Issues of Jurisdiction, Choice of Law and Enforcement in International Commercial Arbitration: A Bangladesh Perspective

Khan, Maimul Ahsan

doi:10.1007/978-981-10-3458-9_14

Maimul Ahsan Khan³

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1 Citations

Abstract

In the era of globalization in the field of international trade and commerce, international commercial arbitration has emerged as the prominent dispute settlement mechanism. It has successfully helped business traverse dispute resolution through avoiding the complexities in traditional cross-border commercial dispute litigation system. Parties have greater autonomy and control over dispute resolution process in terms of choice of law, lex arbitri and seat of arbitration among others. The New York Convention on enforcement of foreign arbitral awards has contributed significantly to international arbitration by ensuring that signatory countries would recognize and enforce arbitral awards given in the Convention countries. The UNCITRAL Model Law further offered guidance for States to help harmonize their laws related to international arbitration. Bangladesh’s arbitration law premised upon the NYC and the UNCITRAL ML embodies inter-alia the provisions of choice of law, party autonomy, the scope of applicability of lex arbitri, lex mercatoria and enforceability of foreign arbitral award in Bangladesh. Another notable development is the courts’ role has been capped to a minimal level. This chapter discusses the features of Bangladesh arbitration law related to international arbitration and suggests a few areas that require a statutory revisit.

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Notes

1.
Stephan Balthasar (ed.), International Commercial Arbitration—A Handbook (Munich: Beck, Hart, Nomos, 2015) 448.
2.
Ibid.
3.
A.F.M. Maniruzzaman, ‘The New Law of International Commercial Arbitration in Bangladesh: A Comparative Perspective’ (2003) 14 The Am. Rev. of Int. Arbtn. 139, 140.
4.
See, for example, Gurunanak Foundation v Rattan Singh & Sons AIR 1981 SC 2075 [Desai J].
5.
Vide Notification No. SRO 87-Law/2001 dated 9-04-2001, published in BANGLADESH GAZETTE EXTRAORDINARY, dated 10-04-2001. Section 56 of The Arbitration Act, 2001 [hereinafter the Act] states: “After the commencement of this Act [the Bangla text], the Government shall, by notification in the official Gazette, publish an Authentic text in English which shall be known as the Authentic English Text, of this Act: Provided that in the event of any conflict between this Act and the English text, this Act shall prevail.” It should be noted that the official Authentic English Text of the Act has not been published yet by the Government of the People’s Republic of Bangladesh.
6.
Within the Indian subcontinent, India’s Arbitration and Conciliation Act, 1996 is also modeled on UNCITRAL ML; more than 70 countries have revisited their arbitration law inspired by the UNCITRAL ML.
7.
Maniruzzaman (n 3) 140.
8.
Ibid.
9.
K.U Bhuiyan and J Alam, Niko Case and the prospect of foreign investment in Bangladesh, The Daily Star, 08 March 2015, 15.
10.
Maniruzzaman (n 3) 141.
11.
AA, 2001, s 2(c). It is similar to s 2(1) (f) of the Indian Arbitration and Conciliation Act, 1996.
12.
(n 11) s 2(n).
13.
(n 11) s 9(2).
14.
(n 11) s 9(2)(b) an exchange of letters, telex, telegrams, Fax, e-mail or other means of telecommunication which provide a record of the agreement.
15.
6 MLR (AD) 245.
16.
(n 11) Ss. 7 and 10.
17.
19 BLT (HCD) 396.
18.
(n 11) s. 54 Application of this Act to other laws providing for arbitration—Nothing of this Act shall apply to the Industrial Relations Ordinance, 1969 (XXXIII of 1969) or to any other law making special provisions for arbitration.
19.
http://sarco.org.pk/bangladesh.html, accessed 21 July 2016.
20.
See, generally, the section on the Severability of the Arbitration clause in Stephen Schwebel, [Cambridge: Grotius Publications Ltd. 1987] International Arbitration: Three Salient Problems.
21.
Ibid., at 3.
22.
(n 11)s 18—Severability of agreement—An arbitration agreement which forms part of another agreement shall be deemed to constitute a separate agreement while giving decision for the purpose of determining the jurisdiction of the arbitral tribunal.
23.
(n 3) 150.
24.
AA, 1996—s 7 an arbitration agreement which forms or was intended to form part of another agreement … shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement.
25.
(n 11) Ss 17–18.
26.
In Germany this doctrine meant that arbitrators could make a final ruling on their jurisdiction, there being no subsequent review of the decision by any court. The German Law has, since, aligned much with the UNCITRAL ML thus moving away from the strict no-review standard. See, Klaus Peter Berger, ‘Germany Adopts the UNCITRAL Model Law’ (1998) 1(3) Int’l Arbtn. L Rev. 121, 122; Also see, Philippe Fouchard, Emmanuel Gaillard, Berthold Goldman, John Savage, Fouchard, Gaillard, Goldman on International Commercial Arbitration (Kluwer Law International, 1999) 396.
27.
See, George A. Bermann, ‘The “Gateway” Problem in International Commercial Arbitration’ (2012) 37(1) Yale Jour. Of Int’l L 1.
28.
Negative effect of the principle of competence-competence refers to the principle that the courts should refrain from engaging into the examination of the arbitrators’ jurisdiction before the arbitrators themselves have had an opportunity to do so. This rule of priority in favour of the arbitrators, increasingly recognised in practice, exemplifies the specific nature and autonomy of international arbitration, in full harmony with the New York Convention’s philosophy of recognition of the validity of the arbitration agreement and of the award resulting from the arbitral process. For a detailed discussion, see, generally, George A. Bermann, ibid.
29.
John J. Barceló III, ‘Who Decides the Arbitrators’ Jurisdiction? Separability and Competence-Competence in Transnational Perspective’ (2003) Vand. Jour. of Transnational L 1115.
30.
AA, 1996, Ss 30–32; John J. Barceló III, ibid., 1130.
31.
Maniruzzaman (n 3) 147–48.
32.
(n 11) Section 17: Competence of arbitration tribunal to rule on its own jurisdiction—Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own jurisdiction on any questions including the following issues, namely—(a) whether there is existence of a valid arbitration agreement. (b) whether the Arbitral Tribunal is properly constituted; (c) whether the arbitration agreement is against the public policy; (d) whether the arbitration agreement is incapable of being performed; and e) whether the matters have been submitted to arbitration in accordance with the arbitration agreement.
33.
Maniruzzaman (n 3) 148.
34.
Ibid.
35.
Williams, David AR., ‘Defining the Role of the Court in Modern International Commercial Arbitration’ (2014) 10(2) Asian Int’l Arbtn Jour. 137.
36.
(n 11) s 20—Powers of the High Court Division in deciding jurisdiction—(1) 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 the jurisdiction of the arbitral tribunal.
37.
Ibid., s 20(2).
38.
Professor David A R Williams QC, Herbert Smith Freehills, “Defining the Role of the Court in Modern International Commercial Arbitration,”—SMU Asian Arbitration Lecture, Singapore—2012.
39.
Tjong Very Sumito v Antig Investments [2009] 4 SLR(R) at [28].
40.
(n 11), s 20 (4) Unless otherwise agreed by the parties, where any application is pending before the High Court Division under this section the arbitral tribunal shall continue arbitration proceedings and make an arbitral award.
41.
Maniruzzaman (n 3) 153.
42.
(n 11) s 21(1).
43.
Ibid., s 21(3) and (4).
44.
Maniruzzaman (n 3) 157.
45.
[2007] 12 MLR 265.
46.
STX Corporation Ltd. v Meghna Group of Industries Ltd. and Ors. [2012] 32BLD 400.
47.
56 DLR (AD) (2004).
48.
Ibid., para 15.
49.
(Arbitration Application No. 11 of 2010, 10 June 2014).
50.
22 BLD (HCD) (2002) 320.
51.
14 BLT (HCD) (2006) 103.
52.
4 SCOB [2015] AD 28.
53.
Ibid., para 7.
54.
By an amendment to the Code of Civil Procedure, 1908 in 2003 Sections 89A and B specifying that court may refer the parties to mediation and arbitration, respectively. In 2006 the next amendment to the Code provided for an option for mediation during appeal. In 2012 the Code was further amended to replace the word ‘may’ with ‘shall’ in section 89A (mediation) and 89C (mediation at the stage of appeal) to make mediation mandatory in both pre-trial and appellate stage in every civil litigation.
55.
Unpublished work of Md Mamonor Rashid, Arbitration and Mediation As A Mechanism to Settle Corporate Dispute in Bangladesh, School of Law, University Utara Malaysia, (2015) 28.
56.
John B. Tieder, ‘Factors to Consider in the Choice of Procedural and Substantive Law in International Arbitration’ (2003) 20(4) Jour. of Int’l Arbtn. 393.
57.
(n 11) s 36(1).
58.
Maniruzzaman (n 3).
59.
(n 11) s 36(1) Provided that any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country.
60.
Doug Jones, ‘Choosing the Law or Rules of Law to Govern the Substantive Rights of the Parties: A discussion on Voie Directe and Voie Indirecte’ (2014) 26 SAc.L J 911, 914.
61.
Maniruzzaman (n 3).
62.
(n 11) Ss 42(1) and (2).
63.
6 SCOB [2016] AD 54.
64.
(n 11) s 43(2).
65.
See, for example, Bangladesh Railway v Pamkaya (M) SDN. BHD. (Arbitration Application No. 07 of 2010[HCD}); Joinal Abedin Jamal and others v Noor Afza 63 DLR 432: party waived right to object to tribunal.
66.
54 DLR [2002] 93.
67.
Ibid., 94.
68.
[2013] 33 BLD 340.
69.
Ibid., paras 15, 16.
70.
(n 11)s 2(k); see, Maniruzzaman, M, ‘Bangladesh embraces the UNCITRAL model law on international commercial arbitration—but not quite!’ (2004) 19(3) Mealey’s Int’l Arbtn. Rep. 1, 3.
71.
Ibid., s 47—Power of Government to declare specified state—For the purposes of this chapter, the Government may, by notification in the official Gazette, declare a state as a specified state.
72.
See, Bangladesh Air Service (PVT) v British Airways PLC 49 DLR 187(AD) (1997); also see, YB Comm Arb XXIII (1998) 624, 625.
73.
(n 11) s 46. Grounds for refusing recognition or execution of foreign arbitral awards—(1) Recognition or execution of foreign arbitral award may be refused only on the following grounds, namely:
1. (a)
  if the party against whom it is invoked furnishes proof to the Court that
  1. (i)
    a party to the arbitration agreement was under some incapacity;
  2. (ii)
    the arbitration agreement is not valid under the law to which the parties have subjected it;
  3. (iii)
    the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable due to some reasonable causes to present his case; or
  4. (vi)
    the concerned foreign arbitral award contains decisions on matters beyond the scope of the submission to arbitration; Provided that, f the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced;
  5. (v)
    the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, in absence of such agreement was not in accordance with the law of the country where the arbitration took place;
  6. (vi)
    the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made; or
2. (b)
  the court in which recognition or execution of the foreign arbitral award is sought, finds that
  1. (i)
    the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force in Bangladesh; or
  2. (ii)
    the recognition and execution of the foreign arbitral award is in conflict with the public policy of Bangladesh.
(2) If an application for setting aside or suspension of the enforcement of the foreign arbitral award has been made to a competent authority referred to in sub-clause (v) of clause (a) of sub-section (1) the Court may, f it considers it proper, adjourn the decision on the enforcement of the foreign arbitral award and may also, on the application of the party claiming enforcement of the foreign award, order the other party to give suitable security.
74.
[2015] 2 SCOB 15 (AD).

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Law, University of Dhaka, Dhaka, Bangladesh
Maimul Ahsan Khan

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Faculty Of Legal Studies, South Asian University, New Delhi, India
Sai Ramani Garimella
Faculty Of Legal Studies, South Asian University, New Delhi, India
Stellina Jolly

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Khan, M.A. (2017). Issues of Jurisdiction, Choice of Law and Enforcement in International Commercial Arbitration: A Bangladesh Perspective. In: Garimella, S., Jolly, S. (eds) Private International Law. Springer, Singapore. https://doi.org/10.1007/978-981-10-3458-9_14

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DOI: https://doi.org/10.1007/978-981-10-3458-9_14
Published: 20 January 2017
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