Mahbub & Company successfully represented a renewable energy power producer in an Arbitration Miscellaneous Case seeking the appointment of an arbitrator under Section 12 of the Arbitration Act, 2001. The respondent, a non-banking financial institution (NBFI), had instituted proceedings before the Artha Rin Adalat in connection with a loan repayment dispute, despite the financing agreement between the parties containing an arbitration clause. The clause provided that disputes between the parties would be resolved through arbitration and that the resulting award would be final and binding. The NBFI refused to appoint its arbitrator citing the Artha Rin Adalat Ain. In these circumstances, the M&C team filed the Arbitration Miscellaneous Case on behalf of the petitioner for appointing an arbitrator.
On behalf of the petitioner, the Mahbub & Company (M&C) team submitted that the Arbitration Act, 2001 and the Artha Rin Adalat Ain, 2003 serve distinct objectives and operate in separate legal spheres. Relying on judicial precedent, M&C argued that the pendency of an Artha Rin Suit does not bar the Court from appointing an arbitrator where the statutory requirements under Section 12 of the Arbitration Act have been fulfilled. The team further submitted that the arbitration clause in the financing agreement was severable from the underlying contract and remained independently enforceable notwithstanding the respondent’s objections.
M&C counsel further submitted that the arbitration agreement remained legally enforceable notwithstanding the pendency of the recovery proceedings, as an arbitration clause constitutes a separate and independent agreement capable of surviving disputes relating to the underlying contract. It was also argued that, consistent with the Arbitration Act, 2001, judicial intervention should facilitate, rather than impede, the parties’ agreed dispute resolution mechanism through arbitration.
Upon hearing the parties, the Commercial Court was pleased to allow the application and pass an order for the appointment of an arbitrator in accordance with Section 12 of the Arbitration Act, 2001.
The order reinforces the pro-arbitration approach adopted by Bangladeshi courts by recognizing that the pendency of recovery proceedings under the Artha Rin Adalat Ain, 2003 does not, by itself, preclude the dispute to be resolved by arbitration proceedings, especially when it was the dispute resolution mechanism opted by the parties. It also affirms the independent and enforceable nature of arbitration agreements and the Court’s role in giving effect to the parties’ contractual choice of dispute resolution.
Under the supervision of Barrister Saqeb Mahbub, Partner at Mahbub & Company, the petitioner company was represented in court by Tajriyaan Akram Hussain, Associate and Lead, Corporate Secretarial Department and was assisted by Asif Hasan Satu, Junior Associate.
