Originally from Arbitration in Asia - 2d Edition

PREVIEW

[1]  INTRODUCTION

The concept of arbitration in Bangladesh, as in many South Asian countries, has deep historical roots that predate formal legal codification. Traditional mechanisms such as shalish (village councils), mediation, and consensus-based conflict resolution, often led by respected community elders, formed the foundation of indigenous dispute resolution avenues. These methods laid the groundwork for modern Alternative Dispute Resolution (ADR), particularly arbitration.

During the British colonial era, Bangladesh (then part of British India) was governed by laws that included provisions for arbitration. The Arbitration (Protocol and Convention) Act, 1937 and the Arbitration Act, 1940, inherited from British India, served as the primary legislation until the early 2000s. However, these laws were widely criticized for being outdated and ill-suited to the complexities of modern commercial disputes.

To address these shortcomings, Bangladesh enacted the Arbitration Act, 2001, repealing the 1940 Act and introducing a more comprehensive legal framework. Modeled largely on the UNCITRAL Model Law, the 2001 Act aligns Bangladesh’s arbitration regime with international standards. It governs both domestic and international commercial arbitration and includes provisions for the recognition and enforcement of foreign arbitral awards.

Bangladesh formally acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on May 6, 1992, thereby committing to enforce foreign arbitral awards in accordance with international norms.

The Arbitration Act, 2001 provides a robust framework covering key aspects such as the appointment and challenge of arbitrators, jurisdiction of arbitral tribunals, interim measures by courts, and the recognition and enforcement of awards. This legislation facilitates efficient dispute resolution and reflects global best practices.

In terms of institutional development, the Bangladesh International Arbitration Centre (BIAC) was established in 2011 as the country’s first formal arbitration institution. Supported by major trade bodies including the ICC-B, DCCI, and MCCI, BIAC offers a neutral and professional platform for resolving commercial disputes.

Despite these advancements, challenges persist. The ADR landscape in Bangladesh continues to evolve, with limited public awareness, a shortage of trained professionals, and bureaucratic inertia impeding its full potential. Nevertheless, arbitration is increasingly being adopted in commercial contracts, particularly those involving foreign direct investment (FDI), and is viewed as a viable alternative to the overburdened court system.