Arbitration
Arbitration is a procedure for settling disputes in which both you and the supplier usually agree to accept the decision of the arbitrator as legally binding. This means you cannot take court action, except to enforce the award if the supplier doesn’t pay.[1] The arbitrator will usually be a member of the Chartered Institute of Arbitrators and often acts independently of the trade association. The arbitrator will make a decision based on the written evidence presented by you and the supplier. The decision is confidential and cannot be made public without the supplier’s agreement. You will have to pay a registration fee which may be refunded if you are successful.
Some contracts for services and delivery notes include an arbitration clause stating that you will refer any dispute to arbitration. Although this is binding once you have signed the agreement, if the total cost is below the small claims limit (£5,000), you cannot be forced to arbitrate unless you gave your agreement after the dispute arose.
Bangladesh Council for Arbitration (BCA) of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) (2001 Act)
The Rules may be called the “Rules of Arbitration of the Bangladesh Council of Arbitration” framed under the auspices of FBCCI. These Rules shall apply where any agreement, submission or reference, in the form of an arbitration clause in a contract or in the form of a separate agreement, provides in writing for arbitration under these Rules of Bangladesh Council of Arbitration (BCA) the parties shall be taken to have agreed in writing that the arbitration shall be conducted in accordance with these Rules or such amended Rules as the BCA may adopt from time to time. An arbitration agreement shall be deemed to be in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams, fax, E-mail or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. The BCA Rules include the Appendixes and any amendment made therein from time to time.
Arbitration Agreements
Arbitration in Bangladesh is ruled by the Arbitration Act, 2001 (“the Act”). Section 9 of the Act groups out the essential components to be comprised in an arbitration affirmation and states that it may be in the pattern of an arbitration clause in agreement or in the pattern of a distinct agreement. An arbitration affirmation that would be identified by the courted compasses in writing articles marked by the parties, exchange of notes, telex, telegrams, fax, e-mails or other entails of telecommunication supplying a record of the affirmation or an exchange of declaration of assertion and protection in which reality of the affirmation is supposed by one party and not refuted by the other.[2]
The Agreement should contain all the ingredients of a usual agreement that would make it enforceable, i.e. the wordings of the agreement should be free of ambiguity, and should state the disputes to which the arbitration agreement would be applicable. It should also include the governing law for resolution of the dispute.
Since the enactment of the Arbitration Act, 2001 there has been positive response both from the business community as well as from the Government. A specific Bench of the High Court Division of the Supreme Court of Bangladesh has been vested with the jurisdiction to appoint arbitrators in respect of an international commercial arbitration as defined in the Act.[3]
Significant differences between the governing law and the Model Law
The Arbitration Act, 2001 is based on the UNCITRAL Model Law. However, on certain aspects the provisions of the 2001 Act differ and some of the major differences can be stated thus:
ü Section 11 of the 2001 Act deals with the number of Arbitrators and mandates that, unless otherwise agreed between the parties, the number shall not be even.[4]
ü The Model Law permits the parties to approach a Court or Authority for appointment of a third Arbitrator or Sole Arbitrator as the case may be, in cases where the parties fail to reach an agreement. Under the 2001 Act, this power in the case of the domestic arbitration is vested with the District Judge and in case of international commercial arbitration this power is given to the Chief Justice or any Judge of the Supreme Court designated by him.
ü Matters which are dealt with by the 2001 Act on which the Model Law is silent are:
ü Award of interest by the Tribunal (Section 38(6))[5]
ü Costs of arbitration (Section 38(7)).[6]
ü Enforceability of an award in the same manner as if it were a decree of a Court under Section 44 in situations where the award is not challenged within the prescribed period or the challenge has been unsuccessful.
ü Appeals in respect of certain matters (Section 48).[7]
ü Fixing the amount of deposit as an advance for the cost of arbitration (Section 49).
ü Non-discharge of arbitration agreement by death of a party, (Section 51).
ü Rights of a party to an arbitration agreement in relation to insolvency proceedings (Section 52).
ü Identification of Court having exclusive jurisdiction over the arbitral proceedings (Section 53).
ü Applicability of the Limitation Act, 1908 to arbitrations as it applies to proceedings in Court and related issues.
Jurisdiction
Section 54 of the Arbitration Act, 2001 states that the Act is not applicable to the Industrial Relations Ordinance, 1968 or to any other law making special provisions for arbitration.
The Arbitration (Protocol and Convention) Act, 1937 and the Arbitration Act, 1940 have been repealed by section 59(1). The saving clause provides that the repealed enactments shall be applied in relation to the proceedings which commenced before the Act came into force.
Section 10(1) of the 2001 Act makes it obligatory on the part of the judicial authority to refer the parties to arbitration if action brought before it is a matter which is covered by the arbitration agreement, provided such request is made not later than submitting to the Court the first statement on the substance of the dispute. Pursuant to Section 10(2), the Court, if it is satisfied that an arbitration agreement exists, refers the parties to arbitration and stays the proceedings, unless it finds that the arbitration agreement is void, inoperative or incapable of determination by arbitration.[8]
Decisions under the old Arbitration Act, 1940 would have a bearing on this issue. Under the old Act a Court decided on the facts of each case whether sufficient cause had been made out or not for the dispute to be referred to arbitration and in doing so, the Court was not limited to the kind of causes referred to in the Arbitration Act. When the dispute required investigation into the charge of fraud the court could have refused to refer the matter to arbitration. When the dispute between the parties raised difficult and complicated question of law which required a decision by the court, it could have refused to refer the dispute to arbitration. The Court also considered the conduct of the applicant and considered whether such conduct was sufficient cause for not making the reference. Moreover, undue delay could be sufficient cause for not ordering the reference.
Section 20 of the Arbitration Act, 2001 states that the High Court Division may, on the application of any of the parties to the arbitration agreement, after serving notice upon all other parties, determine any question as to jurisdiction of the arbitral tribunal if it is satisfied that the determination of the question is likely to save substantial cost, the application was submitted without any delay and there is good reason why the matter should be decided by the Court. The application will have to state the reasons on which the matter should be decided by the High Court Division. However, even if such an application is pending before the Court, unless otherwise agreed by the parties, the arbitral tribunal is expected to continue the arbitration proceedings and make an arbitral award.
Selection of Arbitral Tribunal
If the parties fail to select arbitrators, section 12 of the Arbitration Act, 2001 sets out the default procedure for such selection and states that the District Judge in case of arbitration other than international commercial arbitration and Chief Justice or a Judge of the Supreme Court designated by the Chief Justice in case of international commercial arbitration would select arbitrators.[9] In order to invoke section 12, either party may apply to the Court for appointment of an arbitrator.
The Court’s power to intervene is restricted to the following:
- Appeal against the decision of arbitral tribunal challenging arbitrator (Section 14(4)).
- Power to decide on termination of mandate of the arbitrator in the event of his inability to perform his functions or failing to act without undue delay (Section 15(2)).
- Powers of High Court Division in deciding jurisdiction (Section 20).
- Power to enforce interim measures taken by arbitral tribunal (Section 21(4)).
- Power to issue summons upon the application of the arbitral tribunal (Section 33).
- Power to direct determination of any question in connection with insolvency proceeding by arbitration under certain circumstances (Section 52).
Under the old Arbitration Act, 1940, the Court had wide powers to grant interim relief. Though these provisions have been omitted, it can be reasonably anticipated that the Court may grant some interim relief in aid of the arbitration proceedings. A party’s request to a court for relief will have no effect on the jurisdiction of the arbitration tribunal, subject to any order made by the Court.
The only limit to the scope of the arbitrator’s authority with respect to ordering the disclosure of documents is set out in Section 33(2) of the Arbitration Act, 2001 which states that a person shall not be compelled under any summons to produce any document or material which that person could not be compelled to produce at the trial in an action before the Court.[10]
Section 38 sets out the requirements relating to the form and content of an arbitral award and requires the award to be written and to contain the signatures of the majority of the members of the arbitral tribunal along with a valid reason for any omitted signature. The date and place of arbitration should be stated and signed copies of the arbitral tribunal should be delivered to each party.
The Act does not require reasons to be given by the arbitral tribunal if the parties have agreed that no reasons are to be given or the award is an arbitral award on agreed terms (Section 38(3)).
The arbitral award may include interest in the sum for which the award is made at such rate as the tribunal deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. Subject to what is specified in the award, interest on the sum directed to be paid by the arbitral award at the rate of 2% per annum more than the current Bangladesh Bank rate is payable for the period between the date of award and the date of payment.[11]
Suggestion
I shall conclude by making a couple of observations.
First, like all innovative activities, ADR desires a motivator or an armed detachment of motivators throughout the country. For functional causes, it is not likely for a seated Judge to spare the time, power and effort to suppose this role. Retired Judges who are highly regarded by both the Bar and the Bench should arrive ahead to supply leadership. That will be giving back to the Bar and the Bench a little part of the liability they owe to them for the respect granted to them throughout their employed life. The identical proceeds for aged older lawyers. Nothing can take root by a sporadic effort of a couple of years. At smallest two or three generations of solicitors and Judges should give their maintained work to make ADR an integral part of their judicial system.
Secondly, a well considered out design of activity is essential to make ADR a success. It is not desirable that an avalanche of mediation should descend upon the Courts all at a time. The Courts should mention somewhat easier situations to the mediators. A straightforward case is one that requires the smallest judicial effort to arbitrate upon details and law. A somewhat convoluted case is one that needs a little more judicial effort to find out details and law. A convoluted case is one that needs the greatest judicial effort to ascertain details and law. Following this criterion, simple situations should be mentioned first. With knowledge profited, somewhat convoluted situations can be mentioned to mediation. All nations can delay before convoluted situations can be mentioned to mediation. It should not be the objective of any one to accomplish anything overnight.
Conclusion
In Bangladesh, until very lately the regulation pertaining to arbitration utilized to be ruled by the Arbitration Act, 1940. Many provisions of the Arbitration Act, 1940 were anachronistic vis-à-vis the up to date nationwide arbitration regulations which are discovered all through the world. Factors which stood on the way of broader use of methods of arbitration under the preceding Arbitration Act, 1940 encompassed comprehensive function of the enclosures in the method of arbitration, its supervision and enforcement of arbitral awards. The enforcement of arbitral accolade was discovered to be slow and cumbersome. An accolade could only be enforced after getting an alignment from the District Court and that was a slow and much challenged process. There was furthermore substantial question if it was likely to enforce arbitral accolades regardless of the detail that Bangladesh acceded in 1992 to the New York Convention, 1958. Generally the court is compelled to mention parties to arbitration where an arbitration affirmation exists. No judicial administration is commonly to discover anylawful proceedings filed by one party to the arbitration affirmation contrary to the other till the arbitration method is tired and that hearing will be finished in a kind prescribed by this Act.
Disputes originating out of building, technology and infrastructure agreements are often mentioned to arbitration.
Bibliography
- 1. http://www.adviceguide.org.uk/c_alternative_dispute_resolution.pdf
- 2. Arbitration Act, 2001 (“the Act”). Section 9
- 3. http://en.wikipedia.org/wiki/Alternative_dispute_resolution
- 4. The 2001 act section 11
- 5. The 2001 act section 38(6)
- 6. The 2001 act section 38(7)
- 7. The 2001 act section (48-53)
- 8. The 2001 act section 54
- 9. The act 2001 section 12
- 10. The 2001 act section 33(2)
- 11. http://www.supremecourt.gov.pk/ijc/Articles/7/4.pdf