Legal Framework for Foreign Investment Protection
Core Protection Standards
Under most BITs signed by Bangladesh, foreign investors are entitled to several key protections that mitigate political and regulatory risks:
- Fair and Equitable Treatment (FET): Ensures stable and predictable legal frameworks.
- Full Protection and Security (FPS): Obligates the state to provide physical and legal protection.
- Most-Favored-Nation (MFN) Clause: Prevents discrimination between investors from different treaty partners.
- Expropriation Protection: Prohibits nationalization except for public purposes, under due process, and with prompt, adequate, and effective compensation (Hull Formula).
| Statute/Treaty Type | Primary Protection | Legal Basis |
|---|---|---|
| Foreign Private Investment Act 1980 | Non-Discriminatory Treatment | Section 4 |
| Bilateral Investment Treaties (BITs) | International Arbitration (ICSID) | Treaty Specific |
| Income Tax Act 2023 | Double Taxation Avoidance | Section 233 |
| Foreign Exchange Regulation Act 1947 | Repatriation of Profits | Section 18B |
Dispute Resolution & Claim Mechanisms
Bangladesh is a signatory to the ICSID Convention (1965). Most BITs provide a tiered dispute resolution mechanism, starting with mandatory consultations followed by international arbitration.
Key Treaty Partners
Bangladesh has active BITs with major economies including the United Kingdom, Germany, Japan, China, South Korea, and the UAE. Investors must verify if their home state has a 'Force in Effect' treaty to invoke Investor-State Dispute Settlement (ISDS) protections.
Consult Barrister Liton Asaduzzaman Sarkar
For treaty shopping analysis or filing investment claims under the ICSID Convention, contact our chambers.
Schedule Legal ScopingFrequently Asked Questions
What is the statutory guarantee against expropriation in Bangladesh?
Section 7 of the Foreign Private Investment (Promotion and Protection) Act, 1980 stipulates that foreign investment shall not be nationalized or expropriated except for a public purpose and against adequate compensation paid expeditiously.
How are investment dispute awards enforced in Bangladesh?
Awards are enforced under the Arbitration Act, 2001. Specifically, Section 45 provides for the recognition and enforcement of foreign arbitral awards, subject to the New York Convention standards.
Can foreign investors repatriate capital and dividends?
Yes, Section 8 of the Foreign Private Investment (Promotion and Protection) Act, 1980 guarantees the right to transfer capital and returns, subject to the Foreign Exchange Regulation Act, 1947.
◆ Related Statutory Guides & Practice Insights
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