NEPAL Law and Practice Contributed by: Purna Man Shakya, Prakrit Shrestha and Dechen Gurung, Reliance Law Firm
its own Arbitration Rules and panel of arbitrators, and its Arbitral Procedures Regulations, 2072 (2015) draw on UNCITRAL principles for arbitrator appointment and challenge. Its hearing room facilities and secre - tarial services further support its position as the pre - ferred venue for arbitration seated in Nepal. Parties also commonly select foreign institutions, including the Singapore International Arbitration Centre (SIAC) and the International Chamber of Com - merce (ICC). No new arbitral institution has been established in Nepal in the past 12 months. Policy discussion has instead focused on strengthening NEPCA’s institu - tional capacity and aligning its rules with the 2025 amendments to the Arbitration Act (see 2.2 Changes to National Law ). 1.4 National Courts Nepal does not operate a dedicated commercial or international arbitration court. Supervisory jurisdiction over arbitration is instead distributed across the ordi - nary court hierarchy, structured into three tiers: • the Supreme Court; • the High Court (referred to in the Arbitration Act by its pre-2017 name, the “Appellate Court”); and • the District Court. The High Court of the seat of arbitration holds the primary supervisory role. It hears applications for the appointment and removal of arbitrators, challenges to jurisdiction, interim measures and applications to set aside or enforce awards, including foreign awards. The District Court at the seat plays a more limited, supportive role: it assists arbitral tribunals in taking evidence under Section 23, enforces domestic awards under Section 32 and enforces foreign awards for - warded to it under Section 34 (3) of the Act. The Supreme Court sits at the apex, hearing limited supervisory and constitutional matters and, under Section 43 of the Act, framing the procedural rules governing arbitration proceedings before subordinate courts.
Nepal has also established dedicated commercial benches within the High Court to hear commercial dis - putes, including arbitration-related matters. While this reflects an institutional effort to improve the efficiency and expertise of commercial dispute resolution, the commercial benches have yet to have a significant practical impact: arbitration-related matters continue, in practice, to be handled similarly to ordinary matters despite the designation, and the anticipated benefits of specialisation have yet to be fully realised. The Arbitration Act governs both international and domestic arbitration in Nepal. It is supplemented, for foreign investment disputes, by Section 40 of FITTA, and, for public contracts, by Section 119 of the Public Procurement Act. The Act is not a verbatim enactment of the UNCITRAL Model Law on International Commercial Arbitration (1985), but draws heavily on its underlying principles, including: • party autonomy (Section 3); • separability of the arbitration clause (Section 16.3); • competence-competence (Section 16.1); • camera hearings (Section 19); and • a largely closed list of grounds for setting aside an award (Section 30), mirroring Article 34 of the Model Law. 2. Governing Legislation 2.1 Governing Law Notable divergences from the Model Law include: • the absence of any distinction between “domestic” and “international” arbitration, the Act applying uniformly to both; • the absence of express provision for tribunal- ordered interim measures to be independently enforceable through the courts; and • until the 2025 amendment, the absence of any fast-track procedure (see 2.2 Changes to National Law ).
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