Arbitration Act, 2001 - In a Nutshell

Domestic Arbitration and International Commercial Arbitration held in Bangladesh

The Arbitration Act, 2001 is the main legislation governing the procedure of arbitration in Bangladesh. Arbitration has evolved as an important dispute resolution mechanism in commercial contracts executed by the Government and real-estate disputes. 

The central and local Government procures goods and services by issuing local or international tender in accordance with the Public Procurement Act, 2006 and Public Procurement Rules, 2008 and the contracts executed contains arbitration clause for resolving dispute. Moreover, the Real Estate Development and Management Act, 2010 provides a mandatory requirement for making recourse to Arbitration to settle dispute between the landlord, purchaser or real-estate company. 

Arbitration Agreement

Section 9 of the Arbitration Act, 2001 provides that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. The arbitration agreement is required to be in writing and it will be deemed to be in writing if it is contained in emails communicated between the parties to the dispute.

Composition of Arbitration Tribunal and procedure to be followed

The parties have choice to determine the number of arbitrators, the procedure for appointing the arbitrator and place of arbitration. 

If the parties cannot determine the number of arbitrators, the arbitration tribunal shall consist of three members. The parties may appoint an arbitrator of their choice and the two arbitrators will jointly appoint an arbitrator who will act as the chairman of the tribunal.

If a party fails to appoint an arbitrator within 30 (thirty) days of receipt of a request from the other party to appoint an arbitrator, a party may make an application to the District Judge for appointment of arbitrator in case of domestic arbitration under section 12 of the Arbitration Act, 2001. In case of international commercial arbitration, an application can be made to the Chief Justice of Bangladesh or to any other Judge of the Supreme Court designated by the Chief Justice for appointment of arbitrator. 

Grounds for challenging an arbitrator and the procedure for challenge

An arbitrator may be challenged on the ground of his lack of independence, impartiality or requisite qualification as agreed by the parties. A challenge shall be made by a party within 30 (thirty) days after he/she becomes aware of the said circumstances for challenge. 

The Arbitration Tribunal constituted will decide on the challenge. A party aggrieved by a decision of the arbitration tribunal may prefer an appeal to the High Court Division under section 14(4) of the Arbitration Act, 2001.

Jurisdiction of Arbitration Tribunals and conduct of arbitral proceedings

The arbitration tribunal may rule on its own jurisdiction and an objection that the tribunal does not have jurisdiction shall be raised no later than the submission of the statement of defence. 

The High Court Division is empowered under section 20 of the 2001 Act to decide on any question as to the jurisdiction of the arbitral tribunal.

The arbitral tribunal is not bound to adhere to the provisions of the Code of Civil Procedure, 1908 or the Evidence Act, 1872 in conduct of the arbitral proceedings.

The arbitral tribunal shall follow the rules of procedure as agreed by the parties. In the absence of any such agreement, the arbitral tribunal shall decide the procedural and evidential matters in conducting the proceedings.

The abitration tribunal shall decide the dispute in accordance with the rules of law as agreed by the parties. In other words, if the parties have specified in the arbitration agreement that law of a particular legal system will be followed in resolving the dispute, the said substantive law shall be applied in resolving the dispute.

Arbitral award and grounds for challenge

By section 39 of the Act, an arbitral award is final and binding on both the parties. However, there are limited grounds on which the Court may set aside an arbitration award as provided in section 43. The application for setting aside an arbitration award must be filed within 60 (sixty) days from the receipt of the award before the District Judge in case of domestic arbitration and the High Court Division in the case of a international commercial arbitration held in Bangladesh.

Enforcement of arbitral award

An arbitral award may be executed following the provisions of the Code of Civil Procedure as if it is a decree passed by the court.

Appeal

An appeal will lie before the High Court Division under section 48 of the Act from an order of the District Judge refusing to set aside an arbitral award or to enforce an arbitral award.

The Arbitration Act, 2001 can be read in Bangla by clicking here.