Introduction: The garment sector is the export backbone of Bangladesh which involve thousands of factories, international buyers and service providers all bound by contracts where delays in deliveries or defects in goods can lead to costly disputes. In a field where speed, confidentiality and business relationships are crucial, court litigation is frequently too public, technical and slow.
In response to this need, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) provides the BGMEA Arbitration Rules, 2016 which establishes a formal, sector-focused framework that results in legally binding awards enforceable under domestic arbitration laws as well as international treaties like the New York Convention or any other arbitration treaty that is currently in effect or may become so in the future.
Why Arbitration Is Needed in Bangladesh’s Garment Sector
For Bangladesh’s RMG sector, disputes over quality, delivery, payment, compliance and logistics are almost inevitable given complex global supply chains. In addition to producing awards that are enforceable both domestically and internationally, arbitration under the BGMEA Arbitration Rules, 2016 provides a specialized, industry-aware forum that is quicker, more private and more commercially sensitive than regular courts.
The BGMEA Arbitration Rules, 2016: What is it all about
The BGMEA Arbitration Rules, 2016 are a set of procedural rules governing arbitrations administered by the BGMEA Arbitration Committee. The Rules apply when parties have a written arbitration agreement, as defined in the Arbitration Act, 2001, agreeing that the BGMEA will administer the arbitration.
Institutional Structure: Committee, Secretariat and Tribunal
The BGMEA Arbitration Committee is an independent arbitration body within the BGMEA and is the only institution authorized to administer arbitrations under the Rules, including scrutiny and approval of awards.
A chairman is in charge of the committee. Nonetheless, in the event that the Chairman is unavailable, a Vice-Chairman can act swiftly to make critical decisions that are subsequently reported back to the entire Committee. BGMEA employees who report to the Secretary General also assist the Committee.
Starting an Arbitration: Request and Response
The arbitration under the BGMEA Arbitration Rules, 2016 begins when a claimant submits a Request for Arbitration to the Secretariat as per Rule 5. The secretariat then notifies the receipt of the Request to the parties and records the date of such receipts. The Request must include:
– details of the parties and representatives;
– a description of nature and circumstances of the dispute and the basis of the claim;
– relief sought and valuation;
– relevant agreements including the arbitration clause, nominations or proposals for arbitrators and observations on the place, law and language of the arbitration, along with supporting documents.
The claimant must also submit sufficient copies of the Request and pay the required filing fee. If the Claimant fails to do so, the Secretariat may close the file without prejudice to refiling later.
The respondent then, as per Rule 6 of the BGMEA Arbitration Rules, 2016, submits an Answer within the specified time addressing the claims, relief sought, arbitrator nominations and any counterclaims along with supporting documents.
Parties may agree on a sole arbitrator or nominate separate arbitrators who then select a presiding arbitrator within three days, as per Rule 7 of the BGMEA Arbitration Rules, 2016. If a party fails to nominate an arbitrator or the nominated arbitrators cannot agree on a chair within the time limits, the Arbitration Committee steps in to make the appointment and its decision is final and binding. Arbitrators must disclose any circumstances which make doubts about their independence or impartiality. Challenges are decided by the Committee and arbitrators may be replaced if they are unable or fail to act.
Jurisdiction, Place, Language and Applicable Law
The arbitral tribunal, as per Rule 11 of the BGMEA Arbitration Rules, 2016, has competence to rule on its own jurisdiction including objections to the existence or validity of the arbitration agreement and issues about the composition of the tribunal. The arbitration clause is treated as independent from the main contract so invalidity of the contract does not automatically invalidate the arbitration agreement.
Unless otherwise agreed, Rule 15 of the BGMEA Arbitration Rules, 2016 stipulates the place of arbitration is BGMEA Bhaban though hearings can be held elsewhere if the tribunal considers it appropriate. If the agreement is silent on language, the official language of the proceedings is English. Parties are free to choose the applicable rules of law. However, in the absence of agreement, the tribunal applies the rules of law it considers appropriate and must take into account the contract and relevant trade usages.
Conduct of Proceedings and Evidence
As per Rule 20 of the BGMEA Arbitration Rules, 2016, within seven days of constitution of the tribunal, the claimant must submit a detailed statement of claim with supporting documents and the respondent must file a statement of defence with documents within seven days of receiving the claim. The tribunal can hold hearings, examine witnesses and experts, request additional evidence and even inspect sites, machinery, production lines or products relevant to the dispute. The tribunal may decide the case solely on documents unless a party requests a hearing and it is not bound by national civil procedure or evidence rules
Fast-track Arbitration and Time Limits
As per Article 24, the BGMEA Arbitration Rules, 2016 provide a fast-track option where the total amount in dispute does not exceed BDT 50 lacs. Any party may request fast-track treatment after constitution of the tribunal and if approved, time limits are shortened so that the award is normally rendered within 20 days subject to limited extension in exceptional circumstances.
For regular cases, the tribunal must render its final award within three months from receipt of the Request for Arbitration following Rule 24 and possible extensions may be granted by the Committee when necessary. Awards should be issued within ten days of concluding the oral hearings.
The Award: Form, Scrutiny and Finality
The tribunal must submit a draft award to the Committee before signing for scrutiny and approval as to form and no award may be rendered until approved as per Rule 27 of BGMEA Arbitration Rules, 2016. The final award is in writing, signed by the tribunal and deposited with the Committee which transmits original signed copies to the parties once all costs are settled.
The award is final and binding and parties are expected to carry it out immediately. Limited post- award remedies exist within the Rules: within 14 days of receipt, parties may request correction of clerical or similar errors or interpretation of specific points; the tribunal may also correct such errors on its own initiative and may extend time for corrections or additional awards where needed.
Costs and Deposits and Liability
The tribunal fixes the costs of the arbitration in the award including arbitrators’ and witnesses’ fees and expenses, legal fees administrative fees of the expenses, legal fees, administrative fees of the Committee and other expenses. Schedule I explains that BGMEA charges a non-refundable registration fee of BDT 5,000 for members and BDT 10,000 for non-members payable by claimants with the Notice of Arbitration and by respondents when filing counterclaims.
The amount in dispute is based on claims and counterclaims with foreign-currency claims converted into taka and BGMEA may charge more in exceptional cases. Actual expenses such as experts, travel, hearing rooms and support services are billed to the party for whose benefit they were incurred and BGMEA can require advance deposits or bank guarantees holding both parties jointly liable for common costs and retaining a lien over the award until all costs are fully paid.
Confidentiality
As per Rule 35, parties and Arbitrators may not disclose information about the arbitration or award except in specified situations such as enforcement, legal obligations, regulatory requirements or tribunal orders. The Committee, its members, staff and arbitrators are protected by an exclusion of liability for acts or omissions in connection with arbitrations under the Rules and are not obliged to testify in related court proceedings.
Conclusion
The BGMEA Arbitration Rules, 2016 provides a framework to maintain important business relationships, lower transaction costs and uphold the reputation of Bangladesh as a trustworthy sourcing destination by offering precise procedures, stringent deadlines, knowledgeable arbitrators and a reliable institutional framework. This customized arbitration process can not only be a legal choice in a sector that supports the country’s economy, but it can also be a crucial instrument for risk management, conflict resolution and maintaining expansion in the apparel industry.
