Introduction
Arbitration is a form of alternative dispute resolution that offers a more cost-effective and efficient way to settle disputes outside of the traditional court system. In Bangladesh, arbitration has grown in popularity as individuals and businesses seek to avoid the delays and expenses associated with litigation in the country’s overburdened courts. This article provides a comprehensive overview of the arbitration process in Bangladesh, exploring its legal framework, procedures, and enforcement mechanisms. It is important to note that the Arbitration Act of 2001 is not the first legislation on arbitration in Bangladesh; previously, arbitration was governed by the Arbitration Act of 1940.
What is Arbitration?
Arbitration is a private process that parties can choose as an alternative to court proceedings. It is consensual, meaning that both parties must agree to resolve their dispute through arbitration. This agreement is often included in the main contract between the parties, though it can also be made separately after a dispute has arisen.
The Arbitration Process
The arbitration process in Bangladesh mirrors certain aspects of the court system. It typically begins with one party submitting a request for arbitration, outlining the claim, the relief sought, and any supporting documents. The other party, or respondent, then has a set time to submit their response, which may include defenses or counterclaims.
Once the pleadings are complete, the parties select arbitrators. If they cannot agree, the Arbitration Act allows for court-appointed arbitrators. The arbitrators then conduct the proceedings according to agreed-upon rules or default procedures. During hearings, both parties present evidence, call witnesses, and make legal arguments. Finally, the arbitrators issue a written, reasoned award, which is provided to both parties. This decision includes any relief granted to the prevailing party.
Types of Arbitration
- Domestic Arbitration: If the arbitration takes place in Bangladesh and the award is enforced in Bangladeshi courts, it is considered domestic arbitration under the Arbitration Act of 2001.
- Foreign Arbitration: If arbitration occurs outside Bangladesh and the award is enforced in another country, it is categorized as foreign arbitration.
Steps in Arbitration in Bangladesh
- Arbitration Agreement: An arbitration agreement, typically in writing, must exist between the parties. This can either be part of the main contract or a separate agreement.
- Appointment of Arbitrators: The parties appoint one or more arbitrators to oversee the process. If no agreement is reached on the number, the tribunal will default to three arbitrators. An additional arbitrator may be appointed to act as chairperson in the case of an even number.
- Time Limits for Appointment: If one party fails to agree on an arbitrator within 30 days, the District Judge (for domestic arbitration) or the Chief Justice of the Supreme Court (for international arbitration) appoints one.
Legal Requirements for Arbitration
- Arbitration Agreement: Courts will only refer a dispute to arbitration if a valid agreement exists, as required by Section 9 of the Arbitration Act 2001.
- Validity of the Agreement: Section 10(2) allows courts to reject arbitration if the agreement is void or inoperative.
- Severability: An arbitration clause remains valid even if the rest of the contract is deemed void, per Section 18.
Procedural Requirements
- Arbitration begins with a formal notice under Section 27.
- Parties present facts supporting their claims, and the tribunal determines any jurisdictional disputes.
- Interim awards may be granted during the proceedings.
Enforcement of Arbitral Awards
One of the main advantages of arbitration in Bangladesh is the enforceability of arbitral awards, which are treated as if they were court judgments. Once the award is confirmed by a court, it can be enforced against the losing party’s assets. However, the losing party may challenge enforcement on limited grounds, such as an invalid arbitration agreement or procedural misconduct.
- Final and Binding Award: As per Section 39(1), an arbitral award is final and binding on both parties.
- Interest on Awards: Courts can order interest on monetary awards from the date of the decree.
- Appeals: Parties can challenge the award within 60 days under Section 42, but once this window closes, the award is enforceable like a court decree.
Enforcement of Foreign Arbitral Awards
Foreign arbitral awards are enforceable in Bangladesh under Section 45 of the 2001 Act, in line with the New York Convention. To enforce a foreign award, the party must provide the original or certified copy of the award and the arbitration agreement.
Setting Aside an Arbitral Award
Under Section 43, an award can be set aside if certain conditions are met, such as incapacity of a party, invalidity of the arbitration agreement, or lack of proper notice. Additionally, the High Court may nullify an award if it conflicts with public policy or involves fraud or corruption.
Conclusion
Arbitration in Bangladesh offers a flexible and efficient alternative to traditional litigation, with a robust legal framework that ensures fairness and impartiality. The enforceability of arbitral awards enhances its appeal, making it a viable option for businesses and individuals seeking to resolve disputes quickly and cost-effectively. As the demand for alternatives to the overburdened court system grows, arbitration is likely to become an increasingly preferred method of dispute resolution. Understanding its process and legal framework is key to protecting one’s interests and securing a fair resolution.