Enforcement of Foreign Arbitral Awards in Bangladesh

Enforcement of Foreign Arbitral Awards in Bangladesh

A practical perspective and step by step guide on how to enforce Foreign Arbitral Awards in Bangladesh.

Bangladesh is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. Accordingly, the governing law for arbitration in Bangladesh (i.e. the Arbitration Act, 2001) recognizes foreign arbitral awards as binding upon the parties to the arbitration agreement for all purposes, unless recognition is refused under a limited number of grounds. If the grounds of refusal do not apply to an award, then it can be enforced by execution by the District Judge’s Court, Dhaka under the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court.

Section 45 of the Arbitration Act, 2001, enumerates the procedures of enforcing a foreign arbitral award. As per the section, the following steps need to be fulfilled to execute a foreign arbitral award –

(A) Filing of an Execution Case in a prescribed manner before the District Judge’s Court, Dhaka. The details of the parties, the arbitration proceeding, and the award must be written in the plaint, and any immovable or movable properties of the judgment-debtor (if known) need to be listed for the purpose of carrying out the execution.

(B) Annexing required documents with the plaint of the Execution Case, which must include:

(i) the original arbitral award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;
(ii) the original agreement for arbitration or a duly certified copy thereof, and
(iii) such evidence as may be necessary to prove that the award is a foreign award.

Once an application is filed and admitted by the Court, it is treated as a decree of the Civil Court, and the procedures for executing a decree as enumerated in the Code of Civil Procedure, 1908 are followed.

To execute the arbitral award, the court may, in general, issue an order for the delivery of any specifically decreed property, the attachment and sale of any property (or sale without attachment), an order for the arrest and detention of a party, and/or appoint a receiver with regards to the property of the judgment-debtor.

It is important to note that the application for execution of the foreign arbitral award must be made within 3 years from the date of award (as per Article 182 of the Schedule of Limitations Act, 1908).

*Challenging the enforcement of a foreign arbitral award*

Section 46 of the Arbitration Act of 2001 contains a number of grounds on which the Court may refuse to recognize and enforce a foreign arbitral award. The grounds are as follows:

First Ground: If the party against whom the enforcement is invoked furnishes proof to the Court that –

(i) a party to the arbitration agreement was under some form of incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it;
(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;
(iv) the concerned foreign arbitral award contains decisions on matters beyond the scope of the submission to arbitration;
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, in the absence of such agreement was not in accordance with the law of the country where the arbitration took place;
(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;

Second Ground: If the court in which recognition or execution of the foreign arbitral award is sought, finds that:

(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 (ii) the recognition and execution of the foreign arbitral award is in conflict with the public policy of Bangladesh.

In such a scenario, if the Court is satisfied that one or both of the grounds mentioned above are fulfilled, it may adjourn the decision on the enforcement of the foreign arbitral award and, on the application of the party claiming enforcement of the foreign award, order the other party to give suitable security.

*Judicial developments in the enforcement of foreign arbitral awards*

The Appellate Division of the Supreme Court of Bangladesh emphasized that the court cannot, for simple reasons, defeat the purpose of the arbitration proceeding, there must be a gross violation for which the court can reject such enforcement of the foreign arbitral award. The apex court confirmed that the factual and contractual positions are matters to be decided by the arbitrator, and, as such, unless there appears to be gross illegality, the court should not entertain such arguments. (Tata Power Company Ltd. v M/S Dynamic Const [2015] 2 SCOB (AD) 15 )

In another instance, when the Dhaka District Court refused to issue an order of attachment of property situated in a place outside Dhaka, the High Court Division of the Supreme Court held that the legislative intention was to extend the jurisdiction of the District Court for the execution of foreign awards in Bangladesh. It was reiterated that when executing foreign awards, the District Court, before which the enforcement application is made, should treat the foreign award as its own decree, and therefore, the District Court had committed an error of law by not allowing the application for attachment under the execution proceedings. (Goenka Impex S.A. v Tallu Spinning Mills Ltd., 33 BLD (2016) 340)

On a question as to whether the disputant parties to an international arbitration can approach the Bangladesh courts for interim relief against assets located in Bangladesh (during or before the enforcement), the High Court Division of the Supreme Court answered in affirmative and held that “It is evident that Section 3(1) provides that the 2001 Act would apply where the place of arbitration is in Bangladesh. It does not state that it would not apply where the place of arbitration is not in Bangladesh. Neither does it state that the 2001 Act would ‘only’ apply if the place of arbitration is Bangladesh”. (HRC Shipping Ltd. v M.V. Xpress Manaslu & Others, 12 MLR (2007) HCD 265).

It is, however, important to note that there are conflicting decisions from the Supreme Court in this regard.

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