TRW Insight / Bangladesh
Mediation is now the front door for many disputes in Bangladesh, and arbitration the standard for commercial contracts. Knowing which route applies, and what the law makes compulsory, decides cost, speed and enforceability.
Alternative dispute resolution in Bangladesh: the 2026 framework
Alternative dispute resolution in Bangladesh is no longer a polite suggestion that sits at the edge of litigation. In 2026 it is built into the first step of several categories of dispute, embedded in the civil courts, hard-wired into money-loan recovery and supported by a modern arbitration statute that follows the UNCITRAL Model Law. For businesses, families, lenders, employers and foreign investors, the real question is no longer whether to use ADR, but which route fits the dispute, what the law makes compulsory, and how to make any settlement stick.
This guide brings together every route that matters: court-annexed mediation under the Code of Civil Procedure, arbitration under the Arbitration Act 2001, settlement conferences in the Artha Rin Adalat, the mandatory pre-case mediation regime introduced through the Legal Aid Services (Amendment) Ordinance 2025, family-court reconciliation, labour conciliation, village courts and institutional arbitration at the Bangladesh International Arbitration Centre. It explains how each process works in practice, the organisations that run them, the benefits and the limits, and the steps that protect your position before you sit down at the table.
Summary: Bangladesh now uses alternative dispute resolution at three levels: compulsory pre-case mediation for listed family, property and tenancy disputes in a growing number of districts; court-referred mediation once a civil suit or loan case is filed; and binding arbitration under the Arbitration Act 2001 for commercial and cross-border contracts. Choosing the right route early decides cost, speed, confidentiality and enforceability.
Key point: Since the Legal Aid Services (Amendment) Ordinance 2025, now the Legal Aid Services (Amendment) Act 2026, a party in a covered district generally cannot file certain family, partition, pre-emption, rent and maintenance cases without first attempting mediation through the district legal aid office. A signed and certified settlement carries the force of a court order.
At a glance
Pre-case mediation
Compulsory first step for listed family, partition, pre-emption, rent and maintenance disputes in pilot districts since September 2025.
Court-annexed mediation
Sections 89A and 89C of the Code of Civil Procedure let trial and appellate courts send a pending suit or appeal to mediation.
Arbitration
The Arbitration Act 2001 governs domestic and international arbitration seated in Bangladesh and the enforcement of foreign awards.
Loan recovery settlement
The Artha Rin Adalat Ain 2003 channels bank and borrower disputes into settlement conferences and mediation.
Institutions
BIAC, district legal aid offices, family courts, labour conciliators and village courts each run their own settlement processes.
Table of Contents
What alternative dispute resolution in Bangladesh covers in 2026
Alternative dispute resolution in Bangladesh describes every structured way of resolving a dispute other than a contested trial and judgment. The three core methods are negotiation, mediation and arbitration, with conciliation and early neutral evaluation operating as variations. What makes the Bangladeshi system distinctive is how deeply these methods are woven into statute: the legislature has inserted ADR stages into the Code of Civil Procedure, the money-loan court regime, the family courts, labour law and the legal aid system, rather than leaving settlement entirely to private initiative.
The policy reason is the scale of the court backlog. In July 2026 the Law Minister put the number of pending cases nationwide at about 4.5 million and linked it in part to a shortage of judges.[8] Every structured settlement removes a file from that queue, which is why successive governments have expanded ADR rather than narrowed it.
Negotiation, mediation, conciliation and arbitration distinguished
Negotiation is direct dealing between the parties or their lawyers, with no neutral involved. Mediation adds a neutral who helps the parties reach their own agreement but has no power to impose one. Conciliation is close to mediation, though a conciliator may propose terms, and in Bangladesh the word is most often used in labour and family contexts. Arbitration is different in kind: the parties appoint a tribunal whose award binds them and can be enforced as a court decree. The practical consequence is simple. Mediation preserves control over the outcome; arbitration gives up that control in exchange for finality.
Why the statutory framework matters
Because so much ADR in Bangladesh is statutory, the procedural rules attached to each route carry real consequences. Time limits run, court fees can be refunded, settlements can become decrees and, under the 2025 legal aid reforms, a case filed without first attempting mediation may not be entertained at all in covered districts. Treating ADR as an optional courtesy rather than a legal step is one of the most common and expensive mistakes we see.
Mandatory pre-case mediation under the 2025 legal aid reforms
The most significant change to alternative dispute resolution in Bangladesh in a generation came through the Legal Aid Services (Amendment) Ordinance 2025, since re-enacted by Parliament as the Legal Aid Services (Amendment) Act 2026 (Act No. 45 of 2026), which amended the Legal Aid Services Act 2000 and inserted new sections 21B to 21E together with a schedule of covered laws.[4] [5] The ordinance was issued on 1 July 2025, and mandatory pre-litigation mediation began in twelve districts from 18 September 2025, following an inauguration in Sylhet.[6]
Which disputes must go to mediation first
The regime applies to disputes that historically clog the lower courts and that are most suited to a negotiated outcome. The covered categories reported at launch were family disputes under the Family Courts Act 2023, rent disputes under the House Rent Control Act 1991, property-distribution and partition disputes within the jurisdiction of Assistant Judge courts, pre-emption claims, maintenance claims by parents, dowry-related complaints under the Dowry Prohibition Act 2018 and certain complaints under the Women and Children Repression Prevention Act 2000.[6]
How the process works
Mediation is conducted through the district legal aid office under the supervision of the district legal aid officer, and retired senior district judges may be appointed as special mediators. A party may file the case in court only if mediation fails. Where it succeeds, the settlement signed by the parties and certified by the chief legal aid officer is treated as final, binding and enforceable, with the status of a court order that can be executed through the court.[6] In practice this means the settlement document deserves the same drafting care as a consent decree: precise property descriptions, payment schedules, default clauses and possession dates.
Where the regime applies in 2026
The first twelve districts were Sylhet, Moulvibazar, Sunamganj, Faridpur, Mymensingh, Rangpur, Dinajpur, Satkhira, Kushtia, Comilla, Noakhali and Rangamati.[6] By mid-2026 the programme had run in twenty pilot districts, and on 21 July 2026 the Law, Justice and Parliamentary Affairs Minister, Md Asaduzzaman, extended mandatory pre-case mediation under section 21B to ten more: Bogura, Thakurgaon, Patuakhali, Bhola, Natore, Jashore, Shariatpur, Cox's Bazar, Panchagarh and Tangail.[7] Before filing anywhere, confirm whether the district has been notified, because coverage continues to expand.
What the early results show
The government's own figures point to a sharp fall in new filings. Comparing February to May 2026 with the same months of 2025 in the pilot districts, family court filings fell from 3,559 to 1,744, partition suits from 2,001 to 661 and pre-emption cases from 17 to 2, with an average decline in filings of about 62 per cent.[8] Fewer filings do not by themselves prove better outcomes, but they confirm that mediation is now the default front door for these disputes.
Court-annexed mediation under the Code of Civil Procedure
Once a civil suit is filed, alternative dispute resolution in Bangladesh continues inside the courtroom. Sections 89A, 89B and 89C of the Code of Civil Procedure 1908 create three distinct tools: mediation at trial, withdrawal to arbitration, and mediation at the appellate stage.[1]
Section 89A: mediation at trial
After the written statement is filed, the trial court can refer the dispute to mediation, conducted by the parties' lawyers, by the parties themselves or by a mediator drawn from the court's panel. The process is time-limited, and if it succeeds the court records a compromise and passes a decree on those terms. A successful mediation also entitles the plaintiff to a refund of the court fee paid on the plaint, which is a material saving in high-value property and commercial suits. If mediation fails, the suit returns to trial and nothing said in the mediation can be used against either side.
Section 89B: withdrawing to arbitration
Parties to a pending suit may jointly apply to withdraw it and refer the dispute to arbitration under the Arbitration Act 2001. This is useful where the parties realise mid-way that they want a specialist decision-maker, confidentiality or a faster timetable, and it avoids the cost of abandoning the suit and starting again.
Section 89C: mediation on appeal
Appellate courts have a parallel power to send an appeal to mediation. This matters because positions often soften after a trial judgment: the losing party faces the cost and uncertainty of appeal, and the winning party faces delay in enforcement. A well-timed appellate mediation can convert a paper victory into an actual payment or transfer of possession.
Arbitration under the Arbitration Act 2001
For commercial contracts, joint ventures, construction projects and cross-border supply chains, arbitration is the centrepiece of alternative dispute resolution in Bangladesh. The Arbitration Act 2001 replaced the Arbitration Act 1940, is substantially based on the 1985 UNCITRAL Model Law and was amended in 2004 to add section 7A, which allows courts to grant interim measures in support of arbitration.[2] [9]
When the Act applies
The Act applies to arbitrations seated in Bangladesh. Where the seat is abroad, only the provisions on recognition and enforcement of foreign awards apply. An arbitration is treated as international by reference to the parties' nationality or place of incorporation rather than the place of business or the subject matter.[9]
Key procedural time limits
The Act contains short, enforceable deadlines. Parties generally have thirty days to appoint or agree on an arbitrator. A challenge to an arbitrator must be stated within thirty days, the tribunal decides it within thirty days, an appeal lies to the High Court Division within thirty days and the High Court Division is directed to decide within ninety days. Objections to jurisdiction must be raised no later than the statement of defence. Unless the award says otherwise, interest runs at two per cent above the Bangladesh Bank rate.[9]
Courts and arbitration agreements
Courts stay proceedings brought in breach of a valid arbitration agreement. The High Court Division has, however, held that the statutory stay provision does not apply to clauses providing for a foreign seat, leaving the court to rely on its inherent powers instead, and that interim relief under section 7A is not available before or during a foreign-seated arbitration.[9] Parties to cross-border contracts should therefore draft their clauses, and plan any urgent protective steps, with the seat firmly in mind. Our analysis of arbitration agreement enforceability in Bangladesh covers clause drafting in detail.
Challenging and enforcing domestic awards
A domestic award may be challenged within sixty days of receipt on limited grounds, including incapacity, invalidity of the arbitration agreement, lack of proper notice, excess of mandate, improper composition or procedure, non-arbitrability, public policy and fraud or corruption. Once the challenge period has expired or a challenge has been refused, the award is enforced as a decree of the court.[9] The Appellate Division has read public policy narrowly, treating an award as contrary to it only where it is patently illegal or shocks the conscience of the court.[9]
Enforcing foreign arbitral awards in Bangladesh
Bangladesh acceded to the New York Convention on 6 May 1992.[11] Under the Arbitration Act 2001 a foreign award is enforced by the District Court in Dhaka as if it were a decree of that court, on production of the original or an authenticated copy of the award and the arbitration agreement. The grounds for refusal mirror those for setting aside a domestic award, and an award annulled at the seat will not be recognised.[9]
Two practical points deserve attention. First, the Act draws no distinction between Convention and non-Convention states, which widens the range of enforceable awards. Second, the Act contains no sovereign immunity defence at the enforcement stage, which matters for claims against state-owned enterprises.[9] Parties should still expect enforcement to take time and should plan for asset tracing, translation and certification well before the award is issued.
Settlement in money-loan cases under the Artha Rin Adalat Ain 2003
Banks and financial institutions recover loans through specialised Artha Rin courts, and the Artha Rin Adalat Ain 2003 makes alternative dispute resolution in Bangladesh part of that recovery process.[3] After the defendant's written statement, the court can send the matter to a settlement conference or mediation, and the Act also provides for mediation at the execution stage. A successful settlement can restructure repayments, release security on agreed terms and end parallel proceedings, while a failed attempt returns the case to adjudication without prejudice.
For borrowers, the settlement stage is often the last realistic opportunity to negotiate rescheduling before a decree. For lenders, it can produce faster cash recovery than execution against contested collateral. Either way, the terms should be reviewed against current Bangladesh Bank rescheduling and classification rules before signature. Our guide to banking regulations in Bangladesh sets out the regulatory context.
ADR organisations and institutions in Bangladesh
A recurring question is which body actually runs alternative dispute resolution in Bangladesh. The answer depends on the route.
Bangladesh International Arbitration Centre
Dhaka institution established in 2011 administering arbitration and mediation under its own rules.
District legal aid offices
Gatekeepers for mandatory mediation under section 21B of the Legal Aid Services Act 2000.
Civil, appellate and Artha Rin courts
Refer pending suits, appeals and loan cases to mediation or settlement conferences.
Family courts
Run reconciliation stages in divorce, dower, maintenance and guardianship matters.
Conciliators and the Labour Court
Handle conciliation and arbitration of collective industrial disputes.
Village courts and conciliation boards
Resolve small local civil and petty criminal disputes quickly and cheaply.
Bangladesh International Arbitration Centre
The Bangladesh International Arbitration Centre in Dhaka was established in 2011 and administers domestic and international arbitration and mediation under its own rules.[10] Parties are free to choose BIAC, an international institution such as the ICC, SIAC or ICSID, or ad hoc arbitration under the UNCITRAL Rules, whether the seat is in Bangladesh or abroad.[9]
District legal aid offices
Under the 2025 reforms, district legal aid offices are the gatekeepers for mandatory pre-case mediation and also offer voluntary mediation, often at minimal cost.[6]
Courts and court panels
Civil courts, appellate courts, Artha Rin courts and family courts run their own mediation or reconciliation stages and maintain panels of mediators.
Labour conciliators and dispute bodies
The Bangladesh Labour Act 2006 provides a conciliation and arbitration route for industrial disputes before the Labour Court.[12] Employers should also track the 2025 to 2026 labour reforms, which contemplate a dedicated ADR authority for workplace disputes once its rules and panels are prescribed.
Village courts and local conciliation boards
For small local disputes, village courts in union parishads and conciliation boards in municipal areas provide quick, low-cost resolution. A 2024 amendment approved by the cabinet proposed raising village courts' monetary limit from Tk 75,000 to Tk 3 lakh, so check the current limit before choosing this forum.[13]
Family, labour and community disputes
Family courts
The Family Courts Act 2023 replaced the 1985 ordinance and continues the tradition of reconciliation in matters of divorce, dower, maintenance, restitution of conjugal rights and guardianship.[14] With mandatory pre-case mediation now applying to family disputes in covered districts, most family matters will pass through at least one structured settlement stage before any contested hearing. Our guide to child custody and guardianship in Bangladesh explains how settlements are framed around the welfare of the child.
Labour disputes
Collective disputes under the Labour Act 2006 move through bargaining, conciliation and, where the parties agree, arbitration before reaching the Labour Court.[12] Individual grievances follow their own internal and statutory steps. For employers, documented compliance with these steps is often the difference between a defensible termination and an expensive reinstatement order. See our analysis of terminating employees in Bangladesh.
Community shalish and NGO mediation
Traditional shalish and NGO-supported community mediation continue to resolve a large number of local disputes. Outcomes can be practical and fast, but they are only as enforceable as the documentation behind them, so any agreement that affects land, money or custody should be recorded properly and, where possible, brought within a statutory route.
Step-by-step: how to use ADR effectively
The process differs by route, but the disciplined approach is the same. The following sequence reflects how we prepare clients for alternative dispute resolution in Bangladesh.
Map the dispute
Identify the legal category, the forum with jurisdiction and whether the district is covered by mandatory pre-case mediation.
Check every deadline
Record limitation dates, contractual notice periods, arbitrator-appointment windows and any challenge periods before talks begin.
Read the dispute clause
Confirm whether the contract requires negotiation, mediation or arbitration, and the seat, rules and language it specifies.
Assemble the record
Collect contracts, title documents, correspondence, accounts and evidence so the neutral sees a complete and credible file.
Set a settlement range
Agree internally on the best outcome, the walk-away point and the non-monetary terms that matter.
Engage the right forum
File with the legal aid office, accept court referral, or serve a notice of arbitration, as the route requires.
Draft for enforcement
Record any settlement with precise terms, payment and default clauses, and the certification or decree that makes it enforceable.
Protect the fallback
If settlement fails, move promptly to trial or arbitration without losing rights through delay.
Two further points apply throughout. Keep settlement communications clearly marked as without prejudice, and never let a negotiation run past a limitation date, an appointment deadline or a challenge window without protective steps in place.
Benefits and limits of ADR
The benefits
- Speed: statutory mediation stages are time-limited, and a negotiated outcome avoids years of trial and appeal.
- Cost: legal aid mediation is low-cost, and a successful court-annexed mediation can trigger a court-fee refund.
- Confidentiality: mediation and arbitration keep sensitive commercial and family information out of public court records.
- Control and relationships: parties design their own terms, which preserves business and family relationships that litigation often destroys.
- Enforceability: certified legal aid settlements, compromise decrees and arbitral awards can all be executed through the courts.
The limits
- Imbalance of power: mediation works poorly where one side is under pressure or lacks information, which is why independent legal advice matters.
- Drafting risk: a vague settlement can be harder to enforce than a judgment.
- Court involvement remains: arbitration still depends on courts for interim relief, challenges and enforcement, and outcomes can be delayed at that stage.
- Not every dispute fits: criminal liability, public-law challenges and cases needing urgent injunctions may require the courts from the outset.
Choosing the right route for your dispute
The table below summarises how the main routes of alternative dispute resolution in Bangladesh compare. On a phone, scroll it sideways.
| Route | Legal basis | Binding? | Typical use | Key point |
|---|---|---|---|---|
| Pre-case mediation | Legal Aid Services Act 2000, s 21B (2025 amendment) | Yes, once certified | Family, partition, pre-emption, rent, maintenance | Compulsory before filing in covered districts |
| Court-annexed mediation | Code of Civil Procedure, ss 89A and 89C | Yes, as compromise decree | Pending civil suits and appeals | Court-fee refund on success |
| Arbitration | Arbitration Act 2001 | Yes, award enforced as decree | Commercial, construction, cross-border | Limited court review; 60-day challenge window |
| Loan settlement | Artha Rin Adalat Ain 2003 | Yes, if recorded | Bank and borrower disputes | Available before decree and at execution |
| Family reconciliation | Family Courts Act 2023 | Yes, if recorded | Divorce, dower, maintenance, custody | Now preceded by mandatory mediation in covered districts |
| Labour conciliation | Bangladesh Labour Act 2006 | Depends on route | Collective industrial disputes | Precedes Labour Court adjudication |
For many commercial disputes the best strategy combines routes: a mediation window written into the contract, followed by arbitration if settlement fails, with a clear seat, rules and language. For property and family disputes in covered districts, mandatory legal aid mediation is the starting point, with careful drafting to turn any agreement into an enforceable instrument. Our alternative dispute resolution and mediation practice and international arbitration practice advise on both.
What to watch in 2026 and beyond
Three developments will shape alternative dispute resolution in Bangladesh over the coming year. First, the geographical reach of mandatory pre-case mediation continues to grow, and further district notifications are likely. Second, the business community continues to press for reform of the Arbitration Act 2001, including adoption of the 2006 Model Law amendments on interim measures and clearer support for foreign-seated arbitration. Third, the labour reforms of 2025 and 2026 point toward a dedicated workplace ADR authority whose rules will matter for every major employer.[9] [12] Contracts signed today should anticipate these changes with flexible, well-drafted dispute resolution clauses.
When a dispute is emerging, the earliest decisions carry the most weight: which forum, which documents, which deadlines and what a realistic settlement looks like. If you want a clear view of your options, contact TRW or book a consultation.
Frequently asked questions
Is mediation compulsory before filing a case in Bangladesh?
For listed disputes in covered districts, yes. The Legal Aid Services (Amendment) Ordinance 2025 requires mediation through the district legal aid office before filing family, partition, pre-emption, rent, parents' maintenance and certain dowry or repression complaints, and the case may be filed only if mediation fails.[5] [6]
Which districts have mandatory pre-case mediation in 2026?
Is a mediated settlement legally binding in Bangladesh?
What law governs arbitration in Bangladesh?
Can a foreign arbitral award be enforced in Bangladesh?
How long do I have to challenge an arbitral award?
An application to set aside a domestic award must generally be made within sixty days of receiving it, on the limited grounds the Act sets out.[9]
Do I get my court fee back if mediation succeeds?
Where a suit is settled through court-annexed mediation under section 89A of the Code of Civil Procedure, the plaintiff is entitled to a refund of the court fee paid on the plaint.[1]
What is the Bangladesh International Arbitration Centre?
BIAC is a Dhaka-based institution, established in 2011, that administers domestic and international arbitration and mediation under its own rules.[10]
Can bank loan disputes be settled through ADR?
Yes. The Artha Rin Adalat Ain 2003 provides for settlement conferences and mediation in money-loan suits, including at the execution stage.[3]
Should a commercial contract include a mediation clause before arbitration?
Usually, yes. A short, time-limited mediation step followed by arbitration with a stated seat, rules and language gives the parties a cheap chance to settle without losing the certainty of a binding award.
Source register
Primary legal and regulatory sources
Materials checked on 19 October 2026. Confirm the current official text before relying on any provision.
- Code of Civil Procedure 1908 (sections 89A to 89C) — Laws of Bangladesh
- Arbitration Act 2001 — Laws of Bangladesh
- Artha Rin Adalat Ain 2003 — Laws of Bangladesh
- Legal Aid Services Act 2000 — Laws of Bangladesh
- Legal Aid Services (Amendment) Ordinance 2025 — Laws of Bangladesh
- Dhaka Tribune, 17 September 2025 — Pre-litigation mediation launches in 12 districts
- Jagonews24, 21 July 2026 — Mandatory pre-case mediation launched in 10 more districts
- Dhaka Tribune, July 2026 — Law Minister on mediation results and case backlog
- Chambers Global Practice Guides — International Arbitration 2026: Bangladesh
- Bangladesh International Arbitration Centre
- United Nations Treaty Collection — New York Convention status
- Bangladesh Labour Act 2006 — Laws of Bangladesh
- Jagonews24, February 2024 — Cabinet approves Village Court (Amendment) Act 2024
- The Business Standard — Family Courts Bill 2023 passed in parliament
Related TRW assistance
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TRW advises on mediation strategy, arbitration clauses, BIAC and international arbitration, enforcement of awards and settlement drafting. Explore our alternative dispute resolution practice or contact TRW to discuss your matter.