Southern Solar Power Ltd and another Versus Bangladesh Power Development Board

and others (Spl. Original) 16 ALR (HCD) 91-109

HIGH COURT DIVISION

(SPECIAL ORIGINAL JURISDICTION)

   
M. Khurshid Alam
Sarkar, J Southern Solar
  Power Ltd and
another
Judgment on
} . . . Petitioners
23.05.2019
}
-Versus-
}
} Bangladesh
  Power
Development
Board and
others
. . . Respondent
s
 
 

Words and Phrases

Arbitration

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. ...22

Interpretation of statute

Meaning of ‘International Commercial Arbitration’ & Foreign Arbitration:

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. An ‘international
commercial arbitration’, the seat of which is outside Bangladesh, is to be meant as ‘foreign
arbitration’. ...28 and 32

Arbitration Act (I of 2001)

Sections 3, 45, 46 and 47

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. 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. 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. 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.                                    ...36, 37 and 56

Arbitration Act (I of 2001)

Sections 7, 7A, 10, 12, 14(4), 20, 21(4), 42, 44, 45, 48 and 50

Jurisdiction of the Courts in arbitration matters:

‘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. 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) appeals under Sections 14(4) and 48 before the High Court Division and
(ix) application under Section 50 before the District Court for arbitrators’ remuneration. 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.           ...39 and 56

Arbitration Act (I of 2001)

Sections 7A and 45

Whether this Court is competent to pass any interim Order where the arbitration is being
or would be held outside Bangladesh:

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. 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”. ...43 and 56

Words and phrases

‘Per incurium’

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.                                                                ...56

Interpretation of statute
Cardinal principles of statutory interpretation:

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. ...56

Words and Phrases

 “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.          ...60

Words and Phrases

“Unconditional Bank guerantee”

Whether payment of “unconditional Bank Guerantee” can be stopped:

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.       ...64
 

Arbitration Act (I of 2001)

Section 7A

Code of Civil Procedure (V of 1908)

Order XXXIX, Rules 1 and 2

 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. 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.    ...57 & 58

HRC Shipping Limited Vs. M.V. X-Press Manaslu and others 12 MLR 265; KA Lalif Vs
Olam International 13 BLC 457 and Drilltee-Maxwell Joint venture vs. Gas Transmission
Company Limited (GTCL) and others, 21 BLC 122; Uttara Bank Vs Macneill & Kilburn 33
DLR (AD) 298; Unicol Bangladesh Vs Maxwell 56, DLR (AD) 166; Uzbekistan Airways Vs
Air Spain Ltd 10 BLC 64 and (3) STX Corporations Ltd Vs Meghna Group 64 DLR 550;
HRC Shipping Ltd Vs MV X-press Manaslu and other 12 MLR (HC) 265 (2007); Drilltee-
Maxwell Joint Venture Vs GTCL 21 BLC 122; Travel Trade Ltd Vs Gulf Air Company GSC
(Arbitration Application No. 2 of 2012); Unicol Bangladesh Vs Maxwell Engineering
Works Ltd 56 DLR(AD) 166; AIR (SC) 1432, Dozco’s case 2010(9) UJ 4521(SC), Venture
Global Engineering Vs Satyam Computer Services 45CC (2008) 190 ref.

Mr. Rokanuddin Mahmud, Senior Advocate with

Mr. Md. Asaduzzaman and

Mr. Md Anisul Hassan, Advocates

 . . . For the petitioners

Mr. Mahbubey Alam, Senior Advocate with

Mr. Ariful Islam, Advocate

. . . For the Respondent No. 2

Mr. Md. Abdul Halim, with

Mr. AM Jamiul Hoque, Advocates

. . . For the Respondent No. 4

JUDGMENT

M. Khurshid Alam Sarkar, J. 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,
SunEdison Energy Holding (Singapore) Pte Ltd (SunEdison), 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 in progressing 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 it 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.             He 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 Olam 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 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, I 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 modern 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.

34.         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.

35.         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 ÕD³
mvwj‡ki ‡ÿ‡ÎÕ (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. 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.

36.         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.

37.         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.
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.

38.         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.

39.         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.

40.         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.

41.         The above examen 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.

 
42.         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.

43.         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.

44.         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.

45.         In the case of KA Lalif Vs Olam 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.

46.         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.

47.         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.

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

 
49.         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).

50.         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.

51.         The case of STX Corporation Ltd Vs Meghna Group 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.

52.         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).

 
53.         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 above-referred 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 in 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”.

54.         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.

    

55.         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 overviewing 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 examen
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 Loreburn 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(1) of the Arbitration Act from rendering nugatory.

56.         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.

57.         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.

58.         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.

59.         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.”

60.         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.”

61.         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.

62.         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.

63.         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).

64.         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).
 

65.         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.

66.         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.

67.         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.

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

69.         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.