Arbitrations in Bangladesh during COVID-19 pandemic



Apart from the colossal health and economic crisis, the COVID-19 pandemic directly resulted in access to justice becoming non-existent in Bangladesh due to the closure of Courts from 26th March, 2020. On 9th May, 2020 the Hon’ble President promulgated an Ordinance that paves the way for virtual operation of the judiciary. While this is a welcome development, as and when virtual-Courts are established, it is likely that such Courts would, initially, only hear urgent cases, at least until a large number of such Courts are established and the judges and lawyers are able to fully adapt to this new system. Therefore, it is imperative that we explore and adopt alternative means of resolving disputes, especially the commercial disputes.

After the coming into force of Arbitration Act 2001 of Bangladesh (“the Act”), inclusion of arbitration clauses in commercial contracts have become the norm. Even if a contract does not contain an arbitration clause, arbitration under the Act may be invoked for resolution of any commercial dispute, if the parties to the dispute so decide, so long as the place of Arbitration is in Bangladesh. In order to ascertain the suitability of arbitration proceedings under the Act during this pandemic, let us briefly consider some of the core elements involved:

a) Appointment of arbitrator(s): If the parties are able to mutually decide on a sole arbitrator or nominate their respective arbitrators (in case of a three-member Tribunal), the Tribunal may be formed swiftly. However, due to hostility between the disputing parties, as is usually the case, it may lead to a situation where the parties fail to mutually decide on an arbitrator or one of the parties fails/refuses to nominate an arbitrator in case of a three-member Tribunal. In such situations, the affected party shall have to seek intervention from the relevant Court under section 12 of the Act for the appointment of an arbitrator. Since the operation of virtual Courts is imminent, appointment of arbitrators under section 12 of the Act shall not pose as a major impediment during this pandemic.

b) Procedural freedom: The most attractive aspect of resolving a dispute by way of arbitration is the fact that the parties to a dispute have complete freedom to decide on the procedure to be followed in the arbitration proceedings, pursuant to section 25 of the Act. In the absence of an agreement between the parties, the Tribunal may determine the procedure taking into account prevailing facts and circumstances. It is pertinent to note that as per section 24 of the Act, the Tribunal is neither bound to follow the Code of Civil Procedure nor the Evidence Act. Furthermore, section 30 of the Act allows the Tribunal, unless otherwise agreed by the parties, to conduct the proceedings purely based on documents submitted by the parties thereby doing away with the need to hold oral hearings, virtual or otherwise. In view of the restrictions to movement and limited operation of postal services, parties and/or the Tribunal may also decide to do away with serving hardcopies of pleadings and documents and instead exchange documents through emails. During this pandemic, the Tribunal and/or the parties have the freedom of tailoring the procedural aspects of an arbitration under the Act.

c) Virtual Hearings: There is no dearth of power under the Act to hold virtual hearings. Sections 25 and 26 of the Act allow the Tribunal and/or the parties full freedom to decide on a procedure and a place respectively for holding oral hearings. There is no legal bar against fixing a designated digital platform like “Zoom” or “Skype” or other similar platforms available in Bangladesh as the place of arbitration. The arbitration rules and procedures of international arbitral institutions like “The International Chamber of Commerce’s International Court of Arbitration” (ICC), “The International Centre for Settlement of Investment Disputes (ICSID) and “The Singapore International Arbitration Centre (SIAC) permit the use of videoconferencing and virtual hearings in one form or another. Despite the Act providing full procedural freedom to conduct virtual arbitration sessions in Bangladesh, there are some practical difficulties. Most arbitrators and counsels are not familiar with the concept of conducting and/or taking part in a full-scale hearing on a digital platform. There is a significant difference between taking part in a videoconference and conducting a virtual hearing. Virtual arbitration hearings would, among others, ideally require a digital database of all pleadings, documents and laws filed and/or referred to by the parties, an operator controlling the video-link, a separate operator ensuring easy and efficient access to particular documents to which the counsels refer to from time to time. Therefore, arbitrators and counsels may need extensive training in this regard. The technology for holding virtual hearings would surely improve with increased usage. Leading arbitration centres around the globe are partnering with service providers like “Epiq” and “Opus” to improve the experience of virtual hearings. For example, “Arbitration Place” in Canada, now offers Arbitration Place Virtual and the “Australian Disputes Centre” offers Australian Disputes Centre Virtual. These specialised institutions are providing custom designed software and hardware virtual hearing capabilities including live document display and sharing and transcription services. Arbitration centres in Bangladesh like “Bangladesh International Arbitration Centre” and “Bangladesh International Mediation and Arbitration Centre” should urgently consider providing similar upgraded services with the latest technologies available by partnering with leading service providers.

d) Interim Orders: When a party to a dispute needs an interim order before commencement of arbitral proceedings or before the Tribunal has been established, the said party must file an application under section 7A of the Act (power of Court to pass interim orders at any stage of arbitration proceedings) before the designated Court seeking interim directions. Once virtual Courts are established, even if on a limited scale, it is likely that such applications would be entertained by the Courts since these are, by their very nature, urgent.

e) Setting aside an award and enforcement of awards: Sections 42 and 43 of the Act allow a party aggrieved by an award to challenge the same on certain vague grounds. Section 44 of the Act provides that the award would be treated like a decree of a Court and therefore shall be enforced as per the Code of Civil Procedure. Such applications must be made before relevant Courts. During this pandemic, even after the establishment of virtual Courts, it may initially be difficult to get such applications heard unless the applicant is able to show urgency or at least until the judiciary has fully adapted to this new system.

The legislature of Bangladesh could play a significant role by urgently making certain necessary amendments to the Act, even if such amendments stay in effect for a temporary duration, directly addressing the impediments mentioned earlier to improve the efficacy of arbitrations in Bangladesh during this pandemic. Without delving too deep into all the necessary amendments (that being a separate topic for extensive discussion), the amendments that are urgently required during this pandemic are, among others, briefly as follows: a) an arbitration under the Act should be strictly time-bound, b) determine a structure for fees that an arbitrator may charge, c) the grounds for challenging an award should be further restricted and should be unambiguous, d) provide sole jurisdiction to the High Court Division to hear challenges to both domestic and international commercial arbitration awards and impose a strict time-limit for passing such orders and e) provide an expedited procedure for enforcement of awards.

The objective behind these proposed emergency amendments is three-fold: a) to reduce the scope of interference by Courts with arbitration proceedings and awards, b) to expedite the procedure for enforcement of awards and c) making the various stages and steps during an arbitration proceeding and other related Court proceedings including enforcement proceedings strictly time-bound. These proposed amendments to the Act, among many others, are long overdue and shall have a significant and positive impact on the efficacy of arbitration as a dispute settlement mechanism in Bangladesh during and even after the pandemic.

Arbitration under the Act, despite its existing shortcomings, has the potential to become the primary mechanism for adjudication of commercial disputes in Bangladesh during this pandemic, there being no legal barriers in this regard. Parties to a commercial dispute should be strongly encouraged to take appropriate steps to resolve their dispute through arbitration as this is the only realistic way forward.




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