Alternative dispute resolution order of the day

Mahbubur Rahman is the president of the International Chamber of Commerce-Bangladesh and chairman of the business advisory council of the UN-ESCAP.

An eminent business leader, he is also a former president of the Federation of Bangladesh Chambers of Commerce & Industry and the Dhaka Chamber of Commerce & Industry.

He is the founder chairman of the Bangladesh International Arbitration Centre.

On July 2017, he was appointed as an arbitrator of the China International Economic and Trade Arbitration Commission (CIETAC) -- the first Bangladeshi to have that role.

Rahman spoke about alternative dispute resolution practices in Bangladesh and growing trade with China and its prospects, among other issues.

TDS: We are delighted to learn of your recent appointment as the arbitrator of the CIETAC. Could you please inform us on CIETAC and its activities?

MR: The CIETAC is a well-known organisation in the world and is the biggest arbitration institution in China. Established in April 1956, it resolves commercial and trade disputes by means of arbitration.

In 2010, the CIETAC formulated construction dispute review rules to provide efficient expert services for a quick fix to construction disputes. In 2011, it set up Investment Dispute Resolution Centre to accept investment dispute cases between private investors and the host state government.

I feel immensely honoured to be the first Bangladeshi to be appointed as an arbitrator of the CIETAC.

The volume of foreign trade in China has increased steadily. With the development of foreign trade, dispute resolution has become an unavoidable issue. Therefore, arbitration was introduced by the CIETAC.

I wish, as a nominated arbitrator of the CIETAC, I can contribute to the prestigious regional forum in mitigating international business disputes.

TDS: Bangladesh-China bilateral trade has had a robust growth, and with that comes the possibilities of commercial disputes. How do you see your appointment in this context?

MR: The Bangladesh-China bilateral trade has been increasing significantly over the years. In fact, China is one of Bangladesh's top trading partners. In fiscal 2015-16, Bangladesh's total merchandised export to China was $808.14 million, up from only $319.66 million in fiscal 2010-11, as per statistics from the Export Promotion Bureau.

Bangladesh's exports to China grew at an annual average of 30 percent in the last five years. Nevertheless, the recent export growth has been quite slow, only 6 and 2.2 percent in fiscals 2014-15 and 2015-16, respectively. The share of exports to China was merely 2.4 percent of the total export in the immediate past fiscal year.

On the other hand, imports from China have been the highest for quite some time. Data from the Bangladesh Bank show that import from China was worth about $9.8 billion in fiscal 2015-16, up from $5.9 billion in fiscal 2010-11.

Together, Bangladesh's trade with China is now about 26.5 percent of its total trade with the world. If this rate prevails, the total bilateral trade would be $18 billion in 2021, when the country would celebrate its 50th anniversary.

With the ever-increasing volume of trade with China, there is also a potential for an increase in commercial disputes as numerous commercial and business deals are being made regularly.

The performance of a contract is a substantial factor to achieve business objectives and maintain an overall fraternal relationship between the two countries.

As an arbitrator of the CIETAC, I will definitely try to convince both the Chinese and Bangladeshi parties in disputes to invoke the CIETAC arbitration clause to mitigate disagreements amicably so that business between the two countries can run more smoothly and expand more in the coming years.

More specifically, I would like to suggest that pre-litigation mediation under an institution should be taken into cognisance by the courts. The possibility of arbitration as a dispute resolution tool for money loan disputes under the Artha Rin Adalat Ain (2003) should also be explored.

TDS: You have played a very important role in setting up the BIAC. Do you think your involvement with the CEITAC can help enhance the ADR landscape in Bangladesh?

MR: As you know, alternative dispute resolution is the order of the day. Disputes arising out of business and commercial transactions can be mitigated outside of courts to save time and cost and also to lighten the burden of pending cases with our civil judiciary. The BIAC, being the first and only ADR institution in Bangladesh, is committed to applying best practices in all possible cases.

The BIAC during its journey of nearly seven years has got recognition from 11 international ADR centres including the Netherlands-based Permanent Court of Arbitration, the Singapore International Arbitration Centre, and the Indian Institution of Arbitration and Mediation.

We are already working together with these international institutions and have jointly arranged training programmes and workshops to raise the number of ADR specialists in Bangladesh.

I have a scope to share the message and objectives of the BIAC with the CIETAC and we look forward to signing a cooperation agreement so that the CIETAC can also participate in our activities of invoking ADR practices in business and commercial transactions.

TDS: We understand the BIAC is working in promoting the use of ADR in commercial disputes. However, Bangladesh's record in timely and effective dispute resolution is poor and is considered a hurdle in improving investment climate and attracting foreign direct investment. How do you see BIAC's role in this context?

MR: Bangladesh's GDP, after almost a decade of 6 percent plus growth, grew 7.24 percent in fiscal 2016-2017. But unfortunately, Bangladesh stood 189th out of 189 countries in enforcement of contract sub-index of the Doing Business Index 2018 of the World Bank Group.

The main hurdle the country is facing is inordinate delays in implementation of development projects, unreasonable delays in contract enforcement and inefficient management.

In order to step into higher growth trajectory, Bangladesh urgently needs to overcome the hurdle of project implementation delays and reduce the average number of days required for contract enforcement.

FDI in Bangladesh reached an all-time high of $2 billion in 2016 after averaging $1 billion from 2002 to 2016.

The latest FDI flow can be maintained and upheld by effective and expeditious resolution of business disputes for which the BIAC is working relentlessly in collaboration with 18 local corporate bodies, banks, financial institutions, construction firms and non-governmental organisations.

TDS: Do you have any specific suggestions to improve the effectiveness of ADR in Bangladesh?

MR: Yes, we have urged the government to incorporate arbitration or mediation clauses in all government contracts.

The Hon'ble Minister for Law, Justice and Parliamentary Affairs Mr Anisul Huq MP has already given positive indications. Intervention by the government will be very vital for effective application of ADR norms and practices.

The Arbitration Act 2001, the Code of Civil Procedure (Amendment) Act 2003, the Money Loan Court Act 2003, the Bangladesh Energy Regulatory Commission Act 2003, and the Real Estate Development and Management Act 2010 are among the important legal reforms already in place for effective ADR practices in business and commercial disputes.

TDS: How can Bangladesh attract FDI from China since many industries are relocating to other countries in the region?

MR: China is a giant in FDI all over the world and Bangladesh always welcomes China for FDI. Bangladesh will have to diversify its export basket and remove structural problems to get more access to a very diversified and competitive Chinese market.

China could invest in Bangladesh's manufacturing sector in which Bangladesh is not its competitors. With the Chinese economy evolving and its market moving towards high-end products, China could move away from labour-intensive areas in the lower-end of manufacturing and relocate the industries to Bangladesh.