Overview of laws regarding Alternative Dispute Resolution in Bhutan

Introduction –

The act that governs the alternative dispute resolution is Alternative Dispute Resolution Act of Bhutan 2013, (“the Act”). It came into force on March 14, 2013. There act is divided into 13 chapters. 

The rules and regulations under the Act (Alternative Dispute Resolution Rules and Regulations of Bhutan, 2019) were launched by the government in year 2019, to effectively implement the Act. 

Scope–

Alternative Dispute Resolution Act of Bhutan 2013 covers the International and Domestic commercial arbitration and negotiated settlements conduced within the Kingdome of Bhutan. It also covers the provisions regarding the recognition and enforcement of arbitral awards including foreign arbitral awards. 

The important sections of the Act are described below –

• Establishment of Alternative Dispute Resolution Centre (“the Centre”): A Centre is established as an independent body for serving as an efficient, neutral and reliable dispute resolution service centre. The main functions of the centre are:
• Facilitating dispute resolution proceedings by providing required facilities for the conduct of such proceedings at the request of the parties.
• Carrying out appropriate secretarial and administrative functions of dispute resolution at the request of the parties.
• Appointment of arbitrator in case where the parties to dispute fails to appoint the same on their own.

Bhutan Alternative Dispute Resolution Centre (Bhutan ADRC) was establish and started functioning from 15th May 2018.

• Applicability of provisions to International Arbitration: The provisions of Chapter 3 to Chapter 11 are applicable to the International commercial Arbitrations in the same way as they are applicable on domestic commercial arbitration unless otherwise provided. 
• All the communication relating to an arbitration must be in writing. Oral communication will not be considered for any legal purpose or regarding any legal effect. 
• Arbitration Agreement: The arbitration agreement between the parties can be in a form of separate agreement providing for the terms and conditions raising to disputes and its resolution and the procedure of the arbitration process. An arbitration clause forming a part of the original agreement shall also be considered as an agreement for the provisions of this act.  
• Interim measure by Court: A court is compatible for granting interim measures of relief or protection to the parties of arbitration agreement, during the arbitral proceedings.  
• Domestic and International Arbitration:  Domestic arbitration is the one of which all the parties are citizens of Bhutan or body corporate, incorporated in or whose management and control is exercised in Bhutan. International Arbitration is wherein at least one of the parties is a citizen on a country other than Bhutan or a body corporate incorporated in a country other than Bhutan or managed or controlled by a country other than Bhutan. 
• Subject matter not to be subject to domestic arbitration: The following are the matters that can be taken as a subject matter of a domestic arbitration in Bhutan:
  • Any disputes for rights and liabilities arising out of criminal offences;
  • Matrimonial disputes;
  • Insolvency and winding up;
  • Guardianship;
  • Testamentary;
  • Subject of inheritance;
  • Subject of Taxation;
  •  Matters which are against public policy, morality or other enactments for the time being in force in Bhutan.
• Subject matter of international arbitration: The disputes arising out of the commercial relations, whether contractual or not, shall be a subject matter of international commercial arbitration. However, it is to be noted that arbitration shall not be permitted on the matter of winding up and insolvency, subject of taxation and other matters which are against the public policy, morality or provisions of existing laws in Bhutan. 
• Nationality of Arbitrators: A person appointed as an arbitrator of a domestic arbitration process shall be a citizen of Bhutan. In case of international arbitration, nationality of a person shall not be a matter concern for his appointment as arbitrator, unless otherwise decided by the parties. 
• Applicability of Substantive Law:  Arbitral Tribunal shall apply the substantive laws of Bhutan while deciding the dispute under domestic arbitration. In case of International arbitration, only provisions of this act are applicable to the process and the substantive law that has been agreed by the parties in case of disputes as per the terms of the contract shall be applicable. 
• Nationality of an arbitral award: An award shall have the nationality of the country where the place of arbitration is situated. 
• Recognition of foreign award: The recognition of such shall be governed by the terms of international conventions and bilateral or multilateral agreements entered into by Bhutan regarding the recognition and enforcement of awards. The award is binding and is enforced in Bhutan in accordance with civil and criminal procedure code unless otherwise provided by the Court. 
•  Negotiated Settlements: In Bhutanese law, provisions of both domestic and international negotiation are available. Parties under domestic negotiated settlement may settle any dispute in accordance with the laws in force in Bhutan. For international negotiated settlement, the disputes arising only from commercial relationships, whether contractual or not, shall be negotiated.  
• Restriction in initiating arbitration or court proceedings: When a negotiated settlement proceeding is going on, the parties shall not initiate any judicial or arbitral proceedings in respect of the disputes. However, a party has an exception to initiate such proceeding if it seems that such proceeding is necessary to save his/her rights. 
•  Adjournment of court proceedings: If parties of dispute decides to pursue negotiated settlement during a court proceeding in respect of a dispute, the court shall adjourn the proceeding upon such request by the parties.   
• In applicability of laws: The provisions of civil and criminal procedure code and evidence act shall not be applicable on the negotiated settlement proceedings.
• Enforcement of Settlement agreement: The settlement agreement provided by the negotiated settlement proceeding shall be enforced by the court of competent jurisdiction in accordance with the laws in force of Bhutan.  

Sources –

• An article posted on Kuensel dated 24.07.2019, Url-

https://kuenselonline.com/bhutan-adr-rules-and-regulations-launched/

• The Alternative Dispute Resolution Act of Bhutan, 2013, Url –

https://www.nab.gov.bt/assets/uploads/docs/acts/2014/Alternative_Dispute_Resolution_Act_of_Bhutan_2013_eng10th.pdf

• Official website of Bhutan Alternative Dispute Resolution Centre, Url –

https://www.bhutanadrcentre.bt/about-us/