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December 17, 2009

Legal Environment In Business | Dreamers Group


AIUBARBITRATION IN BANGLADESH
Arbitration in Banglaes! 2
Legal Environment in Business.
Subject of Term Paper: Corporate Social Responsibility.
Prepared for
Mrs. Sabrina Zerin.
Faculty Member,
Faculty of Business Administration,
American International University - Bangladesh.
Prepared By
Dreamers Group
Alam usrat !ahan.
Legal Environment in Business
AIUBARBITRATION IN BANGLADESH
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No part of this report may be reproduce, stored in retrieval system, or
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Arbitration in Banglaes! 3
Legal Environment in Business
AIUBARBITRATION IN BANGLADESH
Arbitration in Banglaes! 4
Tale o!
"ontent
Name of the topic Page#
Legal Environment in Business
AIUBARBITRATION IN BANGLADESH
Arbitration in Banglaes! #
Letter of Transmittal
ovember "#, #$$%
Sabrina Zerin
Faculty Member,
Faculty of Business Administration,
American International University - Bangladesh.
Subject Submission of fina! term paper.
&ear Madam,
'ith the passage of time (e the students of )*egal +nvironment in Business,, section --, are
standing on the entity of our course completion, hence are finali.ed (ith our final group term
paper.
/ividly enough, our report comprise ade0uate endeavors. But no doubt, our contribution (ill
be best evaluated on your sharp scale of acceptance 1 analytical remar2s.
3ather in case of any further clarification or elaboration as to our report, (e (ould (elcome
the opportunity to consult (ith you to e4plore ho( our findings could best meet your needs.
'ith best regards,
Alam, usrat !ahan.
Legal Environment in Business
AIUBARBITRATION IN BANGLADESH
Arbitration in Banglaes! $
A%&no'le(gement
'e (ould li2e to e4press our gratitude and indebtedness to our honorable faculty Mrs.
5abrina 6erin, Faculty member of American International University - Bangladesh 7AIUB8.
'ith her ine4haustible guidance, valuable advice, illumination suggestion, continuous
inspiration, constructive criticism and generosity helped us to carry out this term paper
successfully. 'e (ould also li2e to than2 those people, (ho helped us many times by giving
the information, direction, support, help and inspiration to accomplish this report.
Legal Environment in Business
Arbitration in Banglaes! )
E*e%utive summar+
Legal Environment in Business
Arbitration in Banglaes! ,
-ur.ose o! t/e Re.ort
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Arbitration in Banglaes! 0
Literature Revie'
9his report is about Arbitration *a(. 9o ma2e this report (e gathered so many information
and data. Most of the information is collected from the (eb. 'e also ta2e information from
some (ell-2no(n reports, boo2s, and :ournals. 9a2ing information from 'i2ipedia is totally
prohibited in this term.
9he information are combined in point by point rather than ma2ing chapters, and the statistics
of the report is given in the last page.
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Arbitration in Banglaes! 12
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3/at is Aritration4
Arbitration is a process used by agreement of the parties to resolve disputes. In
arbitration, disputes are resolved, (ith binding effect, by a person or persons acting in a
:udicial manner in private, rather than by a national court of la( that (ould have :urisdiction
but for the agreement of the parties to e4clude it. 9he decision of the arbitral tribunal is
usually called an a(ard.
Aristotle 7;<=-;## B>8 (rote, ?It bids us remember ... to settle a dispute by negotiation and
not by force@ to prefer arbitration to litigation -- for an arbitrator goes by the e0uity of a case,
a :udge by the strict la(, and arbitration (as invented (ith the e4press purpose of securing
full po(er for e0uity.?
"
Ance an arbitration agreement is entered into for submitting future differences to arbitration,
it is not, necessary to obtain the fresh consent of all the parties for a reference to arbitration at
the time (hen the dispute actually arises.
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General T+.es o! Aritration
9hree types of arbitration are contemplated by the Arbitration Act of "%=$, namely B
I. Arbitration in the course of a suit.
II. Arbitration (ith the intervention of the court.
III. Arbitration other(ise than in the course of a suit and (ithout the intervention of
the court. In practice, the last category attracts the ma4imum number of cases.
;
T+.es o! institutional aritration
Arbitration has been used customarily for the settlement of disputes bet(een members of
trade associations and bet(een different e4changes in the securities and commodities trade.
Many contracts contain a standard arbitration clause, referring to the arbitration rules of the
respective organi.ation. umerous arrangements bet(een the parties in industry and
commerce also provide for the arbitration of controversies arising out of contracts for the sale
of manufactured goods, for terms of service of employment, for construction and engineering
pro:ects, for financial operations, for agency and distribution arrangements, and for many
other underta2ings.
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5atters Re!erale in Aritration
Generally spea2ing, all :ustifiable matters of a civil nature can be referred to arbitration, but
there are certain e4ceptions to the rule. For e4ample, it is not permissible to refer a
matrimonial dispute to arbitration, since the issues in such dispute are not only those of fact
or la( but also involve 0uestions of public (elfare.
C
Sele%tion o! aritrators
9he matter of selecting arbitrators is an important aspect of the arbitration process, as the
arbitratorsD ability and fairness is the decisive element in any arbitration. 9he general practice
is for both the parties to select an arbitrator at the time the arbitration agreement is
concluded. 5election of arbitrators is also often made by agencies administering commercial
arbitration, under pre-established rules of procedure. 9hese organi.ations, including various
trade associations, and >hambers of >ommerce, maintain panels of e4pert arbitrators. 9he
parties may either ma2e their o(n selection or entrust the appointment of the arbitrators to
the organi.ation.
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-ro%e(ure in aritration
9he arbitration process is governed by the rules to (hich the parties refer in the agreement.
In the absence of specific legal rules, the procedure (ill be determined by the arbitrators.
9he arbitration proceeding must be so conducted as to afford the parties a fair hearing on the
basis of e0uality. 9he arbitrator generally has the authority to re0uest the parties and third
persons to produce documents and boo2s and to enforce such a re0uest by issuing subpoenas
through court. If a party fails to appear at a properly convened hearing, (ithout sho(ing a
legitimate cause, the arbitrator in most instances (ill proceed in the absence of the party and
then render an a(ard after investigation of the matter in dispute. 9he technical rules of
evidence do not apply to arbitrations.
9he Arbitration Act adopts the approach, that in the (or2ing of an arbitration agreement, the
parties are free to lay do(n provisions regarding various matters of procedure. But in the
absence of an agreement, the rules contained in the First 5chedule to the Arbitration Act,
"%=$, apply.
An arbitrator can be removed for misconduct. In applying this provision courts generally
follo( the (ide construction adopted in most common(ealth countries, so that, it is not
merely misconduct involving moral turpitude that attracts this po(er, but also misconduct of
a technical nature, for e4ample, a breach of the rules of natural :ustice.
&etailed provision e4ists for settling the problems that might arise (here t(o or more
arbitrators are contemplated by the arbitration agreement and a difference of opinion arises
bet(een them.
*a( to be applied in transnational transactions the statutory la( of various countries and the
rules of agencies administering commercial arbitration contain provisions on the form,
certification, notification, and delivery of the a(ard. 9he arbitrator must comply (ith these
re0uirements.
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Aritration A%t in Bangla(es/
In Bangladesh, the present la( of arbitration is contained mainly in the Arbitration
Act, "%=$, there being separate Acts dealing (ith the enforcement of foreign a(ards. 9here
are also stray provisions as to arbitration, scattered in special Acts.
Under the Act of "%=$, an arbitration agreement must be in (riting, though it need not
be registered. 9he agreement might ma2e a reference about present or future differences. 9he
arbitrator may be named in the agreement or left to be designated later, either by consent of
the parties or in some other manner specified in the agreement. /ery often, the rules of
prestigious commercial bodies lay do(n that a person (ho becomes a member of the
association must accept the machinery of arbitration created or recogni.ed by the rules of the
association. 9his also amounts to an Garbitration agreementH for the purposes of the
Arbitration Act, "%=$.
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Legal Environment in Business
Bill No.1000.
An Act to consolidate and amend the la( relating to domestic
arbitration, international commercial arbitration and enforcement
of foreign arbitral a(ards. "#ereas it is e4pedient to consolidate
and amend the la( relating to domestic arbitration, international
commercial arbitration and enforcement of foreign arbitral
a(ards@
Bill No.1000.
An Act to consolidate and amend the la( relating to domestic
arbitration, international commercial arbitration and enforcement
of foreign arbitral a(ards. "#ereas it is e4pedient to consolidate
and amend the la( relating to domestic arbitration, international
commercial arbitration and enforcement of foreign arbitral
a(ards@
Arbitration in Banglaes! 1)
Intro(u%tion o! t/e Bill
IJroposal for enacting a >omprehensive Arbitration Act by repealing the Arbitration 7Jrotocol and >onvention8
Act, "%;F, the Arbitration Act, "%=$K
/!ort title, e&tent an commencement"
9his Act may be called the Arbitration Act, "%%%. It e4tends to the (hole of Bangladesh. It
shall come into force.
De0nitions"
In this Act, unless the conte4t other(ise re0uires B
". Garbitration agreementH means an agreement by the parties to submit to arbitration all
or certain disputes (hich have arisen or (hich may arise bet(een them in respect of
a defined legal relationship, (hether contractual or not@
#. GarbitrationH means any arbitration (hether or not administered by a permanent
arbitral institution@
;. Garbitration tribunalH means a sole arbitrator or a panel of arbitrators@
=. Garbitral a(ardH means a decision of the arbitral tribunal on the substance of the
dispute@
C. G>hief !usticeH means the >hief !ustice of Bangladesh@
E. GcourtH means the >ourt of the &istrict !udge and includes such >ourts of Additional
!udge as are designated by the Government by notification in the official Ga.ette to
perform the functions of the >ourt of the &istrict !udge under this Act@
F. Gforeign arbitral a(ardH means an arbitral a(ard made in pursuance of an arbitration
agreement, in the territory of any state other than Bangladesh, but does not include an
arbitral a(ard made in the territory of a specified state@
<. Ginternational commercial arbitrationH means an arbitration relating to disputes
arising out of legal relationships, (hether contractual or not, considered as
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commercial under the la( in force in Bangladesh and (here at least one of the parties
is-
a. an individual (ho is a national of, or habitually resident in, any country
other than Bangladesh@ or
b. a body corporate (hich is incorporated in any country other than
Bangladesh@ or
c. a company or an association or a body of individuals (hose central
management and control is e4ercised in any country other than Bangladesh@
d. the Government of a foreign country@
%. Glegal representativeH means a person (ho in la( represents the estate of a deceased
person, and includes any person (ho intermeddles (ith the estate of the deceased,
and, (here a party acts in a representative character, the person on (hom the estate
devolves on the death of the party so acting@
"$. GpartyH means a party to an arbitration agreement@
"". GpersonH includes any institution or organi.ation or company or association or body
of persons, (hether incorporated or not, operating (ithin Bangladesh or outside
Bangladesh@
"#. GprescribedH means prescribed by rules framed under this Act@
";. G5pecified stateH means a state declared by the Government as a specified state.
/cope o1 Act t!e la'"
". 9his Act shall apply (here the place of arbitration is in Bangladesh.
#. ot(ithstanding sub-section 7"8 the follo(ing sections shall apply even if the place of
arbitration is outside Bangladesh- sections =C to =F.
;. 9his Act shall not affect any other la( for the time being in force by virtue of (hich
certain disputes may not be submitted to arbitration.
=. 9he provisions of this Act shall, sub:ect to the provisions of section C=, apply to all
arbitration proceedings commenced in Bangladesh after the coming into force of this
Act, (hether the arbitration agreement in pursuance of (hich such arbitration
proceedings are commenced, (as entered into before or after the coming into force of
this Act.
C. 'here the arbitration proceedings (ere commenced prior to the coming into force of
this Act, the la( in force prior to the coming into force of this Act shall, unless the
parties other(ise agree, apply to such arbitration proceedings.
E. 'here the 3epublic is a party to an arbitration agreement, the 3epublic shall be
bound by the provisions of this Act.
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2onstruction o1 re1erences"
". 'here this Act, e4cept section ;E, leaves the parties to determine a certain issue, that
freedom shall include the right of the parties to authori.e any person to determine that
issue.
#. 'here this Act-
a. refers to the fact that the parties have agreed or that they may agree, or
b. in any other (ay refers to an agreement of the parties, that agreement shall
include any arbitration rules referred to in that agreement.
;. 'here this Act, other than clause 7a8 of sub-section 7;8 of section ;C or clause 7a8 of
sub-section 7#8 of section =" refers to a claim, it shall also apply to a counter-claim,
and (here it refers to a defense, it shall also apply to a defense to such counter-claim.
3eceipt o1 'ritten communications"
". Unless other(ise agreed by the parties, (here, under this Act, any (ritten
communication, notice or summons is re0uired to be served on any party or on any
person, such (ritten communication, notice or summons shall be deemed to have
been served on such party or person, as the case may be, if it is delivered to the
addressee personally or at his place of business, or habitual residence or mailing
address@ and if none of these can be found after ma2ing a reasonable in0uiry, such
(ritten communication, notice or summons, as the case may be, shall be deemed to
have been served if it is sent to the address, last 2no(n place of business or habitual
residence or mailing address by registered post or by any other means (hich provides
a record of the attempt to deliver it.
#. 9he communication, notice or summons, as the case may be, shall be deemed to have
been received on the day it is delivered.
;. 9he section shall not apply to (ritten communication, notice or summons, as the case
may be, in respect of any proceedings of any :udicial authority.
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4aiver o1 rig!t to ob5ect"
A party (ho 2no(s that-
". any provision of this Act from (hich the parties may derogate, or
#. any re0uirement under the arbitration agreement, has not been complied (ith and yet
proceeds (ith the arbitration (ithout stating his ob:ection to such non-compliance
(ithout undue delay or, if a time-limit is provided therefore, (ithin such period of
time, shall be deemed to have (aived his right to so ob:ect.
6urisiction o1 court in respect o1
matters covere b% arbitration
Agreement"
'here a party to an arbitration agreement institutes legal proceedings in a >ourt against
another party to such agreement in respect of a matter agreed to be submitted to arbitration
under such agreement, the >ourt shall have, not(ithstanding any other la( for the time being
in force, no :urisdiction to hear and determine such legal proceedings e4cept in so far as
provided by this Act.
Aministrative assistance"
In order to facilitate the conduct of the arbitral proceedings, the parties, or the arbitral
tribunal, (ith the consent of the parties, may arrange for administrative assistance by a
suitable person.
%
9
7roposal 1or enacting a 2ompre!ensive Arbitration Act b% repealing t!e Arbitration
8protocol an 2onvention9 Act 19*7, t!e Arbitration Act, 19+0$
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Aritration Agreement
:orm o1 arbitration agreement"
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1$ An arbitration agreement may be in the form of an arbitration clause in a contract or
in the form of a separate agreement.
2$ An arbitration agreement shall be in (riting and an arbitration agreement shall be
deemed to be in (riting if it is contained B
a. in a document signed by the parties@ or
b. 7b8 in an e4change of letters, tele4, telegrams or other means of
communication (hich provide a record of the agreement@ or
c. in an e4change of statements of claim and defense in (hich the e4istence of an
agreement is alleged by one party and not denied by another.
Explanation : 9he reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement if the contract is in (riting and the reference is such as to
ma2e that arbitration clause part of the contract.
Arbitrabilit% o1 t!e ispute"
". 'here any party to an arbitration agreement or any person claiming under him
commences any legal proceedings against any other party to the agreement or any
person claiming under him in respect of any matter agreed to be referred to
arbitration, any party to such legal proceedings may, at any time before filing a
(ritten statement, apply to the >ourt before (hich the proceedings are pending to
refer the matter to arbitration, and, thereupon, the >ourt shall, if it is satisfied that an
arbitration agreement e4ists, refer the parties to arbitration and stay the proceedings,
unless the >ourt finds that the arbitration agreement is void, inoperative or is
incapable of determination by arbitration.
#. ot(ithstanding that an application has been made under sub-section 7"8 and that the
legal proceedings are pending before the >ourt, an arbitration may be commenced or
continued and an arbitral a(ard made.
"$
10
7roposal 1or enacting a 2ompre!ensive Arbitration Act b% repealing t!e Arbitration
8protocol an 2onvention9 Act 19*7, t!e Arbitration Act, 19+0$
8!ttp"##'''$la'commissionbanglaes!$org#reports$!tm9
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"om.osition o! aritral triunal
;umber o1 arbitrators"
". 5ub:ect to the provisions of subsection7;8, the parties shall be free to determine the
number of arbitrators of an arbitral tribunal.
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#. 'here no determination referred to in sub-section 7"8 is made, the number of
arbitrators of an arbitral tribunal shall be three.
;. Unless other(ise agreed by the parties, (here the parties appoint an even number of
arbitrators, the arbitrators so appointed shall :ointly appoint an additional arbitrator
(ho shall act as the >hairman of the arbitral tribunal.
Appointment o1 arbitrators"
". 5ub:ect to the provisions of this Act, the parties shall be free to agree on a procedure
for appointing the arbitrator or arbitrators, as the case may be.
#. Unless other(ise agreed by the parties, a person of any nationality may be appointed
as an arbitrator.
;. In the absence of an agreement referred to in sub-section 7"8 B
a. in an arbitration (ith a sole arbitrator if the parties fail to agree on the
arbitrator (ithin thirty days from the receipt of a re0uest by one party from the
other party to so agree, the appointment shall be made, on the application of a
party, by the &istrict !udge, e4cept in the case of an international commercial
arbitration, in (hich case, the appointment shall be made by the >hief !ustice
or any other !udge of the 5upreme >ourt designated by the >hief !ustice@
b. in an arbitration (ith three arbitrators, unless other(ise agreed by the parties,
each party shall appoint one arbitrator, and the t(o arbitrators thus appointed
shall appoint the third arbitrator (ho shall be the >hairman of the arbitral
tribunal.
=. If the appointment procedure in sub-section 7;8 applies and B
a. a party fails to appoint the arbitrator (ithin thirty days of receipt of a re0uest
to do so from the other party@ or,
b. the t(o arbitrators fail to agree on the third arbitrator (ithin thirty days of
their appointment. the appointment shall be made, upon the application of a
party, by the &istrict !udge, e4cept in the case of an international commercial
arbitration, in (hich case, the appointment shall be made by the >hief !ustice
or any other !udge of the 5upreme >ourt designated by the >hief !ustice.
C. 9he third arbitrator appointed under clause 7b8 of sub-section 7=8 shall be the
>hairman of the arbitral tribunal.
E. If more than one arbitrator are appointed under sub-section 7=8, the &istrict !udge or
the >hief !ustice or any other !udge of the 5upreme >ourt designated by the >hief
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!ustice, as the case may be, shall appoint one of them to be the >hairman of the
arbitral tribunal.
F. 'here, under an appointment procedure agreed upon by the parties-
a. a party fails to act as re0uired under such procedure@ or
b. the parties, or the arbitrators, fail to reach an agreement re0uired of them
under such procedure@ or
c. a third party, including a person, fails to perform any function assigned to such
third party under such procedure@ any party may, unless the arbitration
agreement on the appointment procedure provides other means for securing
the appointment, ma2e application to the &istrict !udge to ta2e necessary
measures to(ards the appointment of an arbitrator or arbitrators, e4cept in the
case of an international commercial arbitration, in (hich case, the application
shall be made to the >hief !ustice or to any other !udge of the 5upreme >ourt
designated by the >hief !ustice and the &istrict !udge or the >hief !ustice or
the !udge of the 5upreme >ourt designated by the >hief !ustice, as the case
may be, shall ma2e the necessary appointment including that of the >hairman
of the arbitral tribunal.
<. 9he appointment of arbitrator or arbitrators by the &istrict !udge or the >hief !ustice
or the !udge of the 5upreme >ourt designated by the >hief !ustice, as the case may
be, under sub-sections 7;8, 7=8 and 7F8 shall be made (ithin si4ty days from the date of
ma2ing of the applications referred to in those sub-sections.
%. 9he >hief !ustice, or the !udge of the 5upreme >ourt designated by him or the
&istrict !udge, as the case may be, shall, in appointing an arbitrator, have due regard
to any 0ualifications re0uired of an arbitrator under the agreement bet(een the parties
and to such considerations as are li2ely to secure the appointment of an independent
and impartial arbitrator.
"$. In the case of appointment of a sole arbitrator or third arbitrator in an international
commercial arbitration, the >hief !ustice or the !udge of the 5upreme >ourt
designated by the >hief !ustice, as the case may be, may appoint an arbitrator of a
nationality other than the nationalities of the parties (here the parties belong to
different nationalities.
"". 9he >hief !ustice or the &istrict !udge, as the case may be, may ma2e such procedure
or scheme as may be deemed appropriate for dealing (ith matters under this section.
"#. 9he decision of the >hief !ustice or the !udge of the 5upreme >ourt designated by the
>hief !ustice or the &istrict !udge, as the case may be, under sub-sections 7;8, 7=8 and
7F8 shall be final.
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";. 9he designation of a !udge of the 5upreme >ourt by the >hief !ustice for the purposes
of this section may be generally or in respect of a particular case or cases and for such
period as the >hief !ustice may specify.
"=. 9he reference to G&istrict !udgeH in this section shall be construed as a reference to
the &istrict !udge (ithin the local limits of (hose :urisdiction the arbitration
agreement has been made.
Grouns 1or c!allenge"
". 'hen a person is re0uested to accept appointment as an arbitrator, he shall first
disclose any circumstances li2ely to give rise to :ustifiable doubts as to his
impartiality or independence. An arbitrator shall, from the time of his appointment
and throughout the arbitral proceedings, disclose (ithout delay any circumstances
referred t o in sub-section 7"8 to all the parties and to the other arbitrators, unless they
have already been so informed by him.
#. An arbitrator may be challenged only if B
a. circumstances e4ist that give rise to :ustifiable doubts as to his independence
or impartiality, or
b. he does not possess the 0ualifications agreed to by the parties.
;. A party may challenge an arbitrator appointed by him, or in (hose appointment he
has participated, only for reasons of (hich he becomes a(are after the appointment
has been made.
2!allenge proceure
". 5ub:ect to sub-section 7E8, the parties shall be free to agree on a procedure for
challenging an arbitrator.
#. Failing any agreement referred to in sub-section 7"8, a party (ho intends to challenge
an arbitrator shall, (ithin thirty days after becoming a(are of the circumstances
referred to in sub-section 7;8 of section ";, challenge the arbitrator before the arbitral
tribunal by a (ritten statement stating the reasons for the challenge.
;. 9he arbitral tribunal shall decide on the challenge (ithin thirty days from the date of
filing the (ritten statement referred to in sub-section 7#8 unless in the mean(hile, the
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arbitrator challenged under sub-section 7#8 (ithdra(s from his office or the other
party or parties, if there be more than one, agree to the challenge.
=. A party (ho is aggrieved by the decision of the arbitral tribunal made under sub-
section 7;8 may, (ithin thirty days from the date of the decision, appeal to the Ligh
>ourt &ivision against the decision.
C. 9he Ligh >ourt &ivision shall decide on the appeal (ithin ninety days from the date
on (hich it is filed.
E. If a challenge under any procedure agreed upon by the parties or under the procedures
provided in sub-section 7#8 or in an appeal from an order under the said sub-section is
not successful, the arbitral tribunal shall continue the arbitral proceedings and ma2e
an a(ard.
<ermination o1 arbitrator=s manate"
". 9he mandate of an arbitrator shall terminate B
a. if he (ithdra(s from his office@ or
b. if he dies@ or
c. if all the parties agree on his termination@ or
d. if he is unable to perform the functions of his office or for any reason fails to
act (ithout undue delay@ and,
i. he (ithdra(s from his office@ or
ii. all the parties agree on the termination of his mandate.
#. If an arbitrator has incurred the dis0ualifications referred to in clause 7d8 of sub-
section 7"8, and, such arbitrator fails to (ithdra( from his office or all the parties fail
to agree on the termination of hi s office, the &istrict !udge may, upon application by
a party (ithin the prescribed period, remove such arbitrator, e4cept in the case of an
international commercial arbitration in (hich case, the >hief !ustice or any other
!udge of the 5upreme >ourt designated by the >hief !ustice, shall, upon application
by a party (ithin the prescribed period, remove such arbitratorM Jrovided that (here
the parties have so agreed, such removal shall be made by the person agreed to by the
parties.
Legal Environment in Business
Arbitration in Banglaes! 2,
;. Any reference to G&istrict !udgeH in this section shall be construed as a reference to
the &istrict !udge (ithin the local limits of (hose :urisdiction the arbitration
agreement has been made.
=. 'here an arbitrator (ithdra(s from his office or (here all the parties agree on the
termination of his mandate under the circumstances referred to in clause 7d8 of sub-
section 7"8, it shall not imply acceptance of the validity of any ground referred to in
this clause or in sub-section 7;8 of 5ection ";.
Appointment o1 substitute arbitrator
". 'here the mandate of an arbitrator terminates, a substitute arbitrator shall be
appointed according to the provisions applicable to the appointment of the arbitrator
(hose mandate has been terminated.
#. In the absence of any agreement bet(een the parties, the substitute arbitrator shall, at
the discretion of the arbitral tribunal, continue the hearings from the stage at (hich
the mandate of the arbitrator has been terminated.
;. In the absence of any agreement bet(een the parties, an order or ruling of the arbitral
tribunal prior to the termination of the mandate of an arbitrator shall not be invalid
solely on the ground of such termination.
""
11
7roposal 1or enacting a 2ompre!ensive Arbitration Act b% repealing t!e Arbitration
8protocol an 2onvention9 Act 19*7, t!e Arbitration Act, 19+0$
8!ttp"##'''$la'commissionbanglaes!$org#reports$!tm9
Legal Environment in Business
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"om.osition o! aritral triunal
;umber o1 arbitrators"
". 5ub:ect to the provisions of subsection 7;8, the parties shall be free to determine the
number of arbitrators of an arbitral tribunal.
#. 'here no determination referred to in sub-section 7"8 is made, the number of
arbitrators of an arbitral tribunal shall be three.
;. Unless other(ise agreed by the parties, (here the parties appoint an even number of
arbitrators, the arbitrators so appointed shall :ointly appoint an additional arbitrator
(ho shall act as the >hairman of the arbitral tribunal.
Appointment o1 arbitrators"
". 5ub:ect to the provisions of this Act, the parties shall be free to agree on a procedure
for appointing the arbitrator or arbitrators, as the case may be.
#. Unless other(ise agreed by the parties, a person of any nationality may be appointed
as an arbitrator.
;. In the absence of an agreement referred to in sub-section 7"8 B
Legal Environment in Business
Arbitration in Banglaes! 32
a. in an arbitration (ith a sole arbitrator if the parties fail to agree on the
arbitrator (ithin thirty days from the receipt of a re0uest by one party from the
other party to so agree, the appointment shall be made, on the application of a
party, by the &istrict !udge, e4cept in the case of an international commercial
arbitration, in (hich case, the appoint ment shall be made by the >hief !ustice
or any other !udge of the 5upreme >ourt designated by the >hief !ustice@
b. in an arbitration (ith three arbitrators, unless other(ise agreed by the parties,
each party shall appoint one arbitrator, and the t(o arbitrators thus appointed
shall appoint the third arbitrator (ho shall be the >hairman of the arbitral
tribunal.
=. If the appointment procedure in sub-section 7;8 applies and B
a. a party fails to appoint the arbitrator (ithin thirty days of receipt of a re0uest
to do so from the other party@ or,
b. the t(o arbitrators fail to agree on the third arbitrator (ithin thirty days of
their appointment. the appointment shall be made, upon the application of a
party, by the &istrict !udge, e4cept in the case of an international commercial
arbitration, in (hich case, the appointment shall be made by the >hief !ustice
or any other !udge of the 5upreme >ourt designated by the >hief !ustice.
C. 9he third arbitrator appointed under clause 7b8 of sub-section 7=8 shall be the
>hairman of the arbitral tribunal.
E. If more than one arbitrator are appointed under sub-section 7=8, the &istrict !udge or
the >hief !ustice or any other !udge of the 5upreme >ourt designated by the >hief
!ustice, as the case may be, shall appoint one of them to be the >hairman of the
arbitral tribunal.
F. 'here, under an appointment procedure agreed upon by the parties B
a. a party fails to act as re0uired under such procedure@ or
b. the parties, or the arbitrators, fail to reach an agreement re0uired of them
under such procedure@ or
c. a third party, including a person, fails to perform any function assigned to such
third party under such procedure@ any party may, unless the arbitration
agreement on the appointment procedure provides other means for securing
the appointment, ma2e application to the &istrict !udge to ta2e necessary
measures to(ards the appointment of an arbitrator or arbitrators, e4cept in the
case of an international commercial arbitration, in (hich case, the application
shall be made to the >hief !ustice or to any other !udge of the 5upreme >ourt
designated by the >hief !ustice and the &istrict !udge or the >hief !ustice or
the !udge of the 5upreme >ourt designated by the >hief !ustice, as the case
Legal Environment in Business
Arbitration in Banglaes! 31
may be, shall ma2e the necessary appointment including that of the >hairman
of the arbitral tribunal.
<. 9he appointment of arbitrator or arbitrators by the &istrict !udge or the >hief !ustice
or the !udge of the 5upreme >ourt designated by the >hief !ustice, as the case may
be, under sub-sections 7;8, 7=8 and 7F8 shall be made (ithin si4ty days from the date of
ma2ing of the applications referred to in those sub-sections.
%. 9he >hief !ustice, or the !udge of the 5upreme >ourt designated by him or the
&istrict !udge, as the case may be, shall, in appointing an arbitrator, have due regard
to any 0ualifications re0uired of an arbitrator under the agreement bet(een the parties
and to such considerations as are li2ely to secure the appointment of an independent
and impartial arbitrator.
"$. In the case of appointment of a sole arbitrator or third arbitrator in an international
commercial arbitration, the >hief !ustice or the !udge of the 5upreme >ourt
designated by the >hief !ustice, as the case may be, may appoint an arbitrator of a
nationality other than the nationalities of the parties (here the parties belong to
different nationalities.
"". 9he >hief !ustice or the &istrict !udge, as the case may be, may ma2e such procedure
or scheme as may be deemed appropriate for dealing (ith matters under this section.
"#. 9he decision of the >hief !ustice or the !udge of the 5upreme >ourt designated by the
>hief !ustice or the &istrict !udge, as the case may be, under sub-sections 7;8, 7=8 and
7F8 shall be final.
";. 9he designation of a !udge of the 5upreme >ourt by the >hief !ustice for the purposes
of this section may be generally or in respect of a particular case or cases and for such
period as the >hief !ustice may specify.
"=. 9he reference to G&istrict !udgeH in this section shall be construed as a reference to
the &istrict !udge (ithin the local limits of (hose :urisdiction the arbitration
agreement has been made.
Grouns 1or c!allenge"
". 'hen a person is re0uested to accept appointment as an arbitrator, he shall first
disclose any circumstances li2ely to give rise to :ustifiable doubts as to his
impartiality or independence.
Legal Environment in Business
Arbitration in Banglaes! 32
#. An arbitrator shall, from the time of his appointment and throughout the arbitral
proceedings, disclose (ithout delay any circumstances referred t o in sub-section 7"8
to all the parties and to the other arbitrators, unless they have already been so
informed by him.
;. An arbitrator may be challenged only if B
a. circumstances e4ist that give rise to :ustifiable doubts as to his independence
or impartiality, or
b. he does not possess the 0ualifications agreed to by the parties.
=. A party may challenge an arbitrator appointed by him, or in (hose appointment he
has participated, only for reasons of (hich he becomes a(are after the appointment
has been made.
2!allenge proceure"
". 5ub:ect to sub-section 7E8, the parties shall be free to agree on a procedure for
challenging an arbitrator.
#. Failing any agreement referred to in sub-section 7"8, a party (ho intends to challenge
an arbitrator shall, (ithin thirty days after becoming a(are of the circumstances
referred to in sub-section 7;8 of section ";, challenge the arbitrator before the arbitral
tribunal by a (ritten statement stating the reasons for the challenge.
;. 9he arbitral tribunal shall decide on the challenge (ithin thirty days from the date of
filing the (ritten statement referred to in sub-section 7#8 unless in the mean(hile, the
arbitrator challenged under sub-section 7#8 (ithdra(s from his office or the other
party or parties, if there be more than one, agree to the challenge.
=. A party (ho is aggrieved by the decision of the arbitral tribunal made under sub-
section 7;8 may, (ithin thirty days from the date of the decision, appeal to the Ligh
>ourt &ivision against the decision.
C. 9he Ligh >ourt &ivision shall decide on the appeal (ithin ninety days from the date
on (hich it is filed.
E. If a challenge under any procedure agreed upon by the parties or under the procedures
provided in sub-section 7#8 or in an appeal from an order under the said sub-section is
not successful, the arbitral tribunal shall continue the arbitral proceedings and ma2e
an a(ard.
Legal Environment in Business
Arbitration in Banglaes! 33
<ermination o1 arbitrator=s manate"
". 9he mandate of an arbitrator shall terminate B
a. if he (ithdra(s from his office@ or
b. if he dies@ or
c. if all the parties agree on his termination@ or
d. if he is unable to perform the functions of his office or for any reason fails to
act (ithout undue delay@ and,
i. he (ithdra(s from his office@ or
ii. all the parties agree on the termination of his mandate.
#. If an arbitrator has incurred the dis0ualifications referred to in clause 7d8 of sub
section 7"8, and, such arbitrator fails to (ithdra( from his office or all the parties fail
to agree on the termination of hi s office, the &istrict !udge may, upon application by
a party (ithin the prescribed period, remove such arbitrator, e4cept in the case of an
international commercial arbitration in (hich case, the >hief !ustice or any other
!udge of the 5upreme >ourt designated by the >hief !ustice, shall, upon application
by a party (ithin the prescribed period, remove such arbitrator. Jrovided that (here
the parties have so agreed, such removal shall be made by the person agreed to by the
parties.
;. Any reference to G&istrict !udgeH in this section shall be construed as a reference to
the &istrict !udge (ithin the local limits of (hose :urisdiction the arbitration
agreement has been made.
=. 'here an arbitrator (ithdra(s from his office or (here all the parties agree on the
termination of his mandate under the circumstances referred to in clause 7d8 of sub-
section 7"8, it shall not imply acceptance of the validity of any ground referred to in
this clause or in sub-section 7;8 of 5ection ";.
Appointment o1 substitute arbitrator"
Legal Environment in Business
Arbitration in Banglaes! 34
". 'here the mandate of an arbitrator terminates, a substitute arbitrator shall be
appointed according to the provisions applicable to the appointment of the arbitrator
(hose mandate has been terminated.
#. In the absence of any agreement bet(een the parties, the substitute arbitrator shall, at
the discretion of the arbitral tribunal, continue the hearings from the stage at (hich
the mandate of the arbitrator has been terminated.
;. In the absence of any agreement bet(een the parties, an order or ruling of the arbitral
tribunal prior to the termination of the mandate of an arbitrator shall not be invalid
solely on the ground of such termination.
"#
T/e aritrator an( t/e %ourt
12
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8protocol an 2onvention9 Act 19*7, t!e Arbitration Act, 19+0$
8!ttp"##'''$la'commissionbanglaes!$org#reports$!tm9
Legal Environment in Business
Arbitration in Banglaes! 3#

>hallenges to the process of arbitration are not uncommon. A party may claim, for e4ample,
that no valid arbitration agreement came into e4istence, because the person signing the
agreement had no authority to do so or that a condition precedent to arbitration had not been
fulfilled. More often, the validity of an arbitration is contested on the ground that the specific
controversy is not covered by the agreement. In such cases, the 0uestion (hether the
arbitrator has authority to deal (ith the conflict is usually determined by a court.
>hallenges before the courts against the a(ard cannot be e4cluded by agreement of the
parties, since the fairness of the arbitration process as a 0uasi :udicial proceeding has to be
maintained by the legal system.
>hallenges before the court are, ho(ever, confined to specific grounds and specific matters.
A revie( of the a(ard by a court (ill not generally deal (ith the arbitrators decisions as to
facts or (ith his application of the la(. 9he :urisdiction of the court is thus restricted. 9he
arbitration process must be the end and not the beginning of litigation.
";
6iling t/e a'ar(
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Legal Environment in Business
Arbitration in Banglaes! 3$
An a(ard of the arbitrator must be filed in the court and a decree obtained in terms thereof.
9he decree so obtained can be e4ecuted, li2e any other decree of the court. Lo(ever, the
court may, instead of confirming the a(ard, remit it to the arbitrator, modify it or set it aside
for the specified causes. Most of the orders passed by a court under the provisions of the
Arbitration Act, "%=$ in this regard are sub:ect to appeal.
"=
En!or%ement o! aritral a'ar(s
$nforcement of arbitra! a%ard.& 'here the time for ma2ing an application for setting aside
an arbitral a(ard under section =# has e4pired, or such application having been made, it has
been refused, the arbitral a(ard shall be enforced by e4ecution by the >ourt under the >ode
of >ivil Jrocedure, "%$<, in the same manner as if it (ere a decree of the >ourt.
$'p!anation In this section, the e4pression, ?>ourt?, means the >ourt (ithin the local limits
of (hose :urisdiction the arbitral a(ard has been finally made and signed.
"C
"om.etent "ourt
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Legal Environment in Business
Arbitration in Banglaes! 3)
9he court having :urisdiction under the Arbitration Act "%=$ is the court in (hich a suit on
the matter under dispute could be instituted.
Jrovisions have been enacted in the Act to deal (ith 0uestions concerning the cost of
arbitration and the procedure to be follo(ed by the arbitrators regarding filing of the a(ards.
In case of difference of opinion bet(een an even number of arbitrators, the parties can
provide for an umpire. Generally, most of the provisions applicable to arbitrators apply, (ith
necessary modifications, to umpire also.
"E
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Legal Environment in Business
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Bangla(es/ "oun%il !or
Aritration Re%ommen(e(
Aritration "lause

9he parties are free to construct their arbitration clause considering the nature of the contract
and refer all or certain disputes (hich have arisen or (hich may arise to the B>A. 9he
Bangladesh >ouncil of Arbitration, ho(ever, recommends to the parties desirous of ma2ing
reference to arbitration by the Bangladesh >ouncil of Arbitration to use any of the follo(ing
arbitration clauses in (riting in their contractsM

a. ?Any dispute or difference (hatsoever arising bet(een the parties out of or relating to
the construction, meaning, scope, operation or effect of this contract or the validity or
the breach thereof shall be settled by arbitration in accordance (ith the 3ules of
Arbitration of the Bangladesh >ouncil of Arbitration and the A(ard made in
pursuance thereof shall be binding on the parties.?
b. Ar, GAll disputes arising out of or in connection (ith the present contract shall be
finally settled under the 3ules of Arbitration of the Bangladesh >ouncil of Arbitration
by one or more arbitrators appointed in accordance (ith the said 3ules.H
"F
17
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Legal Environment in Business
Arbitration in Banglaes! 30
"on%lusion
Legal Environment in Business
Arbitration in Banglaes! 42
Biliogra./+
httpMNNduhaime.orgN*egal&ictionaryNANArbitration.asp4
httpMNN(((.va2ilno".comNsaarcla(NbangladeshNarbitrationla(NarbitrationOla(OinOban
gladesh.htm
Jroposal for enacting a >omprehensive Arbitration Act by repealing the Arbitration
7Jrotocol and >onvention8 Act, "%;F, the Arbitration Act, "%=$
7httpMNN(((.la(commissionbangladesh.orgNreports.htm
httpMNN(((.:urisint.orgNdocNhtmlNclaNenN#$$EN#$$E:iclaen#.html
Legal Environment in Business
Arbitration in Banglaes! 41
Re.ort Statisti%s
Legal Environment in Business
Arbitration in Banglaes! 42
Legal Environment in Business