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“All Citizens are Equal before Law and are Entitled to Equal Protection of Law”-Article 27 of the Constitution of the People’s Republic of Bangladesh

Issue No: 81
August 16 , 2008

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Précis of a salient Act

Samaha M Karim

Arbitration is a procedure by which a dispute is resolved by one or more independent third parties (the arbitrators) rather than by a court. It is one of the techniques of alternative dispute resolution (ADR) by which civil disputes are resolved without the need for conventional litigation.

The United Nations Commission on International Trade Law (UNCITRAL) on 21 June 1985 adopted The UNCITRAL Model Law on International Commercial Arbitration.

The Model Law is a thorough and promising source for the desired harmonisation and improvement of national laws. It provides all stages of the arbitral process and shows a worldwide consent on the principles and important issues of international arbitration practice.

The Arbitration Act 2001
On 10th April 2001, the Arbitration Act 2001 came into effect in Bangladesh. It replaced the previous Arbitration Act, 1940. The Act follows closely the UNCITRAL Model Law and provides a united formula for both international commercial arbitration and domestic arbitration by consolidating the entire law of arbitration in one single Act. To a large extent in adopting the model, the 2001 Act has tried to promote principles of party autonomy, freedom for the arbitrators and finality of the arbitral award. The 2001 Act consists of 59 sections in 14 chapters.

Although the earlier Arbitration Act and certain provisions of the Civil Procedure Code were repealed by the Act, provisions in the Code which deal with Court administered arbitration on application of parties in pending actions are still operative.

Arbitration agreement
Chapter III of the Act provides the meaning of an arbitration agreement. In simple terms, it is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship whether contractual or not. An arbitration agreement that would be recognized by the court includes written documents signed by the parties, exchange of letters, telex, telegrams, fax, e-mails or other means of telecommunication providing a record of the agreement or an exchange of statement of claim and defence in which existence of the agreement is alleged by one and not denied by the other.

Chapter IV of the Act deals with the composition of arbitral tribunal. Full autonomy is given to the parties to determine the number of arbitrators according to section 11 of the Act. The arbitral tribunal shall consist of three arbitrators in line with the UNCITRAL provisions if the parties fail to determine the number of arbitrators. Where the parties appoint an even number of arbitrators, the latter would jointly appeal for an additional arbitrator who would be the Chairman of the tribunal. If accepted by the parties involved in the dispute, a person of any nationality may be chosen as an arbitrator.

Generally, arbitration laws provide for the removal of an arbitrator, who is guilty of undue delay, etc. The 2001 Acts also provides for challenging an arbitrator if circumstances give rise to justifiable doubts as to his impartiality and independence. Under the 2001 Act, the arbitral tribunal is to act in an impartial, practical and expeditious manner in dealing with any dispute submitted to it for arbitration.

Settlement other than arbitration
Section 22 of the Act speaks of the arbitrator's power and also the duty to encourage settlement of disputes through mediation, conciliation or other procedure with the agreement of parties. Agreements reached in the above procedures are accorded the same status as an arbitration award and are referred to as arbitral awards on agreed terms.

Under section 25 of the 2001 Act the parties are given the freedom to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Section 24 states that the arbitral tribunal shall not be bound either by the Code of Civil Procedure or the Evidence Act. However, the Limitation Act, 1908 is made applicable.

Challenge to Jurisdiction
As regards to challenge to the arbitrator's jurisdiction, the 2001 Act confers on the arbitral tribunal the power to rule on its jurisdiction. Any party aggrieved by the decision of the arbitral tribunal can appeal to the High Court Division. If a challenge to the arbitral proceeding fails, the tribunal shall continue the proceedings and render an award and court cannot interfere with the tribunal proceedings at that stage.

According to Section 38(3) of the 2001 Act, the arbitral tribunal does not require reason to be given if the parties have agreed that no reasons are to be given. The Act requires the award to be in writing, signed by the arbitrators or a majority of them, stating the date, place of arbitration and the reasons upon which it is based, unless the parties have agreed that no reasons be given or the award is one made on agreed terms at the request of parties. The tribunal could correct, modify or make an additional award and where parties have so agreed, give an interpretation of a specific point or part of the award.

Status of the award
The 2001 Act confers, on the award, the status of a decree, subject to the possibility of the award being challenged on certain grounds before the competent court. Section 39 states that an award shall be final and binding on the parties and persons claiming under them respectively.

Challenge to the award
The award of an arbitrator can be challenged before the competent court. Section 43 of the Act provides the grounds for setting aside arbitral awards. Fraud, corruption or conflict with public policy of Bangladesh, violation of principles of natural justice, acting beyond the terms of the submission and deciding on matters which are legally not arbitral are the grounds available for setting aside the awards.

The writer is working with Law Desk.


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