‘ADR most preferred way to resolve LC related trade disputes’

Experts at a webinar have termed Alternative Dispute Resolution (ADR) as the most helpful process of resolving disputes between the parties contracting under Letters of Credit (LC) in international trade deals.

The virtual discussion titled "Settlement of Letters of Credit Related International Trade Disputes through ADR" was held on 14 November.

Bangladesh International Arbitration Centre (BIAC), the first registered ADR institution of Bangladesh, and Dhaka Chamber of Commerce and Industry (DCCI), a partner of BIAC, jointly organized the programme.

An expert panel of speakers comprising eminent business leaders, bankers, lawyers and ADR specialists from home and abroad explained how ADR could help resolve disputes between the parties.

With ADR institutions like BIAC in Bangladesh and other institutions existing in the region, the webinar aimed at suggesting greater transparency on how the ADR processes, including arbitration and mediation work.

It also suggested how ADR institutions could provide relatively inexpensive and quick access to the resolution of disputes arising out of LC, particularly in the developing nations.

The participants at the discussion stressed specifically the issues and challenges of resolution of the trade disputes arising out of LC through the use of ADR methods in Bangladesh, especially in the wake of the Covid-19 pandemic worldwide.

Shams Mahmud, president of DCCI and managing director of Shasha Denim Ltd and Shasha Garments Ltd, in his welcome speech said that to mitigate risk profile of businesses, institutional ADR processes, including arbitration and mediation, could be of immense help, especially in LC related international trade disputes.

He emphasised the importance of LC in businesses in developing national trade competency.

He appreciated BIAC's role as a trend setter and pioneer in bringing businesses, banks, ADR facilitators and the government agencies together in order to institutionalise best practices of ADR in Bangladesh.

Muhammad A (Rumee) Ali, chief executive officer of BIAC, said BIAC as the only licenced ADR centre in Bangladesh had arbitration, mediation and other methods of ADR in their agenda.

He stressed further cooperation with DCCI to help resolve commercial disputes in both domestic and international trades.

He urged business leaders, lawyers, mediators and exponents of ADR to come forward and join BIAC's efforts in quick and cost effective dispensation of business disputes for the greater interest of the country.

He also put emphasis on the need of provision of an ADR clause in commercial contracts and synchronising LC with Pro Forma Invoice so that interests of banks and parties are well protected.

Vincent O'Brien, director of International Chamber of Commerce-UAE and a member of the Executive Board, ICC Banking Commission, Paris, joined the webinar as a panelist.

He said Bangladesh had the highest level of practicing ICC Rules in settling LC related international cross border trade disputes.

He said that to businesses, 'time is money,' and to save both time and money, ADR could be the best practice to resolve such disputes.

He expressed satisfaction over BIAC's contribution and continuous efforts in facilitating ADR norms.

Md Ahsan-uz-Zaman, managing director and CEO of Midland Bank Limited, narrated his experience as a banker and emphasised incorporation of ADR clause in both local and international LC.

He highlighted the need of creating awareness about ADR and favoured new guidelines for resolution of cross border trade disputes in order to do away with discrepancies in LC.

Barrister Sameer Sattar, a lawyer at the Supreme Court of Bangladesh and former director of DCCI, viewed the issue from a lawyer's perspective and shared his experiences.

He said LC was a strict area of interference, and discrepancies in LC could be prevented by appropriate drafts, not diluting the same with providing an ADR clause therein, which could be part of commercial contracts between the parties.

MS Siddiqui, convener of DCCI Special Committee on SDG Affairs-2020, said there were issues and departures from conditions of commercial contracts, which were not suitable to be resolved by the judicial process in the first instance.

He advised that ADR could be a way forward to resolve such disputes.

Barrister Shahedul Azam, a lawyer at the Supreme Court of Bangladesh and a member of DCCI, underscored the need of adequate and proper drafting of an ADR clause in additional contracts outside of the LC, which could help prevent trade disputes.

He said arbitration was not the only solution to resolve LC related disputes.

Rubaiya Ehsan Karishma, a counsel at BIAC, shared her experiences of handling LC related disputes at the programme.

She said that contracting parties tend to lodge complaints to BIAC citing discrepancies in their documents and seek BIAC's assistance.

Rubaiya preferred having a smaller platform than the courts to help parties insert ADR clause in their contracts.

Khaled Aziz, managing director and chief operating officer of Standard Chartered Bank, emphasised the provision of rational conditions in LC.

MA Akmall Hossain Azad, director of BIAC, also participated in the webinar moderated by Barrister Shafayat Ullah, head of Group Legal Affairs, Mutual Trust Bank Ltd.  

The event was live streamed on BIAC's Facebook page and LinkedIn.