Arbitration Law in Bangladesh 2026: The Arbitration Act 2001 and Legal Framework Explained

Arbitration law in Bangladesh: the 2026 legal framework

Arbitration law in Bangladesh rests on one statute, the Arbitration Act 2001, and a growing body of Supreme Court decisions that decide how far the courts will help, supervise or interfere. The Act gives parties a modern framework based on the UNCITRAL Model Law. Its departures from that model, a 2021 Larger Bench ruling on foreign-seated arbitration and the new commercial courts introduced in 2026 all shape how a dispute actually runs. Anyone who signs a contract with a Bangladeshi counterparty needs to understand all three.

This guide explains the structure and key sections of the Act, the line between domestic and international arbitration, what each court does, the amendments and case law that matter, and a summary for foreign parties. Companion TRW guides cover the step-by-step process, clause drafting and enforcement in more detail.

Summary: The Arbitration Act 2001 governs every arbitration seated in Bangladesh, whether domestic or international, and the recognition of foreign awards. The courts' role is limited by statute but still decisive: the District Judge supervises domestic arbitrations, the High Court Division supervises international commercial arbitrations seated in Bangladesh, and a 2021 Larger Bench decision means most supportive powers are not available while a foreign-seated arbitration is under way.

Key point: The seat decides almost everything. If the seat is in Bangladesh, the whole Act applies. If it is abroad, only the provisions on foreign awards apply, and the High Court Division has confirmed in 2026 that it cannot grant section 7A interim relief in support of a Singapore-seated arbitration while the Larger Bench decision in Accom stands.

At a glance

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Table of Contents

How arbitration law in Bangladesh fits together

Arbitration law in Bangladesh has four layers. The first is the Arbitration Act 2001 (Act No. I of 2001), enacted on 24 January 2001, which governs the agreement, the tribunal, the proceedings, the award and the courts' powers.[1] The second is the New York Convention, to which Bangladesh acceded on 6 May 1992 without declarations or reservations; it entered into force for Bangladesh on 4 August 1992.[4] The third is the case law of the High Court Division and Appellate Division, which fills gaps and resolves the Act's ambiguities. The fourth is the institutional or ad hoc rules the parties choose, which supply most of the day-to-day procedure.

Other statutes interact with these layers, from sector laws that send disputes to regulators to the 2026 commercial court legislation. Our overview of alternative dispute resolution in Bangladesh explains how arbitration sits alongside mediation and other settlement routes. This guide stays with the arbitration framework itself.

Model Law foundations and deliberate departures

The Arbitration Act 2001 replaced the Arbitration Act 1940 and is substantially based on the 1985 UNCITRAL Model Law. It does not adopt the 2006 Model Law amendments, which modernised the rules on interim measures and the form of the arbitration agreement.[3] The Act also departs from the Model Law in several deliberate ways. It defines internationality by nationality and place of incorporation rather than place of business. It lets the parties exclude the tribunal's power to rule on its own jurisdiction. It requires the tribunal to await the outcome of a challenge to an arbitrator before it continues.[3]

The courts have held that only the Model Law provisions actually enacted bind them, and that where the Act deviates from the Model Law the Act prevails: STX Corp v Meghna Group, 64 DLR (2012) 550.[3] International Model Law commentary is therefore persuasive, never decisive.

The structure of the Arbitration Act 2001

The Arbitration Act 2001 has fourteen chapters and fifty-nine sections.[2] Reading it in its chapter structure is the fastest way to understand arbitration law in Bangladesh, because each chapter answers a distinct practical question.

• Chapters 1 and 2 (sections 1 to 8): definitions, scope, waiver, the bar on court jurisdiction in section 7, court-ordered interim measures in section 7A and administrative assistance.
• Chapter 3 (sections 9 and 10): the form of the arbitration agreement and the court's duty to refer parties to arbitration.
• Chapter 4 (sections 11 to 16): the number of arbitrators, appointment, challenge, termination of mandate and substitution.
• Chapter 5 (sections 17 to 22): the tribunal's jurisdiction, separability, the High Court Division's power to decide jurisdiction, tribunal interim measures and settlement.
• Chapter 6 (sections 23 to 35): conduct of proceedings, including procedure, seat, commencement, pleadings, hearings, experts, witness summonses and default.
• Chapter 7 (sections 36 to 41): applicable law, decision-making, form of the award, finality, correction and termination.
• Chapters 8 to 11 (sections 42 to 48): setting aside, enforcement of domestic awards, recognition of foreign awards and appeals.
• Chapters 12 to 14 (sections 49 to 59): costs deposits, fee disputes, death and insolvency of a party, limitation, interaction with other laws, rule-making and repeal of the 1940 Act.[2]

The sections that decide most disputes

A handful of provisions do most of the work. Section 3 fixes the Act's reach by reference to the seat. Section 7 says that where the parties have agreed to arbitrate, no court may hear the matter except as the Act provides. Section 7A, inserted by amendment in 2004, lets the court grant interim relief such as injunctions, preservation or sale of property and the appointment of a receiver, before or during the arbitration and until the award is enforced.[1] [3]

Section 10 requires a court to refer the parties to arbitration if a party applies before filing its written statement and a valid, enforceable arbitration agreement exists; the suit is then stayed.[1] Section 12 supplies default appointment rules. Sections 42 and 43 govern setting aside, section 44 turns a domestic award into a decree, and sections 45 to 47 deal with foreign awards. Section 48 provides the appeal route against the District Judge's orders on challenge and enforcement.[3]

On procedure, party autonomy comes first. Under section 25 the tribunal follows the procedure the parties agree, section 24 frees it from the Code of Civil Procedure and the Evidence Act, and section 28 permits consolidation only with the parties' agreement.[1] Where the parties do not fix the number of arbitrators, the default is three.[3]

Domestic and international commercial arbitration under the Act

Arbitration law in Bangladesh draws one central distinction: whether an arbitration seated in Bangladesh is an "international commercial arbitration" or not. The label decides which court supervises the arbitration, who appoints arbitrators in default and where interim relief and setting-aside applications are filed.

What makes an arbitration international

Section 2(c) defines international commercial arbitration as an arbitration of a dispute arising from a legal relationship, contractual or not, that is commercial under Bangladeshi law, where at least one party is an individual who is a national of or habitually resident in a country other than Bangladesh, a body corporate incorporated outside Bangladesh, a company or association whose central management and control is exercised outside Bangladesh, or the government of a foreign country.[1] The test turns on the parties, not on where the contract is performed or what it concerns.[3]

A Bangladeshi subsidiary of a foreign group will usually be a domestic party unless its central management and control is shown to be exercised abroad. In the 2026 SVC Jhilmil v RAJUK application, a petitioner argued that substantial foreign ownership brought it within section 2(c)(iii), a point the court did not need to decide.[9] Contracting parties should not leave internationality to argument; the structure of the contracting entity should be considered at signature.

Domestic, international and foreign: three categories

The Act effectively creates three categories. A domestic arbitration is seated in Bangladesh between Bangladeshi parties. An international commercial arbitration is seated in Bangladesh with at least one foreign party. A foreign arbitration is seated outside Bangladesh, whoever the parties are. The High Court Division has treated an international commercial arbitration seated abroad as a foreign arbitration for the purposes of the Act.[3] The comparison below shows how they differ in practice.

Why the category matters in practice

A setting-aside application for an international commercial arbitration award belongs in the High Court Division, while one for a domestic award belongs before the District Judge.[3] Given that the sixty-day limit for setting aside cannot be extended, an application lost in the wrong forum may leave a party with no challenge at all.[6]

The arbitration agreement and arbitrability

Section 9 requires the arbitration agreement to be in writing. It is treated as written if it is in a document signed by the parties, in an exchange of letters, fax, e-mail or similar communications, or in pleadings where one party alleges the agreement and the other does not deny it.[3] Section 18 treats the arbitration clause as separable from the main contract, and the High Court Division confirmed in Ferdous Alam v PVH Far East, 74 DLR (2022) 598, that invalidity of the underlying contract does not by itself invalidate the clause.[3]

Older authority points the other way where the main contract is void from the start, so separability is not a complete answer to illegality arguments.[3] Our analysis of arbitration agreement enforceability in Bangladesh covers those risks, and a separate TRW guide deals with clause drafting.

What cannot be arbitrated

The Arbitration Act 2001 recognises non-arbitrability as a ground for setting aside and refusing enforcement but does not list excluded subjects. Criminal and competition matters are generally treated as incapable of settlement by arbitration. Sector statutes also matter: section 40 of the Bangladesh Energy Regulatory Commission Act 2003 sends disputes between licensees, and between licensees and consumers, to the regulator.[3]

The role of the courts and the High Court Division

Section 7 sets the default: where the parties have agreed to arbitrate, the courts have no jurisdiction except as the Act provides.[1] In practice the Act gives the courts a supportive role before and during the arbitration and a supervisory role afterwards. Which court acts depends on the category of arbitration.

The District Judge

For the purposes of the Act, "Court" means the court of the District Judge, together with any Additional District Judge's court the Government designates by gazette notification.[1] In domestic arbitrations the District Judge appoints arbitrators in default, grants section 7A interim measures, hears setting-aside applications under section 42 and enforces awards under section 44. Witness summonses under section 33 are also issued by the court on the tribunal's application or with its permission.[1]

The High Court Division

The High Court Division has original jurisdiction in international commercial arbitrations seated in Bangladesh. It grants section 7A interim measures, hears setting-aside applications and decides appeals against a tribunal's decision on a challenge to an arbitrator, which must be brought within thirty days and which the High Court Division is directed to decide within ninety days.[3] Under section 20 it may also decide a question of the tribunal's jurisdiction, but only where doing so is likely to produce substantial cost savings, the application is made without delay and there is good reason for the court to decide it. The parties may exclude this jurisdiction in writing.[3]

The High Court Division also hears appeals under section 48 against the District Judge's orders on setting aside, enforcement of domestic awards and recognition of foreign awards, and it exercises civil revisional jurisdiction over those orders.[3] [6]

The Chief Justice as appointing authority

Where a party fails to appoint an arbitrator, the default appointing authority under section 12 depends on the category: the District Judge for arbitrations other than international commercial arbitration, and the Chief Justice, or a Supreme Court judge the Chief Justice nominates, for international commercial arbitration. The appointing authority is to decide within sixty days of the application.[1]

Stays, interim relief and enforcement of tribunal orders

Under section 21 the tribunal itself can order interim measures and security, and the court may enforce those orders. The Act contains no emergency arbitrator provisions.[3] Before granting section 7A relief, the court must be satisfied that a valid arbitration agreement exists and that arbitration is genuinely intended: Drilltec-Maxwell JV v Gas Transmission Co, 21 BLC (2016) 122.[3] Section 7A applications are a frequent tool in disputes over the encashment of performance guarantees; see our analysis of whether a performance guarantee can be stopped.

Foreign-seated arbitration: the Accom line of authority

The most consequential question in arbitration law in Bangladesh for foreign investors is what the courts will do while an arbitration seated abroad is running. Section 3 says that where the seat is outside Bangladesh, only sections 45, 46 and 47 apply.[1] The courts have had to decide what that means for interim relief and stays of local litigation.

From Southern Solar to Accom

In Southern Solar Power v Bangladesh Power Development Board (2019) the High Court Division confirmed that an international commercial arbitration seated outside Bangladesh is a foreign arbitration for the purposes of the Act.[3] On 12 December 2021 a Larger Bench took the opposite view in Accom Travels and Tours v Oman Air SAOC, 27 BLC 596. By a 2:1 majority it held that provisions of the Act other than sections 45 to 47 do not apply where the seat is outside Bangladesh, and that sections 7, 7A and 10 have no application to foreign-seated arbitrations, save that section 7A relief may be granted at the stage of enforcing a foreign award.[8]

Stays of local suits

On stays, the position is more nuanced. The Appellate Division in Unicol Bangladesh v Maxwell Engineering Works, 56 DLR (AD) 166, had held section 10 inapplicable to foreign-seated arbitrations. That holding was later displaced in part in the ECOM litigation (Mosharaf Composite Textile Mills v ECOM Agroindustrial Corp, 4 SCOB (2015) AD 28, and the 2017 review), which upheld a stay of a Bangladeshi suit in favour of an arbitration pending in Liverpool.[8] Where section 10 is not applied, the courts may still stay a suit under their inherent powers in section 151 of the Code of Civil Procedure.[3]

The 2026 decisions

On 12 July 2026 the High Court Division dismissed two section 7A applications in Singapore-seated arbitrations. In Legend World Tank v Multinational Shipping the judge set out his respectful disagreement with Accom, describing section 7A as supportive rather than supervisory, but held he was bound by the Larger Bench and vacated an earlier interim order.[8] In SVC Jhilmil v RAJUK, a public-private partnership dispute in which the petitioner sought to restrain termination and the encashment of a bank guarantee, the application was rejected in limine on the same basis.[9]

The practical message is clear. Until the Appellate Division or a larger bench revisits Accom, a party in a foreign-seated arbitration should not count on a Bangladeshi court to freeze assets or restrain a guarantee call while the arbitration runs. Emergency relief must come from the tribunal or an emergency arbitrator under the chosen rules, and the seat decision must weigh that gap. Our guides to PPP projects in Bangladesh and bank guarantees in Bangladesh explain where these disputes usually arise.

Awards, challenges and the limits of court review

Under the Arbitration Act 2001 the tribunal decides the dispute under the law the parties choose (section 36), issues an award in the form section 38 prescribes and that award is final and binding under section 39.[2] Unless the award directs otherwise, interest runs at two per cent above the Bangladesh Bank rate, and the tribunal fixes costs, including arbitrator, legal and institutional fees.[3]

Setting aside under sections 42 and 43

Section 43 lists the only grounds on which an award may be set aside: incapacity, defects relating to the arbitration agreement, lack of proper notice, excess of mandate, improper composition or procedure, non-arbitrability, conflict with the law of Bangladesh, public policy and fraud or corruption.[3] Chambers notes a translation error in sections 43(1) and 46(1) that replaced "invalid arbitration agreement" with wording about the validity of the law under which the agreement was made.[3] The parties cannot agree to widen or exclude the grounds of challenge.[3]

In Lily Begum Ahmed v Navana Real Estate, decided on 11 August 2025, the High Court Division held that the Act is a self-contained code with no power to extend the sixty-day period, that the Limitation Act 1908 does not apply to it, and that the District Judge had acted without jurisdiction in condoning a 116-day delay.[6]

How narrowly the courts review awards

The dominant trend is restraint. The Appellate Division has treated an award as contrary to public policy only where it is patently illegal or so unfair that it shocks the conscience of the court: Saudi Arabian Airlines v Saudi Bangladesh Services, 73 DLR (AD) (2021) 277.[3] On 10 August 2026, in Manikganj Power Generations v Yew Choon, the High Court Division dismissed a challenge, stating that it "does not sit in appeal over an arbitral award" and that section 43 "exhaustively enumerates" the grounds for setting aside.[7]

The trend is not uniform. In Gas Transmission Co v Drilltec-Maxwell JV (2021) the High Court Division re-examined the substance of an award and set it aside, and an appeal was reported as pending.[3] The 2026 Manikganj judgment read that decision as allowing interference only for demonstrably perverse findings or a complete failure to consider material evidence.[7] Practitioners on the ground also report that public policy arguments are raised often in lower courts, which is why enforcement can still take years.[13]

Waiver and enforcement of domestic awards

Section 6 punishes delay. In Rupayan Housing Estate v Mustafa Zaman, decided on 22 April 2025, the High Court Division treated an allegation of bias as waived because it was not raised during the two years of the arbitration. It also held that stamping and registration questions arise only when the award is filed for enforcement under section 44.[10] Once the challenge period has passed or a challenge fails, a domestic award is enforced as a court decree. Our separate guide on enforcing domestic awards explains execution in detail.

Foreign awards and the New York Convention

Sections 45 to 47 are the part of arbitration law in Bangladesh that applies whatever the seat. A foreign award is binding between the parties and is enforced by the District Court in Dhaka as if it were a decree of that court. Documents not in English or Bangla must be translated.[3] Section 46 lists the grounds for refusing recognition, which mirror section 43 and include setting aside at the seat and conflict with the public policy of Bangladesh.[3]

The Act draws no distinction between Convention and non-Convention states, and it contains no provision allowing a state entity to plead sovereign immunity at the enforcement stage.[3] Section 47 gives the Government power to notify specified states.[2] Procedure and asset strategy for enforcement are covered in our dedicated enforcement guides.

Amendments, rules and reform of the Arbitration Act 2001

The Arbitration Act 2001 has been amended only once in substance: the 2004 amendment that inserted section 7A on court-ordered interim measures.[3] No amendment has adopted the 2006 Model Law changes, introduced emergency arbitrator provisions, addressed confidentiality or set a time limit for making an award. The Act is silent on confidentiality, so it depends on the parties' agreement, the chosen rules or procedural orders.[3]

Institutional rules

The Bangladesh International Arbitration Centre in Dhaka began operating in April 2011 under a government licence. It is a not-for-profit institution sponsored by ICC Bangladesh, the Dhaka Chamber of Commerce and Industry and the Metropolitan Chamber of Commerce and Industry. Its current BIAC Arbitration Rules and Mediation Rules both date from 2019.[5] Bangladeshi parties also commonly choose ICC, SIAC or ICSID, or ad hoc arbitration under the UNCITRAL Rules.[3]

Commercial courts in 2026

The Commercial Court Ordinance 2026 was issued at the start of January 2026. It provides for district-level commercial courts staffed by District and Additional District Judges, a 90-day target for completing trials from the final hearing, and commercial appellate benches in the High Court Division. Its subject-matter list covers banking, insurance, import and export, transport of goods, and construction and infrastructure contracts, including tenders.[11] Parliament adopted the Commercial Court Bill 2026 in April 2026 among a group of ratified ordinances.[14] [12]

The new courts change the litigation that runs alongside arbitration, but the Arbitration Act 2001 still defines which court hears arbitration applications. That definition of "Court" covers the District Judge and any Additional District Judge the Government designates.[1] Parties should therefore check, case by case, whether a designation affects where an arbitration application is filed.

The reform agenda

At a BIAC seminar on commercial justice reported on 22 May 2026, the Law Minister, Md Asaduzzaman, said the Arbitration Act 2001 has limitations that "can be fixed easily". He pointed to arbitrator fees high enough to deter ordinary businesses and to delays that defeat the purpose of quick dispute resolution.[12] Practitioners have long pressed for interim relief in support of foreign-seated arbitrations, which the 2026 High Court Division judgments show remains unavailable under current law.[8] Any amendment bill deserves close attention from parties with long-term contracts.

Case-law trends shaping arbitration law in Bangladesh

Read together, the recent decisions show four trends that define arbitration law in Bangladesh today.

• Strict deadlines: the sixty-day setting-aside period is treated as absolute, and the Limitation Act cannot rescue a late challenge.[6]
• Restraint on the merits: the High Court Division repeatedly declines to reweigh evidence, treating its review as supervisory, not appellate.[7]
• Waiver enforced: objections not raised during the arbitration, including allegations of bias, are likely to be lost.[10]
• Seat-based limits on support: Accom continues to bar section 7A relief for foreign-seated arbitrations before the enforcement stage, despite judicial reservations.[8] [9]

These trends favour the party that prepares early and watches time limits, and penalise the party that treats the courts as a second chance on the merits.

Laws and procedures summary for foreign parties

For a foreign company, arbitration law in Bangladesh can be reduced to a short set of rules. The governing statute is the Arbitration Act 2001; Bangladesh is a New York Convention state; a dispute involving a foreign party and seated in Bangladesh is an international commercial arbitration supervised by the High Court Division; and a foreign award is enforced by the District Court in Dhaka.[1] [3] [4]

The parties may choose arbitrators of any nationality and qualifications, and representatives need not be lawyers or admitted to the Bangladesh Bar.[3] Practitioners report that foreign awards must be notarised and attested by the Bangladesh mission before filing, and that enforcement typically takes two to three years at first instance, longer if appeals follow.[13] The steps below are the sequence we follow when advising foreign clients.

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Foreign parties dealing with state-owned entities should also note that government contracts in energy, power, construction and procurement now commonly contain arbitration clauses.[13] Our guide to unpaid infrastructure project claims in Bangladesh shows how those clauses play out. TRW's international arbitration practice advises on seat selection, interim strategy and enforcement.

What to watch in 2026 and beyond

Three issues will shape arbitration law in Bangladesh over the next year. First, whether the Government follows the Law Minister's May 2026 remarks with an amendment bill, and whether that bill addresses interim relief for foreign-seated arbitrations. Second, whether the Appellate Division revisits Accom, given the reservations expressed by the High Court Division in July 2026. Third, how the new commercial courts and arbitration applications interact in practice as designations and practice directions follow.[8] [12]

A clause that names the seat, rules, appointing authority and language, and anticipates the gap in interim relief, will age well. If you need a view on your contract or a live dispute, our dispute resolution practice can help, or you can contact TRW directly.

Frequently asked questions

What is the main arbitration law in Bangladesh?

The Arbitration Act 2001 (Act No. I of 2001), which replaced the Arbitration Act 1940 and is substantially based on the 1985 UNCITRAL Model Law.[1] [3]

Does the Arbitration Act 2001 apply to arbitrations seated outside Bangladesh?

Only sections 45, 46 and 47, which deal with recognition and enforcement of foreign awards. The rest of the Act applies only where the seat is in Bangladesh.[1]

What is an international commercial arbitration under Bangladeshi law?

A commercial arbitration in which at least one party is a foreign national or resident, a company incorporated abroad, a company or association managed and controlled abroad, or a foreign government.[1]

Which court supervises arbitration in Bangladesh?

The District Judge for domestic arbitrations, and the High Court Division for international commercial arbitrations seated in Bangladesh. Default appointments in international cases are made by the Chief Justice or a judge he nominates.[1] [3]

Can a Bangladeshi court grant interim relief for a Singapore-seated arbitration?

Not before the enforcement stage under current authority. The Larger Bench in Accom held section 7A inapplicable to foreign-seated arbitrations, and the High Court Division applied that ruling in July 2026.[8] [9]

How long do I have to challenge an award, and can the time be extended?

Sixty days from receipt of the award. In August 2025 the High Court Division held that the period cannot be extended and that the Limitation Act 1908 does not apply.[6]

Can a court review the merits of an arbitral award?

Generally no. Section 43 lists the only grounds, and the High Court Division has said it does not sit in appeal over an award or reweigh the evidence.[7]

Has the Arbitration Act 2001 been amended?

Once in substance, in 2004, to add section 7A on court-ordered interim measures. The Law Minister said in May 2026 that the Act's limitations can be fixed easily, but no amendment has been enacted yet.[3] [12]

Do I need a Bangladeshi lawyer to appear in an arbitration in Bangladesh?

No. Representatives need not be lawyers or members of the Bangladesh Bar, in domestic or international arbitration. Court applications connected with the arbitration are a separate matter.[3]

Are the new commercial courts a substitute for arbitration?

No. The commercial courts introduced in 2026 hear commercial suits faster, but a valid arbitration agreement still bars court proceedings on the same dispute, and the Arbitration Act 2001 continues to govern arbitration applications.[1] [11]