Why the Arbitration Act 2001 is not exhaustive

Arbitration has emerged as the pre-eminent mode of dispute resolution in domestic and international trade. Its absence could jeopardise the stability of the safe international business and commercial trade structures. Even a less developed country like Bangladesh has great potential in utilising arbitration as a mode of dispute resolution.

The whole procedure of commercial or non-commercial arbitration is controlled by Arbitration Act 2001 ("the Act"). As per section 3(1) of the Act, it is applicable whenever the place of arbitration is in Bangladesh. Although the Act has tried to touch all the pertinent areas, it still has many shortcomings. For example, there is no provision in the Act explaining how the arbitrators will be paid or what will be the criteria for determining their fees. Without having a fixed procedure in an arbitral sitting, arbitrators may charge higher amounts without proper consideration of the subject-matter. 

Further, according to section 12 of the Arbitration Act 2001, if the parties fail to appoint the arbitrators, the learned district judge court may appoint the panel of arbitrators after a petition of a party. In practice, only retired district judges or retired justices of the supreme court are appointed as arbitrators. It is important to note here that appeal or revision is not allowed against the order of appointment of arbitrators. However, if any of the parties to arbitration during the arbitration hearing finds that the arbitrator is partial, biased, prejudiced against them, they can challenge the appointment of such arbitrator under this act.

Since it has less formality, the arbitrator tribunal can give its verdict within the shortest amount of time. However, the verdict can be challenged before the concerned local district judge court. Suppose, an arbitrator tribunal (which may be constituted by retired justices of the supreme court) decided a case and delivered an award. After their verdict, the petition goes back to the same district judge court for implementation under section 44 of the Act. Section 42 (1), on the other hand, provides that the court may set aside any award under this Act other than an award made in international commercial arbitration, on the application of a party within sixty days from the date of granting the award. Regarding the court, section 2(b) states that court here means District Judge Court. Now the main question is whether a district judge of the lower court can adjudicate on the validity of a judgment given by the ex-chief justice or other justices of the Supreme Court of Bangladesh. To address these concerns, the law may be amended so that the appeal against the decision of the arbitral tribunal lies before the High Court Division.

According to section 48 of the Act, an appeal shall lie before the High Court Division against the order of the district Judge Court. This procedure prolongs the whole arbitration mechanism. People use a huge amount of money in arbitration tribunal but this arbitral award falls under the jurisdiction of the same court. Moreover, it is also the same court where the parties seek remedy against, or on behalf of an arbitral award given by the arbitrators through a process similar to regular court process. This gap weakens the spirit of quick and easy remedies.

Although emergency arbitration has emerged as a turning tide for granting urgent interim reliefs throughout the world, it has not been able to develop a strong ground in Bangladesh. Many arbitral institutions around the world have started providing for rules governing emergency arbitrations wherein the parties have an opportunity to seek interim relief prior to the constitution of the arbitral tribunal. This is done keeping in mind the needs of parties that require urgent interim relief, the issuance of which can be an important factor in the outcome of the arbitral proceedings.

For these ambiguities and loopholes in the arbitration procedure, people are losing their confidence in alternative dispute procedures.

The Parliament should amend the Arbitration Act 2001 to expressly allow our courts to issue interim remedies in cases of foreign-seated arbitrations, institute a separate court system only for arbitration, and accept foreign arbitral awards without unnecessary intervention.  Otherwise, the reputation that Bangladesh is trying to develop as an arbitration-friendly country will be nipped in the bud.

The writer is an Advocate of the District and Sessions Judge Court, Dhaka.