TRW KNOWLEDGE · LEGAL INFORMATION
Arbitration Agreement Template — Bangladesh: Legal Guide by TRW Law Firm
A clear, enforceable arbitration agreement helps businesses manage commercial disputes outside courts. This article explains the arbitration agreement template used in Bangladesh, outlines key clauses, drafting steps, common pitfalls, and practical considerations. It aims to equip managers and advisers with information to prepare agreements that align with local practice.
Introduction and purpose
Arbitration agreements are the starting point for resolving contractual disputes by private dispute resolution rather than litigation. For organisations and counterparties operating in Bangladesh, an arbitration agreement should set out how disputes will be resolved, who will decide them, where and under what rules. A well-drafted agreement reduces procedural uncertainty, helps preserve business relationships and makes the enforcement of an award more straightforward where enforcement is sought.This guide explains the elements commonly found in an arbitration agreement template suitable for contracts that have a connection with Bangladesh. It focuses on practical drafting considerations, common drafting choices and frequent pitfalls to avoid. The information is public legal-information intended to help managers, in-house counsel and external advisers prepare and review arbitration clauses; it is not a substitute for legal advice tailored to a specific contract or factual situation.Statutory framework and practical context
The principal statutory framework for arbitration in Bangladesh is found in the Arbitration Act 2001, which follows the structure of the UNCITRAL Model Law and sets out the legal backdrop for formation, jurisdictional questions, appointment of arbitrators and recognition and enforcement of awards. Courts in Bangladesh have a role in limited supervisory matters, for example in appointing arbitrators in specified circumstances or in granting interim measures, but parties’ private agreements determine much of the procedure and institutional architecture.Practical practice in arbitration combines statutory rules, agreed procedural rules (institutional or ad hoc), and the parties’ selected seat and governing law. Choosing clear contractual language about these choices reduces scope for disputes about jurisdiction, applicable procedure and enforcement. Many organisations also consider institutional options, and both international and local arbitration institutions operate in Bangladesh’s commercial environment.Core clauses to include in an arbitration agreement
The clauses below are commonly included in robust arbitration agreements. Each clause should be drafted to match the commercial context, negotiating balance and the parties’ risk allocation preferences. Short, imprecise clauses are a frequent cause of later disputes.1. Scope of disputes (What is arbitrable?)
Define clearly which disputes are covered by arbitration. Typical formulations exclude matters that statutory law may reserve to courts, but allow all contractual claims, tort claims related to the contract, and questions of enforcement or validity of the contract. Consider express language covering past, present and future disputes, and whether technical disputes (e.g., valuation, calculation) are within scope.2. Seat and place of arbitration
Distinguish between the legal seat (which determines the supervisory court) and the physical place for hearings. Naming a seat in Bangladesh will generally subject certain supervisory steps to the jurisdiction of Bangladeshi courts; naming an international seat will invoke the laws of that jurisdiction as procedural law for the arbitration. Express the seat as clearly as possible (for example, “the seat of arbitration shall be Dhaka, Bangladesh”).3. Governing law
State which substantive law governs the contract and any dispute about it. The governing law can be the law of Bangladesh or another jurisdiction. When parties choose non-Bangladeshi governing law but select Bangladesh as the seat, issues can arise around interpretation and public policy; clarity prevents uncertainty.4. Number and appointment of arbitrators
Specify how many arbitrators will determine the dispute and the method for their appointment. Common options include a sole arbitrator, three arbitrators (each party appoints one and the appointed arbitrators select the presiding arbitrator), or institutional appointment. Set timeframes for appointments and fallback mechanisms if parties cannot agree.5. Procedural rules and institutional link
Decide whether to adopt an institution’s rules (for example, the rules of an established arbitration centre) or to proceed ad hoc (e.g., under UNCITRAL Rules). If institutional, identify the institution and its rules by name. If ad hoc, include a reference to model rules or agreed procedures for preliminary steps, emergency arbitrators and consolidation.6. Languages and documents
Identify the arbitration language(s) and the language of documentary evidence and witness testimony. If documents are in other languages, include who will bear translation costs or which language will prevail for the award and orders.7. Confidentiality
Confidentiality provisions can limit disclosure of evidence, hearings and awards. Parties often expressly require confidentiality unless disclosure is required by law, necessary for enforcement, or permitted by written agreement. Be careful to define the scope of confidentiality, its duration and exceptions.8. Interim and emergency relief
Provide for interim measures and identify which tribunal or court can grant emergency relief prior to constitution of the tribunal. Common approaches reserve emergency relief to courts at the seat or provide for emergency arbitrators where institutional rules permit.9. Costs and allocation of fees
Address fees of arbitrators, administration costs, and how costs are to be allocated. Clauses may provide for an arbitral tribunal’s discretion to allocate costs or set a default rule, for example that costs follow the event or are apportioned according to reasonableness.10. Waiver and time limits
Consider whether the clause should include procedural waivers (for example, a requirement to give notice within a specified time) or preserve statutory limitation defences. Parties sometimes agree to time bars for initiating arbitration, but enforceability of such bar clauses depends on governing law and local rules.11. Amendment and severability
Include a statement about amendment (that the clause can be amended only in writing) and severability (that if any part of the arbitration clause is invalid it will not void the remainder of the contract). Clear severability language supports the continuation of arbitration when a portion is challenged.Checklist: Key arbitration-clause elements
| Element | Typical options | Primary drafting questions |
|---|---|---|
| Scope | All disputes; only contractual disputes; exclude specific claims | Do you want wide or narrow coverage? |
| Seat of arbitration | Dhaka (Bangladesh) or foreign seat | Which courts will supervise the arbitration? |
| Governing law | Bangladesh law or other governing law | Which substantive law should decide contract rights? |
| Number of arbitrators | Sole; three | How to appoint and replace arbitrators? |
| Procedural rules | Institutional rules; UNCITRAL; custom rules | Do you want institutional administration? |
| Confidentiality | Comprehensive; limited; none | What disclosures are permitted or required? |
Drafting process: a practical step-by-step guide
Drafting an arbitration clause is a practical process that benefits from early consideration in commercial negotiations. Below is a sequence that many organisations follow to produce a clause tailored to their needs.Step 1 — Identify the parties and transaction context
Start by confirming the parties’ names, the nature of the contractual relationship and any regulatory or licensing context (for example, if public law issues or statutory controls may affect arbitrability). Consider whether related contracts need identical clauses to avoid fragmentation of disputes.Step 2 — Decide the dispute coverage
Determine whether the clause should cover all disputes arising out of or relating to the contract, including tort claims and questions of validity, or whether it should be limited to specific claim types. Express transitional language for existing claims if that is intended.Step 3 — Choose seat, rules and language
Agree on the seat, the procedural rules and the language of arbitration. These choices influence procedural law, the availability of interim measures and the convenience of hearings for witnesses and counsel. Consider the consequences of selecting a foreign seat or foreign governing law.Step 4 — Agree arbitrator appointment and expertise
Decide on the number of arbitrators and any required qualifications (for example, industry experience, technical or legal expertise). Include fallback mechanisms for deadlocks or failure to appoint within stated timeframes.Step 5 — Draft confidentiality, interim relief and cost rules
Set expectations on confidentiality, identify whether emergency arbitrator or court-ordered interim relief is permitted, and include a transparent approach to costs and security for costs if appropriate for the transaction.Step 6 — Legal review and negotiation
Subject the drafted clause to legal review to ensure alignment with applicable law and to identify any public policy or enforceability concerns. During negotiation, record any agreed variations clearly and preserve a contemporaneous written record of the final agreed wording.Step 7 — Execution and incorporation
Ensure the arbitration clause is incorporated into the main contract in clearly worded, standalone or integrated form, and that signature pages or electronic execution methods correctly evidence the parties’ agreement to the clause.Common drafting errors and practical traps
In practice, recurring problems arise from ambiguous language, mismatched choices (for example, a foreign governing law combined with a local seat without clarity on procedural provisions), and omission of fallback appointment mechanisms. Below are some common errors to watch for.- Vague scope language: Phrases such as "any dispute" without further qualification can lead to arguments about non-contractual claims.
- No fallback on appointments: When parties fail to provide a procedure if an appointing party does not act, appointments can stall.
- Mixing seats and enforcement expectations: Choosing a seat solely for convenience without considering supervisory court powers can complicate interim relief and enforcement.
- Failure to consider confidentiality exceptions: Overly broad confidentiality clauses can clash with regulatory disclosure obligations or enforcement steps.
- Assuming local enforcement is automatic: Recognition of awards depends on local standards; anticipate steps required to enforce awards in relevant jurisdictions.
Institutional options and related practice resources
Parties can choose institutional administration (to benefit from administrative support, appointment mechanisms and established rules) or ad hoc arbitration governed by established rules such as the UNCITRAL Rules. Institutions may offer emergency arbitrator procedures and case administration that help speed progress. When assessing institutional options for a contract with connections to Bangladesh, consider both local and international institutions and their rules, transparency, cost structures and track record.For organisations with cross-border investment or financial transactions, related specialist teams and resources may be relevant. Examples of practice areas that often intersect with arbitration planning include foreign direct investment, financial services regulation and disputes connected to tax, employment or Supreme Court practice. Where topical expertise is required, see practice areas such as foreign direct investment and financial services regulatory matters, and consider counsel with specialist arbitration experience such as a leading arbitration lawyer where appropriate.Recent developments and institutional trends
Practitioners report growing interest in arbitration as companies seek alternatives to congested court dockets. Local institutional development and growing use of model procedural rules are commonly cited by market participants as factors making arbitration a practical option for commercial disputes. Observers also note more frequent use of emergency or interim procedures and a focus on clearer drafting of jurisdictional language to reduce challenges on arbitrability and jurisdiction.When following developments, consult up-to-date institutional rules and official sources. For court-level procedural information, parties sometimes refer to published cause lists and court practice; a commonly used public reference is the Supreme Court cause list where procedural matters are listed. (A user seeking court hearing schedules may consult resources such as the Supreme Court cause list.)Practical drafting examples (illustrative clauses)
Below are neutral, illustrative clause fragments showing common drafting patterns. They are samples for educational purposes and should be adapted to the specific transaction.- Comprehensive scope: "All disputes, controversies or claims arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, shall be finally settled by arbitration."
- Seat and rules: "The seat of arbitration shall be Dhaka, Bangladesh. The arbitration shall be conducted under the [name the institutional rules] in force at the time of commencement."
- Number of arbitrators: "The tribunal shall consist of three arbitrators. Each party shall appoint one arbitrator and the two party-appointed arbitrators shall appoint the presiding arbitrator within thirty days of their appointment."
- Confidentiality: "All arbitration hearings and submissions shall be confidential, except to the extent disclosure is required by law or for enforcement of any award."
How TRW Law Firm resources and practice pages may help
Organisations preparing arbitration clauses often combine internal commercial input with specialist drafting support. For background material, procedural guidance and issues that cross into regulated sectors, parties sometimes review firm resources and practice pages such as practice area summaries and organisational profiles on our firm pages. For service details and enquiries about how experienced teams approach drafting and negotiation, reference information is commonly presented under services and formal contact channels under contact.Legal-information disclaimer
This article provides general legal information about arbitration clauses and drafting considerations for contracts connected to Bangladesh. It is not legal advice. For advice about a specific contract or dispute, consult a qualified lawyer who can consider the full factual and legal context.FAQ
Q1: What makes an arbitration agreement enforceable in Bangladesh?
A: Enforceability depends on clear expression of the parties’ agreement to arbitrate, conformity with statutory requirements, and that the subject matter is arbitrable under applicable law. A concise arbitration clause that identifies the parties, scope, seat and procedure reduces the risk of enforceability challenges. If a party alleges lack of agreement or that a dispute is not arbitrable, courts assess agreement formation, the clause’s wording and relevant statutory exceptions.Q2: Should the seat be in Bangladesh or abroad?
A: The choice of seat affects which courts have supervisory authority and may impact interim relief and enforcement strategy. Choosing Bangladesh as the seat aligns supervisory powers with local courts; choosing a foreign seat may provide familiar procedural law for international parties. Consider comparative enforcement regimes, ease of obtaining interim relief and the parties’ need for a neutral forum when selecting the seat.Q3: Can arbitration clauses cover statutory or public-law rights?
A: Some public-law rights or statutory remedies may be reserved to courts by law, and arbitrability can vary depending on the subject matter and local policy. Parties should assess whether the claims they intend to arbitrate are private contractual rights or matters that statutory law or public policy generally requires courts to decide. Where doubt exists, consider drafting an express preservation clause or seeking legal advice on arbitrability.Q4: How are arbitrators appointed if the parties disagree?
A: A robust clause includes fallback appointment mechanisms: for example, time limits for appointments, a default appointing authority (an institution) or a court appointment procedure if parties do not act. If no mechanism exists and appointment stalls, a court at the seat or an institution identified in the contract may be asked to appoint arbitrators under the applicable arbitration statute.Q5: Are arbitration awards enforced in Bangladesh?
A: Enforceability of awards generally depends on statutory recognition and the absence of recognised grounds for refusal, such as lack of jurisdiction, invalid agreement, or conflict with public policy. When a party seeks to enforce an award in Bangladesh or another jurisdiction, they must follow the procedural steps required by local recognition and enforcement statutes. Practical enforcement considerations include evidence of the award, certification and compliance with local formalities.Q6: Can parties modify their arbitration agreement after signing?
A: Parties can modify an arbitration clause by mutual written agreement. Any amendment should be documented clearly and incorporated into the main contract or as a formal addendum. Oral modifications may be difficult to prove and could raise enforceability issues; therefore, a written amendment with signatures or other agreed execution methods is advisable.Q7: What role do institutional rules play in practice?
A: Institutional rules provide a ready-made procedural framework, appointment mechanisms, administrative services and sometimes emergency arbitrator processes. They can reduce preliminary disputes over procedure and appointments. Choosing an institution requires assessing familiarity with sectoral disputes, administrative capacity, cost structures and procedural features that matter to the parties.Final observations
Drafting an arbitration agreement is a commercial as well as a legal exercise. Clarity about scope, seat, governing law, appointment mechanisms and procedure makes later dispute resolution more predictable. Where disputes involve regulated activities or cross-border elements, coordination with specialist advisers helps align the clause with enforcement strategy and regulatory constraints. For further information on practice areas that commonly intersect with arbitration planning, consider resources on foreign investment, financial regulatory matters and specialist arbitration teams.CONTINUE EXPLORINGConnected
Connected
legal insight.
Let’s discuss
the detail.
For a focused conversation with TRW, book a consultation or contact the firm directly.Book consultation →info@trw.org