Sponsored briefing: Dispute resolution through courts in Bangladesh

Junayed Ahmed Chowdhury and Maliha Ahmed on the backlog of cases, revenue matters and alternative dispute resolution in Bangladesh’s courts

Overview

Dispute resolution through courts in Bangladesh is time-consuming. As per the data from recent reported cases, the average life span of a civil case from its institution in any of the District Courts until completion of an appeal at the High Court Division of the Supreme Court of Bangladesh is approximately 12.3 years (calculated from case data published in law reports between 2018 and 2022). The primary reason behind such lengthy litigation is the huge backlog of cases pending in the courts. The problem is further exaggerated by shortage of judges, their frequent transfer in the lower judiciary and reconstitution of Benches in the High Court Division of the Supreme Court of Bangladesh. As per the Annual Report 2021 of the Supreme Court of Bangladesh, from 1 January 2021 until 31 December 2021, a grand total of 536,230 cases were pending in the High Court Division of the Supreme Court of Bangladesh and only 23,654 of them were disposed (Supreme Court Annual Report 2021, at p112). On the other hand, from 1 January 2021 until 31 December 2021, a grand total of 23,031 cases were pending in the Appellate Division of the Supreme Court of Bangladesh (the apex court) and only 6,859 of them were disposed (Supreme Court Annual Report 2021, at p102).

The present Government of Bangladesh has given its concentrated effort to tackle the backlog of cases. In 2021-2022, in various districts across Bangladesh, appointments of 62 District and Session Judges, 11 Metropolitan Session Judges with 292 additional posts, two Metropolitan Magistrates, 30 Senior Judicial Magistrates, and 22 Judicial Magistrates along with additional 216 posts were created (Annual Report 2021-2022, Ministry of Law, Justice and Parliamentary Affairs, 22 October 2022, at p4). During the Covid-19 pandemic, the Bangladesh Parliament promulgated the Use of Information Technology by Court Act 2020 on 8 July 2020, which enabled the lower judiciary to dispose of 314,482 bail applications between 11 May 2020 and 10 August 2021 by use of virtual courts all over Bangladesh in which 158,507 individuals were granted bail. As a result of use of virtual courts, the government managed to contain the serious issue of prison overcrowding during the Covid-19 pandemic period (Annual Report 2021-2022, Ministry of Law, Justice and Parliamentary Affairs, 22 October 2022, at p10).

Arbitration

A concerning trend in international commercial arbitration, in which one of the parties is Bangladeshi, has been the interference by national courts. The High Court Division of the Supreme Court of Bangladesh has in recent years passed anti-arbitration injunction to impede foreign seated arbitrations. This raises many questions pertaining to the jurisdiction of national courts over an international arbitration tribunal and the extent to which such injunctions harm the sanctity of a contract containing a foreign seated arbitration clause. It also creates significant challenges when a foreign contracting party wants to enforce a foreign arbitral award in Bangladesh that was passed disregarding an anti-arbitration injunction from Bangladesh. Due to this problem, Vertex Chambers receives regular queries from foreign clients enquiring about the method and impediments in enforcing a foreign arbitral award in Bangladesh. Furthermore, this trend may have a long term impact on Bangladesh’s foreign direct investment prospects.

Revenue matters

The Income-tax Ordinance 1984 (‘Ordinance’) is one of the most complex and evolving statutes in Bangladesh. It is amended every year through promulgation of the Finance Act. Explanations regarding the changes introduced in the Ordinance are provided in ‘Income-tax Paripatra’ issued annually by the National Board of Revenue (‘NBR’) – the tax administration authority in Bangladesh. Notwithstanding such explanations, tax disputes are quite prevalent in NBR’s appellate forums and the High Court Division of the Supreme Court of Bangladesh. One of the major difficulties in resolving such disputes is the lack of resources for interpretation of the Ordinance. To put things into perspective, Junayed Chowdhury, managing partner of Vertex Chambers, has authored two editions of the book ‘Corporate Tax Law and Practice’ which is the only practitioner’s textbook on corporate tax laws of Bangladesh. Furthermore, the Cabinet of Bangladesh has recently approved in principle the draft Income Tax Act 2023 which has been drafted in Bengali language. The enactment of a tax statute written in Bengali language may lead to increased litigation regarding statutory interpretation. Moreover, practitioners may face difficulty due to different legislative language when citing cases from other commonwealth jurisdictions, which usually hold persuasive value in Bangladeshi courts. Vertex Chambers regularly advises clients on interpretational issues regarding tax litigation due to lack of clarity in the local legislation.

Similar challenges are also faced with regard to the new Value Added Tax and Supplementary Duty Act 2012. Vertex Chambers regularly advises on the impact of the new VAT law in matters where there is ongoing litigation or potential litigation resulting from differing interpretation by the competing parties. Vertex Chambers has recently advised on the impact of the new VAT law on infrastructure contracts and construction services. However, in the absence of authoritative judicial decision in Bangladesh on the interpretation of the law, our legal research is heavily reliant upon resources of other commonwealth countries.

Lack of precedent and academic books

Compared to the size of the population and legal problems that people and businesses face, there is a scarcity of reported judgments in Bangladesh on various legal issues. There also exists a shortage of well researched academic or practitioners’ books on different areas of law (for example, corporate law, banking and finance, construction and infrastructure, arbitration and ADR, climate and environment, energy and natural resources etc.). This poses a challenge for practitioners undertaking legal research to solve specialist legal issues. As a result, Bangladeshi legal practitioners are largely dependent upon case laws and materials of other common law jurisdictions.

Alternative dispute resolution

Alternative dispute resolutions are gaining traction from contracting parties because of the convenience of avoiding lengthy litigation. Many lawyers and former judges are constituting arbitration tribunals to expedite the dispute resolution process.