International business disputes: Execution of foreign judgment and arbitral award in Bangladesh

International trade frequently involves international business disputes where parties from different countries engage in legal battles in different states. When the territory under which two business entities operate is different, enforcement of contractual rights is not an easy catch. In international trade, parties have to follow the contractual covenants for raising a claim and getting desired relief.

Suppose, a foreign company has obtained a foreign court's 'judgement' or 'arbitral award' against a Bangladeshi company and the Bangladeshi company is unwilling to obey that 'judgment' or 'arbitral award' in Bangladesh. To bind the Bangladesh company, the foreign company must comply with the execution process in Bangladesh. 

Unless it is directly contravening any existing law or public policy, Bangladesh respects the decisions of foreign courts and arbitral tribunals as she maintains the principles of comity of the nations.

Execution of a foreign judgment 

A foreign judgment passed by a court of a reciprocating territory (any gazette notified country or territory enjoying direct enforcement facility i.e. India) can be directly enforced by filing an Execution Petition under section 44A of the Code of Civil Procedure, 1908 (CPC). Conversely, if the judgment is passed by a court of a non-reciprocating territory, a suit upon the judgment may be filed under section 20 of the CPC, where the foreign Judgment will carry an evidential value only. 

However, to be enforceable in Bangladesh, both categories must pass the 'Conclusiveness Test' stipulated under section 13 of the CPC. A foreign judgment will be declared inconclusive if: (a) it is not passed by a competent court (Superior Court to District Judges Court in Bangladesh); (b) it is not passed on the merits of the case; (c) correct view of international law is not taken; (d) it contradicts the principles of natural justice; (e) it has been obtained by fraud; and (f) the claim contravenes any law in force in Bangladesh.

Such a conclusive judgment can be executed in Bangladesh in a way as if it had been passed by the District Court of Bangladesh. Nevertheless, to get the judgment enforced in Bangladesh, the foreign decree-holder is required to submit a certified copy of the decree along with a certificate from the Superior Court stating the extent to which the decree has been satisfied or adjusted. Before execution, a notice will be issued against the Judgment debtor under Order XXI, Rule 22. 

If the foreign judgment is passed in a reciprocating territory, an application for execution is to be filed within 12 years from the date when the decree or order becomes enforceable. On the contrary, the limitation period for filing a suit is 3 years when the judgment is passed in a non-reciprocating territory.  

Execution of a foreign arbitral award

As the Arbitration Act (1940) did not have a sufficient mechanism to enforce foreign arbitration awards in Bangladesh, the UNCITRAL model of arbitration law was introduced in Bangladesh by incorporating the Arbitration Act 2001, replacing the 1940's Act.

Under the 2001's Act, an arbitral award can be enforced under CPC in the same manner as if it were a decree of the court. As per section 45, a foreign arbitral award shall be treated as binding and can be enforced by executing the same by the court on the application made to it by any party.

No foreign arbitral award shall be recognised and enforced by the court unless the application is accompanied by (a) original arbitral award or an authenticated copy of the award; (b) original or authenticated agreement for arbitration; and (c) evidence proving that the award is foreign. If all the requirements are satisfied, a court in Bangladesh must accept the foreign arbitral award as having the same force as a decree of its own.

A judgment debtor has the right to contest such application and have the recognition or execution of foreign arbitral award refused by the court by proving (i) incapacity of any party; (ii) invalidity of the arbitration agreement; (iii) inadequate notice;(iv) inappropriate subject matter of the dispute which is not capable of being settled by arbitration;(v) irregularity in the formation of the arbitral tribunal or arbitration procedure; and (v) the award conflicting to the public policy of Bangladesh.

Enforcement methods available to a judgment creditor

Generally, the executing court may order the execution of a judgment by (a) delivery of any property specifically decreed; (b) attachment and sale or by sale without attachment of any property; (c) arrest and detention in prison; (d) appointing a receiver; and (e) using any other required manner.

The court may allow the decree-holder with the freedom to choose the most favourable mode of execution. Furthermore, the judgment debtor may be asked by the court to deposit the decretal amount in court and the court may direct remittance to the decree-holder. 

It is, regrettably, presumed that the court or tribunal that passed the foreign judgment or arbitral award is a competent court to pass the decree or award. However, the judgment debtor is always allowed to rebut this presumption. Therefore, execution of a decree or an award must have been sought after following the proper judicial process in the foreign territory. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.