International Commercial Arbitration at Nepal
International Commercial Arbitration in Nepal is gradually evolving as the country seeks to create a more arbitration-friendly legal environment for cross-border commercial disputes. Here's an overview of the current framework and practice:
📘 Legal Framework
1. Arbitration Act, 1999 (2055 B.S.)
This is the primary legislation governing both domestic and international arbitration in Nepal.
It is largely based on the UNCITRAL Model Law, which helps align Nepalese arbitration law with international standards.
It covers:
Recognition and enforcement of foreign arbitral awards
Conduct of arbitration proceedings
Role of courts in arbitration
Appointment and removal of arbitrators
2. New York Convention
Nepal became a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1998, and it came into force in 1999.
This means that arbitral awards from other Convention states are generally enforceable in Nepal (subject to certain conditions).
🏛️ Institutions and Infrastructure
1. Nepal International ADR Center (NIAC)
Established in 2013, it is Nepal's primary institution for institutional arbitration.
Offers facilities and administrative services for domestic and international arbitrations.
Adopts rules modeled on international best practices (e.g., UNCITRAL Arbitration Rules).
2. Other Institutions
Ad hoc arbitration is still common, often conducted under UNCITRAL rules or other agreed procedures.
⚖️ Role of Courts
Nepalese courts play a supportive but limited role in arbitration.
Courts can assist in:
Interim measures
Enforcement of awards
Appointment of arbitrators when parties fail to agree
Judicial interference has historically been a concern, but recent reforms and training efforts aim to promote arbitration-friendliness.
🚧 Challenges
Lack of awareness and limited experience in international arbitration
Inconsistent court decisions on enforcement
Delays in judicial processes
Need for legal reform to further modernize arbitration laws
✅ Opportunities and Progress
Growing interest from investors and the government to improve the arbitration landscape
Ongoing training and collaboration with international arbitration bodies
Strong potential as a regional hub for arbitration due to Nepal’s strategic location
🌍 Key Considerations for International Parties
Ensure clear arbitration clauses in contracts, preferably referencing international rules (e.g., ICC, SIAC, UNCITRAL)
Consider choosing neutral seats and experienced arbitrators
Be prepared for potential delays in enforcement, though enforcement is generally possible
RELATED Blog
0 comments