NEPAL Law and Practice Contributed by: Purna Man Shakya, Prakrit Shrestha and Dechen Gurung, Reliance Law Firm
13.2 Ethical Codes Nepal-qualified counsel appearing in arbitration are bound by the Nepal Bar Council Act, 2050 (1993) and the Bar Council’s Rules of Professional Conduct (see 7.4 Legal Representatives ). These prohibit contin - gency fees, success-based remuneration, and any arrangement giving counsel a financial interest in the subject matter or proceeds of a dispute and further prohibit lawyers from providing or accepting loans connected with funding a case. Arbitrators are bound by the statutory oath of impar - tiality and honesty, and the disclosure obligation, in Section 9 of the Arbitration Act (see 4.1 Limits on Selection ) and, where the arbitration is administered by NEPCA, by NEPCA’s own Arbitral Procedures Reg - ulations (see 1.3 Arbitration Institutions ). There is no separate, codified ethical code specifically for arbi - trators in Nepal comparable to the IBA Guidelines on Conflicts of Interest. Reform commentary has, how - ever, called for NEPCA and the courts to adopt the IBA’s 2024 Guidelines, including its traffic-light sys - tem, as a supplementary standard (see 4.5 Arbitrator Requirements ). 13.3 Third-Party Funding Nepali law neither expressly authorises nor prohibits third-party funding of arbitration by external, non- lawyer funders. Such arrangements remain unregu - lated and are not, at present, widely used in the Nepali market. The relevant restriction operates instead at the level of legal ethics, rather than funding regulation as such. The Nepal Bar Council’s Rules of Professional Con - duct restrict lawyer-provided funding arrangements (see 13.2 Ethical Codes ), though they do not directly regulate funding by independent commercial funders. 13.4 Consolidation The Arbitration Act contains no express power, for either a tribunal or a Nepali court, to consolidate sepa - rate arbitral proceedings, whether those proceedings share a tribunal, a contract or common parties. In the absence of a statutory consolidation mecha - nism, related disputes seated in Nepal can be brought together only by the parties’ express agreement; for
the Section 34 (2) requirements satisfied, enforceabil - ity uncontested, and both the seat and Nepal signa - tories to the New York Convention. NEA v Swanta Electrical (High Court, Case No 071- DP-1341) confirms that even a properly framed pub - lic-policy objection will fail without evidence: a bare invocation of Section 30 (3)(b) does not suffice, and the petitioner must produce an objective basis show - ing how the award is inconsistent with public policy. Refusal is reserved for narrower circumstances, the denial of a fair opportunity to be heard or serious procedural unfairness ( Hanil Engeeneering ; see 3.1 Enforceability ), or the absence of established reci - procity ( Sanghi Brothers ; see 12.1 New York Conven- tion ). This suggests the courts apply an international, rath - er than purely domestic, conception of public policy, reserving refusal for the clearest cases of procedural unfairness, corruption, fraud or fundamental incom - patibility with Nepali legal or constitutional order – a posture reinforced by the 2025 amendment (see 2.2 Changes to National Law ). 13. Miscellaneous 13.1 Class Action or Group Arbitration Nepali law does not provide for class action or group arbitration. The Arbitration Act is drafted through - out on a bilateral, party-to-party model – claimant, respondent, counterclaim and rejoinder under Section 14 (see 7.2 Procedural Steps ) – with no procedural mechanism for representative claims, opt-in or opt- out classes, or aggregated group proceedings of the kind found in some other jurisdictions’ consumer or securities arbitration regimes. Multiple claimants or respondents may in principle participate in a single arbitration where they are all parties to the same arbitration agreement. This is join - der by virtue of a shared contract, however, rather than class or group arbitration in the technical sense. NEPCA’s rules likewise contain no dedicated class or collective arbitration procedure (see 1.3 Arbitration Institutions ).
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