BANGLADESH Law and Practice Contributed by: Sharif Bhuiyan, Dr Kamal Hossain & Associates
3.4 Validity Section 18 of the Act contains provisions regarding severability of an arbitration agreement. Section 18 states that “An arbitration agreement which forms part of another agreement shall be deemed to constitute a separate agreement when ruling upon the validity of that arbitration agreement for the purpose of deter - mining the jurisdiction of the arbitral tribunal.” The Supreme Court of Pakistan in Manzoor Hussain v Wali Mohamad 17 DLR (SC) (1965), 369 (Bangladesh was a part of Pakistan in 1965) discussed the enforce - ability of an arbitration clause contained in a void con - tract and observed that if the principal contract was clearly ab initio void or came within mischief under Section 23 of the Contract Act, then the arbitration clause contained in it would be unenforceable and the award would be invalid (paragraph 25). In Bangladesh Jute Mills Corporation v Maico Jute and Bag Corporation 56 DLR (HCD) (2004) 224, the HCD observed that if the contract itself is void, illegal or fraudulent, then the entire contract, along with the arbitration clause, would be voidable (paragraph 9). In Ferdous Alam v PVH Far East Limited 74 DLR (2022) 598, the HCD held that although the arbitration clause is a part of the underlying contract, it has, in a series of decisions, been treated as independent of the other clauses and the invalidation of the underlying agree - ment will not invalidate the arbitration clause (para - graphs 17 and 18). There is no limit on the parties’ autonomy to select arbitrators in Bangladesh. Section 11 of the Act allows parties to determine the number of arbitrators. If the parties fail to determine the number, the default num - ber is three. Unless otherwise agreed by the parties, if the parties appoint an even number of arbitrators, the appointed arbitrators must appoint an additional arbitrator to serve as chairman of the tribunal. Section 12 (1) of the Act allows the parties to agree on a procedure for appointing the arbitrator or arbitrators. 4. The Arbitral Tribunal 4.1 Limits on Selection
that bars certain disputes from being submitted to arbitration. Section 43 (1)(b)(i) of the Act provides that an arbi - tral award may be set aside and Section 46 (1)(b)(i) of the Act provides that enforcement of a foreign arbitral award may be refused if the court finds that the sub - ject matter of the arbitration award is not capable of settlement by arbitration under the law of Bangladesh. Accordingly, the concept of arbitrability is recognised in the Act. However, the Act does not set out a list of subject matters that are not capable of settlement by arbitration. Usually, in conformity with the practice in various jurisdictions, matters concerning criminal law, competition law, etc, will be regarded as not capable of settlement by arbitration. Section 40 of the Bangladesh Energy Regulatory Commission Act, 2003 requires that any dispute between licensees or between licensees and consum - ers be referred to the Bangladesh Energy Regulatory Commission (BERC), a statutory body regulating the energy sector, for settlement under the Bangladesh Energy Regulatory Commission Dispute Settlement Regulations, 2014. 3.3 National Courts’ Approach There is no judicial decision in Bangladesh regarding the determination of the law governing the arbitration agreement. If the parties choose a governing law of the arbitration agreement, the courts in Bangladesh will give effect to the choice. In the absence of the parties’ choice of governing law, if the contract containing the arbi - tration agreement includes a governing law clause, the courts in Bangladesh would accept the contract’s governing law as the governing law of the arbitration agreement. If there is neither a governing law for the contract nor a governing law for the arbitration agree - ment, the law of the seat of the arbitration will likely be the governing law of the arbitration agreement. Arbitration agreements are usually enforced by courts in Bangladesh.
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