Construction Arbitration in Bangladesh 2026: Claims, Dispute Boards, Public Contracts and Plant Disputes

Construction arbitration Bangladesh projects face in 2026: claims, boards and awards

Construction arbitration Bangladesh contractors and employers rely on is decided less by the arbitration itself than by what happened on site and in the correspondence years earlier. A late notice, a termination letter sent on three days' warning, a claim that was never broken down into measured items or an application filed in the wrong court can decide the outcome before any tribunal sits. The High Court Division's construction judgments of 2024 to 2026 show this repeatedly, and they also show that a well-run award against a public employer will usually survive.

This guide covers the contentious side of building and plant projects: contractor-employer disputes, the claims and adjudication ladder in public works contracts under the Public Procurement Act 2006 and the Public Procurement Rules 2025, FIDIC dispute boards, delay and defects claims, arbitration against government entities, ICC construction practice and the lessons from Indonesian projects, cement plant disputes, and enforcement in Bangladesh. Contract structuring, procurement challenges and the general arbitration framework are covered in companion TRW guides linked throughout.

Summary: Most construction disputes in Bangladesh pass through a contractual ladder before arbitration: a claim notice, the Engineer's or Project Manager's decision, an adjudicator or dispute board, and then arbitration under the Arbitration Act 2001 or institutional rules such as the ICC's. Public works contracts built on BPPA standard documents use short, strict windows of 14 and 28 days. The courts review awards narrowly, so the contest is won on notices, records and procedure rather than on a second look at the facts.

Key point: In Concord Progotee Consortium v RAJUK (6 February 2025) and Unique Construction v Project Manager, Chandana-Barasia River Excavation Project (25 June 2026), the High Court Division restored construction awards against public employers that District Judges had set aside, holding that the court cannot reassess evidence and must identify the precise ground under section 43. The same judgments show claimants losing large heads of claim for want of proper particulars.

At a glance

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Table of Contents

Where construction arbitration Bangladesh disputes come from

Almost every construction dispute is a contractor-employer dispute about one of five things: time, money for changed or additional work, payment of certified sums, defective work, or termination and the security that follows it. On public projects the employer is a procuring entity such as the Roads and Highways Department, the Local Government Engineering Department, the Bangladesh Water Development Board or a development authority. On private projects it is a sponsor, a real estate developer or an industrial owner building a factory, a power plant or a cement line.

The form of contract shapes the dispute. Domestic public works are let on BPPA standard tender documents with a Project Manager, an adjudicator and arbitration under the Arbitration Act 2001.[2] Foreign-funded and EPC projects usually use FIDIC forms with an Engineer, a dispute board and international arbitration. How those contracts are structured and procured is covered in our guides to EPC contracts in Bangladesh and infrastructure projects in Bangladesh. This guide starts where those end: once a claim has been made and rejected.

Domestic or international arbitration

For construction arbitration Bangladesh law draws a sharp line between domestic and international cases, and it matters for forum and procedure. An arbitration is an international commercial arbitration where at least one party is a foreign national or resident, a foreign-incorporated body, an entity managed and controlled abroad or a foreign government.[1] A Chinese EPC contractor's branch, a Japanese joint venture partner or a Korean consultant will usually make the arbitration international, which moves interim relief and setting-aside applications to the High Court Division rather than the District Judge.[1]

Public contract dispute resolution under the PPA 2006 and PPR 2025

Public contract dispute resolution in Bangladesh has two separate tracks, and confusing them is a common error. Tender-stage complaints, before and around contract award, go up the administrative tiers to the Review Panel under sections 29 and 30 of the Public Procurement Act 2006 and rules 72 to 77 of the Public Procurement Rules 2025.[2] That process is explained in our guide to the procurement complaint and Review Panel mechanism. Disputes after signature, about performance, payment, delay or termination, are resolved under the contract itself.

The contractual ladder in BPPA works contracts

BPPA's October 2025 standard tender document for works, e-PW3A, sets out the post-award ladder in its General Conditions of Contract.[2] Clause 94 governs contractor's claims: notice of any claim for extension of time or additional payment must be given as soon as practicable and no later than 28 days after the contractor became aware, or should have become aware, of the event. If notice is late, the completion date is not extended, no additional payment is due and the procuring entity is discharged from liability. A fully detailed claim must follow within 42 days.[2]

Clause 95 then sets three steps. The parties must first use their best efforts to settle amicably. A contractor who believes a Project Manager's decision was outside the Project Manager's authority or wrongly taken must refer it to the adjudicator within 14 days of written notification; the adjudicator, named in the particular conditions and jointly appointed, must decide within 28 days. If the parties cannot settle within 28 days of the adjudicator's decision, either may give notice of arbitration, which is conducted under the Arbitration Act 2001 at the place stated in the particular conditions.[2]

The adjudicator in practice

Where the parties disagree on the adjudicator, the template names the President of the Institution of Engineers, Bangladesh as appointing authority, and a replacement must be designated within 14 days of a request. The contractor pays the adjudicator's fees and the procuring entity reimburses half through progress payments.[2] In practice adjudicators are frequently retired senior engineers from the public sector, which gives the step technical credibility but no guarantee of speed. In Unique Construction the adjudicator never decided the contractor's final-bill reference within 28 days, and the contractor proceeded to arbitration on that basis.[4]

Contracts tendered under the PPR 2008

Many live disputes concern contracts tendered under the Public Procurement Rules 2008, which the 2025 Rules replaced. The older standard documents used the same three-step structure under different clause numbers: in both Concord Progotee v RAJUK and Unique Construction, the adjudication clause was GCC 94.2 and termination for default sat in GCC 89.1.[3] [4] Always work from the conditions actually signed, not the current template.

FIDIC dispute boards and claims on EPC and foreign-funded projects

On FIDIC projects the ladder is longer and the time bars harsher. The 2017 claims timetable of 28 days for notice and 84 days for a fully detailed claim, and the basic dispute board mechanics, are summarised in our EPC and infrastructure guides. For construction arbitration Bangladesh parties should focus on three further features of Clause 21 of the 2017 suites.

Appointment, avoidance and decision

Unless the contract states otherwise, the parties must jointly appoint the Dispute Avoidance/Adjudication Board within 28 days after the contractor receives the Letter of Acceptance. The board may, by joint request, help the parties avoid disputes informally during performance. Once a dispute is referred, it decides within 84 days, and a party that disagrees must give a notice of dissatisfaction within 28 days of the decision.[8] Bangladeshi employers often leave the board unappointed until a dispute arises; that removes the avoidance function, which is the board's main value on a long project.

Non-compliance goes straight to arbitration

A decision binds the parties even after a notice of dissatisfaction, until it is revised. Under Sub-Clause 21.7 a party may refer the other's failure to comply with a binding decision directly to arbitration, without a further board reference or amicable settlement period. Unless otherwise agreed, arbitration under Sub-Clause 21.6 is under the ICC Rules, and the tribunal may open up and revise non-final decisions.[8]

Why the Bangladeshi employer cannot simply wait

Bangladesh has no statutory adjudication regime of the kind used in the United Kingdom or Singapore, so a board decision is enforced through the arbitration clause rather than a summary court process. That makes the drafting of Clause 21 and the seat decisive. The leading authority on enforcing an unpaid decision is an ICC case on an Indonesian project, discussed below.

Delay claims: extension of time, liquidated damages and termination

Delay generates more construction arbitration Bangladesh work than any other issue, because it produces claims on both sides: the contractor's for time and prolongation cost, and the employer's for liquidated damages and, eventually, termination.

Extension of time and approval thresholds

Under e-PW3A the contractor is entitled to an extension where completion is delayed by a compensation event or a variation. Compensation events include late possession of site, late drawings or instructions, ground conditions substantially worse than could reasonably have been assumed, delayed advance payment and the employer's risks.[2] Notice of the extension request is due within 14 days, and the Project Manager decides within 21 days of a request with full supporting information.

Approval sits at different levels. The procuring entity may extend by up to 30 per cent of the original contract time; an extension of more than 30 and up to 100 per cent requires the head of the procuring entity; anything beyond 100 per cent needs the Secretary of the ministry or division.[2] A contractor who keeps working on informal assurances from a project director, without the approval the contract requires, is building a claim on sand.

Liquidated damages

The template sets liquidated damages as a daily percentage, between 0.03 and 0.05 per cent, of the value of the uncompleted works, capped at no more than 10 per cent of the final contract price. The procuring entity may deduct liquidated damages from payments, and must refund any overpayment if the completion date is later extended.[2] Delay that reaches the number of days for which the maximum liquidated damages can be paid is itself a fundamental breach entitling the procuring entity to terminate. Contractors should therefore contest wrongly deducted liquidated damages early, rather than treating them as a matter for final account.

Termination: the Purbachal Link Road case

Concord Progotee v RAJUK is the clearest recent example of a termination that failed. The contract for the Purbachal Link Road, worth about Tk 197.56 crore, was signed in October 2011 for completion in 18 months. On 9 March 2014 RAJUK's project director approved an extension to 31 March 2014; two days later RAJUK terminated, having given the contractor three days to confirm whether it would continue, rather than the 28 days' notice of default required by GCC 89.1.[3]

An adjudicator upheld the termination. A three-member tribunal, appointed through the District Judge, declared it unlawful and ordered payment of about Tk 5.64 crore for executed work and retention money within 60 days. The District Judge set the award aside in 2023; the High Court Division restored it on 6 February 2025, noting that RAJUK did not appear to defend the appeal.[3]

The same award carries a warning for contractors. The joint venture's compensation claim of about Tk 213.93 crore was not submitted in a proper way, and the tribunal made no order on it.[3] The contractor won the termination point and lost almost all the money.

Proving delay

The ICC Commission's construction report treats the Society of Construction Law Delay and Disruption Protocol, ASCE 67-17 and AACE Recommended Practice 29R-03 as helpful guides, encourages experts on the same subject to meet early to agree a baseline and methodology, and warns that building a critical path programme retrospectively is difficult, risky and expensive.[9] Bangladeshi tribunals increasingly expect the same discipline. Keep the programme updated monthly, record each delaying event against it, and cross-reference every taka of quantum to primary documents.

Defects claims, retention and performance security

Defects disputes usually arise at completion or during the defects liability period, and they are often fought over money already held by the employer: retention, the performance guarantee and the final payment.

The defects liability period

Under e-PW3A the Project Manager notifies defects before the end of the defects liability period, which starts at completion and is extended for as long as defects remain uncorrected. The template's guidance suggests twelve months so that at least one full monsoon is covered, and provides for retention of five per cent of the contract price.[2] Late payment carries interest at the rate stated in the particular conditions, and an amount increased by an adjudicator or arbitrator carries interest from the date it should have been certified.[2]

Measurement is the other recurring fight. In Unique Construction the employer relied on a task force's post-completion measurement showing only 71.84 per cent of the excavation done, despite its own completion certificate. The High Court Division held that questions of that kind were disputed facts within the tribunal's exclusive domain.[4] Joint measurements and signed completion certificates are the contractor's best evidence; employers should raise quality concerns before certifying, not afterwards.

Protecting the performance guarantee

Termination is usually followed by a call on the performance guarantee. Section 7A of the Arbitration Act 2001 allows the court to grant interim injunctions and protective measures before or during arbitration.[1] In Prokaushal Projukti and Quashem Construction JV v LGED (23 April 2026), a contractor building a girder bridge over the Karatoya river sought price revision after Covid-era material price rises; with 77 per cent of the work complete, LGED moved to re-tender the remainder and encash a guarantee of about Tk 1.52 crore. The District Judge issued only a show-cause notice. The High Court Division ordered status quo over the contract and the guarantee until the section 7A petition was decided, within two months.[7]

The court stressed that a section 7A application involves urgency and that, once arbitration has been commenced by a notice under section 12, the subject matter should be preserved.[7] Serve the arbitration notice first, then move for protection. When a guarantee call can be restrained at all is analysed in our note on whether a performance guarantee can be stopped.

Arbitration with government entities: what the courts expect

Most construction arbitration Bangladesh courts see involves a public employer, and the case law shows a consistent pattern: procedural errors by either side are punished, while awards on the merits are protected.

Use the right court

The "Court" under the Arbitration Act 2001 is the District Judge's court, including an Additional District Judge's court appointed for the purpose by gazette notification.[1] In Executive Engineer, RHD Patuakhali v Rupsha Engineers (4 February 2025), a Joint District Judge had appointed arbitrators by consent in 2015, the tribunal had made an award, and that court later set the award aside. The High Court Division held the whole earlier proceeding a nullity: jurisdiction under the Act is exclusive and cannot be conferred by consent. The dispute had to start again, with arbitrators appointed by the District Judge in 2023.[5]

Follow the contract's pre-arbitral steps

Government contracts sometimes name an official as the decision-maker. In Government of Bangladesh v Asad Enterprise (3 July 2024), eight contracts for works at the National Botanical Garden and Baldha Garden provided that the Chief Conservator of Forests would decide disputes and his decision would be final. The contractor went straight to the District Judge for appointment of arbitrators and obtained an award. The High Court Division set it aside: the tribunal had exceeded its jurisdiction by ignoring the clause, leaving the contractor free to sue in the civil courts more than two decades after the work.[6]

Courts will not re-try the merits

Unique Construction concerned the re-excavation of the Chandana river for the Bangladesh Water Development Board at Rajbari, a contract of about Tk 2.56 crore. The tribunal awarded the unpaid bill, part of a claim for additional work and interest; the District Judge set the award aside as contrary to law and public policy.[4] On 25 June 2026 the High Court Division reversed that decision. It held that the court does not sit in appeal, cannot reassess evidence, must identify the precise element of public policy said to be violated, and cannot treat an award of interest as unlawful without identifying the contract term or statutory limit it breached.[4]

The court relied on the Appellate Division's statement in Tata Power v Dynamic Construction that a decision contrary to law, beyond the reference, or based on misreading of evidence is not for that reason in conflict with public policy.[4] Section 38(6) allows the tribunal to award pre-award interest at a reasonable rate, and the award carries post-award interest at two per cent above the bank rate unless it directs otherwise, in each case subject to the parties' agreement.[1] Our guide to setting aside an arbitral award covers the section 43 grounds in full.

Public employers must engage

RAJUK's failure to appear in the High Court Division, despite the court asking a law officer to contact it, did not stop the appeal being decided against it.[3] A procuring entity should treat arbitration as litigation with a budget, a responsible officer and instructed counsel, not as an internal file. The same applies at the adjudication stage, where a procuring entity that ignores a reference gives the contractor a clear route to arbitration.

ICC construction arbitration and the lessons from Indonesia

At the top end of construction arbitration Bangladesh projects with foreign contractors or lenders commonly choose ICC arbitration, either directly or through FIDIC's default clause. The ICC Rules, costs and the history of ICC cases involving Bangladesh are covered in our guide to ICC arbitration in Bangladesh. What follows concerns how ICC tribunals handle construction cases, and what Indonesian projects teach.

How ICC tribunals manage construction cases

The ICC Commission's 2019 report on construction industry arbitrations sets the expected standard. A claimant that has not justified the amount of a claim should be required to produce the primary documents, cross-referenced to its statement of case, so the respondent knows where each amount comes from; the respondent must then give reasons for disputing liability or quantum.[9] Tribunals are encouraged to consider splitting issues, to clarify early whether expert evidence is needed, and to order site visits or tests on plant only where their benefits justify the cost.[9]

PGN v CRW: enforcing a dispute board decision

In 2006 PT Perusahaan Gas Negara engaged CRW Joint Operation to build a gas pipeline from South Sumatra to West Java under conditions modelled on the 1999 FIDIC Red Book, governed by Indonesian law. A dispute adjudication board ordered PGN to pay US$17,298,834.57 on variation claims, and PGN refused.[10] CRW's first attempt to enforce through a final award was set aside in Singapore. In a second ICC arbitration, Case No 18272/CYK, the tribunal issued an interim award on 22 May 2013 ordering payment pending the merits.

In 2015 the Singapore Court of Appeal, by majority, refused to set that interim award aside, treating the obligation to comply promptly with a board decision as a separate obligation enforceable before the merits were decided.[10] The lesson for Bangladeshi employers is direct: a dispute board decision cannot be parked while the merits are argued. For contractors, it is to seek a separate interim or partial award on compliance rather than folding it into a final award.

Indonesian law points that travel

Indonesia's Construction Services Law, Law No 2 of 2017, requires construction disputes to be resolved first by deliberation and consensus, then through mediation, conciliation and arbitration, and allows the parties to form a dispute board.[11] Article 31 of the Language Law, Law No 24 of 2009, requires Indonesian in agreements involving Indonesian private institutions or citizens; in Nine AM v PT Bangun Karya Prima Lestari the West Jakarta District Court in June 2013 declared an English-only agreement void, and the Jakarta High Court upheld that decision in February 2014.[12]

Enforcement in Indonesia runs through the Central Jakarta District Court, which grants an exequatur for awards from New York Convention states in commercial matters. Public order is the defence most often raised by state-linked respondents, awards against the Republic need Supreme Court approval, sworn Bahasa Indonesia translations are required, and contested recognition takes about 12 to 18 months.[13]

What Bangladeshi parties should take from Indonesia

Three lessons carry over. First, statutory or contractual tiers before arbitration must be followed in order, as Asad Enterprise shows in Bangladesh. Second, formal validity rules of the counterparty's country, such as language requirements, must be checked before signature, not raised as a defence afterwards. Third, enforcement against a state-linked employer is a separate project with its own timetable, translations and approvals, and should be planned before the award is issued.

Cement plant disputes: EPC, performance tests and supply interfaces

Cement plant disputes arbitration is a distinct construction sub-specialty because the contract buys an output, not just a structure. A cement line is a process plant: limestone and other raw materials feed a kiln that produces clinker, which is ground with additives into cement. The contractor's promise is usually framed as guaranteed capacity in tonnes per day, fuel and power consumption, and product quality, proved by performance tests after mechanical completion.

Where cement plant claims arise

The common heads of claim are failed or delayed performance tests, disputes over whether the employer's raw materials and fuel met the test specification, defects in kilns, mills and refractory linings, and the split between offshore equipment supply and onshore civil and erection contracts. Each interface is a potential defence. A contractor will say the test failed because the limestone was off-specification or the gas pressure was too low; the employer will say the design could never reach capacity. Well-drafted contracts attach performance damages to a shortfall within a stated band and a right of rejection to a serious one, so the test result decides the money.

Two procedural points follow. Test protocols, sampling and the operating conditions for the test should be agreed in the contract, not at the test. And where a tribunal may need to observe the plant, the ICC Commission report notes that tests should be conducted only where there have been no material alterations since completion and the operating conditions are representative of those contemplated in the contract.[9] Once the plant has been modified or run hard for a year, that evidence is gone.

Chhatak: a case study in interface risk

The modernisation of the Chhatak Cement Factory, Bangladesh's only state-owned cement plant, shows how interface risk becomes a dispute risk. The project began in 2016 with Nanjing C-Hope Cement Engineering Group as main contractor. By September 2026 physical progress was reported at 92 per cent, spending had reached about Tk 1,418 crore against an original budget of about Tk 667 crore, and completion had been pushed to June 2027.[14]

The causes were largely outside the plant: shortages of limestone and gas, an unfinished 17 km cross-border limestone ropeway whose Indian section was moved to a local subcontractor after the Indian government did not allow the Chinese contractor to build it, and a 42 km gas pipeline still at survey stage. The government's monitoring body, IMED, criticised project management and recommended an investigation into the ropeway.[14] On any plant project, the contract must say who carries raw-material and utility risk, how performance tests proceed if feedstock is unavailable, and when taking-over occurs if the employer cannot run the plant.

Enforcing construction awards in Bangladesh

In construction arbitration Bangladesh enforcement follows the general rules. A domestic award becomes enforceable once the 60-day window for a setting-aside application under section 42 has expired or an application has been refused. It is then enforced under the Code of Civil Procedure as if it were a decree of the court within whose jurisdiction it was made and signed.[1] The construction cases show why that timetable matters: in Unique Construction the execution case filed in 2017 was decided against the contractor alongside the setting-aside order in 2022, and that order was reversed only by the 2026 appeal.[4]

A foreign award, including an ICC award seated in Singapore or London, is enforced by the District Judge's court in Dhaka on production of the authenticated award, the arbitration agreement and evidence that it is a foreign award, with certified translations where required, and may be refused only on the grounds in section 46.[1] The procedure, the execution tools and the special rules for public debtors are covered in our guides to enforcement of arbitral awards in Bangladesh and foreign arbitral award enforcement. Unpaid public-sector claims that have not yet reached an award are addressed in our note on unpaid infrastructure project claims.

Running a construction arbitration Bangladesh claim: step by step

Whether the claim is for a delayed road, a failed kiln test or a wrongful termination, the sequence below reflects how we prepare construction arbitration Bangladesh matters for contractors and employers.

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Throughout, keep settlement discussions without prejudice and never let negotiation with a project director run past a claim notice date, an adjudication window or the 60-day challenge period.

Comparing the main construction dispute routes

The table compares the routes most often used on Bangladeshi projects. On a phone, scroll it sideways.

For contracts without an arbitration clause, the court route and the Commercial Courts Act 2026 are discussed in our infrastructure guide. Our construction claims and project disputes practice and international arbitration practice act on both sides of these routes.

Construction arbitration Bangladesh: critical mistakes to avoid

Missing the claim notice

The 28-day notice in public works contracts and FIDIC forms is a condition of entitlement, not a formality. A claims register opened at the first site meeting costs little and protects everything.[2]

Terminating without the contractual notice

A short-fuse letter is not a notice of default. Concord shows a public employer losing a termination, and the retention it withheld, because it gave three days instead of 28.[3]

Filing a global claim

Tribunals award what is proved. An unparticularised compensation claim, like the Tk 213.93 crore claim in Concord, is likely to produce no order at all.[3]

Choosing the wrong court or skipping a step

Rupsha and Asad Enterprise each cost a contractor years: one by using a court without jurisdiction, the other by bypassing a named decision-maker.[5] [6]

Accepting liquidated damages deductions in silence

Liquidated damages deducted from interim payments are rarely recovered at final account unless the extension claim behind them was notified and pursued. Dispute each deduction when it is made.[2]

Waiting to protect the guarantee

Serve the arbitration notice and seek section 7A relief before the guarantee is paid out, not after.[7]

If a claim is emerging on your project, the earliest decisions matter most: which notices are running, which records exist and which forum the contract really specifies. Contact TRW to have the contract and the claim reviewed.

Frequently asked questions

How are construction disputes resolved in Bangladesh?

Usually through a contractual ladder: a claim notice, the Engineer's or Project Manager's decision, an adjudicator or dispute board, and then arbitration under the Arbitration Act 2001 or institutional rules. Courts support the process through arbitrator appointments, interim relief, challenges and enforcement.[1] [2]

What is the deadline for a contractor's claim in a public works contract?

Under BPPA's e-PW3A conditions, notice must be given no later than 28 days after the contractor became aware, or should have become aware, of the event, with a fully detailed claim within 42 days. A late notice loses the claim.[2]

Who appoints the adjudicator if the parties disagree?

The standard particular conditions name the President of the Institution of Engineers, Bangladesh as appointing authority, acting within 14 days of a request.[2]

Is the Review Panel the right forum for a payment or delay dispute?

No. The Review Panel handles procurement complaints under sections 29 and 30 of the Public Procurement Act 2006. Disputes after the contract is signed follow the contract's amicable settlement, adjudication and arbitration clauses.[2]

How much can a procuring entity deduct as liquidated damages?

The e-PW3A template sets a daily rate between 0.03 and 0.05 per cent of the value of uncompleted works, capped at no more than 10 per cent of the final contract price.[2]

Which court appoints arbitrators in a domestic construction arbitration?

The District Judge's court, or an Additional District Judge's court appointed by gazette notification. An appointment by another court is a nullity even if both parties consented.[1] [5]

Can a contractor stop encashment of a performance guarantee pending arbitration?

It can apply for interim relief under section 7A of the Arbitration Act 2001. In April 2026 the High Court Division ordered status quo over an LGED contract and guarantee once the contractor had served an arbitration notice.[1] [7]

Will a court re-examine the tribunal's findings on measurement or delay?

No. In June 2026 the High Court Division held that disputed questions of fact, such as measurement of completed work, are for the tribunal, and that the court cannot reassess evidence under section 43.[4]

Must a FIDIC dispute board decision be paid before the arbitration ends?

Yes. A binding decision must be complied with until revised, and non-compliance can be referred directly to arbitration under Sub-Clause 21.7 of the 2017 suites.[8] [10]

What makes cement plant disputes different from other construction disputes?

The contractor guarantees output, so disputes turn on performance tests, raw-material and fuel quality and utility interfaces as much as on construction defects. Test conditions and interface risks must be fixed in the contract.[9] [14]