The Legal Framework for Investor Protection
Statutory Protections and Treaty Rights
Under Section 7 of the Foreign Private Investment (Promotion and Protection) Act 1980, the Government of Bangladesh guarantees that foreign private investment shall not be nationalized or expropriated except for a public purpose and against adequate compensation. Furthermore, Bangladesh has signed over 30 Bilateral Investment Treaties (BITs) which provide for Most Favored Nation (MFN) treatment and Fair and Equitable Treatment (FET).
| Protection Mechanism | Legal Basis | Scope of Coverage |
|---|---|---|
| Expropriation Protection | Section 7, Act of 1980 | Guarantees prompt and adequate compensation. |
| Repatriation of Capital | Section 8, Act of 1980 | Right to transfer profits and capital gains. |
| International Arbitration | ICSID Convention / BITs | Direct recourse to international tribunals. |
| Enforcement of Awards | Arbitration Act 2001 | Recognition of foreign awards under Section 45. |
The ICSID Arbitration Process
Foreign investors can bypass local courts if a BIT or a specific investment contract contains an ICSID arbitration clause. This provides a neutral forum for resolving disputes against the State.
Key Procedural Steps
- Triggering the BIT: The investor must issue a formal Notice of Dispute citing specific breaches of the BIT (e.g., FET or Umbrella Clause).
- Amicable Settlement: Most BITs require a 3 to 6-month 'cooling-off' period for negotiation.
- Request for Arbitration: Filing the request with the ICSID Secretariat under Article 36 of the ICSID Convention.
- Enforcement: Once an award is rendered, it is binding and enforceable as a final judgment of a local court under Section 45 of the Arbitration Act 2001.
Consult LegalBD
Ensure your investment is structured to maximize treaty protection. Contact Barrister Liton Asaduzzaman Sarkar for strategic advisory.
Schedule ScopingFrequently Asked Questions
Can a foreign investor repatriate their entire capital upon exit?
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.
How are foreign arbitral awards enforced in Bangladesh?
Foreign awards are recognized and enforced under Section 45 of the Arbitration Act 2001, provided the award is from a country that is a signatory to the New York Convention.
What constitutes 'Fair and Equitable Treatment' in Bangladesh?
While not defined in the Companies Act 1994, FET is a standard in BITs that protects investors against arbitrary, discriminatory, or non-transparent state actions.
◆ Related Statutory Guides & Practice Insights
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