Discuss the provision of Arbitration Act 1940?

2. Introduction:

An arbitration clause is a normally used clause in a contract that is required the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside of the courts, and is therefore considered a kind of forum selection clause.

A word of concern is in order. There is no such thing as a single “model”, “miracle” or “all purpose” clause appropriate for all occasions[1]. All should be carefully tailored to the exigencies of a specified condition, enchanting into account the likely types of disputes, the needs of the parties’ relationship and the appropriate laws. Because the arbitration clause is typically one of the last contractual provisions negotiated after the parties have agreed on the necessary terms often the parties merely insert category clauses or allow the party with the maximum bargaining power to dictate the contents of the clause. In the latter case, a negotiator must know which requirements are essential and which are not. In international arbitral rules generally allow parties to an agreement containing an arbitration clause to choose the substantive law that will govern disputes[2]. In Bangladesh present law of arbitration base on arbitration act 1940.

  3. In Bangladesh arbitration act 1940 & an arbitration types:

a. About Arbitration

 Arbitration   is a less formal proceeding whereby a neutral party, usually a lawyer, is retained by the parties to the dispute and he or she makes the decision as opposite to a judge or jury.  It is frequently touted as being a less expensive, more efficient method of resolving disputes.  However, most arbitrators charge in the range of thousands of dollars per day, the rules of evidence are “relaxed” and there is no or limited discovery to allow you access to the opposing parties documents and witnesses.  In short, although the idea is great in theory, it can be just as expensive as court in the long run.[3]

If you are about to sign a construction contract, it is worth a few hundred dollars to have an experienced construction attorney review and comment on the contract before you sign it.  If you have a construction dispute, the sooner you involve an experienced lawyer, the better off you will be.

 b.Arbitration in Bangladesh:

In Bangladesh, present law of arbitration is controlled mainly in the Arbitration Act, 1940, there being separate Acts dealing through the enforcement of foreign awards.  There are also stray provisions as to arbitration, scattered in special Acts.  Three types of arbitration are contemplated by the Arbitration Act of 1940,

(i) Arbitration in the course of a suit

(ii) Arbitration with the intervention of the court, and

(iii) Arbitration otherwise than in the course of a suit and without the intervention of the court In practice, the last category attracts the maximum number of cases.

Under the law Act of 1940, an arbitration agreement has to be in writing, though it need not be registered. The agreement may make a indication about present or future differences. The 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. Very often, the rules of prestigious commercial bodies lay down that a person who becomes a part of the association have to accept the machinery of arbitration created or recognized by the rules of the association.  This as well amounts toward an “arbitration agreement” for the purposes of the Arbitration Act, 1940.

c.Types of institutional arbitration

Arbitration has been used customarily for the settlement of disputes involving members of trade associations and between dissimilar exchanges in the securities and commodities trade.  Many contracts contain a standard arbitration clause, referring to the arbitration rules of the relevant organization.  Numerous arrangements between the parties in industry and commerce also endow with for the arbitration of controversies arising out of contracts for the sale of manufactured goods, for conditions of service of employment, for construction and engineering projects, for financial operations, for group and distribution arrangements, and for lots of other undertakings.

 4.Factors Relevant to the Enforceability of an Arbitration Clause International Arbitration

 a.Treaty Requirements:

    .The Convention on the acknowledgment and Enforcement of Foreign Arbitral Awards and the Inter-American Convention on International Commercial Arbitration Directory the requirements that have to be met for an arbitral agreement to be, enforceable by the authority of the treaties.

 b.Capacity of the Parties:

When the arbitration agreement is invalid under the main law agreed by the parties or, in the absence of an agreement on the governing law, under the law of the country where the award is made. With this incentive in brain, sometimes a State will disagree that it did not have the capacity to have the same opinion to arbitration. Swiss law provides that a State oran enterprise or organization controlled..

 c.Authority of the Signators

 A alike issue arises when a party claims the person signing the agreement was not properly authorized. In civil law countries, certain formalities, such as a power of attorney, are frequently required for authorization to sign an agreement. Some States, and perhaps even some personal companies, may require two signatures of persons at specific levels previous certain contracts might be considered binding.

 d.Parties Bound By An Arbitration Clause

 In general, an arbitration clause binds solitary the persons otherwise companies who sign the agreement. This requirement reflects the fact that arbitration is consensual in nature, and is dependent upon the parties’ agreement.

 e.Unified Contractual Scheme

Some arbitral tribunals and courts have determined that an arbitration clause in one contract between the parties would too apply to other agreements between the alike parties if the agreements relate to the alike project. Other cases have referred to agreements without an arbitral clause as “merely accessory” to a contract containing an arbitration agreement as a method of justifying the extension of the clause. U.S. court ordered arbitration of all contractual and tort claims between the parties even if only the letter of intention included an arbitration clause.[4]

f.Separability Doctrine

 To deal through these claims, arbitral panels in addition to courts promulgated the separability doctrine. The essence of this doctrine is that the arbitration clause is an sovereign agreement, separate as of the remainder of the contract in which it is contained.30 With this common sense in mind,courts have detained that the arbitration clause did not end with the contract containing it.

 g.Arbitrability of Disputes

 One of the issues that infrequently arises is whether the type of dispute involved is “arbitrable” – that is, whether under a given nation’s observation of public order or public policy a particular species of controversy may properly be arbitrated, or whether it have to be litigated in the nation’s courts.

 h.Conditions Precedent to Arbitration

Infrequently, parties make available that a certain action or event will happen prior to the initiation of an arbitration proceeding. Example, in different arbitration clauses reviewed by the author, a meeting of senior executives to negotiate a settlement, the occurrence of mediation41or a lack of command of a specific court have been provided as conditions to the filing of arbitration.42 Exhaustion of other alternative dispute resolution (ADR) procedures may also be listed as conditions to the initiation of arbitration.[5]

 i.Incorporation of Arbitration Clauses by Reference

 Major projects may engage the negotiation and drafting of a lot of different but interrelated agreements – in a few cases dozens of separate contracts. If the parties desire to include the same

arbitral clause in each agreement, rather than typing the same language into each and taking the risk of varying language, which could lead to different results, the parties may prefer to negotiate a single master or umbrella arbitration agreement. This master agreement can then beincorporated into each separate contract by reference

 j.Unconscionable Arbitration Clauses

 Newly, a few plaintiffs in U.S. courts have attacked the selection of the ICC Arbitration policy in contracts on the view that the ICC’s administrative fees are extreme, and thus, the arbitration clause is unconscionable.  Example of these attacks is demonstrated by the case of Brower v. Gateway 2000, Inc.49 There, a computer manufacturer’s Standard Terms and circumstances Agreement, which is included in the box with the computer, provided for arbitration of any disputes in accordance through the ICC Arbitration Rules

5.Legal value of arbitration

Arbitration in the international context involves numerous difficulties, one of the most troublesome of which is the choice of substantive law to be applied in a given dispute.[6] The substantive law of the arbitration may be specified by the parties in their original agreement.[7] In general, parties to an agreement containing an arbitration clause have virtually complete autonomy in selecting the substantive governing law;[8] almost any choice of substantive law by the parties is enforceable, so long as the arbitral award itself is enforceable.[9]

Although parties frequently specify the law of a particular jurisdiction as the background law governing the merits of any dispute, they often supplement such a choice, or avoid it altogether, by referring to lex mercatoria, customs of the trade, or general principles of law.[10] Of these three substantive schemes, the last is especially vague because of its broad scope and lack of explication in the literature. Particularly because there is no delineated set of general principles, results become unpredictable, and parties to agreements have little ground on which to base their expectations. Moreover, because general principles of law are an especially popular choice of substantive law when sovereign governments are involved in an agreement, and because such agreements are likely to proliferate as developing nations make long-term economic development contracts with companies from industrial nations,[11] the application of this term will become an even more important issue.[12]

In many cases the parties simply are unable to agree on a particular national or non-national law and are willing to put off any conflict over the applicable law until the need arises.[13] Arbitrators in such situations have more discretion than in any other case, as they may apply any substantive law that their arbitral rules and other procedural provisions allow. Traditionally, scholars believed that the arbitrator was bound to apply the conflict-of-laws system where the arbitral tribunal had its seat, but recently this view has been challenged; instead, arbitral tribunals now frequently apply the conflict of-laws system they view most appropriate.

Alternatively, arbitrators may apply a variety of other conflict-of-laws standards that have only an indirect foundation in national law. The least significant departure from a national conflict-of-laws system is the cumulative application of the conflict-of-laws systems connected with the dispute. A more substantial departure is the application of the conflict-of-laws system the arbitrator views as most appropriate and most responsive to international commerce. A third, still greater departure is the application of a basic conflict-of-laws rule derived from a comparison of competing systems.[14] The last step before attaining a fully denationalized arbitral procedure is the application of a substantive national law without reference to any conflict-of-laws system.[15]

 The traditional approach in the secondary literature to the problem of general principles of law has been to discuss the choice-of-law issue and to suggest possible justifications for applying such a general substantive standard.[16] However, if these justifications are legitimate, a more important task involves defining the general principles that make up such a standard. In the arbitration context, the best indication of the acceptance of a proposition as a general principle is its frequent invocation by arbitral tribunals and its recognition by scholars.

The International Court of Arbitration (the “Court”) of the International Chamber of Commerce (the “ICC”) is the independent arbitration body of the ICC. The Court does not itself resolve disputes. It administers the resolution of disputes by arbitral tribunals, in accordance with the Rules of Arbitration of the ICC (the “Rules”). The Court is the only body authorized to administer arbitrations under the Rules, including the scrutiny and approval of awards rendered in accordance with the Rules. The President of the Court (the “President”) or, in the President’s absence or otherwise at the President’s request, one of its Vice-Presidents shall have the power to take urgent decisions on behalf of the Court, provided that any such decision is reported to the Court at its next session. As provided for in the Internal Rules, the Court may delegate to one or more committees composed of its members the power to take certain decisions,. The Court is assisted in its work by the Secretariat of the Court (the “Secretariat”) under the direction of its Secretary General (the “Secretary General”).

 6.Arbitration Conduct:

1)      In all cases, the arbitral tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case.

2)      The parties undertake to comply with any order made by the arbitral tribunal

3)      In order to ensure effective case management, the arbitral tribunal, after consulting the      parties, may adopt such procedural measures as it considers appropriate, provided that they are   not contrary to any agreement of the parties.

4)      Upon the request of any party, the arbitral tribunal may make orders concerning the                         confidentiality of the arbitration proceedings or of any other matters in connection with the   arbitration and may take measures for protecting trade secrets and confidential information.

 5)      The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an

expeitious and cost-effective manner, having regard to the complexity and value of the dispute

7.Remedies & Breach of contract

Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party’s performance. If the party does not fulfill his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to breach the contract.[17] Breach of contract is a type of civil wrong.[18]

There are three crucial remedies in American law. One is from the traditional law courts of England, and is seen in the form of a payment of money to the victim. This payment is commonly referred to as damages. Compensatory damages compensate an injured victim or plaintiff, and punitive damages punish someone who because of fraud or intentional conduct, is deemed to deserve punishment. Punitive damages serve the function in civil law that fines do in criminal law.

The second category of remedy comes from the Chancellor of England, commonly called the Chancery Court, or, more commonly, equity. The injunction is a type of equitable remedy,[19] as is specific performance, in which someone who enters into a contract is forced to perform whatever promise has been reneged upon. Two additional equitable remedies are the equitable lien and the constructive trust.

The third broad group is declaratory remedies. Common examples are the declaratory judgment and the action to quiet title, and these remedies usually involve a court’s determination of how the law applies to particular facts without any command to the parties.[20] Courts give declaratory remedies about many different kinds of questions, including whether a person has a legal status, which the owner of a property is, whether a statute has a particular meaning, or what the rights are under a contract.

While those are the three basic categories of remedies in American law, there are also a handful of others (such as reformation and recession, both dealing with contracts whose terms need to be rewritten or undone).

8. Conclution

.Unfortunately, the use of this vague standard also produces uncertainty and unpredictability because these principles have been inadequately articulated and documented. Both parties and the tribunals arbitrating their disputes therefore need a coherent list of such principles to ease the application of this non-national substantive law. Although this compilation is by definition general and broad, any list is bound to heighten the certainty of those contracting parties who choose general principles as the governing law. Thus, even in its rudimentary form, this list may serve as a source for arbitral tribunals and contracting parties in deriving such general principles. Although much work remains to be done, the list may facilitate the use of general principles of law as the governing substantive law by providing a delineated set of such principles. Basically In Bangladesh we use the arbitration act 1940.Our application type is ‘’Arbitration otherwise than in the course of a suit and without the invention of the court in practice.”’

 9. Bibliography




4.von Mehren, Special Substantive Rules for Multistate Problems: Their Role and Significance in Contemporary Choice of Law Methodology, 88 HARV. L. REV. 347 (1974)

 5.Croff, supra note 10, at 632-33.

 6.Rosett,Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods, 45 OHIO ST. L.J. 265, 266-68 & n.8 (1984)



 9.Glanville Williams. Learning the Law. Eleventh Edition. Stevens. 1982. p. 9

 10.Douglas Laycock, The Death of the Irreparable Injury Rule (Oxford Univ. Press 1991).

 11.Bray, Samuel (2010). “Preventive Adjudication”. University of Chicago Law Review 77: 1275, 1281.

12.Johnson v. Levine, 736 So. 2d 1235, (Fla.4th DCA,. 1999).

 13.Mercedes Homes, Inc. v. Colon, 966 So. 2d 10 (Fla. App., 5th DCA, 2007).

 14.Reuter Recycling of Florida, Inc. v. City of Dania Beach, 859 So. 2d 1271 (Fla. App., 4th

DCA, 2003).

 15.S.D.S. Autos, Inc. v. Chrzanowski, et. al. 2007 Fla. App. Lexis 18683 (Fla. App., 1st

DCA, 2007).

 16.Stinson-Head, Inc. v. City of Sanibel, 661 So. 2d 119 (Fla. App., 2d DCA, 1995).

Terminix Int’l. Co. v. Michaels, 668 So. 2d 1013 (Fla., 4th DCA, 1996.)





 21.Willmott, L, Christensen, S, Butler, D, & Dixon, B 2009 Contract Law, Third Edition, Oxford    University Press, North Melbourne.

(1870-71) LR 6 QB 597

 22. R. Austen-Baker, ‘Gilmore and the Strange Case of the Failure of Contract to Die After All’ (2002) 18 Journal of Contract Law 1

 23.A. REDFERN & M. HUNTER, supra note 1, at 53-55.

 24.Branson & Wallace, Choosing the Substantive Law to Apply in International Commercial Arbitration, 27 VA. J. INT’L L. 39

25.American Arbitration Association, “Home Construction Arbitration Rules and Mediation

Procedures,” (Effective June 1, 2007.)

 26.American Arbitration Association, “Labor Arbitration Rules (Including Expedited Labor

Arbitration Rules)” (Amended and Effective August 1, 2007

27.A. REDFERN & M. HUNTER, supra note 1, at 72-73

 28.von Mehren, International Commercial Arbitration: The Contribution of the French Jurisprudence, 46 LA. L. REV. 1045, 1053 (1986).

 29.Statute of the International Court of Justice, art. 38 [hereinafter I.C.J. Statute], reprinted in CURRENT INTERNATIONAL TREATIES 137 (T. Millar ed. 1984).


(1962); see also Buffenstein, Foreign Investment Arbitration and Joint Ventures, 5 N.C.J. INT’L L. & COM. REG. 191, 194 (1980)


 32.Branson & Wallace, supra note 10, at 42; Croff, supra note 10, at 623-24


34. http://www.arbitration-links.de/

35. : The right of appeal : a practical digest of charter-party disputes and the right of appeal under the Arbitration Act 197 9 by ociety of Maritime Arbitrators.

36. www.businessdictonary.com/definition.confliation.html




40. http://en.wikipedia.org/wiki/Arbitration

41. http://en.wikipedia.org/wiki/Arbitration_clause



[1] Stephen Bond, How to Draft an Arbitration Clause (Revisited), 1 ICC Int’l Ct. Arb. Bull. 14 (Dec. 1990).


[3] http://www.nolo.com/legal-encyclopedia/arbitration-clauses-contracts-32644.html

[4] Anderra Energy Corp. v. SAPET Development Corp., 22 Y.B. Com. Arb. 1077, 1080 (1997).

 [5] See DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 335 (7th Cir. 1987) (summary

judgment granted in part because party did not comply with mediation clause, which required an appeal to

[6] A. REDFERN & M. HUNTER, supra note 1, at 53-55.

[7] Branson & Wallace, Choosing the Substantive Law to Apply in International Commercial Arbitration, 27 VA. J. INT’L L. 39, 46 (1986).

[8] A. REDFERN & M. HUNTER, supra note 1, at 72-73

[9] von Mehren, International Commercial Arbitration: The Contribution of the French Jurisprudence, 46 LA. L. REV. 1045, 1053 (1986).

[10] Statute of the International Court of Justice, art. 38 [hereinafter I.C.J. Statute], reprinted in CURRENT INTERNATIONAL TREATIES 137 (T. Millar ed. 1984).

[11] A. FATOUROS, GOVERNMENT GUARANTEES TO FOREIGN INVESTORS 21-28 (1962); see also Buffenstein, Foreign Investment Arbitration and Joint Ventures, 5 N.C.J. INT’L L. & COM. REG. 191, 194 (1980)

[12] McNair, The General Principles of Law Recognized by Civilized Nations, 33 BRIT. Y.B. INT’L L. 1 (1957).

   Branson & Wallace, supra note 10, at 42; Croff, supra note 10, at 623-24

[14] von Mehren, Special Substantive Rules for Multistate Problems: Their Role and Significance in Contemporary Choice of Law Methodology, 88 HARV. L. REV. 347 (1974)

[15] Croff, supra note 10, at 632-33.

[16] Rosett,Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods, 45 OHIO ST. L.J. 265, 266-68 & n.8 (1984)

[17] http://bizlawfirm.com/all-practice-areas/breach-of-contract/

[18] Glanville Williams. Learning the Law. Eleventh Edition. Stevens. 1982. p. 9

[19] Douglas Laycock, The Death of the Irreparable Injury Rule (Oxford Univ. Press 1991).

[20] Bray, Samuel (2010). “Preventive Adjudication”. University of Chicago Law Review 77: 1275, 1281.