20 in April 2023. This report will include expectations for financial authorities’ oversight of financial institutions’ reliance on critical service providers, such as “Big Tech” and fintech firms.

Once in effect, the requirements of DORA and the new UK regime for contracting with payment service providers will impose a significant legal burden on businesses that provide payments technology.

The implementation of a new incident reporting mechanism by DORA, including a requirement that “major” incidents be reported to competent authorities within strict timeframes, will necessitate substantial process investments.

In the United States, we anticipate the banking agencies to finalize their 2021-proposed guidance on “third-party risk management,” which will establish supervisory expectations for risks posed by third-party relationships as well as higher standards for providers of “critical services.”

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The guidance requires, among other things, that covered institutions conduct due diligence, provide ongoing oversight of a third party’s information security programme and information systems, and assess the third party’s ability to continue providing services during a disruption event.

Additional global regulators will launch comprehensive regulatory regimes to ensure that financial institutions have appropriate internal governance and control frameworks surrounding the use of ICT, including the use of third-party technology providers.

We are also likely to see a rise in regulatory enforcement actions related to operational disruptions; TSB Bank plc was recently fined £48.65 million by UK financial regulators for operational risk management and governance failures related to its IT upgrade program.

Similarly, the same technology disruption events are likely to result in civil claims and litigation, whether for contract breach, negligence, or data breach.

Multiple jurisdictions have implemented open banking regimes, permitting third-party payment service providers (TPPs) to initiate payments or access account information on behalf of their customers. Regulators anticipate that firms will fulfill their regulatory obligations while competing on the basis of quality and value.

Some jurisdictions have taken this concept a step further, applying it to other types of accounts and financial products as part of a broader “open finance” initiative.

Open Finance

Multiple jurisdictions have implemented open banking regimes, permitting third-party payment service providers (TPPs) to initiate payments or access account information on behalf of their customers.

Regulators anticipate that firms will fulfill their regulatory obligations while competing on the basis of quality and value.
Some jurisdictions have taken this concept a step further, applying it to other types of accounts and financial products as part of a broader “open finance” initiative.

Developing comprehensive legislative frameworks for such initiatives is time-consuming, but essential for ensuring that TPPs are regulated to provide clarity around I security, consent, data use, privacy, and ethics, and to build customer trust.

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In the context of Open Banking, the recast EU Payment Services Directive’s rules on TPP access, strong customer authentication, and secure communication standards may provide a blueprint for expansion in the European Union.

The Consumer Financial Protection Bureau (CFPB) in the United States is in the process of developing a proposal for an Open Banking rule that would give consumers more control over their financial data by allowing them to access and share it with other providers.

The concept of Open Application Programming Interface (API) for use in the banking industry i.e open finance has emerged as one of the most significant developments over the past few years. Open banking entails making the APIs accessible to third parties (financial technology companies), who can use the shared consumer data to create innovative products and services, as well as to generate offers and discounts based on consumer spending habits.

The API will allow the company’s software to access information from another company’s software. When we order an Uber, the Google Maps API allows us to track our car’s journey to the pickup location.

Without these APIs, if you want to share the information in your bank account with another organization, you must give them your login credentials. These new APIs will allow you to safely and securely share your bank account information without disclosing your password.

The objective of Open Banking regulations is to transfer account information ownership from banks to customers. It enables individuals to securely share transaction information with other banks and third parties.

The fundamental aspect of open banking is that customers are not required to share their data with third parties. When you sign up for a service, each provider will ask for your permission to access your information.

The system will then send a request to your bank, which will then process the request and share your information. You may also revoke your consent at any time. The rules only apply to online-accessible accounts, and you must connect your online banking to the third party for it to obtain your data.

It is ultimately your decision whether or not to share your information. Under Open Banking, however, your financial information will be more secure than ever before. All banks, apps, businesses, and other third parties operating within the Open Banking framework are evaluated according to the highest privacy and security standards.

Here are a few real-world examples of how the customer could benefit:

  • Customers can obtain better deals on credit cards, loans, and mortgages by comparing them across multiple financial institutions and third parties based on their individual circumstances.
  • Gain a comprehensive perspective of accounts in a single location.
  • Monitor multiple bank accounts and credit cards for fraud with ease.
  • Utilize a unified platform to efficiently and safely manage your finances across multiple services and providers, from banking to online shopping.
  • Open banking is not limited to developed nations; many markets around the world have sought to adopt similar principles with the ultimate goal of enhancing customer financial outcomes.

The rule is intended to promote competition by making it simpler for consumers to “walk away” from their current providers and transfer their financial data to other providers via application programming interfaces (APIs).

Future of Open Finance in 2023

There will be a renewed emphasis on open finance and the development of more innovative use cases. With web 3.0 and metaverse applications raising a new set of legal and regulatory questions, consumers will receive payment services through channels that are novel.

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Following a consultation in 2022, the publication of a new framework for Open Finance in the EU is scheduled for the second quarter of 2023.

In Bangladesh’s banking industry and open finance, there are numerous supply difficulties. The cost of providing financial services is disproportionately high to the price of the product. Open Banking is the only remedy for this issue.

Despite digitization and open source, industries such as retail, transportation, food and beverage, education, etc. are experiencing significant disruptions. However, the trend will have a much greater impact on the financial services industry, whose business models are on the verge of digital transformation.

Multiple parties are involved in Open Finance, and it is unclear who should be responsible for data protection and security and who owns customer data. It will be difficult to determine who owns all of this information, as it will continue to flow from screen to screen. In the future, accelerating data ownership and customer privacy will be crucial.

The evolving landscape of banking presents both challenges and opportunities. Our banks should collaborate with other service providers to enrich and streamline the customer experience.

As the Open Banking community continues to expand throughout 2023, new obstacles and opportunities will emerge. Banks must continue to prioritize data privacy, cyber security, and customer protection throughout the implementation phase. However, the benefits Open APIs offer to customers and banks will drive their growth and adoption.

The CFPB is expected to issue a proposed Open Banking rule later this year in the United States. Significant issues remain unresolved, including the rule’s applicability to non-banks as well as privacy and data security concerns.

Smaller banks have urged the CFPB to phase in a ban on “screen scraping,” in which a third party uses a customer’s login credentials to access their account information, because they lack the technological resources to build a library of APIs.

Hire a Competent law firm for your cross border transactions in Bangladesh:

Tahmidur Rahman Remura Wahid TRW Associates is comprised of competent Barristers and Advocates with expertise in multiple legal fields, allowing them to provide the required services to a high degree and allowing clients to acquire all necessary and supplementary legal services under one roof.

The Barristers, Advocates, and attorneys at Tahmidur Remura Wahid TRW in Mohakhali New DOHS, Dhaka, Bangladesh have extensive experience assisting clients with all sort of licensing matters. For questions or legal counsel, please contact us at:

DHAKA: House 410, ROAD 29, Mohakhali DOHS
DUBAI: Rolex Building, L-12 Sheikh Zayed Road
LONDON: 1156, St Giles Avenue, Dagenham

 Email Addresses:
[email protected]
[email protected]
[email protected]

 24/7 Contact Numbers, Even During Holidays:


How much money can you take out of Bangladesh without declaring it?

One can take US$ 12,000 in foreign currency out of Bangladesh.

An adult can withdraw up to $12,000 per calendar year for private international travel. Out of this total, up to US$ 5,000 or its equivalent may be used for travel to SAARC member countries and Myanmar, and up to US$ 7,000 may be used for travel to all other countries.

What are the transfer regulations of Bangladesh Bank?

With government approval, expatriates working in Bangladesh may remit through an Authorized Dealer (AD) 50% of salary, 100% of leave salary, actual savings, and pension benefits. No prior approval from the Bangladesh Bank is required for such transfers.

What is the maximum TT allowed in Bangladesh?

Different limits apply to individual versus institutional IBFT transactions. For individuals, the maximum value of each transaction is 3,00,000 taka, and the maximum number of transactions per day is ten, with a daily limit of 10,00,000 taka.

How does open banking differ from open finance?

Open Banking is followed by Open Finance.

Open Banking enables account information (AIS) and payment initiation (PIS) services, whereas Open Finance will encompass additional financial products and services beyond banking. Open Finance is significantly more widespread than Open Banking.

What are the fundamental risk policies of Bangladesh Bank?

BB has issued five core risk management guidelines since then: Asset-Liability Management (2005), Credit Risk Management (2005), Internal Control and Compliance Framework (2005), ICT Security (2010), and Prevention of Money Laundering and Terrorist Financing (2005). (2012).

What is NOP in banking in Bangladesh?

NOP refers to the net total of a financial institution's foreign-currency assets and liabilities, including spot and forward transactions and off-balance sheet items in that foreign currency.

How can I reduce my non-performing loan in Bangladesh?

There are three key strategic options for managing a large portfolio of NPLs, with varying degrees of isolation and resource requirements:

(i) Carry on with business as usual...
(ii) Establish an exercise unit (operational separation)...
(iii) Establish a bad bank (operational, financial, and legal separation).

What are the Open Finance risks in Bangladesh?

Open Finance risks in Bangladesh may include a loss of control over personal data, increased financial exclusion, careless automation, and the growing influence of platform monopolies.



MLM company in Bangladesh and Multi-level Marketing (MLM) ENTERPRISE IN BANGLADESH

Multi-level Marketing (MLM) is a business opportunity known by a variety of names, including network marketing, direct selling, person-to-person marketing, matrix marketing, binary marketing, and one-to-one marketing.

Network marketing, also known as Multi-Level Marketing, is one of the least understood strategies for bringing products and/or services to market. It is a system in which the company producing the product or service compensates those who recommend it to others.

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Members, Independent Salespeople, Network Marketers, Advisors, Agents, and Distributors are some of the terms used to refer to the people who operate as components of the chain, depending on the scheme.

MLM has evolved and developed further over the subsequent decades, resulting in the wide variety of companies, product lines, compensation plans, and cultures that exist today.

This distinctive, potent system of free enterprise continues to expand, attracting an increasing number of individuals. As we prepare to enter the twenty-first century, MLM has never been more well-respected, healthy, appealing, or lucrative. In Bangladesh, MLM Company continues to expand due to rising demand throughout the country.

MLM Company began its journey with the intention of providing self-employment opportunities to millions of educated but unemployed Bangladeshi youths.


Prior to World War II, the MLM business evolved gradually over a number of years, and it is generally agreed that Nutrilite was the first legitimate MLM company. In 1940/41, Dr. Carl Rehg Bourgh formally introduced the MLM business model in the United States.

The first multilevel marketing company is Calpurnia Vitamins Co. Then Neutrality Product incorporated (NPI).In 1958, it was treated as an international MLM concept with the input of American legislators and the Traditional marketing Concept. Currently, more than 150+ countries and 15,000+ businesses employ this system worldwide.

Malaysia is the best example, with over a thousand businesses employing this system (2018). The Direct Sales Act 1993 is an act of the Malaysian Parliament, and our neighboring country, India, has more than 3,000 MLM companies in operation.

In Bangladesh since 1999, there are approximately 75 MLM companies that can explore employee engagement. According to www.mlmbd.com, there are currently 24 MLM companies operating in Bangladesh.


MLM system is an innovative development in the global business arena. In addition, it is a marketing system viewed as the modern concept for the entire universe.

Essentially, it is an unmediated direct product Distribution marketing system. It is a multi-level marketing system utilizing personal referrals among Basic consumers. It is a strategy for selling products in which independent salesmen are permitted to recruit other salesmen and earn commissions from their recruits’ sales.


Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for the sales they personally generate, but also for the sales of others they recruit, thereby creating a downline of distributors and a compensation structure with multiple levels. MLM is also known as pyramid selling, network marketing, and referral marketing.

Salespeople are typically expected to sell directly to consumers through relationship referrals and word-of-mouth marketing. Some people refer to MLM as “direct selling,” but MLM is only one type of direct selling, which began centuries ago with peddling.MLM companies have frequently been the subject of criticism and lawsuits.

In addition, they have been criticized for their similarities to illegal pyramid schemes, price-fixing of products, high initial start-up costs, and emphasis on recruiting lower-tier salespeople over actual sales.

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Encouraging, if not requiring, salespeople to purchase and use the company’s products, the possible exploitation of personal relationships, which are used to generate new sales, and recruiting goals. Occasionally exaggerated compensation schemes and cult-like techniques are employed by some groups to increase their members’ enthusiasm and loyalty.

People continue to falsely accuse MLM of pyramid selling, despite the fact that reputable MLM companies were the first to petition government authorities to outlaw pyramid selling. It did not take long for legislation to prohibit pyramid selling to be enacted. Despite its clever name, pyramid selling is not actually a system or structure.

It is extremely difficult to legislate against a mentality or an attitude. Thus, many anti-pyramid laws unintentionally discriminate against legitimate network marketing, “throwing the baby out with the bathwater.”


MLM is a relatively new business activity and trend in Bangladesh. Almost 55 years ago, many nations, including the United States, Canada, Singapore, Malaysia, Taiwan, and India, adopted this concept. In addition, it entered Bangladesh via GGN in 1998. (Global Guardian Network).

Due to the novelty of the marketing concept in Bangladesh, MLM companies initially encountered numerous obstacles.

However, many people, including some government agencies, misunderstood the concept. MLM operates not only as a direct marketing channel, but also as Multi-Level Marketing, Network Marketing, and Direct Selling.

Health and health-related products; computers, information, and communication technology; and convenience and consumer goods make up the majority of the companies’ offerings.

On this line of business, there are approximately 75 MLM companies in Bangladesh where our employees can be engaged. According to www.mlmbd.com, 24 MLM companies are actively operating in Bangladesh, altering their customers’ lifestyles and the economy of the country. If you want to know about the formation procedure of the company, you can get to know more here.


The Bangladeshi government cabinet approved proposals for a law to regulate the multi-level marketing (MLM) industry. According to the proposed MLM Control Act of 2012, any individual or entity conducting such businesses must obtain a license.

The law stipulates a maximum fine of Tk 50 lakh and a maximum jail term of three to five years for business license violations and forgery. In addition, anyone found guilty of defrauding people in the name of MLM business will be sentenced to one to five years in prison and will be required to compensate the victims with double the amount of money exchanged.


However, in some instances, Destiny-2000 Ltd, Uni Pay2, and other companies have performed in a manner inconsistent with their social image, and these sectors require additional attention. It must maintain its receivables and payables with greater consistency and accountability from a government standpoint.

Their marketing strategy is distinct from that of all other MLM companies worldwide. Their marketing strategy was weak and unoriginal, and their management system is inefficient and dishonest. They should ensure a proper payment system via the banking channel for the prompt payment of their Distributors and appoint additional distributors to serve the expanded market.

Ethical Marketing of the MLM Business and Direct Selling in Bangladesh

In addition to the above they should ensure product availability and introduce more delivery locations across the country, as well as consider readjusting their prices to the local market in order to gain market share from the incumbent. The company must capture the industrial project sector of the market because it is currently one of the fastest-growing MLM markets.

In addition, it should host a variety of seminars with competent trainers, consultants, and government officials in order to educate them on the correct and authentic MLM business. It should communicate with the government in order to establish MLM’s guiding principles and constitutions.

They should create efficient and informative websites to provide comprehensive information about Destiny Business.

In addition, the Government does not have a specific focus on MLM in Destiny Business, which is why the company is unreliable. The government has no specific rules and regulations regarding MLM. This is the primary obstruction. Due to legal loopholes, companies like Unipay2u and destiny 2000 were able to evade prosecution with relative ease.

Legal Hurdles MLM Businesses are facing in Bangladesh

The fundamental issue with these digital MLM activities conducted online is that their business usually is based on a pyramid scheme, which is intrinsic to the MLM industry and declared illegal under section 15 of the MLMAC Act. First, this section expressly prohibits pyramid or similar module-based pyramid business systems.

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Future manufacturing or production of illusory or non-materialistic products on a time-based base cycle is impeded.

Under this section, all digital-based MLM companies may be questioned as to whether their business can operate beyond these legal restrictions or whether they should be subject to immediate legal sanction. However, it is concerning that MLM companies frequently disguise themselves as e-commerce platforms in order to remain hidden from the majority of consumers.

With the passage of time, they have also convinced a large number of public figures and celebrities to become their supporters and ambassadors. Consequently, the rapid involvement of large numbers of people cannot be controlled in due time.

In addition, the MLM Act is a law with numerous flaws and loopholes that should be rectified as soon as possible. The largely illicit Ponzi scheme is not explicitly prohibited or defined. In addition, a monetary fine is fixed as the sanction for violation of the provisions. For instance, section 26 imposes a monetary penalty not to exceed fifty lakhs of taka on anyone who violates section 15.

When an MLM company has the potential to seize millions of taka, the question arises as to how much of a fixed monetary fine is justifiable. Incorporating ad valorem fines would be a more sensible and pragmatic measure to prevent these scams.

In addition, the Act is silent on the subject of how victims will receive redress in the event of a violation or a scam.


Millions of Bangladeshis have lost their hard-earned money to fraudulent companies as a result of widespread allegations of corporate fraud. In the coming months, the Bangladeshi Ministry of Commerce intends to establish a strict all. In the future, all businesses will be closely monitored.

The MLM companies are prohibited from engaging in the following 21 types of businesses: land, apartments, shops, office space, insurance, leasing, cooperatives, trees, and lotteries. According to the High Court’s recommendation, if a company’s license is suspended and it is discovered operating a business or selling products, the government will freeze the company’s bank accounts.

The sale of any imaginary product, tangible assets such as trees, apartments, etc., any type of bonus scheme, the collection or disbursement of funds by installment or savings, the sale of lottery tickets, and the trading of gold/platinum/bronze are exceptional areas where MLM companies would not be permitted to operate.

In addition, the secretary will have the authority to suspend MLM companies’ licenses and halt their operations if they are found guilty of wrongdoing. Electronic marketing, pyramid selling schemes, networking marketing, telemarketing, door-to-door sale, and mail order sale will be permitted for MLM companies.

If a company circumvents any provision of the act, the company will be punished and the board of directors will face jail time. In addition, MLM companies must be registered with the Registrar of Joint Stock Companies and Firms (RJSC) as any other business in Bangladesh.


I would like to discuss a number of reasons why Bangladesh is ripe for MLM business. Utilize these advantages to promote your MLM program and recruit members of your organization who may be successful in the MLM industry in Bangladesh.

Network marketing will be successful wherever there are people, a social environment, easy Internet access, and a demand for high-quality products. Now that Bangladesh is a digital nation, direct selling business prospects are better than ever.

Multi-level marketing businesses appear to be more popular than ever, especially given the current economic climate. They are currently trending on social media websites. In fact, people who work from the comfort of their own homes have been taken by many multi-level marketing business companies.

There are currently a variety of MLM companies with a range of products conducting business in Bangladesh. It is very simple for individuals to distinguish genuine products.

They support the populace and come in all shapes and sizes, with a variety of compensation plans. Possessing a lucrative multi-level marketing business opportunity can make everyone’s dreams come true and provide financial gain. It is very exciting to learn that you can begin internet marketing with an MLM business opportunity and achieve great success.

However, they require the same amount of effort and dedication as any other business. If you are relatively new to this industry and concept, it is acceptable to have some skepticism. Here are some benefits of possessing multilevel marketing opportunities.

Capital Raising opportunities provided by the MLM business systemn

Having successful multilevel marketing businesses can give you the money that you have always dreamed of having. They provide an advantage to a prosperous life that no other business mode can match.

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Multi-Level Marketing (Mlm) Enterprise In Bangladesh 72

If we are looking for great MLM companies, we must carefully select the one we wish to work with. Additionally, which one is sound better than the other and must be aware though many of them sound too good to be true.

Independent sales force members hold a very positive view of the direct selling industry as a result of the positive social impacts on those in the industry. While most had seen development in lifestyle and in extra income, clearly the most compelling result was the way in which people believed they had benefited in a more personal way.

That they believed they had improved individuals and that they were now more confident, more motivated, better communicators, and had acquired new skills, especially business and financial skills. This result has shed new light on Bangladesh’s business sector.

However, the social context and demographics of members and distributors involved in MLM practices must be considered. I believe that numerous other predictors, such as available opportunities, motivations for participation, and the economic impact of such practices on lifestyle and the economy of Bangladesh as a whole, may also be significant.

The profitability and the market tests of MLM Company are encouraging for the potential and present investors and it is very attractive for newcomers who want to be launching an MLM business in Bangladesh.

I hope that network marketing and online marketing will be the future of commerce and sales in Bangladesh, as well as a fantastic opportunity to take charge of one’s financial future.

FAQ QuestionsAnswers
What is an MLM company?An MLM company is a business model that uses a direct selling approach to market and distribute products or services.
Is it legal to start an MLM company in Bangladesh?Yes, it is legal to start an MLM company in Bangladesh.
What are the legal requirements for starting an MLM company in Bangladesh?To start an MLM company in Bangladesh, you need to register with the Registrar of Joint Stock Companies and Firms (RJSC).
What is the registration process for an MLM company in Bangladesh?The registration process involves filing an application with the RJSC, submitting a memorandum of association and articles of association, and paying the required fees.
Are there any restrictions on the types of products or services that can be marketed through an MLM company in Bangladesh?Yes, there are restrictions on the types of products or services that can be marketed through an MLM company in Bangladesh. The company cannot market products or services that are illegal, unethical, or harmful to public health or safety.
What are the tax implications of operating an MLM company in Bangladesh?An MLM company is subject to corporate income tax, VAT, and other taxes as applicable.
Are there any guidelines or regulations for MLM companies in Bangladesh?Yes, the Bangladesh Direct Selling Association (BDSA) has developed a code of conduct for MLM companies operating in the country. The code of conduct includes guidelines for ethical business practices, product claims, and compensation plans.
Is it necessary to have a physical office for an MLM company in Bangladesh?Yes, it is necessary to have a physical office for an MLM company in Bangladesh. The company must have a registered office address in the country.
Can foreign nationals invest in an MLM company in Bangladesh?Yes, foreign nationals can invest in an MLM company in Bangladesh subject to the foreign investment laws and regulations of the country.
What are the penalties for non-compliance with the MLM regulations in Bangladesh?Non-compliance with the MLM regulations in Bangladesh can result in fines, imprisonment, or both. The RJSC has the authority to cancel the registration of a company that violates the regulations.

Hire a Competent law firm for your MLM Company formation in Bangladesh:

Tahmidur Rahman Remura Wahid TRW Associates is comprised of competent Barristers and Advocates with expertise in multiple legal fields, allowing them to provide the required services to a high degree and allowing clients to acquire all necessary and supplementary legal services under one roof.

The Barristers, Advocates, and attorneys at Tahmidur Remura Wahid TRW in Mohakhali New DOHS, Dhaka, Bangladesh have extensive experience assisting clients with trade licensing matters. For questions or legal counsel, please contact us at:

DHAKA: House 410, ROAD 29, Mohakhali DOHS
DUBAI: Rolex Building, L-12 Sheikh Zayed Road
LONDON: 1156, St Giles Avenue, Dagenham

 Email Addresses:
[email protected]
[email protected]
[email protected]

 24/7 Contact Numbers, Even During Holidays:


How does MLM work?

In MLM, independent salespeople (also known as distributors or representatives) earn commissions on their own sales as well as the sales made by their downline (other salespeople they have recruited into the business). The more they sell and the larger their downline grows, the more they earn.

Is MLM a pyramid scheme?

MLM is not a pyramid scheme. While both pyramid schemes and MLM involve recruiting new members, in MLM, commissions are earned through the sale of actual products or services. Pyramid schemes, on the other hand, involve making money solely through the recruitment of new members.

Is MLM legal in Bangladesh?

MLM is legal as long as it operates within the bounds of the law. However, there are some countries where MLM is heavily regulated or even illegal, so it is important to research the laws and regulations in your specific location.

Is MLM a good way to make money?

MLM can be a good way to make money if you are willing to put in the time and effort required to build a successful business. However, not everyone succeeds in MLM, and there are many factors that can affect your success, such as the products or services you are selling, the compensation plan, and the strength of your network.

What are the pros and cons of MLM?

Pros of MLM include the potential for unlimited earnings, the ability to work from home or anywhere, and the opportunity to build your own team and develop leadership skills. Cons include the risk of losing money, the potential for pushy sales tactics or false promises, and the need to constantly recruit new members to maintain your income.

What are some popular MLM companies?

Some popular MLM companies include Amway, Avon, Mary Kay, Herbalife, and Tupperware, among others.

How do I know if an MLM company is legitimate?

You can research an MLM company to determine its legitimacy by looking at factors such as the length of time it has been in business, its reputation within the industry, and its compliance with relevant laws and regulations. You should also carefully review the compensation plan to ensure that it is based on the sale of actual products or services, rather than just recruitment.

Can I start my own MLM company in Bangladesh?

Yes, you can start your own MLM company in Bangladesh, but it requires significant investment and a deep understanding of the industry and relevant laws and regulations. You will also need to develop a unique product or service and a compensation plan that is both fair and attractive to potential distributors.

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