BANGLADESH Law and Practice Contributed by: Mohammed Forrukh Rahman, Kamrunnaher Shimu and Salauddin Kader, Rahman’s Chambers
8. Damages and Valuation 8.1 Remedies
of the Arbitration Act 2001 empowers the tribunal to require the party requesting an interim measure to provide appropriate security. 6. Third-Party Funding 6.1 Prevalence of Third-Party Funding The Arbitration Act 2001 is silent on third-party fund- ing. Although the status of common law doctrines of maintenance and champerty remains somewhat ambiguous, it is generally considered that funding agreements are likely permissible unless contrary to public policy. Third-party funding is not prevalent in Bangladesh. 6.2 Third-Party Funding Case Law There is no significant recent case law in Bangladesh specifically addressing third-party funding in the con- text of arbitration. 6.3 Disclosure and Security for Costs There are currently no statutory rules requiring the mandatory disclosure of a third-party funding arrange- ment. 7. Other Procedural and Evidentiary Issues 7.1 Notice of Dispute and Consultation Period Pre-arbitration procedural requirements are dictated by the specific BIT or contract. Commonly, these instruments require a mandatory negotiation or con- sultation period (cooling-off period), typically lasting three to six months, following a formal Notice of Dis- pute. 7.2 Confidentiality and Transparency The Arbitration Act 2001 does not mandate confiden- tiality. In investor–state disputes, there is inherent ten- sion between the private nature of arbitration and the public interest. Increasing demands for transparency are influencing modern institutional rules. However, most of Bangladesh’s existing BITs predate this trend and do not typically include extensive transparency provisions.
Arbitral tribunals generally have broad authority to award remedies, primarily focused on monetary compensation. Consistent with the international law principle of full reparation, the goal is compensatory; punitive damages are generally not awarded in ISDS. 8.2 Methodologies for Quantum Assessment The following standard international valuation meth- odologies are employed to quantify damages, typi- cally aiming to establish the fair market value (FMV) of the investment: • discounted cash flow (DCF) – commonly used for going concerns or long-term project; • market value – used where reliable data exists, based on comparable transactions; and • cost-based approaches (sunk costs) – used when future profitability is deemed too speculative. 8.3 Recovering Interest and Legal Costs Parties are generally entitled to recover interest (pre- award and post-award), often calculated at commer- cially reasonable rates (frequently compound interest). International practice increasingly follows the “costs follow the event” approach. Tribunals retain discretion based on conduct. As seen in Chevron v Bangladesh , dilatory conduct can lead to adverse cost awards Under established principles of international law, the investor has a duty to mitigate its losses. Failure to take reasonable steps may lead to a reduction in the compensation awarded. 9. Enforcement of Awards 9.1 Enforcement Procedure The procedures and standards for enforcing an award in Bangladesh are as follows. even for the prevailing party. 8.4 Mitigation of Damages • ICSID awards – these are recognised as binding and enforced as a final decree of a domestic court (Article 54 of the ICSID Convention).
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