Md. Mamonor Rashid
By enacting Arbitration Act 2001 the door of the international commercial arbitration in Bangladesh has open and provides a facelift as an attractive place for the international commerce and investment. However, enforcement of foreign arbitral award is still facing some difficulties in Bangladesh with unnecessary interference by the court. The difficulty is greater if it is a foreign party seeking to enforce against a local party.
However, in this article the Arbitration Act 2001 will be discussed, wherever relevant, with reference to the Model Law as revised 2006 and 2010, the Singapore International Arbitration Act 1994 as amended 2012, and the Indian Arbitration Act, 1996 as amended 2015. The purpose of this article is to examine the Arbitration Act 2001 with special focus on enforcement of foreign arbitral award in Bangladesh along with its counterparts India and Singapore, and to suggest certain possible source of inspiration to bring some changes in the arbitration act to cope up with the recent trends of the modernization of international arbitration law.
Enforcement of Foreign Arbitral Awards
Section 45 of the Arbitration Act 2001 embodies Article III of the New York Convention, in that, it makes a foreign arbitral award binding for all purposes on parties to the arbitration agreement and such an award can be executed by the local court as if it was a decree of the local court.
Section 45 (b) provides that a foreign arbitral award shall on the application being made to it by any party, be enforced by execution by the Court under the Code of Civil Procedure, in the same manner as if it were a decree of the Court. In the case of Canada Shipping and Trading S v TT Katikaayu and another (following section 45 (b)), it was held that a foreign arbitral award shall on the application being made to it by any party, be enforced by execution by the Court under the Code of Civil Procedure, in the same manner as if it were a decree of the Court.
Thus, there is no requirement to obtain a separate permission from the local court for enforcement. The court may refuse to execute a foreign arbitral award for a certain reasons specified Foreign arbitral awards are defined as being awards made in pursuance of an arbitration agreement in the territory of any state other than Bangladesh, except such states specified by the government of Bangladesh through a gazette notification. Therefore, as the above provisions consider the territoriality of the arbitral award rather than the lexarbitri under which the award was rendered, the scope of the Arbitration Act 2001 is much narrower than either the Model Law or the New York Convention.
Furthermore, the provision that the government of Bangladesh will be able to specifically exclude the foreign arbitral awards delivered in certain states means that courts will be able to disrupt the enforcement of foreign awards by finding that the arbitration has taken place on the territory of a specified state. If a member state of the New York Convention is so specified, then that will run contrary to the spirit of the New York Convention.
However, under Indian Arbitration and Conciliation Act 1996 the foreign award of the New York and Geneva Convention signatory countries will be enforced directly as if it was a decree of a court and the court may refuse to execute the foreign award which was passed in contravention of the public policy of India.
However, in 2015 India has amended Arbitration and Conciliation Act and introduced two identical explanations to Section 48(2) and Section 57(1) in an attempt to explain the meaning of ‘public policy of India’.
On the other hand, enforcement of international arbitral awards in Singapore are governed by the International Arbitration Act (IAA) which was amended in 2012 in line with UNCITRAL Model Law on International Commercial Arbitration as revised in 2010 and gives effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards 1958.
International arbitral awards whether made in Singapore (Singapore awards) or outside Singapore (foreign awards) may, by leave of the Singapore High Court be enforced in the same manner as a Singapore High Court judgment or an order to the same effect. However, the award will be refused if section 31 of the Singapore IAA (amendment) 2012 finds relevant. In Singapore International Arbitration Act public policy issue is not defined as India does in 2015. Singapore has recognized and validated UNCITRAL Model Law directly to their International Arbitration Act which certainly has a positive effect to enforce foreign arbitral award without much hindrance by the local court.
However, the issue of enforcement of arbitral award in Bangladesh is a very crucial problem which needs to be addressed and resolved quickly by amending arbitration act 2001 in line with Singapore International Arbitration (amendment) 2012, Indian Arbitration and Conciliation Act (amendment) 2015 and UNCITRAL Model Law as revised in 2010.
Bangladesh is becoming a popular choice of business in the international arena and the enactment of the Arbitration Act 2001 was a first initiative for that choice but now it is high time to amend and insert some very important issues.
It is expected that the Arbitration Act, 2001 would bring about an important change in some areas of arbitration law in Bangladesh, i.e. scope, court interference, clear judicial interpretation, time limit of arbitral tribunal and fast track procedure, and area of enforcement of foreign arbitral awards as provided in the New York Convention, to which Bangladesh is a party.
The amendment of the Arbitration Act 2001 is highly required which will come as a welcome relief to most international entities/individuals who are the parties to foreign- seated international commercial arbitration. Under Indian amendment 2015 foreign parties now have the advantage of approaching courts in India for interim relief against Indian Parties, as regards their assets located in India. In addition, the parties to international commercial arbitration can directly approach the High Court for interim protection, which will no doubt provide foreign parties with some relief. Bangladesh should strictly follow the same and amend its Arbitration Act to attract the foreign investor.
About the Author
The Author has attained his Master of Laws by thesis (Equivalent to M.Phil) on International Commercial Arbitration from University Utara Malaysia with Post Graduate Scholarship. He is practicing as an Associate of B&M Legal, focusing on International Commercial Arbitration, Corporate Law and Drafting. He is the Young Professional member of Singapore International Arbitration Centre (YSIAC), Singapore and Young International Arbitration Group (YIAG), London. Can be reached email@example.com
Md. Mamonor Rashid