Arbitration meant to be swift, but slow pace puts foreign investment at risk

Infograph: TBS

Foreign companies and investors increasingly face years of delays in Bangladesh when seeking to enforce or resolve commercial disputes through arbitration, undermining a mechanism intended to provide a faster and more effective alternative to court litigation.

Experts say delays in resolving commercial disputes discourage investors, particularly foreign direct investment.

Arbitration clauses are commonly included in international commercial contracts because the process is generally viewed as faster, more neutral and internationally enforceable than conventional litigation.

But in Bangladesh, arbitration-related applications can remain pending for years, with some disputes taking more than a decade to conclude.

3,844 applications in 11 years

Data from the Supreme Court shows that 3,844 arbitration applications were filed with the High Court between January 2015 and June 2026, involving around Tk11,000 crore.

Final disposal information was available for roughly 1,000 applications involving around Tk2,000 crore.

In the first six months of 2026, more than 100 applications involving around Tk1,800 crore were filed. None had been finally resolved by June, while orders for the appointment of arbitrators had been issued in only a handful of cases.

In 2025, out of 236 applications involving Tk3,000 crore, only eight were disposed of. Similarly, in 2024, only 16 of the 149 filed applications were resolved, while 2023 saw a mere six disposals out of 276 applications valued at Tk4,000 crore.

Some 194 applications involving around Tk1,500 crore were filed in 2022. Sixteen of them were finally disposed of and orders for arbitrator appointments were issued in 27 cases.

How arbitration works

In international commercial disputes, where a contract contains an arbitration clause, proceedings are conducted under the Arbitration Act 2001. If one party breaches the contract, the other may issue a notice of arbitration and initiate the formation of an arbitral tribunal. 

If a party fails to appoint an arbitrator or does not cooperate, the High Court may make the appointment and, where necessary, issue interim protective orders. The tribunal considers the parties' submissions and evidence before issuing an award, which can then be enforced in Bangladesh in accordance with the law. 

Where Dhaka is designated as the seat of arbitration, Bangladeshi courts retain supervisory jurisdiction over the proceedings.

Where a contract provides for arbitration in another country, the dispute is first resolved by an arbitral tribunal in that country, after which the resulting award may come before the relevant district judge's court in Bangladesh for enforcement.

Nearly eight years for one dispute

A dispute involving Hong Kong-based shipping company South Express Ltd illustrates the delays.

In 2015, Chattogram-based shipbreaking company Madina Enterprise agreed to purchase an old vessel from South Express. After Madina failed to make the payment on time, South Express eventually sold the vessel to another buyer after waiting for a considerable period, suffering a loss of around Tk2 crore.

Under the contract, disputes were to be resolved through arbitration in the United Kingdom, which was designated as the seat of arbitration. South Express subsequently initiated arbitration proceedings in the UK.

The UK arbitration tribunal awarded around Tk2 crore in compensation to South Express in November 2015 and ordered implementation of the award within eight days.

South Express applied to the Dhaka District Judge's Court in 2018 to enforce the UK arbitration award under Bangladesh's Arbitration Act 2001. The district court dismissed the application in 2024, after proceedings that lasted nearly six years.

South Express appealed to the High Court the same year. After lengthy hearings, the High Court in July overturned the district court's decision and ordered enforcement of the UK arbitration award.

The High Court also strongly criticised the district judge in its observations.

South Express's lawyer in Bangladesh, Mohiuddin Abdul Kadir, told The Business Standard that the dispute had already been settled in the UK and that the award should have been enforced by the Dhaka District Judge's Court under the 1958 New York Convention and Bangladesh's Arbitration Act.

He said the execution case took nearly six years to conclude, during which at least four judges were transferred or replaced and numerous hearing dates were scheduled.

The lawyer said judges in Bangladesh have little experience with arbitration. "Otherwise, how could the judge reject the UK tribunal's award?"

Madina Enterprise's lawyer, Barrister Imran A Siddique, said the company would appeal the High Court ruling to the Appellate Division within the 60-day statutory period.

Kadir said nearly eight years had already passed since the dispute entered the Dhaka District Judge's Court and the High Court, adding that a further appeal could make it impossible to predict when the matter would finally be resolved.

150 awards awaiting enforcement

The delays can continue even after an arbitration tribunal has issued an award.

Lawyers said that where an arbitration tribunal constituted by the High Court resolves a dispute and issues an award, the matter can subsequently come before the High Court and then be sent to the relevant district judge's court for enforcement.

Similarly, when a contract provides for arbitration in another country, the dispute may be settled by an arbitration tribunal in that country before the resulting award is brought before the relevant district judge's court in Bangladesh for enforcement.

Data from the Dhaka District Judge's Court shows that around 150 applications seeking enforcement of such awards are pending, involving commercial disputes worth approximately Tk3,000 crore.

Disputes lasting more than a decade

Another case involving Malaysia Maritime & Dredging Corporation, or MMDC, has remained unresolved for more than a decade.

MMDC signed an agreement with the Chittagong Port Authority in 2011, and a dispute arose in 2013. The contract provided for the dispute to be resolved in Dhaka under Bangladesh's arbitration law.

After attempts at negotiation failed, MMDC applied to the High Court for the appointment of an arbitrator. The High Court subsequently formed an arbitration board chaired by former chief justice Mohammad Ruhul Amin.

The board issued an award on 5 August 2017 in favour of MMDC and ordered the Chittagong Port Authority to pay around Tk22.95 crore to the Malaysian company.

A subsequent application was filed before the High Court seeking cancellation of the award, but it has yet to be disposed of, according to lawyers.

Eight years just to appoint arbitrators

A separate dispute involving Transcom Beverage Ltd and Italy's TFG International highlights delays at an earlier stage of the arbitration process.

Transcom signed an agreement with TFG International in 2016 for the supply of carbonated beverage bottling equipment and made the contractual payment. TFG later allegedly breached the agreement by failing to supply some of the equipment.

According to court records, Transcom sought a refund of €1,46,231 from the Italian company. After the amount was not paid, Transcom applied to the High Court for arbitration in 2018 in accordance with the contract.

The High Court ordered the formation of an arbitration board only in May this year.

A lawyer involved in the matter said the board had yet to reach a decision.

Lawyers involved in the case said arbitration proceedings are generally expected to conclude within six to nine months under international practice. The award would then go to the High Court before being sent to the relevant court for enforcement.

Too few benches, limited expertise

Barrister Margub Kabir, a company and arbitration law specialist, said parties in international commercial disputes in Bangladesh generally have to apply to the High Court for the appointment of arbitrators.

He said such applications are handled by the High Court's company benches, of which there are currently only two.

These benches also hear company cases, admiralty suits, trademark disputes, bank company cases and insurance matters, in addition to arbitration-related applications, he said.

Kabir said, "Increasing the number of courts and judges was essential and that there is no alternative to increasing judicial capacity."

He also called for effective government measures to improve the expertise of lawyers and judges in arbitration matters.

Delays could hurt foreign investment

Business leaders and representatives of multinational companies said the slow judicial process can discourage foreign investors from investing in Bangladesh.

If arbitration, which is supposed to provide an alternative to lengthy litigation, is also subject to prolonged delays, the negative impact on Bangladesh's international investment image could become even greater, they said.

Mohammad Iqbal Chowdhury, chief executive officer of LafargeHolcim Bangladesh, said making Bangladesh's judicial system more efficient would help attract investors.

"Delays in resolving commercial disputes discourage investors, particularly foreign direct investment, regardless of the nature of the case," he said.

"The World Bank's Ease of Doing Business assessments have consistently highlighted the time required to settle disputes in Bangladesh," Iqbal said, adding that the government and relevant stakeholders must find practical ways to speed up the resolution of commercial disputes.

Govt expects commercial courts to help

Attorney General Barrister Ruhul Quddus Kazal said steps are being taken to expedite arbitration proceedings.

According to him, the interim government introduced an ordinance on specialised commercial courts, which was subsequently converted into law by the elected government.

The attorney general said the functioning of commercial courts across the country under the new law would help speed up the disposal of arbitration applications.