Mahbub & Company represented a US-based apparel sourcing and supply chain management corporation challenging an award passed by a BGMEA Arbitration Tribunal.
In a significant legal development, the Company Bench of the High Court Division has stayed the operation of an arbitral award issued by the BGMEA Arbitration Tribunal against a New York-based apparel sourcing and supply chain management corporation. The stay was granted on 12 August, 2026 in response to an application filed under Section 42 of the Arbitration Act, 2001, which sought to set aside the award rendered in favour of a Bangladeshi supplier.
The dispute originated from a complaint lodged by a Bangladeshi apparel manufacturer. regarding alleged export dues, interest, and compensation totaling over USD 342,000 against two purchase contracts. The buyer denied these claims and instead argued that the supplier had not supplied the contractually promised apparels. The BGMEA constituted an arbitral tribunal which consequently awarded in favour of the supplier.
However, US-based sourcing company, through its law firm, Mahbub & Company, challenged the award under Section 42 of the Arbitration Act, 2001 as being ex-facie illegal and passed without jurisdiction. The petitioner argued that there was no written arbitration agreement between the parties, a mandatory requirement under Section 9 of the Arbitration Act, 2001, and Article 1(3) of the BGMEA Arbitration Rules, 2016. The company further contended that it was neither a party to the underlying export contracts nor a beneficiary of the relevant letters of credit.
A critical procedural failure highlighted in the petition was the delayed service of the award. The Company Bench, empowered under the Arbitration Act, heard the matter, and being primarily satisfied, passed an order staying operation of the award.
The US-based sourcing company was represented by Saqeb Mahbub, Partner and M Parvez Rana, Associate at Mahbub & Company.
