Provisions of Arbitration Act not applicable to arbitrations seat in foreign countries, rules HC

The High Court has ruled that the provisions of the Arbitration Act 2001, except the provisions under Sections 45, 46 and 47, are not applicable in respect of arbitration where the seat of such arbitration is in a foreign country. 

A larger bench of the High Court comprising Justice Sheikh Hassan Arif, Justice Md Ashraful Kamal and Justice Ahmed Sohel delivered the verdict after hearing a civil appeal petition filed by a private company, Accom Travels and Tours Limited. 

According to the appeal petition, Accom Travels and Tours Limited which has a travel agency and air freight cargo handling business in Bangladesh and Oman Air engaged in a GSA agreement on September 1 in 2008, followed by a GSSA agreement which was renewed subsequently in 2013. 

However, a dispute arose between the parties. Thus, Oman Air terminated both agreements. 

Because of such termination, the plaintiff suffered a huge loss and Accom Travels and Tours Limited issued legal notice upon Oman Air claiming a certain amount as against such loss of business and profit but got no positive response. 

Accordingly, it filed a suit with the First Court of Joint District Judge, Dhaka against Oman Air for the realisation of damages for an amount of Tk 780 million. 

Thereupon, the Court below, after hearing the parties, dismissed the entire suit on the ground that the suit was not maintainable. Being aggrieved by such dismissal of the suit followed by a decree, Accom Travels and Tours Limited preferred this appeal. 

The Chief Justice constituted a larger bench to hear the case as it involved legal issues. 

In the order portion, the court said, “In view of the provisions under Sections 3(1) and 3(2)

of the Arbitration Act 2001, the provisions of the said Act, except the provisions under Sections 45, 46 and 47, are not applicable in respect of arbitration where the seat of such arbitration is in a foreign country. Thus, the provisions under Sections 7, 7A and10 cannot be invoked in such a case except that the power of the Court concerned to take interim measures under Section 7A of the said Act may only be invoked at the stage of enforcement of the foreign arbitral award.” 

Accordingly, the impugned judgment and decree passed by the First Court of Joint District Judge, Dhaka in the Money Suit are hereby set aside, also read the verdict. 

“The suit in question, namely Money Suit No. 12 of 2015, is restored to its file and number. However, further proceedings of the said suit are hereby stayed, in the exercise of the inherent power of the Court under Section 151 of the Code of Civil Procedure, till the resolution of the dispute between the parties through arbitration in Oman as agreed by them,” the verdict also said. 

In observation, the court said, “It appears that, by the agreements, the parties have not only agreed to resolve their disputes through arbitration in Oman, they have also agreed that their agreements shall be governed and construed in accordance with the law of Oman and that the Court in Oman shall have exclusive jurisdiction.”

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