Statutory Limits, Party Autonomy, and Comparative Lessons
Arbitration in Bangladesh has expanded steadily as a preferred mechanism for resolving commercial disputes, particularly following the enactment of the Arbitration Act 2001 (“the Act”).1 Yet, one area remains persistently unsettled: the arbitrability of landlord–tenant disputes. Despite the frequent inclusion of arbitration clauses in lease agreements—especially commercial leases—the enforceability of such clauses depends on whether the subject matter of the dispute is legally capable of arbitration. This uncertainty is not unique and the evolution of Indian jurisprudence, culminating in Vidya Drolia v. Durga Trading Corporation AIRONLINE 2020 SC 929), provides a persuasive analytical framework for examining the Bangladeshi position.
Arbitration Clauses in Lease Agreements
Lease agreements frequently contain arbitration clauses referring “all disputes arising out of or in relation to the agreement” to arbitration. Such clauses reflect the principle of party autonomy, which is expressly recognised under the Arbitration Act 2001.2 However, party autonomy is not absolute. Section 7 of the Act validates arbitration agreements, but it does not render all disputes to be arbitrable as a matter of law. The question is therefore not whether parties agreed to arbitrate, but whether the dispute itself is capable of private adjudication.
Statutory Framework Governing Tenancy Disputes
Two statutes are central to the analysis:
(a)The Arbitration Act 2001, which adopts a pro-arbitration legislative policy and limits judicial intervention;3 and
(b)The Premises Rent Control Act 1991 (“the Rent Control Act”), which regulates landlord–tenant relationships and provides statutory protection to tenants.4 Where the Rent Control Act applies, it prescribes specific grounds, procedures, and forums for eviction and rent disputes. This statutory design raises a question as to whether parties can bypass such forums through arbitration.
Rent Control, Public Policy, and Non-Arbitrability
Rent control legislation in Bangladesh, like similar statutes in India, is a welfare-oriented law designed to protect tenants from arbitrary eviction and excessive rent demands. The Act confers jurisdiction on designated civil courts and restricts the landlord’s right to recover possession except on enumerated grounds.5 These features strongly indicate that disputes governed by the Rent Control Act are non-arbitrable, as they involve statutory rights and obligations that cannot be waived by contract through an arbitration clause. Allowing arbitration in such cases would amount to contracting out of mandatory law, which is impermissible as a matter of public policy.
Contractual Tenancies Outside Rent Control
A more nuanced question arises where the tenancy does not fall within the scope of the Rent Control Act—particularly in the case of: commercial leases; premises exempted by statute; or contractual tenancies governed primarily by the Transfer of Property Act 1882.6 In such cases, disputes typically concern termination of lease, rent arrears, or interpretation of contractual clauses. These disputes operate inter partes and do not ordinarily affect third-party rights. The reasoning adopted by the Indian Supreme Court in Vidya Drolia—that disputes under the Transfer of Property Act involve subordinate rights in personam—provides a persuasive basis for treating similar disputes in Bangladesh as arbitrable, absent an express statutory bar.
Rights in Rem and Rights in Personam
While Bangladeshi courts have not formally adopted this taxonomy, it aligns well with domestic statutory logic. Eviction disputes governed by rent control legislation implicate rights in rem and statutory policy. Contractual disputes arising from lease agreements outside rent control regimes concern rights in personam. Only the latter category is suitable for arbitration without undermining legislative intent.
Public Policy and Judicial Oversight
Concerns are often raised that arbitration may undermine public policy in landlord–tenant relations. However, the Arbitration Act 2001 provides sufficient safeguards. Courts retain supervisory jurisdiction at the stages of reference, setting aside, and enforcement of arbitral awards.7 Moreover, arbitrators are bound to apply mandatory law. The mere fact that a dispute touches upon possession or tenancy does not automatically render it non-arbitrable unless the statute expressly confers exclusive jurisdiction on a particular forum.
Separability of Arbitration Agreements
An arbitration clause is legally independent of the underlying contract. Even if the lease is alleged to be void, voidable, or improperly stamped, the arbitration agreement may survive for the purpose of determining such disputes. This principle, well recognized in comparative jurisprudence, is consistent with the structure of the Arbitration Act 2001.8
Conclusion
The arbitrability of landlord–tenant disputes in Bangladesh depends on the statutory source of the tenancy relationship. A principled position emerges: Disputes governed by the Premises Rent Control Act 1991 are non-arbitrable, as they involve mandatory statutory protections and exclusive judicial forums. Disputes arising from contractual tenancies outside rent control regimes, particularly under the Transfer of Property Act 1882, are capable of arbitration, as they involve rights in personam and do not offend public policy. Until Bangladeshi appellate courts provide authoritative guidance, comparative reasoning—especially the analytical framework developed in Vidya Drolia—offers a coherent and balanced approach. Arbitration and tenant protection need not be antagonistic; their reconciliation lies in careful statutory interpretation rather than categorical exclusion.
Written by Managing Partner Junayed Ahmed Chowdhury and Pupil Abdullah Bin Haque
References
1.Arbitration Act 2001 (Bangladesh).
2.Arbitration Act 2001, s 7.
3.Arbitration Act 2001, ss 10, 12, 42.
4.Premises Rent Control Act 1991 (Bangladesh).
5.Premises Rent Control Act 1991, ss 18–21.
6.Transfer of Property Act 1882 (Bangladesh).
7.Arbitration Act 2001, ss 43–45.
8.Arbitration Act 2001, s 7; see generally principle of separability.
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