What is a foreign Arbitral Awards?
Arbitration is the most resorted form of Alternative Dispute Resolution and is regarded as the most favourable method for the settlement of disputes around the world. Section 2(k) of the Arbitration Act, 2001 defines a foreign arbitral award as an award which is made in pursuance of an arbitration agreement in the territory of any state other than Bangladesh. However, it does not include an award made in the territory of a specified state.
It is the practice has that parties may submit their dispute for the settlement to the Arbitration in two ways- (a) by incorporating an arbitration clause on their contract for the existing disputes; (b) by invoking the submission clause for the future disputes. It is no secret that a decision made by a sole arbitrator or an arbitral tribunal on the issue in dispute which is final and binding on the parties of the said dispute.
Arbitral awards may be of two kinds- it could be domestic or could be an award made outside the territory of Bangladesh, knowingly, as foreign arbitral award. In the context of the legal system of Bangladesh, arbitral awards in both the categories are governed by the Arbitration Act 2001. This writing will give you an insight only to the extent of recognition and enforcement of a foreign arbitral award in Bangladesh.
How to Enforce an Arbitral Award in Bangladesh?
It might cross your mind as to how an arbitral award is enforced in Bangladesh. While addressing the question, the foremost thing that you must take into account is the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of which Bangladesh is a member state/party. Bangladesh has become a party to the aforesaid convention by way of accession (“Accession” has the same legal effect as ratification. Accession usually occurs after the treaty has entered into force; Arts.2 (1) (b) and 15, Vienna Convention on the Law of Treaties 1969) which recognizes foreign arbitral awards. Precisely, Bangladesh is bound to fulfill the treaty obligations. In furtherance to that, Bangladesh has enacted The 2001 Arbitration Act in line with the UNCITRAL Model Law on Arbitration provides for the provisions on the recognition and enforcement of certain foreign arbitral awards under the Chapter X.
Section 45 provides that a foreign arbitral award shall be binding and enforceable on those persons between whom it was made. Further, an application for the execution of a foreign arbitral award has to be filed in a prescribed manner to the District Judge’s Court. Section 46 furthermore, provides for the grounds of refusal of recognition or execution of the said award e.g. incapacity of the party, invalidity of arbitration agreement, lack of proper notice, conflicts with the public policy of Bangladesh or if the award is beyond the scope of this Act etc. Accordingly once an arbitration proceeding in a foreign country is completed, the Arbitral Award, on an application by any party, will be enforced by a court of this country under the Code of Civil Procedure in the same manner as if it were a decree of the court (Canada Shipping and Trading SA vs TT Katikaayu, 54 DLR 93). Moreover, regarding the enforcement of an arbitral award, the High Court Division said, a court must recognize a foreign arbitral award as having the same force as a decree of its own provided criteria mentioned in the provisions are met.
When A Foreign Arbitral Awards Is Refused For Execution?
As mentioned above, there are certain grounds for refusing recognition or execution of foreign arbitral awards. Those grounds are set out under Section 46 of the Arbitration Act 2001.
In the light of the aforesaid section, grounds are namely-
- If the party against whom it is invoked furnishes proof to the Court –
a. The incapacity of a party e.g. minor or unsound mind or disqualified by the law;
b. Invalidity of the arbitration agreement;
c. Inadequate notice;
d. If the decision is beyond the scope of the submission to arbitration;
e. Arrangement of arbitral tribunal was not in accordance with the agreement;
f. The award being set aside, suspended or not binding on the parties.
- Or, when court finds that-
a. Incapability of settlement by arbitration on the subject matter of the dispute under the existing law
b.Recognition and execution of award is in conflict with the public policy of Bangladesh