Arbitration Act, 2001: Limitations of International Commercial Arbitration in Bangladesh

Arbitration Act, 2001: Limitations of International
Commercial Arbitration in Bangladesh.

Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................4
Commercial Arbitration in Bangladesh...........................................................................................4
Jurisdictional Objections In The Arbitration Act, 2001...................................................................6
Court and Arbitration Tribunal Under The Arbitration Act,2001.......................................7
Supervisory Power of Court on Arbitration Proceeding..................................................................9
Choice of Law – Under the Arbitration Act, 2001.......................................................10
Foreign Arbitral Award in Bangladesh..........................................................................................12
Bangladesh Arbitration Rule: Challenges and Views...................................................................14
Conclusion.....................................................................................................................................14
Bibliography..................................................................................................................................15

Introduction
The legal system existing in Bangladesh considers arbitration as a tradition which was previously
used for the purpose of resolution of dispute and was administrated by the Arbitration Act, 1940.
Most of the provisions of the Arbitration Act, 1940 were outdated as compared to the
contemporary arbitration regulations existing in various parts of the world. Under the Arbitration
Act, 1940, the extensive use of arbitration procedures involved the role of courts in the
arbitration procedure, its regulation as well as implementation of arbitral awards as well.
However, the implementation of arbitral award has been demonstrated to be slow and
burdensome as for its implementation, order could be obtained from the District Court. After the
implementation of the new Arbitration Act, 2001, the utilization of arbitration in the form of
alternative to the resolution of dispute related procedures has increased. Bangladesh has started
taking the initiatives for reform and it is predictable that the new Arbitration Act, 2001 would
make changes in the execution of international arbitral awards as declared in the New York
Convention, of which Bangladesh is also a member. Both business community as well as
government has positively reacted to the enactment of the 2001 Act. The Division of the High
Court has established a specific bench with the jurisdiction of nomination of arbitrators regarding
international arbitration. The research will explore and emphasize upon issues related to
jurisdictional, choice of law and lex arbitri provisions under The Arbitration Act, 2001 as major
points.

Commercial Arbitration in Bangladesh
For the purpose of effective dispute resolution in international trade as well as commerce, the
arbitration is considered as a significant process. The reason behind business community to
believe on arbitral process is for the expansion of whole trade system instead of challenges
across the world. Lack of arbitration might even threaten the stability of safe international
business as well as commercial structure of trade.1 In order to achieve the international
obligations with the New York Convention and UNICITRAL, Bangladesh enacted the arbitration
law known as Arbitration Act, 2001 and annulled the Arbitration Act of 1937 as well as the
Arbitration Act of 1940.2 The country has implemented various policies in order to increase the
foreign investment. Bangladesh realizes its obligation for the defense of foreign private
investment in the country by ratifying the 1965 Conventions on the Settlement of Investment
Dispute between States as well as Nationals of other States (ICSID Convention) which is also
known as Washington Convention. Bangladesh is also a member of 1958 Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), as well as
the UNCITRAL Model Law regarding International Commercial Arbitration of 1985 that has
been amended in 2006.3 Despite offering effective dispute resolution, international commercial
arbitration had to face serious challenges such as employing arbitrators, implementing minimal
standards and proficiency, cost related issues in arbitration, implementation of arbitral awards,
authority of arbitrators, institutional bias, and ability of control and supervision of national courts
upon international commercial arbitration.
1 Mohammad Kafi, Mohammad Abdullahel and Mainuddain, ‘Foreign Direct Investment in Bangladesh: Problems
and Prospects’ (2014) 4 Journal of Nepalese Business Studies 47.
2 Professor Dr A F. M. Maniruzzaman, "The New Law of International Commercial Arbitration in Bangladesh: A
Comparative Perspective" (2003) American Review of International Arbitration.
<https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1342329>.
3 Husain M. Al-Baharna, "International Commercial Arbitration in Perspective" (1988) 3(1) Arab Law Quarterly.