Alternative Dispute Resolution (ADR) in Bangladesh: Laws, Process, and Legal Practice
Introduction to Alternative Dispute Resolution (ADR)
Alternative Dispute Resolution (ADR) is a legal process that resolves disputes without a full court trial. It offers faster, cost-effective, and confidential methods such as mediation, arbitration, and negotiation. ADR has become an important part of Bangladesh’s modern justice system.
Alternative Dispute Resolution (ADR) in Bangladesh
Alternative Dispute Resolution (ADR) in Bangladesh is currently in a state of rapid formalization.The legal landscape has shifted from a discretionary alternative to a statutory mandate in several key areas of practice. The backlog of over 4 million cases in the lower courts has driven recent legislative actions to make ADR the primary gateway for commercial and labor disputes.
1. The Commercial Court Ordinance, 2026
Promulgated on January 1, 2026, this Ordinance (No. 01 of 2026) is the most significant development for arbitration practitioners in decades.
- Specialized Benches: It establishes dedicated Commercial Courts with jurisdiction over investment and business disputes.
- Arbitration Intersection: While the Arbitration Act, 2001 still governs the substantive conduct of proceedings, the new Commercial Courts now serve as the primary forum for applications to enforce or set aside arbitral awards.
- Timeline Mandate: These courts are required to conclude trials within 90 days, drastically shortening the wait time for the judicial enforcement of ADR results.
2. Civil Procedure Reforms (2025 Amendments)
The Code of Civil Procedure (Ordinance No. XVIII of 2025), effective May 8, 2025, significantly strengthened the ADR provisions under Sections 89A, 89B, and 89C.
- Mandatory Mediation: In almost all civil suits, the court is now required to refer the matter to mediation after the filing of written statements.
- Digital Integration: The 2025 reforms allow for virtual mediation sessions and the service of summons via digital messaging (SMS/WhatsApp), reducing the procedural delays that previously stalled ADR initiations.
- Cost Penalties: Section 35A was revised to increase compensatory costs for vexatious litigation to BDT 50,000, incentivizing parties to settle via ADR rather than pursuing frivolous trials.
3. Labor Law: The 2026 ADR Authority
The Bangladesh Labour (Amendment) Act, 2026, passed in April 2026, introduced a specialized Alternative Dispute Resolution Authority for labor disputes.
- Mandatory Step: Before a labor dispute can be tried in a Labor Court, it must now pass through this Authority for conciliation or mediation.
- Success Rate: Under the National Legal Aid Services Organization (NLASO), ADR has already successfully resolved over 190,000 cases through January 2026, with a high concentration in labor-management disputes.
4. Institutional ADR: BIAC’s Role
The Bangladesh International Arbitration Centre (BIAC) remains the only registered institutional ADR body. By 2026, it has become the standard Institutional Partner for the new Commercial Courts.
- Cross-Border Focus: BIAC is increasingly used for disputes involving foreign investors who prefer its rules (aligned with UNCITRAL) over ad hoc arbitration under the 2001 Act.
5. Comparative ADR Framework
| Feature | Arbitration (Act 2001) | Mediation (CPC 89A) | Conciliation (Labor Act) |
|---|---|---|---|
| Binding Nature | Final & Binding (Award) | Binding if settled (Decree) | Binding once signed |
| Court Role | Minimal intervention | Mandatory court referral | Statutory Authority |
| Appeal | Very limited grounds | No appeal against decree | Generally restricted |
| Confidentiality | High | Statutory confidentiality | High |