BANGLADESH Law and Practice Contributed by: Mohammed Forrukh Rahman, Kamrunnaher Shimu and Salauddin Kader, Rahman’s Chambers
1. Overview 1.1 National Position
often arise concerning project delays, cost over- runs, variations, and land acquisition. 1.5 Major Arbitrations Several arbitrations have defined the scope of invest- ment protection and the consequences of state actions, as follows. • Saipem SpA v People’s Republic of Bangladesh (ICSID Case No ARB/05/7) (“ Saipem ”) – this semi- nal case established the doctrine of “judicial expro- priation”. The ICSID tribunal held that the actions of Bangladeshi courts (which revoked the authority of an ICC tribunal seated in Dhaka and nullified its award) constituted an unlawful indirect expropria- tion of the investor’s contractual rights. • Smith Cogeneration (Bangladesh) Private Limited v BPDB (ICC arbitration and enforcement) – this case highlighted the risks of SOE non-participation in arbitration. Crucially, the subsequent enforce- ment action led the Supreme Court of Bangladesh (Appellate Division, 2015) to rule decisively that SOEs cannot use procedural mechanisms outside the Arbitration Act 2001 (specifically Order XXI Rule 29 of the Code of Civil Procedure (CPC)) to stay the enforcement of foreign arbitral awards. • Niko Resources (Bangladesh) Ltd v BAPEX and Petrobangla (ICSID Case Nos ARB/10/11 and ARB/10/18) (“ Niko Resources ”) – these were con- solidated, contract-based ICSID cases involving claims related to gas field blowouts and unpaid invoices, featuring complex jurisdictional debates. • Chevron v People’s Republic of Bangladesh (ICSID Case No ARB/06/10) although Bangladesh pre- vailed on the merits, the tribunal notably awarded costs against Bangladesh owing to Bangladesh’s dilatory conduct during the proceedings. 1.6 Reaction to Awards Made Against the State Bangladesh and its SOEs typically utilise available legal recourse, including jurisdictional challenges and annulment proceedings. While the state vigorously contests claims, the ultimate rejection of the annul- ment application in Niko Resources (2023) demon- strates that the review mechanisms within the ICSID framework are utilized, respecting the finality of the process.
Bangladesh maintains a policy favourable to for- eign direct investment (FDI) and recognises inves- tor‒state arbitration as a crucial mechanism for pro- tecting investments. The government actively seeks FDI through bilateral investment treaties (BITs) and national legislation. Bangladesh remains focused on fostering an investment climate conducive to eco- nomic growth, particularly as the country prepares for graduation from Least Developed Country (LDC) status (expected in 2026). 1.2 Arbitration Conventions Bangladesh is a signatory to the major international arbitration conventions. It ratified the ICSID Conven- tion in 1980 and acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) in 1992. The Arbitration Act 2001 (based on the UNCITRAL Model Law on International Commercial Arbitration (1985) (the “UNCITRAL Model Law”) serves as the implementing legislation. 1.3 Prevalence of Investor–State Arbitration Investor–state arbitration is an established method for resolving disputes. Foreign investors strongly prefer arbitration over domestic litigation, which is often per- ceived as time-consuming. 1.4 Key Industries Arbitration activity involving the state and state-owned entities (SOEs) is concentrated in two main sectors, as follows. • Energy and power – historically the most active area, involving oil and gas exploration (contracts with Petrobangla) and power generation (power purchase agreements (PPAs) with the Bangladesh Power Development Board (BPDB)). Disputes frequently concern tariffs, capacity payments, and contract termination. • Infrastructure – increasingly prominent owing to large-scale PPPs for expressways (eg, Dhaka Elevated Expressway and Hatirjheel-Demra High- way), bridges, and port developments. Disputes
11 CHAMBERS.COM
Powered by FlippingBook