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Amendment to Arbitration Act to boost FDI inflow

Published : 25 Feb 2022 09:35 PM

The Law Commission has placed a report recommending amending the ‘Arbitration Act, 2001’ in order to shun the loopholes in the existing law. 

The initiative has been taken to amend the ‘Arbitration Act, 2001’ aiming to facilitate and streamline the process of recognition and implementation of domestic and foreign Royedad (share of business).

The amendment move to the law has also been taken to gain the confidence of domestic and foreign investors that will help boost inflow of Foreign Direct Investment (FDI) in Bangladesh through resolving commercial disputes rapidly.

Experts and people concerned said that if the ‘Arbitration Act, 2001’ is amended as per the recommendation of the Law Commission, it will avoid the procedural complexities of conventional judicial system through arbitration proceedings outside the courts of Bangladesh and will strengthen the alternative dispute resolution system which will ultimately reduce the load of litigation in the courts. 

The experts on arbitration and mediators called upon the government to amend the law as soon as possible in order to reduce the cost and time in disposal of cases, and to make the law user-friendly to help boost inflow of FDI in Bangladesh.

Sonia Ahmed, Senior Assistant Secretary of Law Commission, said that the commission has recently prepared the draft of the proposed amended ‘Arbitration Act, 2001’ and recommendations in this regard. Signed by Chairman of Law Commission A.B.M Khairul Haque and the commission member Justice ATM Fazle Kabir, the draft and report of the commission that includes the recommendations and statements about loopholes in the existing law have already been sent to the authorities concerned of the government.  

Earlier, the Law Commission had prepared a draft of the ‘Arbitration (Amendment) Act in 2018’ with 53 amendments. That draft and report were not implemented. 

The arbitration process in the country is handled by the ‘Arbitration Act, 2001’.   However, there are some loopholes in the existing law. 

According to the Law Commission’s fresh report, some of the loopholes include room for delay in resolving dispute without specifying a time frame in the provisions of the arbitration Royedad, including the various stages of the arbitration procedure; the existing law does not have a clear provision regarding the time limit for arbitration; it contains linguistic ambiguities that hinders the proper expression of the various provisions of the original laws; provisions relating to the application of the Royedad to the arbitral tribunal are absent in the existing law; and digital system, including the ICT’s use is absent in the law.  

Alongside the loopholes in the existing law, the judiciary in Bangladesh is burdened with a huge number of pending cases. Many cases are filed even on triple pretext. However, the number of pending cases is increasing day by day. 

Arbitration as well as mediation is a system of resolving civil and commercial disputes through a third party. They said that unless a party is adamant on its stance, it is possible to resolve any business dispute through the mediation method. So, the promotion of the mediation system is needed for the interest of the judiciary and for the sake of boosting FDI in Bangladesh. 

Experts and mediators said that promotion of the alternative dispute resolution system would play a vital role in reducing pending cases in the judiciary. Some experts and mediators said that it can make the arbitration method mandatory in various cases and the people seeking justice should be motivated by this method.

Talking to Bangladesh Post on Friday (February 25), former Director of the Bangladesh International Arbitration Centre (BIAC) Akmal Azad said that the mediation method is now becoming a part of the judiciary in India. The method is also becoming popular in some other countries. The arbitration is becoming a suitable and dynamic method of dispute resolution between the foreign investors and the buyers in Bangladesh. Many business disputes remain unresolved for several years. The mediation method should be applied to resolve the business dispute, he said.   

He said that the amendment process to the ‘Arbitration Act, 2001’ is positive. If the law is amended as per desire of experts and mediators, it would play a vital role in resolving many business disputes between the foreign investors and the buyers in Bangladesh which will help boost foreign investment, he added.