International arbitration in the People's Republic of Bangladesh has its own characteristics. For example, if you are an investor and need to start arbitration in Bangladesh, it is important to keep in mind that your case should be considered in international commercial arbitration. It is transferred there automatically if at least one of the parties to the dispute is a foreigner. Today's article will help you understand some of the details of such proceedings.
What dispute is considered international
The current legislation defines international arbitration as proceedings arising from a legal relationship when at least one of the parties is:
- a legal entity registered outside Bangladesh;
- resident or permanently residing outside the jurisdiction;
- an organization that is controlled from any other state;
- the top leadership of another state.
Thus, if a foreigner is involved in the case, the proceedings will be referred to the High Court automatically.
The state adopted the Model Law simultaneously with the new local Arbitration Law aimed at modernizing the outdated legislation in force before. However, such synchronization is fraught with some difficulties. The new legislation has eliminated certain gaps and shortcomings but at the same time the key problems still remain:
- awards enforcement in local courts;
- lack of interim measures in local courts for cases with foreign participation;
- termination at short notice.
Local legislation allows a fairly wide range of commercial disputes to be referred to international arbitration, not only in the field of cross-border transactions, but also involving JVs with foreign investments, incl. with regard to their internal disputes with other Bangladeshi entities.
It is possible to resolve a business dispute in Bangladesh without an arbitration agreement/clause under certain circumstances at some stages of the dispute.
If you intend to register a company in Bangladesh, please note that arbitration is mandatory in this jurisdiction for settling disputes between suppliers and consumers on energy supply issues.
Where to arbitrate in Bangladesh
International arbitration assumes an unlimited choice of specialized institutions and ad hoc arbitration in various jurisdictions. And the effectiveness of the mechanism itself depends precisely on how the local legislation on arbitration complies with international standards.
The Bangladesh legal system still has to go this way and raise the standards of judicial practice for challenging and enforcing arbitral awards and providing judicial assistance to arbitration. At the moment, there is no specialized arbitration court in the jurisdiction to consider commercial cases. The only exception is the dedicated Energy Dispute Resolution Unit.
Ultimately, cases are considered mainly in private arbitration courts, composed of former legal professionals to settle business disputes in Bangladesh. An important condition is that the creation of such a temporary arbitration court is possible only if an arbitration agreement/clause is available.
After the award is rendered, the injured party is allowed to file a claim for its cancellation.
Entrepreneurs who need to resolve a dispute via arbitration in Bangladesh should first of all contact the BIAC private arbitration center, which has a well-organized procedure for resolving a conflict using this ADR method. The center can offer an extensive list of arbitrators and provide its own rules for effective administering arbitration proceedings.
In countries with a developed judicial system, the state usually guarantees international arbitration a certain autonomy and assistance, and on the other hand, it reserves certain control functions through the judicial system. At the moment, Bangladesh has few leverages to manage the international commercial arbitration proceedings. The parties are free to administer the arbitration process as they see fit. Increasing control and supervisory activities is a necessary measure that should launch mechanisms for internal assessment of the quality of international arbitration in the jurisdiction.
If you need further advice on how to initiate arbitration in Bangladesh, you can find it at IQ Decision UK. Contact us by filling out the short form below.