Dispute Resolution in Bangladesh: Complete Guide 2025

Introduction by Barrister Liton Asaduzzaman Sarkar

As the Vice President of Legal Affairs & Company Secretary at Nagad Limited, and an Advocate of the Supreme Court of Bangladesh, I frequently advise foreign investors and corporate boards on mitigating legal risks. Navigating the commercial dispute resolution landscape in Bangladesh requires a strategic understanding of statutory frameworks, judicial precedents, and alternative dispute resolution (ADR) mechanisms. This 2025 pillar guide dissects the triad of Dispute Resolution—Litigation, Arbitration, and Mediation—through the lens of key Bangladeshi statutes.

1. Commercial Litigation: The Statutory Framework

While often viewed as time-consuming, commercial litigation in Bangladesh is sometimes unavoidable, particularly for statutory remedies that cannot be arbitrated. The jurisdiction and procedures are primarily governed by the Code of Civil Procedure 1908, but specific corporate disputes fall under specialized statutes.

Corporate Disputes under the Companies Act 1994

For intra-company disputes, particularly oppression and mismanagement, the High Court Division exercises original company jurisdiction. Section 233 of the Companies Act 1994 is the cornerstone for minority shareholder protection.

Landmark Principle: The Appellate Division has consistently held that for a petition under Section 233 of the Companies Act 1994 to succeed, the petitioner must demonstrate continuous acts of oppression that unfairly prejudice their interests, not merely isolated incidents of corporate disagreement.

Banking and Financial Disputes

Under the Bank Company Act 1991 (Section 5) and the Artha Rin Adalat Ain 2003 (Money Loan Court Act), financial institutions have specialized tribunals for debt recovery. Corporate boards must be aware that directors can be held personally liable for corporate defaults under stringent interpretations of these acts.

2. Arbitration: The Preferred Route for Foreign Investors

Arbitration in Bangladesh is governed by the Arbitration Act 2001, which is heavily inspired by the UNCITRAL Model Law. For foreign investors registered under the BIDA Act 2016, incorporating an arbitration clause is standard practice.

Enforcement of Foreign Awards and FERA 1947

Bangladesh is a signatory to the New York Convention. Foreign arbitral awards are enforceable under Section 45 of the Arbitration Act 2001. However, remitting the awarded amount overseas triggers the Foreign Exchange Regulation Act (FERA) 1947. Section 5 of FERA 1947 mandates Bangladesh Bank's approval for any outward remittance, including dispute settlement payouts.

3. Mediation and Statutory ADR Mechanisms

Mediation is increasingly embedded into specific statutory frameworks to bypass judicial backlogs.

Tax and IP Disputes

Under the new Income Tax Act 2023, Section 260 outlines the Alternative Dispute Resolution (ADR) mechanism, allowing corporate taxpayers to resolve assessment disputes through a facilitator, saving years of appellate tribunal litigation. Similarly, the Patent Act 2023 encourages ADR for intellectual property infringement claims before resorting to civil injunctions.

Comparative Analysis: Dispute Resolution Methods

Procedural Steps for Initiating Arbitration in Bangladesh

1. Invocation: Issue a formal Notice of Arbitration to the counterparty as per the dispute resolution clause in the commercial contract.
2. Appointment of Arbitrator(s): Parties appoint arbitrators. If they fail, an application is made to the District Judge or the Chief Justice (for international commercial arbitration) under Section 12 of the Arbitration Act 2001.
3. Statement of Claim & Defense: Exchange of pleadings, documents, and witness statements.
4. Hearings: Examination and cross-examination of witnesses.
5. Award & Enforcement: The tribunal renders the award. The winning party files for execution in the competent civil court under Section 44 or 45 of the Act.