Arbitration Clause Drafting in Bangladesh 2026: Sample Clauses, Templates and Requirements

Arbitration clause Bangladesh drafting: the 2026 essentials

A well-drafted arbitration clause in a Bangladesh contract is a short piece of text that does a great deal of work. It decides where a dispute will be heard, who will decide it, under which rules, in what language, and whether the award can be enforced against the assets that matter. A poorly drafted arbitration clause Bangladesh courts are asked to interpret does the opposite: it invites a jurisdiction fight, a stay application and months of satellite litigation before anyone argues the merits.

This guide is about drafting. It sets out the statutory requirements that every clause must satisfy, the essential elements, sample wording for the four structures we see most often (a Dhaka-seated BIAC clause, an ad hoc UNCITRAL clause, a foreign-seated SIAC or ICC clause and a multi-tier clause), the specific problems of asymmetric clauses, and the common defects that turn a routine boilerplate provision into a liability. Whether a particular agreement is valid and enforceable is a separate question, which we analyse in our guide to arbitration agreement enforceability in Bangladesh.

Summary: An effective arbitration clause in a Bangladesh-related contract must be in writing under section 9 of the Arbitration Act 2001 and should state, at a minimum, the scope of disputes, the seat, the rules or institution, the number and appointment of arbitrators, the language and the governing law. The choice of seat drives everything else, because a foreign seat takes the dispute largely outside the Act and limits Bangladeshi court support.

Key point: The Arbitration Act 2001 defaults to a three-member tribunal, while the BIAC Rules 2019 default to a sole arbitrator, and the ICC Rules presume one too. If your dispute resolution clause does not fix the number of arbitrators, the answer depends on which instrument governs, and that uncertainty is avoidable.

At a glance

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Table of Contents

Why the arbitration clause Bangladesh contracts carry deserves real drafting time

Dispute resolution clauses are usually the last provisions negotiated and the first read when a relationship breaks down. The Arbitration Act 2001 gives the High Court Division and the district courts defined roles in appointing arbitrators, granting interim measures, hearing challenges and enforcing awards.[1] Every ambiguity in the clause becomes a question one of those courts may have to answer before the arbitration can proceed.

The commercial context has also shifted. The Commercial Court Ordinance 2026, published on 1 January 2026 with immediate effect, provides for district-level commercial courts with a 90-day target for concluding trials once a dispute is taken up for final hearing.[7] Commentators also describe mandatory pre-suit mediation among its features.[8] Faster courts raise the stakes of a defective clause, because a party that prefers litigation now has a more credible forum to argue for.

Statutory requirements for an arbitration agreement

The Arbitration Act 2001 sets a light formal threshold, but it must be met precisely. An arbitration agreement may be a clause in a contract or a separate agreement, and it must be in writing.[1]

The writing requirement under section 9

Under section 9, writing is satisfied by a document signed by the parties, by an exchange of letters, telex, telegram, fax, email or other telecommunication that provides a record of the agreement, or by an exchange of statements of claim and defence in which one party alleges an agreement and the other does not deny it.[1] For drafting purposes, the safest course is still a signed contract containing the clause, with every party that may later need to claim or be claimed against named as a signatory.

Incorporation by reference

A contract can incorporate an arbitration clause from another document, provided the contract is in writing and the reference makes that clause part of the contract.[2] This matters for purchase orders that refer to general terms, subcontracts that refer to a main contract and framework agreements with call-off orders. The reference should be specific: name the document, its date or version and state expressly that its dispute resolution clause applies. A general reference to "all terms and conditions" invites argument.

Scope, arbitrability and statutory carve-outs

The Act defines an arbitration agreement as an agreement to submit disputes arising from a defined legal relationship, whether contractual or not.[1] The Act does not list excluded subject matter, but criminal and competition matters are generally treated as non-arbitrable, and section 3(3) preserves other laws that bar arbitration of particular disputes.[1] [2] One example relevant to drafting: disputes between licensees, or between licensees and consumers, under the Bangladesh Energy Regulatory Commission Act 2003 are routed to the regulator.[2] Energy-sector contracts should be drafted with that channel in mind.

Contract Act limits

Section 28 of the Contract Act 1872 makes agreements in restraint of legal proceedings void, but expressly saves contracts to refer disputes that may arise, or have already arisen, to arbitration.[6] A properly framed arbitration clause therefore sits within the exception. The risk arises where a clause tries to do more than refer disputes, for example by purporting to bar all remedies or to shorten limitation periods without a clear arbitral route.

Essential elements of every arbitration clause Bangladesh parties sign

The Act fills many gaps with default rules, but defaults are rarely what either party would have chosen. A complete clause addresses each of the following elements deliberately.

1. Clear reference and scope

The clause must show an unequivocal agreement to arbitrate, not merely an option to consider it. Use mandatory language ("shall be referred to and finally resolved by arbitration") and broad scope wording that captures disputes "arising out of or in connection with" the contract, including questions about its existence, validity, interpretation, performance, breach and termination, and any non-contractual obligations connected with it. Narrow wording such as "disputes under this agreement" invites arguments that tort, misrepresentation or related-contract claims fall outside it.

2. The seat

The seat is the legal home of the arbitration. Section 3 applies the Act to arbitrations seated in Bangladesh, and for foreign-seated arbitrations only sections 45 to 47 on foreign awards apply.[1] State the seat as a city and country, and use the word "seat". If the parties agree nothing, section 26 lets the tribunal determine the place of arbitration, which is precisely the uncertainty a clause should remove.[1] The seat can differ from the venue of hearings: section 26(3) allows the tribunal to meet anywhere it considers appropriate unless the parties agree otherwise.

3. Institution and rules

Name the institution correctly and the rules it administers. The Bangladesh International Arbitration Centre administers arbitrations under the BIAC Arbitration Rules 2019, which replaced the 2011 rules.[4] [5] For ad hoc arbitration, the UNCITRAL Arbitration Rules are the usual choice, and the 2021 version contains the UNCITRAL Expedited Arbitration Rules, which apply only where the parties expressly agree to them.[12] Decide whether you want the rules in force at the date of the contract or at the commencement of the arbitration; BIAC's 2019 rules apply the version in force when the request is filed unless the parties agree otherwise.[4]

4. Number of arbitrators and appointment

Under section 11 the parties may agree the number of arbitrators; failing agreement, the tribunal has three.[1] Section 12 provides a default appointment mechanism and, where it fails, appointments by the District Judge or, for international commercial arbitration, by the Chief Justice or a Supreme Court judge nominated by him.[1] Under the BIAC Rules 2019, however, a sole arbitrator is the default unless the BIAC Arbitration Committee considers three appropriate.[4] Fix the number expressly, state who appoints and within how many days, and name a fallback appointing authority for ad hoc clauses.

5. Language

Section 25 allows the parties to agree the language of the proceedings and the translation of documents.[1] BIAC's rules default to English where the agreement is silent.[4] Where key documents, witnesses or land records are in Bangla, provide that documents in Bangla may be produced with an English translation, so the tribunal does not have to order translation of the whole record.

6. Governing law of the contract and of the arbitration agreement

No Bangladeshi decision squarely addresses the law governing an arbitration agreement absent an express choice. The expected approach is that an express choice will be respected, then the law of the main contract, then the law of the seat.[2] An express sentence costs nothing and avoids the argument. In a cross-border contract governed by English law with a Singapore seat, for example, say which law governs the arbitration agreement itself.

7. Interim relief, confidentiality and costs

Section 21 empowers the tribunal to order interim measures unless the parties agree otherwise, and section 7A allows courts to grant interim relief in support of arbitration, again subject to contrary agreement.[1] Do not exclude either power by accident. The Act is silent on confidentiality, so if confidentiality matters, write it in.[2] [5] On interest, the Act sets a default rate of two per cent above the Bangladesh Bank rate unless the award directs otherwise, so a contractual interest rate should be stated if the parties have agreed one.[2]

Sample clause 1: Dhaka-seated BIAC arbitration

A Dhaka seat with BIAC administration suits domestic contracts, contracts between Bangladeshi parties and foreign-owned subsidiaries, and cross-border contracts where the counterparty's assets are in Bangladesh and the value does not justify a foreign institution. BIAC publishes its own recommended clause, which refers disputes to arbitration under its rules with Dhaka as the default seat and Bangladesh law as the default governing law.[3] The sample below is TRW's own fuller wording, designed to close the gaps the short institutional form leaves open.

Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, interpretation, performance, breach or termination, and any non-contractual obligation arising out of or in connection with it (a "Dispute"), shall be referred to and finally resolved by arbitration administered by the Bangladesh International Arbitration Centre in accordance with the BIAC Arbitration Rules in force at the date of the Request for Arbitration. The seat of arbitration shall be Dhaka, Bangladesh. The tribunal shall consist of [one / three] arbitrator[s].

The language of the arbitration shall be English, and documents in Bangla may be submitted with an English translation.

This Agreement and this clause shall be governed by the laws of Bangladesh.

Drafting notes on the BIAC clause

• Tribunal size: choose one or three expressly; do not rely on the conflict between the Act's default and BIAC's default.
• Fast track: BIAC Rule 28 offers a fast-track procedure for disputes not exceeding Tk 50 million, with the award due within three months of the tribunal's constitution, on a request made before the preliminary conference.[4] If you want it for all disputes below a threshold, say so.
• Award timing: BIAC Rule 24 requires the award within 60 days after the oral hearings close, save in exceptional circumstances.[4]
• Confidentiality: BIAC Rule 30 addresses confidentiality, but an express contractual undertaking binds the parties directly and can extend to the existence of the dispute.[4]

Sample clause 2: ad hoc arbitration under the UNCITRAL Rules

Ad hoc arbitration remains common in construction, procurement and older joint-venture documents. It avoids institutional fees but puts the full burden of procedure on the clause. An ad hoc arbitration clause Bangladesh parties rely on must therefore be more detailed than an institutional one.

Any Dispute shall be finally resolved by arbitration in accordance with the UNCITRAL Arbitration Rules as in force at the date of the notice of arbitration. The seat of arbitration shall be Dhaka, Bangladesh, and the Arbitration Act 2001 shall apply. The tribunal shall consist of three arbitrators.

Each party shall appoint one arbitrator within thirty days of receipt of the notice of arbitration, and the two arbitrators so appointed shall appoint the presiding arbitrator within thirty days of the appointment of the second arbitrator. If any appointment is not made within the time stated, it shall be made, on the request of either party, by [named appointing authority]. The language of the arbitration shall be English.

Drafting notes on the ad hoc clause

Name an appointing authority. Without one, a failed appointment goes to the District Judge or, in an international commercial arbitration, to the Chief Justice's designate under section 12.[1] That route works but adds a court step. If the parties want the UNCITRAL Expedited Rules for smaller claims, they must opt in expressly.[12] Add fee arrangements for the tribunal, because without an institution the parties will otherwise negotiate fees with the arbitrators after the dispute has started.

Excluding the High Court Division on jurisdiction

Section 20 allows the High Court Division, on application, to decide a question about the tribunal's jurisdiction in limited circumstances. In Bangladesh Power Development Board v Summit Industrial and Mercantile Corporation (2014) 19 BLC 284 the court declined to determine jurisdiction because the parties had expressly excluded that option in writing.[2] Parties who want the tribunal to decide its own jurisdiction without an early court detour can add an express exclusion. Section 17 confirms the tribunal's own power to rule on jurisdiction unless the parties agree otherwise.[1]

Sample clause 3: foreign-seated SIAC or ICC arbitration

Foreign counterparties, lenders and EPC contractors frequently insist on a neutral foreign seat, most often Singapore, London or Paris. That choice is legitimate, and awards from New York Convention states are enforceable in Bangladesh through the foreign-award provisions of the Act.[1] The drafting consequences, however, are significant.

Any Dispute shall be referred to and finally resolved by arbitration administered by the [Singapore International Arbitration Centre in accordance with the SIAC Rules / International Chamber of Commerce in accordance with the ICC Rules of Arbitration] for the time being in force. The seat of arbitration shall be [Singapore / London].

The tribunal shall consist of three arbitrators, of whom the presiding arbitrator shall not be a national of [Bangladesh] or of [the counterparty's state]. The language of the arbitration shall be English. This arbitration agreement shall be governed by the laws of [Singapore / England and Wales]. Nothing in this clause prevents a party from seeking interim or conservatory relief from any court of competent jurisdiction.

Interim relief and stays for a foreign seat

The High Court Division held in Accom Travels and Tours Ltd v Oman Air SAOC (2022) 27 BLC 596 that, apart from sections 45 to 47, the Act does not apply to a foreign-seated arbitration, so section 7A interim relief is unavailable before or during the arbitration.[2]

The same decision held that the statutory stay under section 10 does not apply; a stay must instead be sought under the court's inherent powers.[2] The High Court Division reaffirmed that position in Italian-Thai Development Public Company Ltd v Export-Import Bank of China, although practitioners report that Accom Travels has since been questioned as per incuriam.[5] Until the position settles, assume that Bangladeshi court support for a foreign seat is uncertain and draft for tribunal-ordered and emergency relief instead.

Institution-specific choices

The SIAC Rules 2025, the seventh edition, came into force on 1 January 2025. They add a streamlined procedure for disputes up to S$1 million, raise the expedited-procedure ceiling to S$10 million and allow an emergency arbitrator application before the notice of arbitration is filed, provided the notice follows within seven days.[9] Under the ICC Rules 2021, the expedited procedure applies automatically to agreements concluded from 1 January 2021 where the amount in dispute does not exceed US$3 million, unless the parties opt out.[10] The ICC also notes that its rules presume a sole arbitrator and that parties wishing to exclude the emergency arbitrator must say so expressly.[11]

Enforcement planning

A foreign award must be brought home for enforcement. Under section 45 an award or agreement that is not in English or Bangla needs a certified English translation.[2] An award set aside at the seat will not be recognised.[2] Before agreeing a foreign seat, identify where the counterparty's assets are and confirm the seat's courts are supportive and reasonably fast.

Multi-tier dispute resolution clause drafting

Multi-tier clauses require the parties to negotiate, then mediate, before arbitrating. They are popular in joint ventures, long-term supply and infrastructure contracts because they preserve relationships and give management a structured chance to settle. The Act does not regulate pre-arbitration steps directly; it allows parties to agree procedure under section 25 and treats arbitration as commenced by a notice requiring the dispute to be referred, under section 27.[1] [2]

If a Dispute arises, either party may give written notice to the other identifying the Dispute in reasonable detail. Senior representatives of the parties with authority to settle shall meet within fourteen days of the notice and attempt in good faith to resolve the Dispute.

If the Dispute is not resolved within thirty days of the notice, either party may refer it to mediation administered by the Bangladesh International Arbitration Centre under its Mediation Rules. If the Dispute is not settled within sixty days of the appointment of the mediator, or if no mediator is appointed within thirty days of the referral, either party may refer the Dispute to arbitration under clause [●].

Nothing in this clause prevents a party from commencing arbitration or seeking interim relief where necessary to preserve its rights or to avoid a limitation period expiring.

BIAC publishes its own suggested mediation-then-arbitration clause, with a 60-day mediation window after the appointment of the mediator and a further 60 days for referral to arbitration.[3] Our sample adapts that approach with an earlier negotiation tier and a protective carve-out.

Rules for a workable multi-tier clause

• Fix the clock: every tier needs a start date and an end date that runs automatically, not "a reasonable period".
• Define the trigger: a written notice with stated content creates a record of compliance.
• Make it escape-proof: allow a party to move on if the other fails to engage within the time limit.
• Protect limitation and urgency: carve out interim relief and protective commencement of arbitration.
• Coordinate with statutory mediation: where the mediation stage under the Commercial Courts Act 2026 (which replaced the 2026 Ordinance) could apply to court proceedings, ensure the contractual tier is not inconsistent with it.[8]

For a wider view of where mediation fits alongside arbitration, see our alternative dispute resolution practice.

Asymmetric and optional clauses

An asymmetric clause gives one party, usually a lender or a dominant supplier, the right to choose between arbitration and court litigation, while binding the other party to one route. Such clauses are common in finance documents. Bangladesh courts have not yet tested asymmetric clauses under the Arbitration Act 2001, although comparative common-law authority generally supports them.[5]

Any Dispute shall be resolved by arbitration in accordance with clause [●]. Notwithstanding the foregoing, the Lender alone may, by written notice given before the Borrower has served a statement of defence in any arbitration, elect instead to bring proceedings in the courts of Bangladesh or any other court of competent jurisdiction. If the Lender makes such an election, no arbitration shall be commenced or continued in respect of that Dispute.

Managing the risk

Three risks need attention. First, the absence of local authority means a borrower may argue the clause lacks mutuality or is not a genuine arbitration agreement; draft it so the arbitral route is the primary, mandatory route and the option is a defined carve-out. Second, the election must be time-limited, or the other party faces indefinite uncertainty. Third, the section 10 stay must be sought before a written statement is filed, so a party that receives a court claim must be clear quickly whether the option has been exercised.[1]

Do not confuse asymmetric clauses with permissive clauses saying disputes "may" be referred to arbitration, a common defect discussed below.

Common defects in an arbitration clause Bangladesh courts are asked to read

Most disputes about clauses arise from a small set of avoidable errors.

Wrong or non-existent institution

References to "the Bangladesh Chamber of Commerce arbitration tribunal" or "the International Arbitration Court of Singapore" force a court or tribunal to guess the parties' intention. Use the exact name of the institution and its rules.

Permissive language

Wording that disputes "may be referred to arbitration" invites argument that arbitration is optional. Use "shall".

Conflicting forum clauses

A contract that contains an arbitration clause and a separate clause giving "exclusive jurisdiction" to the courts of Dhaka creates a conflict. If court jurisdiction is intended only for supportive or interim relief, say so expressly.

Seat confused with venue

"Arbitration shall take place in Singapore under Bangladesh law" is ambiguous: it may mean a Singapore seat or merely a Singapore venue for a Dhaka-seated arbitration. The answer decides whether the Act governs. One reported decision has treated an arbitration involving a foreign party, with Bangladesh governing law and no stated seat or rules, as an international commercial arbitration seated in Bangladesh.[5] Do not leave that to inference.

Missing parties

The Act does not provide for binding non-signatories, and Bangladeshi courts are unlikely to extend an arbitration agreement to them.[2] Where a guarantor, parent company or affiliate may be involved in a dispute, make them parties to the arbitration agreement.

Multiple contracts, multiple clauses

A project with a shareholders' agreement, a construction contract and a supply agreement can end up with three inconsistent clauses. Section 28 permits consolidation or concurrent hearings only if the parties expressly empower the tribunal.[1] Use identical clauses across related contracts and include an express consolidation power.

Arbitration clauses in commercial contracts: sector notes

The core wording should be adapted to the transaction.

Supply, distribution and services agreements

For moderate-value domestic contracts, a Dhaka-seated BIAC clause with a sole arbitrator and fast-track option is efficient. For cross-border supply, consider a foreign seat only where the foreign party's assets justify it. Our guide to commercial agreements in Bangladesh covers the surrounding contract terms.

Joint ventures and shareholders' agreements

Joint-venture documents need multi-party drafting: all shareholders and the company should be parties to the clause, with joinder and consolidation powers and a multi-tier escalation step to the parent boards. Keep in mind that some company-law remedies may be sought from the court regardless. See our analysis of shareholder disputes in Bangladesh.

Construction and infrastructure

EPC and construction contracts usually layer an engineer's or dispute board's decision before arbitration. The arbitration clause must say whether that decision is a condition precedent and when it becomes final if not challenged. Payment security and performance guarantees should be coordinated with the dispute route, as explained in our insight on unpaid infrastructure project claims in Bangladesh.

Arbitration agreement template: structure of a standalone submission

Where a dispute has already arisen and the contract contains no clause, or a defective one, the parties can sign a standalone submission agreement. Section 9 recognises a separate arbitration agreement, and the Contract Act saves agreements to refer disputes that have already arisen.[1] [6] A practical template should contain the following parts:

1. Parties, their addresses and the authority of each signatory.
2. Recitals identifying the underlying contract and summarising the dispute.
3. The agreement to submit the defined dispute to final and binding arbitration.
4. Seat, institution or rules, number of arbitrators and named arbitrators if agreed.
5. Language, governing law and timetable for statements of case.
6. Interim measures, confidentiality, costs and interest.
7. Status of any pending court proceedings and an undertaking to withdraw or stay them.
8. Signatures, with dates and witness details.

Where court proceedings are already pending, section 89B of the Code of Civil Procedure allows the parties to apply jointly to withdraw the suit for arbitration, and that application is treated as an arbitration agreement under section 9.[2]

Step-by-step: drafting an arbitration clause Bangladesh courts will respect

The same disciplined sequence applies whether the contract is a short supply agreement or a complex project document.

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Comparing the main clause models

The table below summarises how the principal models compare. On a phone, scroll it sideways.

Every arbitration clause Bangladesh parties adopt should be a reasoned choice between these models, made with the likely dispute and the counterparty's assets in view. Our international arbitration practice drafts and reviews clauses for domestic and cross-border contracts.

Reform watch for 2026

The Arbitration Act 2001 has been amended only once, in 2004, to add section 7A on court interim measures.[2] Business groups have pressed for reform for years. At a 2023 Dhaka Chamber seminar, proposals included interim measures for foreign-seated arbitrations, court enforcement of tribunal interim orders, time limits for court appointments and a timeline for arbitrations.[13] None of those changes has been enacted. Meanwhile, the Commercial Court Ordinance 2026 changes the litigation alternative.[7] Parliament has since replaced the Ordinance with the Commercial Courts Act 2026, passed in April 2026, so check the Act's current text before relying on any specific procedure.

The practical message is unchanged. A clear, complete and consistent clause is cheaper than any reform and more reliable than any default rule. A defective arbitration clause Bangladesh courts must rescue costs far more than an hour of careful drafting. If you are negotiating a contract or reviewing a clause in a dispute, contact TRW.

Frequently asked questions

Does an arbitration clause in Bangladesh have to be signed?

Not necessarily. Section 9 of the Arbitration Act 2001 accepts a signed document, an exchange of letters, emails or other telecommunications recording the agreement, or undenied pleadings. A signed contract remains the safest form.[1]

What is the minimum content of a valid arbitration clause?

A clear, written agreement to refer defined disputes to arbitration. In practice the clause should also state the seat, rules or institution, number of arbitrators, language and governing law, so the default rules do not decide those questions.

How many arbitrators apply if the clause is silent?

Under section 11 of the Act, three. Under the BIAC Rules 2019, a sole arbitrator unless the BIAC Arbitration Committee considers three appropriate. State the number expressly to avoid the conflict.[1] [4]

Can a Bangladeshi party agree to arbitration in Singapore?

Yes. Parties may choose a foreign seat and institution. The Act then applies only through its foreign-award provisions, and Bangladeshi court interim relief before or during the arbitration may be unavailable following the Accom Travels decision.[1] [2]

Should I use BIAC's model clause?

It is a sound starting point, but it does not fix the number of arbitrators or the language. Add those, together with confidentiality and any fast-track preference.[3]

Are asymmetric arbitration clauses valid in Bangladesh?

They have not been tested under the Arbitration Act 2001. Comparative authority supports them, but they should be drafted with a mandatory arbitral default and a time-limited election.[5]

Is a mediation step before arbitration enforceable?

A multi-tier clause is more likely to be given effect where each step has a clear trigger and a fixed time limit. Include a carve-out for urgent relief and limitation protection.

Is arbitration in Bangladesh confidential by default?

The Act is silent on confidentiality. BIAC's rules address it, but an express clause gives the clearest protection.[2] [4]

Can related companies be bound if they did not sign?

Generally not. The Act does not provide for binding non-signatories, so guarantors, parents and affiliates should be made parties to the arbitration agreement.[2]

What if there is no arbitration clause and a dispute has arisen?

The parties can sign a standalone submission agreement, or, where a suit is pending, apply jointly under section 89B of the Code of Civil Procedure to withdraw it for arbitration.[2]