Southern Solar Power Ltd. and Ors. vs. Respondent: Bangladesh Power Development Board and Ors.

IN THE SUPREME COURT OF BANGLADESH (HIGH COURT DIVISION)

arbitration Application No. 13 of 2018

Decided On: 23.05.2019

Appellants: Southern Solar Power Ltd. and Ors.
Vs.
Respondent: Bangladesh Power Development Board and Ors.

**Hon’ble Judges:**Muhammad Khurshid Alam Sarkar, J.

Counsels:
For Appellant/Petitioner/Plaintiff: Rokanuddin Mahmud, Senior Advocate, Md. Asaduzzaman and Md. Anisul Hassan, Advocates

Subject: arbitration

Catch Words

Mentioned IN

**Acts/Rules/Orders:**Code of Civil Procedure, 1908 (CPC) - Order XXXIX Rule 1; Contract Act, 1872 - Section 28; Foreign Private Investment (promotion And Protection) Act, 1980 - Section 4; Specific Relief Act, 1877 - Section 52, Specific Relief Act, 1877 - Section 53, Specific Relief Act, 1877 - Section 54, Specific Relief Act, 1877 - Section 55, Specific Relief Act, 1877 - Section 56, Specific Relief Act, 1877 - Section 57

Citing Reference:

Discussed

 

 7

Mentioned

 

 7

Case Note:arbitration - Injunction - Grant of - Section 7A of arbitration Act, 2001 - Present application filed under Section 7A of arbitration Act seeking injunction against respondent for restraining them from terminating Power Purchase Agreement and Implementation Agreement (PPA & IA) - Whether case made out for grant of injunction as prayed - Held, at time of approaching this Court, petitioners were in process of formation of arbitration tribunal in Hong Kong as per terms of arbitration agreement - Cardinal principles for granting temporary injunction exist in this case - Petitioners deserve to be remedied with preventive relief for specified time, in order to preserve subject in controversy - Respondents are restrained from terminating PPA and IA - Injunction granted - Application disposed of. [68], [69]

Disposition:
Disposed of

Industry: Power and Energy

JUDGMENT

Muhammad Khurshid Alam Sarkar, J.

1. At the instance of the petitioner, this application has been filed under Section 7A of the arbitration Act, 2001 (hereinafter referred to as the arbitration Act) calling upon the respondent nos. 1 to 4 to show cause as to why an interim Order of injunction shall not be granted restraining them from terminating the Power Purchase Agreement and Implementation Agreement (shortly, ‘PPA’ & ‘IA’ respectively) both dated 09.01.2017 and, also from encashing the Bank Guarantee No. 11011000106 dated 13.11.2016 issued by the Bank Asia Limited for an amount of USD 10,00,000 (one million) in favour of the respondent no. 2 (annexure-F) during pendency of the international commercial arbitration to be commenced between the parties.

2. The fact of the case, briefly, is that the petitioner no. 1 is a ‘special purpose vehicle (SPV)’ private company limited by shares incorporated under the laws of Bangladesh (hereinafter referred to either as the petitioner no. 1 or as the company) and the petitioner no. 2, Sun Edison Energy Holding (Singapore) Pte Ltd (Sun Edison), is a company incorporated under the laws of Singapore. The company is established by its promoter, the petitioner no. 2, in order to carry out the works of development of a 200MW (AC) Grid Tied Solar Park on Build-Own-Operate (BOO) basis for 20 years at Teknaf, Cox’s Bazar, Bangladesh (“Project”). On 06.10.2014 the petitioner no. 2 submitted an unsolicited proposal to the respondent no. 3 (the Secretary, Ministry of Power, Energy and Mineral Resources) who along with respondent no. 1 (Bangladesh Power Development Board) (BPDB), approved the said proposal. Thereafter, the respondent no. 1 issued a Letter of Intent (LOI) on 21.10.2015 to the petitioner no. 2, who on 25.10.2015 accepted the LOI. Then, the petitioner no. 2 incorporated the petitioner no. 1 in Bangladesh in the year 2016 to implement the project. The estimated investment for the project was US$300 million and once built, it would be the biggest ever solar based electricity generation plant in Bangladesh. As per the terms of the LOI, the company then submitted a performance security deposit through Bank Guarantee No. 11011000106 dated 13.11.2016 (“Bank Guarantee”) issued by Bank Asia Ltd, a scheduled Bank in Bangladesh (proforma respondent no. 5) for an amount of USD 10,00,000.00 (USD one million) to the respondent no. 2 (Secretary of the BPDB). The respondent no. 1 represented by the respondent no. 2 thereafter executed a Power Purchase Agreement (PPA) on 09.01.2017 with the company with a view to authorizing the petitioner to initiate construction of the Project. It is stated that, under the terms of the PPA, the company is under obligation to complete the construction of the project within 18 months from the signing of the PPA and when the company was ready to initiate the construction works of the project at Teknaf, Cox’s-Bazar, upon obtaining all the financial supports from the financiers, it experienced extreme difficulty microaggressing with the project, because a massive number of Rohingyas took refuge around the project area at Teknaf, Cox’s Bazar, and eventually when the company realized that it would not be possible to complete the construction of the project within the timeline stipulated in the PPA, on 05.10.2017 the company informed the respondent no. 2 of force majeure events with a request to grant an extension for 12 months of all the project related milestones. Thereafter, instead of granting an extension to the company, the respondent no. 2 issued a “BPDB Notice of Default” on 15.10.2017 upon the company informing that it has failed to achieve the ‘Financial Closing’ and this resulted in a “Company Event of Default”.

3. It is stated that thereafter the parties sat together on various times to discuss how to mitigate the problem and continue with the PPA. The company even attempted to search for new land all around Bangladesh and conducted various feasibility studies. However, it could not manage any other suitable properties within such short period. The company at all material times kept the respondent no. 1 informed about its activities in various progress update meetings held with the respondent no. 1. Instead of acknowledging such diligent exercises and efforts of the company, the respondents issued a “Notice of Intent to Terminate” dated 05.04.2018 upon the company informing that it has failed to cure the default. Thereafter, the respondent no. 2 requested the company on 26.04.2018 to extend the tenure of the Bank Guarantee and, accordingly, the company extended the tenure of the Bank Guarantee till 12.05.2019. On 22.05.2018, the company submitted its reply to the respondent no. 2’s “Notice of Intent to Terminate” having stated the reasons for its failure to make progress and requested the respondent no. 2 to schedule an official site visit to understand the gravity of the problem. However, when the respondent nos. 1 and 2 neither made any response to such reply dated 22.05.2018 of the company, nor did they arrange any site visit to the project area to understand the matter, the company again sent a letter dated 06.06.2018 to the respondent no. 2 requesting it to extend the time period of the project and also to allow the petitioners to change the location of the project site, but the respondent nos. 1 and 2 did not make any response to such request of the company. Finding no other alternative, the foreign lawyer of the company, Squire Patton Boggs, issued a notice of dispute dated 02.07.2018 upon the respondent no. 2 having requested to arrange a consultation meeting between the parties so that the parties can attempt, in good faith, to settle the dispute within 30 days of the date of the said letter. Upon receiving no response from the respondents, the aforesaid foreign lawyer of the company issued another notice dated 01.08.2018 upon the respondent no. 2 informing that the company had nominated Mr. Ismael Guerrero and requested the respondents to appoint its representative so that they can sit together and settle the dispute with a cautionary note that if the dispute is not resolved by the referral to CEO by 16.08.2018, then the company will have no choice but to refer the dispute for arbitration. Since the respondents did not co-operate and/or try to resolve the dispute, the company felt that the arbitration is the ultimate solution for resolving the dispute, and since the company is under the apprehension that the respondents may terminate the PPA & the IA at any time and encash the Bank Guarantee in course of processing the arbitration, the respondents are required to be restrained by way of an interim injunction from wrongfully terminating the PPA & the IA and encashing the Bank Guarantee. Hence, the petitioners have approached this Court.

4. The respondent nos. 1 & 2 (BPDB) and the respondent no. 4 (Power Grid Company of Bangladesh) by filing affidavits contested this case. Their common contentions are that the PPA was signed on the understanding that the company shall finance, build, own and operate a 200MW Grid Tied Solar Park for a period of 20 years at Teknaf, Cox’s Bazar, Bangladesh and subsequently sell to the respondent no. 1 (BPDB) electricity from the project on a “no electricity - no payment” basis. If the petitioner fails to achieve “Financial Closing” by the “Required Financial Closing Date” of 08.10.2017, which was the date nine months from the effective date of the PPA, it shall constitute an “Event of Default”. A key component of the company’s obligations for the implementation of the project was the acquisition of land for the “Site” in Teknaf, Cox’s Bazar at its own cost and initiative. This requirement was set out in the project approval dated 15.10.2015 and in the PPA and IA. By mid-August 2017, it was apparent that the company would not be able to achieve Financial Closing by 08.10.2017 or commercial operation by the required commercial operation date of 08.07.2018. Rather than conceding its impeding breaches, the company opportunistically seized upon the humanitarian assistance that Bangladesh provided to the Rohingya minority group fleeing from Myanmar to make a last minute claim of force majeure. It is stated that the company did not claim the presence of the Rohingya as a Political or Force Majeure Event until October 2017, just a few days before it was to miss the required ‘Financial Closing Date’. On 15.10.2017, by written notice the respondent no. 1 informed the company that it had failed to achieve Financial Closing by 08.10.2017 deadline, constituting an “Event of Default” and, therefore, exercised its contractual remedy to issue a “Notice of Default”. On 22.10.2017, a committee tasked with investigating the project status conducted a site visit and prepared a report containing that while the project required at least 600 acres, the company had submitted agreements for the intended sale and purchase of only 43 acres and there are no displaced persons at the designated site. On 12.12.2017, the respondent no. 1 informed the company that there was no existence of Rohingya adjacent to the project area and thus refused the company’s request for extension of the implementation period. Since the company could not take any corrective steps to cure the “Event of Default”, the respondent no. 1 issued a ‘Notice of Intent to Terminate’ on 05.04.2018. Over one month after the ‘Notice of Intent to Terminate’ was sent to the company, on 22.05.2018 the respondent no. 1 wrote that an alleged ongoing Force Majeure or Political Event had affected its ability to further the project at the designated project site and sought for relocation of the project site. On 06.06.2018, the company wrote to the respondent no. 1 requesting a change in the project site along with a prayer for extension to complete the project. On 01.07.2018, the respondent no. 1 rejected the company’s request to relocate. The very next day, on 02.07.2018, the company issued a Notice of Dispute and after a few days, the company filed the present arbitration application under Section 7A of the arbitration Act and obtained an interim Order of injunction. Thereafter, when the company as the claimant filed ICC arbitration Case No. 23904/TO against the respondent no. 1 before the International Chamber of Commerce (ICC), the respondent no. 1 filed its Written Reply and Counterclaim on 26.12.2018, and, now the entire matter is pending before the arbitral tribunal in Hong Kong.

5. Mr. Rokanuddin Mahmud, the learned Senior Advocate for the petitioner, at the very outset seeks this Court’s permission to denominate the terminology ‘Section’ employed in the PPA as “the Terms & Conditions” for avoiding confusion with the ‘Section’ of the Act of Parliament which would be used in making his submissions. Having found substance in the prayer, this Court allowed him to address ‘the Section of the PPA’ as ‘the Terms & Conditions of the PPA’ and, accordingly, henceforth the Sections of the PPA would be referred to as the Terms & Conditions No., and in short form as the T&C No., for avoiding confusion with the Section of the Act of Parliament to be used hereinafter. In other words, henceforth the provisions of the PPA would be referred to as the “Terms & Conditions No."- shortly, T&C No.

6. Mr. Rokanuddin Mahmud, the learned Senior Advocate appearing for the petitioner, thereafter, takes me thorough the “Notice of Intent to Terminate the PPA” dated 05.04.2018 and side by side the T&C Nos. 4.2, 4.4 (b), 16, 16A, 19.2 and 19.3 of the PPA, and submits that, since the delay for executing the project was caused due to a force majeure event, the company’s situation is protected under the T&C No. 16 of the PPA, inasmuch as the company had no control over the occurrence of the event, which the respondents were duly informed with a request for alternative solutions, but the respondents with an ulterior motive of passing the consultation timelines stipulated in T&C No. 4.4(b) of the PPA intentionally remained silent. In elaborating his above count of submissions, Mr. Mahmud submits that whenever a party to the PPA raises any issue invoking T&C No. 4.2, the other party is duty bound to sit together and take initiatives to resolve the issue amicably, but the BPDB, instead of sitting together with the company, whimsically and arbitrarily issued the purported “Notice of Intent to Terminate the PPA”. He submits that the issuance of the purported “Notice of Intent to Terminate the PPA” dated 05.04.2018 is illegal inasmuch as the said notice was issued in violation of the aforesaid provisions of the PPA.

7. The learned Senior Counsel then places before this Court the provision of Section 4 of the Foreign Private Investment (Promotion and Protection) Act, 1980, and submits that the petitioner no. 1, being a foreign company, deserves an equitable treatment by the respondents. He submits that as per the provisions enshrined in the aforesaid law of the land, the petitioners were entitled to get a response after informing as to the force majeure event, but the respondents did not bother to take into consideration the claim raised by the petitioners.

8. Be next refers to T&C No. 19.4 of the PPA, and submits that it is the arbitration clause of the PPA and its invocation is permitted only after exhausting the stages of (i) mutual discussions, (ii) referral to CEO and (iii) mediation by expert, and since at the time of filing this application under Section 7A of the arbitration Act, the respondent no. 1 was in the process of hurriedly terminating the PPA, the petitioners had no option other than to approach this Court with a prayer for restraining the respondents from terminating the PPA & the IA and also from encashing the Bank Guarantee, and since this Court exercised its power under Section 7A of the arbitration Act, pending the arbitration proceeding before the ICC, the Order should be in force, otherwise the arbitration proceeding shall be frustrated and the petitioners shall suffer irreparable loss and injury. He submits that the balance of inconvenience lies in favour of the petitioners inasmuch as if an Order of injunction is not granted, then the PPA as well as the IA will be terminated and the Bank Guarantee will be encashed and, ultimately, the very purpose of arbitration will be frustrated and, on the other hand, the respondents will not suffer any loss and injury if the tenure of the PPA & IA is extended and the Bank Guarantee is not encashed.

9. Mr. Rokanuddin Mahmud, thereafter, takes me through the Preamble, Sections 2(c), 2(k), 3, 7, 7A, 10, 42 and 45 of the arbitration Act, and submits that the scheme of enactment of the arbitration Act in the year 2001 upon repealing the arbitration Act, 1940 is to recognize and deal with the ‘international commercial arbitration’, and the lis between the parties being an ‘international commercial arbitration’, this Court must deal with the dispute giving a harmonious interpretation of Sections 2(c), 2(k), 3, 7, 7A, 10, 42 and 45 of the arbitration Act. Mr. Rokanuddin Mahmud, in elaborating his above count of submissions, argues that Section 7A of the arbitration Act, being a non-obstante provision of the arbitration Act, cannot be limited or excluded merely by Section 3 of the same Act. In a bid to buttress up his argument on the issue of the maintainability of this application on the ground of seat of arbitration being outside Bangladesh, he submits that not a single word has been employed by the Legislature prohibiting this Court to entertain application if the seat of arbitration is outside Bangladesh. He submits that Section 3 of the arbitration Act is a mere permissive provision, not a prohibitive provision inasmuch as while the provision states about application of the arbitration Act for the arbitration to be held in Bangladesh, it does not contain any express wordings making this Court incompetent to deal with the arbitration which will take place outside Bangladesh. In an effort to substantiate his submissions, Mr. Mahmud refers to the case of Bangladesh Air Service (Pvt) Ltd vs. British Airways PLC, reported in 17 BLD (AD) 249, and submits that according to the ratio decided therein, even if the contracting parties chose foreign forum under the supervision of foreign Court for arbitrating their disputes, the local Courts still retain the jurisdiction to decide the lis between the parties.

10. By referring to the cases of HRC Shipping Limited Vs. M.V. X-Press Manaslu and others reported in 12 MLR 265, KA Lalif Vs 01am International 13 BLC 457 and Drilltee-Maxwell Joint venture vs. Gas Transmission Company Limited (GTCL) and others, 21 BLC 122, Mr. Mahmud submits that it has been decided in these cases that an application under Section 7A of the arbitration Act is maintainable, even when the place of arbitration is outside Bangladesh. He continues to submit that very recently, in an unreported Judgment dated 03.09.2015 passed in the case of Lanco Infratech Limited vs. Power cell and another (Arbitration Application No. 19 of 2014), the High Court Division held that injunction cannot be granted on Bank guarantee in the light of the Judgment reported in 33 DLR (AD) 298, however, when challenging the said Judgment dated 03.09.2015, the said Lanco Infratech Limited moved the Hon’ble Appellate Division, the Apex Court, vide an Order dated 14.09.2015 passed in Civil Miscellaneous Petition No. 979 of 2015, was pleased to restrain the respondents from encashing the Bank Guarantee, and in another unreported Judgment dated 30.10.2017 passed in the case of Travel Trade Limited vs. Gulf Air Company GSC (Arbitration Application No. 2 of 2012), the High Court Division held that the Court has jurisdiction to intervene in relation to an agreement, which contains provision of ‘international commercial arbitration’ as provided in Section 2(c) of the arbitration Act.

11. By making the above submissions, the learned Senior Advocate for the petitioners, Mr. Rokanuddin Mahmud prays for restraining the respondents from (i) terminating the Power Purchase Agreement (Contract No. 10144) and the Implementation Agreement both dated 09.01.2017 and (ii) encashing the Bank Guarantee issued by the Bank Asia Limited for an amount of USD 10,00,000 (one million) in favour of the respondent no. 2 during pendency of the international commercial arbitration.

12. On the contrary, Mr. M. Mahbubey Alam, the learned Senior Counsel appearing on behalf of the respondent nos. 1 & 2, commences his submissions by contending that he does not want to proceed with the factual aspects of this case, because he wishes to get this application rejected only on the ground of maintainability. However, without being prejudiced, merely for the sake of rebuttal of the factual aspects contended by the petitioners' side Mr. Alam refers to the letter dated 05.10.2017, by which the petitioners had informed the respondents about force majeure event, and side by side the T&C No. 16.2a(i) and submits that as per the said provision, the company was under a legal obligation to inform the respondents within a maximum of three days of occurrence of the so-called force majeure event, but the company notified the respondents about the force majeure event after about one year of the occurrence, for, as he contends, the Rohingya entered into this country in the early part of the year 2017. Mr. Alam submits that although the company was not competent to raise the issue of force majeure event in the manner as has been adopted by the company by writing a usual letter to the respondents about the matter only 10 (ten) days before the Financial Closing, nevertheless, after issuance of the Notice of Default, when the company expressed their desire to sit with the respondents, the respondents responded to their call and sat together and after having discussion with the company when the respondents found out that the company is not in a position to achieve Financial Closing by 08.10.2017 towards commencing the commercial operation of the project, only then, the respondents as per the provision of T&C of the PPA proceeded towards issuance of “Notice of Intent to Terminate the PPA”.

13. By referring to the T&C No. 19.4(h) of the PPA, he submits that since the parties agreed in the PPA not to initiate any proceedings or to file any action/suit in any Court of competent jurisdiction or before any judicial or other authority arising under, out of, in connection with or relating to the PPA, whether or not any such dispute has been referred to arbitration under T&C No. 19.4(a), and since the arbitration is to be conducted at the Hong Kong International arbitration Centre in Hong Kong as per the ICC Rules, the company by purposefully violating the law, has filed this application knowing fully well that this Court is not competent to pass the interim Order of injunction. He argues that since an arbitral tribunal is already in existence and in seisin of the matter which is registered as ICC arbitration Case No. 23904/TO, and since in pursuance of T&C No. 19.4(g) of the PPA, such arbitral Tribunal has the power to pass any interim order or protection as the arbitral tribunal may consider necessary with respect to the subject matter of the dispute or any ancillary claim referred to it, this Court has no jurisdiction in the matter. He submits that since it is an admitted position that both the parties are presently before the arbitration tribunal which is competent to pass any type of Order, including passing an Order of injunction against encashment of the Bank Guarantee and cancellation of the PPA, it was the duty of the petitioners to withdraw this application, right after the moment they have appeared in the arbitration forum.

14. By referring to the case of Uttara Bank Vs Macneill & Kilburn 33 DLR (AD) 298, the learned Senior Advocate submits that encashment of a Bank Guarantee cannot be restrained by an Order of injunction. He emphatically submits that the present application is liable to be rejected only on this ground alone.

15. Mr. Alam then takes me through the provisions of Section 3 along with Sections 45, 46 and 47 of the arbitration Act and submits that where a foreign arbitration forum has passed any award and requires to be executed in Bangladesh, the Legislature has intended to allow the Court to deal only with the aforesaid matters by specifically spelling about it in Section 3 of the arbitration Act. In elaborating his above count of submissions, the learned Senior Counsel submits that in Section 3 of the arbitration Act, the Legislature has categorically made it clear that apart from the needs enumerated in Sections 45, 46 and 47, there is no other necessity of use or application of any provisions of the arbitration Act in an arbitration matter which is being/has been dealt with by the foreign tribunal. He emphasizes that had the Legislature intended to apply any other provision of the arbitration Act, it would have been stated in Section 3 as has been mentioned therein about Sections 45, 46 and 47 of the arbitration Act In support of his submissions with regard to the jurisdiction of this Court, the learned Senior Counsel refers to the cases of (1) Unicol Bangladesh Vs Maxwell 56, DLR (AD) 166, (2) Uzbekistan Airways Vs Air Spain Ltd 10 BLC 64 and (3) STX Corporations Ltd Vs Meghna Group LEX/BDHC/0128/2011 : 64 DLR 550.

16. By putting forward the above submissions, the learned Senior Advocate for the respondent nos. 1 & 2 prays for discharging the Rule with exemplary costs.

17. After hearing the learned Advocates for the petitioners and the respondents, on perusal of the petitioners' instant application as well as the respondents' affidavits together with their annexures and upon reading the relevant laws and citations, I find that it has been imperative for this Court to adjudicate upon the issue of maintainability, at first. In other words, the core issue to be adjudicated upon by this Court is whether this Court is competent to entertain an application under Section 7A of the arbitration Act arising out of a dispute which has been agreed to by the contracting parties to be resolved by the Foreign arbitration Tribunal and, secondly, whether this Court is empowered to stop encashment of a Bank Guarantee by issuing on an Order of injunction in an application under Section 7A of the arbitration Act.

18. In my consideration, in order to comprehensively adjudicate upon the issue as to competency of this Court to entertain an application under Section 7A of the arbitration Act arising out of a foreign arbitration, 1 should know (i) the definition of the term “arbitration” and its origin, (ii) the scheme of enactment of the arbitration Act, 2001 upon repealing the previous law, (iii) the meaning and the significance of the definition of the terminologies ‘domestic arbitration’, ‘international commercial arbitration’, ‘foreign arbitral tribunal’ and ‘foreign arbitral award’ in arbitration, and the involvement of the Court in the aforesaid matters, in other words, what are the roles to be played or functions to be performed by the Courts in the aforesaid matters and (iv) what are the opinions expressed by this Court as to the powers, duties and responsibility of the Court in dealing with the applications filed under various Sections (such as Section 7A, 10, 12 etc) of the arbitration Act.

19. Let me start with the definition of the word “arbitration” provided in Section 2(m) of the arbitration Act which reads as follows:

2(m). “Arbitration” means any arbitration whether or not administered by permanent institution.

20. From a reading of the definition provided in the statute, it is difficult for anyone to understand the meaning of the terminology “arbitration”. Therefore, I sought for its meaning in the dictionary. The Black’s Law Dictionary inscribes the word ‘arbitration’ with the following meanings:

Arbitration: A dispute-resolution process in which the disputing parties choose one or more neutral third parties to make a final and binding decision resolving the dispute. The parties to the dispute may choose a third party directly by mutual agreement, or indirectly, such as by agreeing to have an arbitration organization select the third party.

21. John P.H. Soper defines arbitration in his book A Treatise on the Law and Practice of Arbitrations and Awards 1 (David M. Lawrence ed., 5th ed. 1935), in the following wordings:

“Arbitration may be defined as a method for the settlement of disputes and differences between two or more parties, whereby such disputes are submitted to the decision of one or more persons specially nominated for the purpose, either instead of having recourse to an action at law, or, by order of the Court, after such action has been commenced.”

22. So, upon taking into consideration the definition given in Section 2(m) of the arbitration Act, the meaning of the arbitration inscribed in the Black’s Law Dictionary and in the text book, it can be said that arbitration is a legal technique for the resolution of disputes outside the Courts, wherein the parties to a dispute refer it. to one or more persons who are known as arbitrators, ‘arbiters’ or ‘arbitral tribunal’ by whose decision/award they agree to be bound.

23. Let me now see whether it originates from the foreign country or is it a home-grown concept. In narrating the origin and concept of arbitration in England, William Holdsworth, in his book A History of English Law 187-88 (A.L. Goodhart & H.G. Hanbury eds., 1964) illustrates that;

“Recourse to arbitration was common in medieval England. But the courts did not look very favourably on a practice which tended to diminish their jurisdiction; and when they were asked to enforce the awards made by arbitrators against recalcitrant parties to an arbitration, they got many opportunities of laying down rules as to the conditions of the validity of these awards, as to the modes of entering them, and as to the conduct of arbitrators, which, at the end of the medieval period, were beginning to make the law as to arbitrators a very technical and not a very reasonable body of law. Its complexity was increased in the succeeding centuries; and, though some of the less reasonable medieval rules were eliminated, it became more elaborate and remained very technical, whilst the growing complexity in the law of pleading made it increasingly difficult to be sure that a disputed award would be enforced. In 1698 the Legislature made a salutary change in the law as to the method of entering awards, but it was not till the legislation of the 19th century that the manifold complexities and irrational technicalities of the common law as to arbitration were reformed, and the law assumed its modem form.”

24. The people of this part of the world (sub-continent) are acquainted with the concept of arbitration from time immemorial. In good old days, disputes between private individuals used to be placed before ‘Shalish’, ‘Panchas’ and ‘Panchayats’. Likewise, commercial matters were decided by ‘Mahajans’ and ‘Chambers’. Formal arbitration proceedings, however, had come into existence after the Britishers started commercial activities in India. The provisions relating to arbitration were found in the Code of Civil Procedure, 1859 (CPC) and, then, in subsequent CPCs. Protracted, time-consuming, atrociously expensive and complex Court-procedures impelled the commercial world to an alternative, less formal, more effective and speedy mode of resolution of disputes by Judges of choice of the parties which culminated into passing of an arbitration Act. A full-fledged law pertaining to arbitration in India was the arbitration Act, 1899. Thereafter, in order to cope with the burgeoning issues relating to arbitration, an amended law was passed in 1940, known as the arbitration Act, 1940. Experience, however, belied expectations. Proceedings became highly technical and thoroughly complicated. The provisions of the arbitration Act, 1940 made ‘lawyers laugh and litigants weep’. Observations were being made inside/outside the Courts to amend the law by making it more responsive to contemporary requirements. Moreover, apart from arbitration, conciliation has been getting momentum and worldwide recognition as an effective instrument of settlement of disputes. There was no composite statute dealing with all matters relating to arbitration and conciliation. The United Nations Commission on International Trade Law (UNCITRAL) adopted a Model Law in 1985 on International Commercial arbitration. The General Assembly of the United Nations recommended its member-States to give due consideration to the Model Law to have uniformity in arbitration procedure which resulted in passing of the arbitration Act, 2001.

25. The intent of the Legislature has vividly been couched in the Preamble of the Act, 2001, which reads as follows:

An Act to enact the law relating to international commercial arbitration, recognition and enforcement of foreign arbitral award and other arbitrations.

26. From a plain perusal of the Preamble, it is my understanding that by enactment of the arbitration Act, 2001, the Legislature sought to make a perfect law of arbitration, containing both the substantive and procedural provisions, upon consolidating and amending the law relating to domestic arbitration, international commercial arbitration, arbitration tribunal, arbitral award, foreign arbitral tribunal, foreign arbitral award and enforcement of domestic as well as foreign arbitral awards.

27. While the expression ‘domestic arbitration’ can be easily understood from its literal meaning that it is a form of the ADR where one or more persons are appointed to hear a case that takes place within one jurisdiction, the meaning of other expressions, namely, arbitration tribunal, arbitral award, international commercial arbitration, foreign arbitral tribunal, foreign arbitral award and enforcement of domestic as well as foreign arbitral awards, have been codified in different sub-Sections of Section 2 of the arbitration Act. Out of the above expressions, I would dwell only on two expressions for the reasons to be known at a later stage. They are ‘international commercial arbitration’ and ‘foreign arbitral award’. At this juncture, I would venture to look at the statutory definition of the expression “international commercial arbitration” embodied in Section 2(c) of the arbitration Act, which runs as follows:

(c) International Commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in Bangladesh and where at least one of the parties is-

(i) an individual who is a national of, or habitually resident in, any country other than Bangladesh; or

(ii) a body corporate which is incorporated in any country other than Bangladesh; or

(iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than Bangladesh; or

(iv) the Government of a foreign country;

28. It is the core feature of the ‘international commercial arbitration’ that ‘at least one of the parties’ to the arbitration agreement requires to be a foreign national/entity. It means that either all the parties of an arbitration would be foreign nationals/entities or at least one party should be a foreign national/entity to come within the purview of the expression “international commercial arbitration”. However, this Section does not impose a condition that in order to constitute an ‘international commercial arbitration’, the place of arbitration should be in a foreign country.

29. Since, in this case, the promoter of the company is a foreign company in whose favour the Letter of Intent dated 21.10.2015 was issued by the respondents, thus, the dispute in question squarely falls within the definition of “international commercial arbitration” under Section 2(c) of the arbitration Act.

30. Next comes, the expression ‘foreign arbitral award’. The definition of ‘foreign arbitral award’ has been given in Section 2(k) of the arbitration Act, which is quoted below:

2(k). Foreign arbitral award means an award which is made, in pursuance of an arbitration agreement, in the territory of any state other than Bangladesh but it does not include an award made in the territory of a specified state.

31. From the above definition, on the one hand, while the meaning of the expression ‘foreign arbitral award’ can plainly be understood, on the other, it is comprehensible that our latest law on arbitration seeks to give recognition to an arbitration taking place or would take place outside Bangladesh. At this stage, I find it profitable to look at the provisions of Sections 42 and 45 of the arbitration Act. Section 42 of the arbitration Act runs as follows:

42. Application for setting aside arbitral award-

(1) …………………………………………

(2) The High Court Division may set aside any arbitral award made in an international commercial arbitration held in Bangladesh on the application of a party within sixty days from the receipt of the award.

32. From the expressions “international commercial arbitration held in Bangladesh”, it may reasonably be inferred that the ‘international commercial arbitration’ may be held both inside and outside of Bangladesh, because by using the words “…..held in Bangladesh” after the expression “foreign commercial arbitration”, the Legislature apparently meant that “international commercial arbitration” may also be held outside Bangladesh and, in that event, the said “international commercial arbitration” may be termed as “foreign arbitration”, because although there is no definition of ‘foreign arbitration’ in the arbitration Act, however, from a conjoint reading of the expressions discussed hereinbefore, all that I find about the foreign arbitration' is that an ‘international commercial arbitration’, the seat of which is outside Bangladesh, is to be meant as ‘foreign arbitration’. The basis of my above opinion is that the Preamble of this latest law does not merely vocalize about ‘international commercial arbitration’ and foreign arbitral award', rather the Legislature was mindful to provide the definitions of the aforesaid phraseologies which have been engraved in Section 2(c) & 2(k) of the arbitration Act respectively.

33. To substantiate the above proposition, now, the provisions of Section 45 of the arbitration Act may be looked at, which are reproduced below:

45. Recognition and enforcement of Foreign arbitral awards-(1) Notwithstanding anything contained in any law for the time being in force, subject to the provisions of section 46 -

(a) any foreign award which would be enforceable shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in Bangladesh

(b) a foreign arbitral award shall, on the application being made to it by any party, be enforced by execution by the Court under the Code of Civil Procedure, in the same manner as if it were a decree of the Court.

2 …………………………………………….

3 …………………………………………….

34. From a bare reading of the marginal note together with the provisions of Section 45 of the arbitration Act, it appears that the Legislature in specific and clearer wordings has given recognition to the foreign arbitral award, as has been heralded by it in the Preamble of the arbitration Act.

35. After being acquainted with the above provisions of the law of arbitration, now, a question comes up for consideration as to whether the arbitration Act, by giving recognition to the ‘international commercial arbitration’ and ‘foreign arbitral award’, has made the High Court Division competent to hear and determine any “international commercial arbitration”, irrespective of the venue of arbitration mentioned in the arbitration agreement. The answer thereto appears to me to be not a straightforward one, for, to examine the question posed above, I would need to look at the provisions of Sections 3, 7 and 7A of the arbitration Act. At first, Section 3 of the arbitration Act may be quoted, which runs as follows;

3. Scope-(1) This Act shall apply where the place of arbitration is in Bangladesh.

(2) Notwithstanding anything contained in subsection (1) of this section, the provisions of sections 45, 46, and 47 shall also apply to the arbitration if the place of that arbitration is outside Bangladesh.

(3) This Act shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

(4) Where any arbitration agreement is entered into before or after the enforcement of this Act, the provisions thereof shall apply to the arbitration proceedings in Bangladesh relating to the dispute arising out of that agreement.

36. From a minute reading of the marginal note and main provisions of Section 3 of the arbitration Act, it appears to me that this Section is not about jurisdiction of the Courts. Section 3 of the arbitration Act makes a general statement about the ‘scope’ of application of the provisions of arbitration Act. My humble understanding about the provisions of in Section 3 of the arbitration Act is that since there is no prohibitory wordings to apply the provisions of the arbitration Act for the foreign arbitration and foreign arbitral tribunal, nor is there any statement to the effect that the provisions of the arbitration Act shall ‘only’ be applicable in case of ‘international commercial arbitration’ taking place in Bangladesh, the relevant provisions of the arbitration Act may be borrowed and applied by the foreign arbitral tribunal, if the parties of the arbitration so agree. And our High Court Division may also apply the necessary provisions of the arbitration Act for the foreign arbitration such as, Sections 7A and 10 in addition to the provisions of Sections 45 to 47 of the arbitration Act. In other words, while ‘the foreign arbitration tribunal’ is free to observe, follow and apply our law, our High Court Division may use the relevant provisions of the arbitration Act, namely, Sections 7A and 10 on top of applying the provisions of Sections 45 to 47, in an arbitration which would take place or is being held in a foreign country, for, the wordings of Section 3 of the arbitration Act do not seek to oust the jurisdiction of the High Court Division in relation to an arbitration proceeding where the place of arbitration is outside Bangladesh.

37. The Legislature by engraving the word ‘scope’ in the marginal note of Section 3 of the arbitration Act sought to mean that while the provisions of this law shall be mandatorily applied to ‘domestic arbitration’, ‘international commercial arbitration’ which would take place in Bangladesh and execution of the award passed by the foreign arbitral tribunal as provided in Sections 45, 46 & 47, the provisions of the arbitration Act may also be applied for foreign arbitration, if the parties to the foreign arbitration in their arbitration agreement makes such stipulation. Thus, clearly this Section is about the ‘arbitration’, and it does not seek to state anything about the business or role of the ‘Court’, as evident from the Bengali wordings   (for the said ‘arbitration’) as occurs in Section 3 of the arbitration Act. So, it is crystal clear that the aforesaid ‘limitation’ is meant for mandatory application of the provisions of the arbitration Act for arbitration, arbitrators, arbitration proceedings, arbitration award, arbitration tribunal; the limitation is in no way meant to be applicable for the Courts.

38. In other words, the provisions of this Act are enacted by the Parliament having aimed at governing the different provisions starting from making of the ‘arbitration agreement’ right up to the end of arbitration, which include initiation of arbitration, appointment of arbitrators, constitution of arbitration tribunal, arbitral award and its execution. Section 3 seeks to state that the provisions of the arbitration Act are the guidelines for arbitration; i.e. for arbitration tribunal (not for, Courts), within Bangladesh territory, as the foreign arbitration tribunals are formed and their businesses are conducted as per the laws of the foreign countries or international bodies, such as ICC and other International Commercial Chambers/forum. Thus, there is apparently no mentioning about conferring or ousting of the jurisdiction of the High Court Division or the Court in Section 3 of the arbitration Act.

39. With the above conclusion, I have to search for the provisions which confer or limit the jurisdiction of the Courts in arbitration matters, and I find Section 7 of the arbitration Act to be such a provision. Section 7 of the arbitration Act reads as follows:

7. Jurisdiction of Court in respect of matters covered by arbitration agreement:- Notwithstanding anything contained in any other law for the time being in force, where any of the parties to the arbitration agreement files a legal proceedings in a Court against the other party, no judicial authority shall hear any legal proceedings except in so far as provided by this Act.

40. From the marginal note of Section 7 of the arbitration Act, it appears that this Section deals with the jurisdiction of the Courts and from a perusal of its substantive provision, it becomes manifested that the provisions of Section 7 of the arbitration Act have sought to narrow down the jurisdiction of the High Court Division and the Court. Section 7 of the arbitration Act seeks to oust ‘any other law’, and since the Legislature has employed the word ‘shall’ in the expressions ‘no judicial authority shall hear any legal proceedings’, the provisions of Section 7 is to be applied by the Courts mandatorily. So, it means that ‘parties to the arbitration’ are barred by the provisions of Section 7 of the arbitration Act to file any legal proceeding in any Court. However, there is permissive space for ‘the parties to the arbitration’ to file legal proceedings, about which the arbitration Act makes provisions to approach the Courts.

41. The legal proceedings permitted by the arbitration Act are;

(i) application under Section 7A for obtaining interim order,

(ii) application under Section 10 for referring the dispute to the arbitration tribunal and thereby stay the proceedings in the Court,

(iii) application under Section 12 for appointment of arbitral tribunal,

(iv) application under Section 20 before the High Court Division for determining the jurisdiction of arbitral tribunal,

(v) application under Section 21(4) before the District Court for enforcement of an interim order passed by the tribunal,

(vi) application under Section 42 for setting aside arbitral award,

(vii) application under Sections 44 and 45 before the District Court for enforcement of domestic arbitral award and foreign arbitral award respectively

(viii) appeal under Section 48 before the High Court Division and

(ix) application under Section 50 before the District Court for arbitrators' remuneration.

42. Now, if the provisions of the Preamble, Sections 2(c), 2(k), 3, 7, 10, 42 and 45 of the arbitration Act is read concurrently, it would be found that the Legislature’s intention was to endow the people of this country with a complete code relating to both types of arbitration matters, namely, ‘domestic arbitration’ and ‘international commercial arbitration’/‘foreign arbitration’, with as much provisions as they could comprehend at the time of enactment of the law. However, the irony is that the Legislature’s effort of providing a full code on arbitration matters subsequently surfaced to still be a bit incomplete, for, while Section 45 of the arbitration Act in clearer terms states that the award of the foreign arbitration would be enforced in Bangladesh subject to fulfillment of certain conditions, it apparently overlooked to mention that ‘international commercial arbitration’ held outside Bangladesh (i.e. the foreign arbitration) shall also enjoy the benefit of enactment of this latest Act, particularly (i) in dealing with interim Orders and (ii) for keeping in abeyance any litigation during pendency of any foreign arbitration regarding the same dispute.

43. The apparent complete code of arbitration Act, 2001 triggered multifarious interpretations on Sections 3, 10 and 12 of the arbitration Act because of having several ambiguities with regard to ‘international commercial arbitration’. Then, the Parliament incorporated Section 7A in the said Act in the year 2004. Let me, therefore, look at the provisions of Section 7A of the arbitration Act, 2001, which read as follows:

7A. Powers of court and High Court Division to make interim orders:-(1) Notwithstanding anything contained in section 7 unless the parties agree otherwise, upon prayer of either parties, before or during continuance of the proceedings or until enforcement of the award under section 44 or 45, in the case of international commercial arbitration the High Court Division and in the case of other arbitrations the court may pass order in the following matters:-

(a) To appoint guardian for minor or insane to conduct on his/her behalf arbitral proceedings.

(b) To take into interim custody of or sale of or other protective measures in respect of goods or property included in the arbitration agreement.

(c) To restrain any party to transfer certain property or pass injunction on transfer of such property which is intended to create impediment on the way of enforcement of award.

(d) To empower any person to seize, preserve, inspect, to take photograph, collect specimen, examine, to take evidence of any goods or property included in arbitration agreement and for that purpose to enter into the land or building in possession of any party.

(e) To issue ad interim injunction;

(f) To appoint receiver; and

(g) To take any other interim protective measures which may appear reasonable or appropriate to the court or the High Court Division.

(2) The similar powers of the court or the High Court Division as are available in relation to any other legal proceedings shall be available to the court or the High Court Division as the case may be, while passing orders under subsection (1).

(3) Before passing order upon application received under sub-section (1) the court or the High Court Division shall serve notice upon the other party:

Provided that if the court or the High Court Division is satisfied that in the event the order is not passed instantaneously, the purpose of making interim measures shall be frustrated, there shall be no necessity of serving such notice.

(4) If the court or the High Court Division is satisfied that arbitration Tribunal has no power to initiate proceedings in any matter under sub-section (1) or the arbitration Tribunal has failed to pass order in such matter, the Court or the High Court Division as the case may be, shall be competent to pass order under this Section.

(5) The Court or the High Court Division if considers appropriate shall be competent to cancel alter or amend the order passed under this section.

(6) Where any arbitration Tribunal or any institution or person empowered in any matters relating to orders passed under sub-section (1) passed any order in such matters, the order passed by the court or High Court Division as the case may be, in the same matter, shall be entirely or the relevant part thereof, inoperative.

44. From a minute reading of the above provisions, it appears to me that the intention of the Legislature was to empower the High Court Division and District Courts to pass necessary interim Order/s of different nature, which are enumerated in clauses (a) to (g) of sub-Sections (1) of Section 7A of the arbitration Act. The Legislature in this newly incorporated provision not only enlisted the matters in which the Courts are competent to pass the interim Order/s, it also did not forget to arm the Courts with the ‘power’ which are usually available to the Courts in dealing with the interim/interlocutory Oder/s, as evident from the provision of sub-Section (2) of Section 7A of the arbitration Act. The Legislature also did not overlook to mention the purpose of empowering the Courts in passing the interim Order/s, by specifically stating that in order to keep the interim measures intact, the Courts will have the mastery of passing interim Order/s without even hearing the other parties, if the situation permits, as can be understood from the Proviso to sub-Section (3) of Section 7A of the arbitration Act. And, by incorporating the provision of sub-Section (4) of Section 7A of the arbitration Act, the Legislature vested a superior class of power in the Courts by spelling out that, where the arbitration tribunal is either powerless or has failed to exercise its power to pass any interim Orders, the Courts shall have the dominion to pass the necessary Order/s. The Legislature, then, by incorporation of sub-Section (6) of the Section 7A of the arbitration Act makes it clear that power of the Courts in passing the interim Order/s are vested in the Courts to help/assist the arbitration tribunal, meaning that the provisions of Section 7A have been inserted in the arbitration Act in aid of the arbitration tribunal, not to disturb the functions of the arbitration tribunal.

45. The above examine of Section 7A of the arbitration Act leads me to find out whether this Court is competent to exercise the above powers in a scenario where the seat of arbitration is outside Bangladesh. In other words, whether this Court is competent to pass an interim Order to assist a foreign arbitration tribunal. In quest for the answer, I went through the provisions of Section 7A of the arbitration Act line by line and it appears to me that since in sub-Section (1) of this newly inserted Section 7A, the Legislature has employed the expression “until enforcement of the award under Section 45”, therefore, an interim Order may be passed by the High Court Division to help the foreign tribunal till the time a foreign arbitral award is enforced. In other words, in case of a foreign arbitration, from the time of initiation of an international commercial arbitration (foreign arbitration) up to the period of enforcement of the award passed by the foreign arbitration tribunal, the High Court Division is competent to pass any interim Order centering around the said foreign arbitration.

46. After the above explorations on the scheme of the arbitration Act, 2001 in tandem with the origin of arbitration, definitions of domestic arbitration, foreign arbitration, foreign arbitral award, functions to be performed by the Courts in a foreign arbitration matter, I should now examine the ratio laid down by this Court in the cases referred to, and relied on, by the parties of this matter.

47. Let me, at first, advert to the case-laws referred to by the learned Advocates for the petitioners. In the case of Bangladesh Air Service (Pvt.) Ltd Vs British Airways PLC 17 BLD (AD) 249, there was a stipulation in the contract that any dispute between the parties shall be resolved through the law of arbitration of England (Arbitration Act, 1950). However, when the Bangladeshi-party approached the Civil Court of Bangladesh for appointment of an arbitrator, the British- party questioned the jurisdiction of the Bangladeshi- Court to appoint an arbitrator. After hearing, the trial Court held that the jurisdiction of the Court was not ousted, but the High Court Division by exercising its revisional jurisdiction set aside the trial Court’s Order holding that the Courts in Bangladesh have no jurisdiction over an arbitration which is agreed by the parties to be held outside Bangladesh, and the same was upheld by the Appellate Division by an illuminating Judgment authored by his Lordship Justice Mustafa Kamal upon a masterly analysis of all the available case laws of the period. Upon reading the entire Judgment, I find that this Judgment was delivered on 08.05.1997, when the arbitration Act, 2001 was not enacted and, secondly, revealed that the learned Advocate for the petitioners, by merely quoting a few lines from Paragraph 23 of the Judgment, is endeavouring to make out a favourable case. The Appellate Division had granted leave in the said case on four grounds, and the No. 1 ground was whether the High Court Division failed to consider the true import of Exception 1 to Section 28 of the Contract Act, 1872. In dealing with this ground, at first, the Hon’ble Appellate Division embarked on the question of ‘proper law of contract’, which was raised by the learned Amicus Curie as an ancillary point, as evident in Paragraphs 14 to 18 of this reported case and, then, examined the No. 1 ground which is imprinted in Paragraphs 19 to 24. In paragraph 23 of this case, the Apex Court observed that since any party to an arbitration is free to file a Damage Suit, the local Courts retain the jurisdiction to decide the lis between the parties and, in that circumstance, the defendant would also be entitled to seek stay of the suit. I find that neither the aforesaid observations made in Para 23 do help the petitioners, nor the overall ratio laid down by the Apex Court in this case nor the ultimate result of the case do assist the petitioners in any manner.

48. In the case of HRC Shipping Ltd Vs MV X- press Manaslu and other 12 MLR (HC) 265 (2007), when the plaintiff (HRC Shipping Ltd) filed an Admiralty Suit for payment of compensation for loss of cargo and containers, the defendant nos. 5 & 6 (MV X- press Manaslu and Sea Consortium Pvt. Ltd respectively) filed an application for an Order of stay of all further proceedings in the Admiralty Suit and, thereby, for referring the matter to the arbitration to be held in London. The High Court, Division upon considering all the relevant laws and decisions, stayed the litigation pending before it holding that the provisions of Section 10 of the arbitration Act are applicable in an arbitration which is taking place outside Bangladesh, as Section 3 of the arbitration Act did not exclude its applicability for a foreign arbitration. In my opinion, since the factual and legal issues of this cited case are different from that of the present case, the ratio laid down in the cited case is not strictly applicable here in this case. However, since this cited case was decided on 30.06.2006 which is well after incorporation of Section 7A on 24.01.2004 in the arbitration Act, and since the applicability of the provisions of the arbitration Act was raised before the Court, the Court could have undertaken the surgery of the newly inserted provisions of Section 7A(1) of the arbitration Act by which the Legislature categorically ousted the provisions of Section 7 of the arbitration Act towards enabling the parties to a. foreign arbitration to apply for interim Order/s of any nature before the High Court Division of Bangladesh Supreme Court at any time before the foreign arbitral award comes to an end through its execution, in substantiating its reasoning in favour of applicability of the provisions of the arbitration Act with an analogy that when the parties to a foreign arbitration have been authorized to invoke at least one provision (such as, Section 7A of the arbitration Act) of the arbitration Act in specific terms, the objection as to applicability of other provisions of the arbitration Act, including the provision of Section 10 of the arbitration Act, gets repelled.

49. In the case of KA Lalif Vs 01am International 13 BLC 457, the application under Section 7A of the arbitration Act was disposed of keeping the sale proceeds in the custody of the Registrar of the Supreme Court of Bangladesh so that following disposal of the foreign arbitration, it can be used. But in the cited case, there was no issue as to the applicability of the provisions of the arbitration Act and, therefore, I do not find this cited case to be of any assistance for adjudication of the case in hand.

50. In the case of Drilltee-Maxwell Joint Venture Vs GTCL 21 BLC 122, this Court allowed the application under Section 7A of the arbitration Act preserving the Bank Guarantees till disposal of the arbitration by the foreign arbitral tribunal. However, since in this cited case, no issue was raised as to the applicability of the provisions of the arbitration Act, I do not find any usefulness of referring to the aforesaid case here in this case.

51. In the unreported case of LANCO Infratech Ltd. Vs Power Cell, Power Division of Ministry of Power, Energy and Mineral Resources (Arbitration Application No. 19 of 2014), the Court did not have the occasion to deal with the applicability of the provisions of the arbitration Act, and the unreported case of Travel Trade Ltd Vs Gulf Air Company GSC (Arbitration Application No. 2 of 2012) was an application under Section 12 of the arbitration Act and, therefore, the observations, ratio and the results of these two unreported cases do not fit in with the facts and circumstances of the present case.

52. I would now take up the cases referred to by the learned Advocate for the respondents.

53. In the case of Unicol Bangladesh Vs Maxwell Engineering Works Ltd 56 DLR(AD) 166, the plaintiff obtained an Order of ad interim injunction on 03.01.2001 (before enactment of the arbitration Act, 2001. Hence, evidently, long ago of the incorporation of Section 7A in the arbitration Act) restraining the defendant no. 1 from proceeding with arbitration which was going on in Singapore. In this cited case, the Appellate Division opted to refrain from examining the issue of competency of the trial Court as to entertaining an application for injunction in a matter which was being dealt with by a foreign arbitration tribunal, mainly on the ground that the trial Court would examine the issue at the time of disposing of the application under Section 34 of the arbitration Act, 1940 (which is the corresponding provision to Section 10 of the arbitration Act, 2001).

54. In the case of Uzbekistan Airways Vs Air Spain Ltd 10 BLC 614, the plaintiff filed a suit claiming compensation from the defendant in the year 2003 (before the insertion of Section 7A in the arbitration Act) and when the defendant filed an application under Section 10 of the arbitration Act for staying all the proceedings of the suit, the trial Court rejected the application on the ground that Section 10 of the arbitration Act does not apply to foreign arbitral proceedings. The aforesaid Order of the trial Court was upheld by the High Court Division by this reported case and, subsequently, by the Appellate Division (CPLA No. 1112 of 2005) but, in upholding the aforesaid Order, none of the Divisions undertook examination as to whether Section 7A of the arbitration Act is applicable to foreign arbitration proceedings.

55. The case of STX Corporation Ltd Vs Meghna Group LEX/BDHC/0128/2011 : 64 DLR 550 is on the provisions of Section 7A of the arbitration Act. Although the Hon’ble Judge of the High Court Division took pain in considering almost all the case-laws of our jurisdiction together with a few case-laws of Indian jurisdiction on the issue of applicability of the provisions of the arbitration Act to the arbitration applications/cases filed before the High Court Division arising out of a foreign arbitration, but none of the learned Advocates of the contending parties placed the crucial pertinent provisions of Section 7A(1) of the arbitration Act (which is -“Notwithstanding anything contained in Section 7…. until enforcement of the award under Section 45,….. the High Court Division may pass order…..) before the Court.

56. I prefer to ignore the interpretations and ratio laid down by the Indian Courts on the various issues of arbitration in the Bhatia’s case - AIR(SC) 1432, Dozco’s case 2010(9) UJ 4521(SC), Venture Global Engineering Vs Satyam Computer Services 45CC (2008) 190 and in so many other cases, which were discussed by the Hon’ble Judges of our Court in dealing with a few cases under Sections 7A, 10 & 12 of the arbitration Act. The reason for opting to avoid the cases of Indian jurisdiction is that the language employed in the Indian arbitration Act is, in some provisions, different from the wordings used in our arbitration Act, as has been detected in course of adjudication upon the case of Corona Fashion Vs Milestone Clothing, reported in 15 ALR 38, 2019(1).

57. In all the referred cases of our jurisdiction, the interpretations (whether in favour of, or against, the application of the provisions of the arbitration Act in the foreign arbitration scenario) were apparently carried out by our Courts overlooking the scheme of amendment of the arbitration Act on 24.01.2004, by which Section 7A was incorporated in the arbitration Act. The most significant feature of Section 7A of the arbitration Act is that by coming into effect on 19.02.2004, it removed the limited nature of applicability of the provisions of the arbitration Act, as was prevalent in Section 7 of the arbitration Act, by heralding that the non-obstante clause of Section 7 of the arbitration Act would no longer be in operation. Given the status of Section 7 of the arbitration Act that it is the provision by which jurisdiction of the Courts regarding arbitration matters have been conferred upon the Courts, albeit only for dealing with the limited issues, having dictated the Courts not to hear any case regarding arbitration, except for the causes enunciated in the arbitration Act, my view is that incorporation of Section 7A in the arbitration Act by the Legislature on 24.01.2004 has obviously changed the jurisdictional footing of the Courts. More importantly, all the abovereferred cases were decided without taking into consideration the expression “Notwithstanding anything contained in Section 7…… until enforcement of the award under Section 45 ….. the High Court Division ….. may pass Order”, which is engraved in Section 7A(1) of the arbitration Act. Had it been the intention of the Legislature to keep the foreign arbitration out of the touch and grip of our Courts dealing with injunction, preservation or any other necessary interim orders, the Legislature would not have incorporated the words “until enforcement of the foreign arbitral award”.

58. In view of the fact that in all of the case-laws referred to by the parties of this case before me, the Hon’ble Judges of this Court did not have the opportunity to consider and examine the expressions “until enforcement of the foreign award” embodied in Section 7A(1) of the arbitration Act, the aforesaid case-laws lack persuasive and authoritative power for binding this Court to apply the ratio laid down therein and, therefore, the said Judgments having been given per incuriam, this Court is not bound to apply the ratio laid down therein. When any Judgment is passed by any Court in ignorance of the applicable laws either because of forgetfulness of the Hon’ble author Judge or due to ill-information about the applicable laws by the learned Advocate/s or for not making the relevant laws available before the Court, the decision should be held to have been given per incuriam and, consequently, it would not have legal force to bind the Courts to follow and apply the ratio laid down therein.

59. After overhauling the provisions of the Preamble, different sub-Sections of Section 2, Sections 3, 7, 7A, 10, 42 and 45 of the arbitration Act and upon over viewing and considering the case-laws on the arbitration Act of our jurisdiction, I find it to be useful to summarise my views by paragraphing the discussions and observations made in this Judgment. The aforesaid summary runs as follows:

1. Section 3 of the arbitration Act is a general statement about the ‘scope’ of applicability of the provisions of the arbitration Act for ‘the arbitration’; it does not make any statement about the functions or jurisdiction of the Court.

2. It is the Section 7 of the arbitration Act which deals with the issues of jurisdiction of the Courts. The position of Section 7 is superior than other provisions of the arbitration Act and other laws and till now it retains its aforesaid superiority, except in the case of passing the injunction Order, preservation Order and other interim/interlocutory Orders enumerated in clauses (a) to (g) of Section 7A(1) of the arbitration Act

3. Provisions of Section 7A of the arbitration Act being supernal, this newly inserted provision extended the jurisdiction of the Courts of Bangladesh investing the power of issuance of injunction Order, preservation Order and other interim Orders not only for the arbitrations taking place in Bangladesh, but also for the foreign arbitrations by clearly stating that “Notwithstanding anything contained in Section 7…… until enforcement of the award under Section 45…… the High Court Division…… may pass Order”.

4. The apparent purpose of the new enactment, as surfaced from the examine carried out in this Judgment, is that while the arbitration proceedings, both domestic and foreign, should be allowed to proceed with minimum interference from the Court, the Court, at the same time, should come forward to assist the foreign arbitration tribunal as and when needed, keeping in mind the scheme and purpose of enactment of the latest law on arbitration matters upon repealing the earlier arbitration Act, 1940 in an effort to harmonize with UNCITRAL Model Law.

5. The learned Advocates, who had conducted the hearing of the referred case-laws, had apparently spellbound the Hon’ble Judges of our Courts to keep them engaged only within the provisions of Section 3, by showing it as the source of ousting the jurisdiction of the Courts. And, that is how, they succeeded to obtain Judgments, sometimes in favour of application of the provisions of the arbitration Act and, at times, to its contrary. While a number of Hon’ble Judges who authored their verdicts against the applicability of the provisions of the arbitration Act to foreign arbitrations due to their oversight on the specific Section (namely, Section 7 of the arbitration Act) by which jurisdiction regarding arbitration matters has been vested in the Courts in addition to overlooking the pertinent provision of Section 7A(1) of the arbitration Act, the other Hon’ble Judges delivered their Judgments in support of applicability of the provisions of the arbitration Act by ignoring to dwell on the above aspects. Had the aforesaid issues, namely, (i) conferment of jurisdiction through Section 7, not vide Section 3, and (ii) specific mentioning about foreign arbitration in Section 7A(1) of the arbitration Act, been delved into by the Hon’ble Judges, there would have been a resolution of this issue with the status of Stare Decisis.

6. While all the provisions of the arbitration Act, except the provisions of Sections 45 to 47, are mandatorily applicable by the Courts of Bangladesh for the arbitration which takes place in Bangladesh, the aforesaid Sections 45 to 47 shall be mandatorily applied to foreign arbitration. The provisions of Sections 7A and 10 of the arbitration Act may be applied by the High Court Division to foreign arbitration at its discretion in order to assist/help the foreign arbitration proceedings. In other words, the Preamble, Sections 2(c), 2(k), 7, 7A(1) and 10 authorise the High Court Division to pass necessary Order/s for the purpose of furthering, not to weakening, the foreign arbitration. However, during pendency of foreign arbitration, the High Court Division should not exercise this discretionary power if it appears that passing any Order would cause disturbance to the performance of the functions of the foreign arbitration tribunal. The High Court Division must not take it as an usual duty when it would be dealing with the applications under Sections 7A and 10 of the arbitration Act in a foreign arbitration scenario. Only upon strictly and meticulously carrying out the need and usefulness of the interference of the High Court Division in cases of foreign arbitration, it should pass the necessary Order. Such as, in a Section-7A application, if the situation is that the foreign arbitral tribunal is yet to be composed of or it lacks required power or the foreign arbitral tribunal cannot be constituted quickly, in the aforesaid situations, for saving the arbitration from becoming a “hollow formality” i.e. in order to protect/secure the subject matter of the arbitration, a discretion may be exercised by the High Court Division so as to restrain the parties from irreversibly altering status quo of the subject matter before the arbitrators are able to render a decision. Similarly, in a Section-10 application, if the High Court Division is ex-facie satisfied that due to the multifarious litigations pending in the Court and arbitration pending in the foreign arbitration tribunal, ultimately the decisions of both the forums (Courts and foreign arbitral tribunal) shall be rendered useless, the High Court Division may in appropriate cases exercise its discretion under Section 10 of the arbitration Act. In other words, for foreign arbitration matters, towards making the said arbitration meaningful and effective, the High Court Division may allow applications under Sections 7A and 10 of the arbitration Act.

7. The Legislature may consider to add the following expressions “Provisions of Sections 7A and 10 may be applied for foreign arbitrations by the High Court Division on its satisfaction as to exigencies and usefulness of issuance of the order/s prayed for” at the bottom of Section 7 of the arbitration Act, either as a ‘Proviso’ or as an “Explanation” taking into consideration that this Court has been spending its invaluable time in interpreting the applicability of the provisions of the arbitration Act in a foreign arbitration scenario, sometimes expressing its opinion in favour of the application of the arbitration Act for foreign arbitration and, on some occasions, opining against its applicability for the foreign arbitration. It appears to me to be pertinent to state here that there are contrary views by our Hon’ble Judges of this Court about making exegesis on the Act of Parliaments, and often observations made by the legendary Judges of the UK are quoted in substantiating their views. Out of the said observations, the statements made by Lord Lorebum L.C in the case of Vickers, sons of Maxim Limited -Vs-Evans 1910 AC 444, is widely used by most of the Hon’ble Judges of the sub-continent, which is reproduced below:

“My Lords, this appeal may serve to remind us of a truth sometimes forgotten, that this House sitting judicially does not sit for the purpose of hearing appeals against Acts of Parliament, or of providing by judicial construction what ought to be in an Act, but simply of construing what the Act says. We are considering here not what the Act ought to have said, but what it does say;…..”

However, my view is that since the Constitution of Bangladesh empowers the High Court Division to declare any law to be void, this Court is competent to make observation about any law, including what ought to be in the Act. Since it was the intention of the framers of the Constitution to see the Supreme Court of Bangladesh as the Guardian of the Constitution, this Court owes a duty to assist the Legislature by pointing out the lacunae and loopholes of the laws of this country whenever any such laws would be referred to before this Court. While the Court merely expresses its views, it remains open for the Legislature to enact/amend the laws accordingly or to ignore them. When this Court carries out the above exercise, it should not be seen as transgression by the Judiciary into the domain of the Legislature. The position of the UK’s Constitution being completely different from our Constitution, the observations made by the UK-Judiciary are not applicable in our jurisdiction. The Judiciary of the UK is not constitutionally allowed to make any comments on the Acts of Parliament, let alone declaring them void.

8. Taking into consideration the cardinal principle of interpretation of law that if there is no ambiguity in the words employed by the Legislature in any Act of Parliament, no attempt should be made to give any meaning other than its literal meaning, and when one provision of an Act of Parliament would appear to be inconsistent with the other provision of the same Act of Parliament, the Court’s duty is to provide a harmonious interpretation on the touchstone of the Preamble and other provisions of the Act, so that none of the provisions turns out to be useless or nugatory. All that I wish to say in summing up my views is that, in the backdrop of embodiment of the clear-cut wordings “Notwithstanding anything contained in Section 7….. until enforcement of the award under Section 45…. the High Court Division…… may pass Order” in Section 7A(1) of the arbitration Act, this Court should not be hesitant to issue appropriate necessary interim Order/s for foreign arbitration matter. Even if it is conceded that there is ambiguity in the wordings employed in the Preamble and in Sections 2(c), 2(k), 7 and 7A(1) of the arbitration Act for not specifically mentioning as to whether ‘international commercial arbitration’ includes foreign arbitration, in that event also, furnishing the interpretation in favour of applicability of the provisions of Sections 7A of the arbitration Act would not make other provisions of the arbitration Act nugatory. Rather, it that would seek to harmonise with all the provisions of the arbitration Act on top of saving the above-quoted provisions of Section 7A(I) of the arbitration Act from rendering nugatory.

60. Thus, from the above threadbare all-out scrutiny on the issue of the applicability of the provisions of the arbitration Act to a foreign arbitration, the irresistible conclusion that derives is that this Court is well competent to entertain an application under Section 7A of the arbitration Act regarding an arbitration which would take place or is taking place in a foreign country and, therefore, I hold that the present application is maintainable, from the view point of the applicability of the provisions of the arbitration Act in a foreign arbitration scenario.

61. The above resolution on the first count of maintainability issue of this case, namely, whether this Court can hear an application under Section 7A of the arbitration Act if arbitration takes place outside Bangladesh, leads me to embark upon the second count of maintainability issue, namely, whether this Court is competent to issue an Order of Injunction restraining the Bank or beneficiary from encashing a Bank Guarantee.

62. In order to deal with the issue, let me first know what is a Bank Guarantee. A Bank Guarantee is an undertaking given by a Bank to pay an amount on demand to the named beneficiary. If it is an irrevocable Bank Guarantee, the Bank guarantees that the agreed/promised amount shall be paid by the Bank in favour of its beneficiary as and when the demand is made by the beneficiary without reference to any dispute between the parties to the underlying contract.

63. In this case, the Bank made a guarantee in favour of the beneficiary in the following terms;

“We unconditionally commit ourselves to immediately pay the BPDB, upon first written request, any amount up to the above indicated amount without there being need for legal or administrative procedures and without need to prove Company’s default.

The undertakings in this Performance Security Deposit constitute direct, unconditional and irrevocable obligations of the Guarantor. The Guarantor hereby binds itself unconditionally and irrevocably and undertakes and guarantees to pay on first written demand of BPDB, without protest or demur and without reference, notice or recourse to the Company or any other person, without requiring BPDB to prove or to show grounds or reasons for such demand and hereby expressly waive all rights to deny its obligations to BPDB irrespective of any dispute, difference or disagreement between the Company and BPDB or contestation by any other party/ person.”

64. From the above terms of the undertaking given by the Bank Asia Ltd (respondent no. 5) in favour of the beneficiary (respondent no. 2), it is ex-facie evident that making of payment by the Bank in favour of the beneficiary has not been made dependent on terms of the underlying contract sealed and signed by the petitioners and the respondents. Therefore, there is no room for making out a prima facie case by the petitioners in favour of non-encashment of the said Bank Guarantee. Regarding preventive measures through the Courts by issuance of different types of injunction Orders in the sub-continent, including our jurisdiction, the relevant laws are Sections 52 to 57 of the Specific Relief Act, 1877 (shortly, SR Act) and Order 39, Rule 1 of the Civil Procedure Code, 1908 (CPC). The paramount requirements of the above legal provisions are that the applicant must satisfy the Court that (i) there is an arguable prima facie case, (ii) balance of inconvenience is in favour of the applicant and (iii) the applicant shall suffer irreparable loss and injury not commensurable in monetary terms unless the other party is restrained. The above principles have been laid down not only by the legal luminaries of the jurisdiction of the sub-continent, but also by many of the finest jurists of the world. Lord Diplock in the case of American Cynamid Co. Vs Ethicon Ltd H.L. (E) 1975 A.C 396 has articulated the aforesaid principles in the following eloquent words;

“The object of the interlocutory injunction is to protect the plaintiff against injury by the violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal right for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The Court must weigh one need against another and determine where “the balance of convenience” lies.”

65. And it is no more a res integra on the subject of injunction that if there is no prima facie case, there is no need to go for conducting the investigation of the remaining two requirements. Nonetheless, to briefly put on record as to whether the aforesaid two requirements do exist in this case, I find from the fact that if the petitioners succeed in the arbitration and, consequently, they are allowed to proceed with the PPA and IA, the company shall not be required to submit another Bank Guarantee in favour of the respondents on top of claiming damage, if the company suffers any. Moreover, at the end of hearing when this Court expressed its opinion that it is the settled law of our jurisdiction that payment of Bank Guarantee cannot be stopped by the Order of injunction, it was contended by the petitioners' learned Advocate Mr. Md. Anisul Hassan that the petitioners are not worried about the Bank Guarantee, rather the concern of the petitioners is with regard to preservation of the PPA and the IA.

66. In a catena of case-laws of our jurisdiction, it has been observed that no order of injunction can be passed by the Courts to stop payment of Bank Guarantee or Letter of Credit. From the reading of the said case-laws, I find that when an unconditional Bank Guarantee or Letter of Credit is given or accepted, the beneficiary is entitled to realize such a Bank Guarantee or a Letter of Credit in terms thereof irrespective of any pending disputes relating to the terms of the contract, and the Bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. The Courts should not grant an Order of injunction to restrain the realization of a Bank Guarantee or a Letter of Credit. The rationale behind it is that a Bank Guarantee or a Letter of Credit is an independent and a separate contract and is absolute in nature and, thus, the existence of any dispute between the parties to the contract is not a ground for issuing an Order of injunction to restrain enforcement of a Bank Guarantee or a Letter of Credit and, secondly, stoppage of encashment of an unconditional Bank Guarantee or a Letter of Credit would result in irretrievable harm or injustice to the party concerned (beneficiary of the Bank Guarantee or the LC). Only if there is clear allegation of committing fraud in preparation of a Bank Guarantee or a Letter of Credit, having vitiated the very foundation of such a Bank Guarantee or a Letter of Credit, the Court may interfere into the matter by passing an Order of injunction.

67. Since the issue as to whether an order of injunction can be issued for stopping the payment of an irrevocable Bank Guarantee was examined time and again by the Courts of all the jurisdictions and it is the unanimous decision of all the Courts of the world that payment of an irrevocable Bank Guarantee and a Letter of Credit cannot be prevented by the Courts unless any one comes out with an egregious allegation of committing fraud in the documents/papers of a Bank Guarantee or a Letter of Credit, the bottom line, as appears to me, is that enforcement of an “On Demand Bank Guarantee” in terms thereof is not subject to judicial interference on the basis of the terms of the contract. Since in this case, evidently, the Bank Guarantee is an ‘On Demand Bank Guarantee’, this application is not maintainable, so far as it relates to the prayer for encashing of the Bank Guarantee. Hence, I do not find any reason to continue with the preventive Order passed by this Court at the time of issuance of this Rule restraining the respondents from encashing the Bank Guarantee of USD 10,00,000 (one million).

68. Since the legal issue as to the applicability of the provisions of Section 7A of the arbitration Act in a foreign arbitration scenario has been settled hereinbefore in the affirmative, I should now probe into the facts of this case to see whether this Court should exercise its discretionary power in favour of the petitioners by granting an Order of injunction restraining the respondents from terminating the Power Purchase Agreement (PPA) and the Implementation Agreement (IA).

69. It appears that at the time of approaching this Court, the petitioners were in the process of formation of arbitration tribunal in Hong Kong as per the terms of the arbitration agreement, and since there was an apprehension by the petitioners that before the arbitral tribunal is composed, the respondents may terminate the PPA and IA and encash the Bank Guarantee, this Court having found a prima facie case and balance of inconvenience in favour of the petitioners, passed an ad interim Order of injunction. Now, after hearing the learned Advocates for both the sides, it appears to this Court that the cardinal principles for granting temporary injunction apparently exist in this case and, therefore, I am of the view that the petitioners deserve to be remedied with a preventive relief for a specified time, in order to preserve the subject in controversy, namely, the PPA and the IA without determining any question of right.

70. Accordingly, the respondents are restrained from terminating the Power Purchase Agreement (Contract No. 10144) and the Implementation Agreement both dated 09.01.2017 for 60 (sixty) days from the date of receipt of this Order towards allowing the petitioner to seek any interim Order, including the preservation Order/injunction Order, from the foreign arbitral tribunal which, as per admission of both the parties, is in seisin of the matter.

71. However, the respondent nos. 1 to 4 shall be free to encash the Bank Guarantee No. 11011000106 of USD 10,00,000 (one million) which was first issued by the Bank Asia Ltd on 13.11.2016 for a period of 18 (eighteen) months and, subsequently, the tenure of the same having been extended from time to time, would now expire on 12.05.2020. The Bank Asia Ltd (respondent no. 5) is hereby directed to encash the aforesaid Bank Guarantee as and when the demand is made by the beneficiary.

72. With the above observations and directions, this application is disposed of, however, without any Order as to costs.

73. Office is directed to communicate a copy of this Judgment to (1) the Hon’ble Minister, Ministry of Law, Justice and Parliamentary Affairs and to (2) the Hon’ble Chairman of the Bangladesh Law Commission for their consideration towards necessary actions.