Out of court settlement for business disputes
Toufiq Ali (L) and Mahbubur Rahman (R)
The Bangladesh International Arbitration Centre (BIAC) will start its journey in the country from Saturday in efforts to settle commercial disputes quickly, transparently and in a cost-effective way to give relief to businesspeople.
The International Chamber of Commerce -- Bangladesh (ICC-B), Dhaka Chamber of Commerce and Industry (DCCI) and Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka have joined efforts to set up the centre for alternative dispute resolution (ADR), with support from Bangladesh Investment Climate Fund that is managed by International Finance Corporation.
BIAC, situated in Suvastu Tower in Dhaka, is a registered, not-for-profit organisation. It was established with approval from the ministries of commerce, and law and parliamentary affairs. It aims to provide an environment where clients can meet their arbitration needs effectively and efficiently.
Its work is central to the question of how best to adapt arbitration to the fundamental changes in the economy, said Mahbubur Rahman, chairman of the centre's board.
He said business communities around the world are increasingly adopting alternative means to resolving conflict, as conventional routes are blamed to be costlier and time-consuming.
He said there is no institutionalised arbitration in Bangladesh. Individual lawyers and retired judges do arbitration from time to time, depending on the necessity of individual clientele.
“Arbitration in institutionalised form has not developed in Bangladesh for two reasons -- our arbitration act was not much supportive of arbitration in our system and anyone losing the arbitration immediately goes to court and posts an injunction,” he said.
“As a result, people feel there is no use of spending money and time in the name of arbitration. Let us better go to the court, even it is delayed.”
He said ICC-B, DCCI and MCCI have come forward to popularise the arbitration process, in order to expedite the dispute settlement process and build people's confidence on the system.
Rahman, also the president of ICC-B, said foreign investors would like to see whether Bangladesh has any legal system that can dispense and settle disputes quicker, instead of going through court procedures, which are sometimes lengthy.
“It is not only for the overseas investors, it is more applicable for us,” he recently told The Daily Star in an interview.
The successful business leader said there are many grey areas in the Arbitration Act 2001, which was replaced Arbitration Act 1940, that does not encourage people to come to arbitration.
He said the government is also trying to make necessary legal arrangements for ADR, as the court is overburdened with cases.
“The BIAC is being set up as the government is trying to emphasise alternative dispute resolution, as thousands of cases are pending with the courts for years due to lengthy processes. Besides, commercial cases are absolutely difficult to settle quickly.”
Arbitration practices are nothing new in Bangladesh. Arthorin Adalat (money loan court) has been set up to settle bank disputes with their clients in Bangladesh.
But Rahman said: “Although the Arthorin Adalat is a good move by the government as it helps the banks a lot, it is inadequate -- there are 10 times more cases than it can handle.”
“It is also time-consuming. The law says that it should be settled within six months, but sometimes it takes two years or more.”
Rahman, who was president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) between 1992 and 1994, said BIAC would start operations in a limited way initially, as the extent of its success remains to be seen.
“If we find that it is accepted by the stakeholders, then we will go for expansion. The centre's area of operations will expand as we move on.”
He said Bangladesh lacks trade related lawyers. “If we can create demand, we will see expert lawyers in this area. Our young barristers are tuned to this kind of a system.”
He said the BIAC arbitrators' panel would include retired judges from High Court, Supreme Court and districts courts. There will be a panel of lawyers. The conflicting parties will however be free to choose their own lawyers and arbitrators.
“As centres, such as BIAC, know the best arbitrators and lawyers in a field, conflicting parties sometimes approach them for suggestions in appointing arbitrators. The centre will do that, as it will not be biased towards any party.”
“But if they do not want to follow our rules, they will still be able to use our facilities,” he said. “We will rent out rooms and facilities for arbitration, arbitrators, consultation and full secretariat services.”
After the verdict is awarded by BIAC, parties will have to take it to the designated court for legal approval. If the court is convinced that the process has been done within the laws of Bangladesh, then it will give approval, making it an order of the court.
District courts in the country now give approval to arbitration awards. But Rahman said there are long queues in these courts. “So, we are trying to have a bench of High Court. If any bench is designated for this in High Court, then it will be quite helpful for us.”
BIAC Chief Executive Toufiq Ali said arbitration practices are not that professional and transparent in Bangladesh.
“For example, arbitration is conducted in lawyers' chambers, justices' homes or in a small room at Institute of Engineers. It is not being done in a structured way. The sanctity and value of arbitration is not there.”
“At the centre, it will be conducted professionally and in a transparent manner,” he said.
Ali said specialisation among Bangladeshi lawyers in arbitration of trade disputes is not commonplace. Only a few names are there but the number of cases is huge, he added.
He said awareness is important, as people are still not clear on arbitration processes as a legal system. But it has been around the world for ages. “We have to market it.”
Ali, a former ambassador to Geneva, said BIAC would also talk to small and medium enterprises to learn about their problems, as these low capital organisations would not be able to pay high fees to settle disputes through arbitration.
“We will also conduct a survey to find out the number of trade related cases in Bangladesh. The number, we can assume, is huge.”
Rahman thanked IFC and BICF for coming forward with technical assistance for three years. “In the next three years, we hope we will be able to run it on our own. But their initial support has been crucial.”
He said they are planning to give memberships to some institutions to promote the system. “We will ensure that they do not have any direct or indirect interference in arbitration.”
Rahman said BIAC would arrange training events and workshops for judges, lawyers, law students and all other stakeholders. It will also organise workshops and awareness programmes.
“We hope this system, if properly implemented and accepted, will not only bring good to the country's business community but also to the government.”
BIAC has two arbitration rooms, and exclusive chambers for arbitrators and involving parties. It also offers services like photocopy, printing, fax, multimedia projection, computer with internet connection (free of cost), audio visual aid, tele and video conferencing and secretarial services for the conflicting parties.
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