BANGLADESH Law and Practice Contributed by: Sharif Bhuiyan, Dr Kamal Hossain and Associates
1. General 1.1 Prevalence of Arbitration
Development Board 2019 (2) 16 ALR (HCD) held that an international commercial arbitration, the seat of which is outside Bangladesh, is a foreign arbitration. According to Section 3 of the Act, the provisions of the Act (except Sections 45 to 47) are not applicable to an arbitration if the place of that arbitration is out - side Bangladesh. Sections 45 to 47 of the Act provide for recognition and enforcement of “foreign arbitral awards”. In Accom Travels and Tours Limited v Oman Air S.A.O.C. 7 BLC (2022) 596 (the “ Accom Travels ” case) the HCD held that the provisions of the Act, except Sections 45, 46 and 47, are not applicable in respect of foreign arbitrations. Section 7Ka cannot therefore be invoked for obtaining interim measures before or during the continuance of foreign arbitration pro - ceedings. However, this section can be invoked at the stage of enforcement in Bangladesh of a foreign arbi - tration award. The HCD further held that Section 10 on suspension of court proceedings initiated in viola - tion of an arbitration clause is not applicable regarding foreign arbitration clauses. However, the court should nonetheless suspend local court proceedings under the court’s inherent power provided in Section 151 of the Code of Civil Procedure 1908 (CPC). 1.2 Key Industries The construction, energy and infrastructure industries have experienced notable arbitration activity in recent years. The reasons for recourse to arbitration include delays in completing projects, contractor claims for extensions of time, contractor claims relating to price escalations, non-compliance with design, imposition of tax and VAT expenses on contractors, unforeseen ground conditions, occurrences of force majeure events including delays caused by COVID-19, non- acceptance of projects by the employer on different grounds, issues between joint venture partners and disputes regarding gas and electricity prices. 1.3 Arbitration Institutions Parties are free to choose any arbitral institution for international arbitration with a seat in Bangladesh or outside Bangladesh.
International arbitration is used as a method of resolv - ing disputes in Bangladesh. Domestic parties can resort to the use of international arbitration instead of litigation in local courts. International arbitration can be chosen by domestic parties in contracts as the method of dispute resolution. Local and interna - tional parties can have recourse to local courts in sup - port of domestic as well as international arbitrations. This recourse may be made during the pendency of the arbitration to obtain interim protective measures and following the conclusion of the arbitration for the enforcement of the arbitration award including a for - eign award. The Arbitration Act, 2001 (the “Act”) governs arbitra - tion in Bangladesh. It replaced the earlier Arbitration Act, 1940. “Arbitration” is defined in Section 2 (m) of the Act as “any arbitration whether or not adminis - tered by a permanent arbitration institution”. The Act deals with both domestic and international arbitration. The term “domestic arbitration” is not defined in the Act. “International commercial arbitration” is defined in Section 2 (c) of the Act as “an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in Bangladesh and where at least one of the parties is: (a) an individual who is a national of, or habitually resident in, any country other than Bang - ladesh; (b) a body corporate which is incorporated in any country other than Bangladesh; (c) a company or an association or a body of individuals whose central management and control is exercised in any country other than Bangladesh; or (d) the government of a foreign country”. A “foreign arbitral award” is defined in Section 2 (k) as “an award, in pursuance of an arbitration agree - ment, made in the territory of any state other than Bangladesh, but does not include an award made in the territory of a Specified State”. The Act does not define the expression “foreign arbitration”. The High Court Division (HCD) of the Supreme Court of Bang - ladesh in Southern Solar Power v Bangladesh Power
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