Sound, enforceable commercial laws vital to attracting FDIs
Bangladesh needs to put in place sound and enforceable commercial laws and affordable commercial dispute resolution systems and ensure adequate protection to investments with a view to removing barriers hindering businesses and creating investment opportunities, said speakers yesterday.
The experience and evidence show that despite overwhelming challenges, it is possible to reform the commercial laws and it is possible to deliver specific improvements, which can make it easier to do businesses, said Robert Chatterton Dickson, the British high commissioner to Bangladesh.
He suggested the reforms so that the graduation of Bangladesh to a developing country from the grouping of the least-developed countries does not face any major challenges.
The envoy was speaking at a seminar on "Revisiting the Arbitration Act for Promoting FDI in Bangladesh" organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its office in the capital.
Dickson said the discontinued World Bank's ease of doing business ranked Bangladesh second from the bottom among 190 countries when it comes to enforcing contracts.
In the post-LDC period, Bangladesh will compete with other developing countries, and confidence is the key to attracting foreign direct investments, said Robert Chatterton Dickson, the British high commissioner to Bangladesh
"In Bangladesh, we worked for many years in justice sector reforms and other areas. But it is fair to say the impact of the work has limitations in terms of the commercial justice system. The justice system is overwhelmed with the backlog of a huge number of court cases."
Dickson said he could see weaknesses in the commercial legal environment, including irrelevant laws and regulations, hindering business and investment opportunities.
In the post-LDC period, Bangladesh will compete with other developing countries, and confidence is the key to attracting foreign direct investments, he added.
"Sound and enforceable commercial laws and affordable commercial dispute resolution systems are vital to attracting FDIs."
He added that foreign investors require protection for their investments and protection against the pretty risks of expropriation, protection through dispute settlement mechanisms, and protection of their intellectual property.
A stable business environment comprising an efficient dispute resolution system is one of the prerequisites for attracting FDI, said Md Sameer Sattar, president of the DCCI.
He said in order to further promote the ongoing growth and success of the business climate, it is essential that Bangladesh establishes a legal framework that enables swift and efficient contract enforcement, particularly in the context of cross-border commercial disputes.
"Therefore, it is essential to reform the Arbitration Act as the first step towards addressing such challenges existing in our legal atmosphere."
According to the business leader, with a rapid FDI stream in Bangladesh, the number of commercial disputes has risen significantly over the last few decades.
"As a result, arbitration has emerged as the pre-eminent mode of dispute resolution in recent times. Arbitration is meant to be a fast and cost-effective way of resolving commercial disputes and traditionally foreign investors have chosen arbitration over national court litigation when resolving cross-border disputes."
Law Minister Anisul Huq said: "Through alternative dispute resolution (ADR) mechanism, we can get faster access to justice."
He said the government is committed to making the best possible business-friendly rules and regulations. "The Arbitration Act 2001 may be revisited."
The minister urged the business community to use ADR.
He agreed that through an effective ADR mechanism, the FDI regime will be improved a lot.
He said that the Mediation convention will be signed and said there should have a fixed time frame for the arbitration proceedings.
Zaved Akhtar, chief executive officer of Unilever Bangladesh, said that arbitration needs specialised resources and an understanding of different aspects as well.
He proposed a smart arbitration model with a digitalised mechanism, according to a press release of the DCCI.
"Moreover, awareness is very crucial to make it more familiar among the business community."
Yasir Azman, CEO of Grameenphone, said for arbitration predictability, certainty and protection of investment are important.
"The Arbitration Act 2001 was a laudable initiative but now its needs reforms."
He stressed digitalisation and technology for faster use of the arbitration act.
Promod Nair, an advocate of India, said India has made amendments to its Arbitration Act and after the reforms, the country's position in the ease of doing business index had improved.
India has separate commercial courts to deal with business disputes alone. Moreover, the Act has identified specific time limits and fees for each arbitration proceeding.
Nair also said that India has an online dispute resolution mechanism that reduces costs and time as well.
While presenting the keynote paper, Ashraful Hadi, an advocate of the Supreme Court of Bangladesh, recommended that the arbitral tribunal should have the same power as the court.
He said that the definition of "court" under the Arbitration Act 2001 should include High Court in respect of international commercial arbitration.
Besides, payment methods of the stamp duty in all aspects should be digitalised, he added.
He also underscored the need for a central database for the arbitration proceedings at home and abroad.
"Bangladesh can become a suitable venue for arbitration among foreigners or foreign investors."
Hadi called for setting up an international commercial court, so that disputes can be settled in an expedited manner, according to the press release.
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