Alternative Dispute Resolution Act of Bhutan, 2013

Link to law: http://www.nationalcouncil.bt/assets/uploads/docs/acts/2014/Alternative_Dispute_Resolution_Act_of_Bhutan_2013_eng10th.pdf

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Alternative Dispute Resolution Act
of Bhutan 2013

TABLE OF CONTENTS

PREAMBLE 1

CHAPTER I: PRELIMINARY 1

CHAPTER II: BHUTAN ALTERNATIVE DISPUTE
RESOLUTION CENTRE 2

CHAPTER III: GENERAL PROVISIONS ON ARBITRATION 9

CHAPTER IV: COMPOSITION OF ARBITRAL TRIBUNAL 16

CHAPTER V: JURISDICTION OF ARBITRAL TRIBUNAL 23

CHAPTER VI: CONDUCT OF PROCEEDING 24

CHAPTER VII: INTERIM MEASURES 32

CHAPTER VIII: MAKING OF AWARD 36

CHAPTER IX: TERMINATION OF ARBITRAL PROCEEDINGS 40

CHAPTER X: RECOURSE AGAINST ARBITRAL AWARD 42

CHAPTER XI: RECOGNITION AND ENFORCEMENT OF
ARBITRAL AWARDS 45

CHAPTER XII: NEGOTIATED SETTLEMENT 47

CHAPTER XIII: MISCELLANEOUS 52

PREAMBLE

Whereas, the Constitution of the Kingdom of Bhutan stipulates
that the Parliament may, by law, establish impartial and
independent Administrative Tribunals as well as Alternative
Dispute Resolution Centres;

Whereas, there is a need to encourage alternative resolution of
disputes through arbitration and negotiated settlement through
establishment of institutions and procedures; and

Whereas, it is important to enforce and recognize the arbitral
awards and outcomes of negotiated settlements.

Parliament of the Kingdom of Bhutan do hereby enact the
Alternative Dispute Resolution Act of Bhutan 2013 on the 15th
Day of the 1st Month of Water Female Snake Year of the Bhutanese
Calendar corresponding to the 25th Day of February, 2013 at its
10th session of the First Parliament as follows:

CHAPTER I
PRELIMINARY

Short title, extent and commencement

1. This Act shall:

(1) Be called the Alternative Dispute Resolution Act of
Bhutan 2013;

(2) Come into force on the 3rd Day of the 2nd Month
of the Water Female Snake Year of the Bhutanese
Calendar corresponding to 14th Day of the 3rd Month
of 2013; and

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(3) Extend to the whole of the Kingdom of Bhutan or
otherwise within the jurisdiction of Bhutan.

Scope

2. This Act shall apply to:

(1) Domestic arbitration and international commercial
arbitration and negotiated settlements conducted
within the Kingdom of Bhutan;

(2) Recognition and enforcement of arbitral awards

including foreign arbitral award; and

(3) Any other matter connected with or incidental to

arbitration and negotiated settlements.

Saving

3. This Act shall repeal any provisions of laws in force in
Bhutan relating to alternative dispute resolution. However,
this Act shall not affect any provisions of Local Government
Act and its rules and regulations.

CHAPTER II
BHUTAN ALTERNATIVE DISPUTE

RESOLUTION CENTRE

Establishment of the Centre

4. There shall be a Centre established in the name as Bhutan
Alternative Dispute Resolution Centre, which is an
independent body, having a distinct legal personality,
and capable of doing all such things and entering into all

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transactions as are incidental or conducive to the exercise
or performance of its functions under this Act.

Administration of the Centre

5. There shall be a Chief Administrator to administer the
affairs and business of the Centre and frame policy related
thereto.

Appointment of Chief Administrator

6. The National Judicial Commission shall appoint a person
who has knowledge on alternative dispute resolution as
the Chief Administrator of the Centre.

7. In exercising functions under this Act, the Centre shall act
independently and shall not be subject to the direction or
control of any other person or authority.

Qualification of Chief Administrator

8. A person shall be qualified for appointment as a Chief
Administrator if he or she:

(1) Is a citizen of Bhutan;

(2) Possesses a university degree; and

(3) Has work experience of minimum of ten years.

Disqualification

9. The National Judicial Commission shall not appoint a
person as Chief Administrator if he or she is:

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(1) Physically or mentally incompetent;
(2) Terminated from public service;
(3) Convicted and sentenced to imprisonment; or
(4) Has been declared insolvent.

Tenure of Chief Administrator

10. The Chief Administrator shall hold office for five years and
may be eligible for reappointment for one more term.

Removal of Chief Administrator

11. The National Judicial Commission may remove the Chief
Administrator from the office:

(1) If disqualified under section 9 of this Act;

(2) Upon finding inefficient or incapable of performing

his or her duty; or

(3) Upon finding misbehavior or irregularity in the

discharge of his or her functions.

Resignation of Chief Administrator

12. The Chief Administrator may resign from his or her office
by submitting a resignation in writing to the Chairperson
of the National Judicial Commission one month in
advance.

Service Condition of other employees

13. The Centre, in consultation with the National Judicial
Commission, shall frame rules relating to:

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(1) Appointment of employees of the Centre;

(2) Terms and conditions of employees;

(3) Qualifications required thereof of such employees;

(4) Entitlements and other benefits of the employees
including the Chief Administrator; and

(5) Such other service conditions under this Act.

14. The Chief Administrator and the employees who are
civil servants shall resign from the civil service upon
appointment to the centre.

Functions of the Centre

15. The Centre shall serve as a neutral, efficient and reliable
dispute resolution service centre and shall:

(1) Carry out administrative and secretarial functions
as may be appropriate for the dispute resolution
proceeding at the request of the parties;

(2) Facilitate the dispute resolution proceeding by
providing required facilities for the conduct of such
a proceeding at the request of the parties;

(3) Appoint an arbitrator, if the Centre has been
so requested, where parties fail to agree on the
appointment of the arbitrator or have not designated
an appointing authority or the designated
appointing authority fails to appoint;

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(4) Provide expertise in the field of alternative dispute
resolutions to the stakeholders;

(5) Provide training to the people who are involved in
the Alternative Dispute Resolution;

(6) Register the arbitration and maintain record of the
arbitral award;

(7) Certify an arbitrator who is trained by the Centre;

(8) Accredit other qualified arbitrators;

(9) Facilitate negotiated settlement as deemed
appropriate;

(10) Disseminate information to the public on alternative
dispute resolution;

(11) Perform such other functions assigned to it by this
Act or any other law incidental thereto; and

(12) Liaise with International Alternative Dispute
Resolution bodies.

Powers of the Centre

16. Subject to the provisions of this Act, the Centre may:

(1) Lay down procedure to administer arbitration and
negotiated settlement when the parties have agreed
to refer it to the Centre;

(2) Levy fees for services provided by the Centre;

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(3) Levy fees on arbitrators certified by it;

(4) Levy fees on arbitrators listed with it;

(5) Issue guidelines and optional models or specimens
for the drawing up of arbitration clauses and
agreements;

(6) Lay down a code of ethics for arbitrators and
negotiators listed with the Centre;

(7) Provide for the determination and prescription of a

schedule of fees for arbitrators;

(8) Establish regional Centres as deemed appropriate;
and

(9) Provide for any other matter in connection with
which rules may be made under any provisions of
this Act.

List of arbitrators

17. The Centre shall maintain and update lists of arbitrators
for domestic arbitration and international commercial
arbitration, and an arbitrator may be listed in both.

18. The Centre shall ensure that the list under section 17 of
this Act contains persons from various relevant fields.

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Removal from the list

19. A person may be removed from the list by the Centre at
any time in accordance with the rules for delisting.

20. A person may at any time delist himself or herself by
informing the Centre in writing.

Provided that any such delisting shall not be deemed to
exclude the arbitrator from any arbitration proceedings in
which he or she has already been appointed.

Finance of the Centre

21. The finance of the Centre may consist of:

(1) Fees charged for the services provided under this
Act;

(2) Donations, grants, subsidies, financial assistance,
bequests and other transfers of funds or other
property, whether public or private; or

(3) Grant from the government.

Accounting and reporting System

22. The financial and procurement procedures of the Centre
shall be subject to the financial rules and regulations of the
Royal Government of Bhutan.

Annual Audit

23. The Royal Audit Authority shall conduct an annual audit
of the Centre.

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Report

24. The Chief Administrator shall submit a report, including
financial and other affairs of the Centre to the National
Judicial Commission annually, which shall be made
available in the public domain.

CHAPTER III
GENERAL PROVISIONS ON ARBITRATION

Scope

25. Unless otherwise provided, the provisions under Chapters
III, IV, V, VI, VII, VIII, IX, X and XI of this Act shall apply
to both domestic arbitration and international commercial
arbitrations.

Communication

26. Any exchange of communication pertaining to the
arbitration shall be in writing.

27. Any written communication is deemed to have been
received if it is delivered to the addressee personally or
if it is delivered at his or her place of business, habitual
residence or mailing address.

28. If the addressee’s place of business, habitual residence
or mailing address cannot be found after making a
reasonable inquiry, a written communication is deemed to

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have been received if it is sent to the addressee’s last known
place of business, habitual residence or mailing address
by registered letter or through any other means which
provides a record of the attempt to deliver it.

29. The communication shall be deemed to have been received
on the day it is so delivered.

30. Sections 26, 27, 28 and 29 of this Act shall not apply to
written communications served or exchanged by the
judicial authority.

Waiver of right to object

31. A party who knows that any provision or requirement
under this Chapter has not been complied with by
the other party, the Centre or arbitral tribunal and yet
proceeds with the arbitration without promptly stating his
or her objection to such non-compliance, shall be deemed
to have waived the right to object.

Arbitration agreement

32. For the purpose of this Chapter:

(1) “Arbitration agreement” means an agreement in
writing between the parties to submit to arbitration
all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not;

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(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a
separate agreement;

(3) An arbitration agreement is in writing if it is:

(a) Contained in a document signed by the parties;

(b) An exchange of letters, telex, telegrams, emails
or other means of communication which
provide a record of the agreement; or

(c) An exchange of statements of claims and
defenses in which the existence of an agreement
is alleged by one party and not denied by the
other;

(4) The reference in a contract to any document
containing an arbitration clause constitutes an
arbitration agreement in writing, provided that the
reference is such as to make that clause part of the
contract.

Court intervention

33. In matters governed by this Act, no court shall intervene
except to the extent provided by this Act.

Referral to arbitration by a court

34. In an action before court which is subject to an arbitration

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agreement, if a party applies for arbitration not later than
when submitting his or her opening statement, the court
shall direct the parties to arbitrate, unless it finds that the
agreement is null and void, inoperative or incapable of
being performed.

35. If any party files petition before the court after
commencement of the arbitral proceeding, the court before
which an action is brought shall dismiss the petition and
direct the parties to continue with the arbitration, unless
it finds that the agreement is null and void, inoperative or
incapable of being performed.

36. If the court finds that arbitration agreement is null and
void, inoperative or incapable of being performed under
section 35 of this Act, it shall continue with the hearing
and direct the parties to discontinue arbitral proceeding.

Arbitration reference and appeal

37. If a party is aggrieved by the order of the court under
sections 34, 35 and 36 of this Act, he or she may appeal to
the higher court within ten working days of the receipt of
such order.

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Interim measure by Court

38. It is not incompatible with an arbitration agreement for
a party to request, before or during arbitral proceedings,
from a court an interim measure of protection and for a
court to grant such measure.

39. If a party is aggrieved by an order issued under section 38
of this Act, he or she may appeal to the higher court within
ten working days of the receipt of order.

40. If the court grants interim measures under section 38 of
this Act before the commencement of arbitration, it shall
direct the party to take effective steps for the appointment
of the arbitral tribunal in accordance with the procedure
specified in Chapter IV, within a period of fifteen working
days from the date of such direction.

Arbitration agreement not to be discharged by death

41. An arbitration agreement shall not be discharged by the
death of the party and shall be enforced by or against the
legal heir or successor of the estate of the deceased party.

42. The authority of an arbitrator shall not be revoked by the
death of any party by whom he or she was appointed.

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43. Nothing in sections 41 and 42 of this Act shall affect
the operation of any law by which a substantive right or
obligation is extinguished by death.

Domestic Arbitration

44. “Domestic arbitration” shall mean an arbitration to which
all parties are:

(1) Citizens of the Kingdom of Bhutan; or

(2) Body corporate, a company, business entity or an

association which is incorporated in, or whose
central management and control is exercised in
Bhutan.

International commercial arbitration

45. “International commercial arbitration” means an
arbitration relating to disputes arising out of legal
relationships, whether contractual or not, considered
commercial and where at least one of the parties is:

(1) A citizen of the country other than Bhutan;

(2) A body corporate, a company, business entity or an

association which is incorporated in the country
other than Bhutan or whose central management
and control is exercised in any country other than
Bhutan; or

(3) The Government of a foreign country.

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Exclusion from domestic arbitration

46. The matters which shall not be subject to domestic
arbitration shall include:

(1) Disputes relating to rights and liabilities which give
rise to or arise out of criminal offences;

(2) Matrimonial disputes relating to divorce, judicial
separation, restitution of conjugal rights, child
custody;

(3) Guardianship;

(4) Insolvency and winding up;

(5) Testamentary;

(6) Subject of inheritance;

(7) Subject of taxation; or

(8) Such other matters which are against public policy,
morality or any other existing provisions of the law
for the time being in force in Bhutan.

Subject matter of international commercial arbitration

47. For the purpose of international commercial arbitration,
only those disputes arising from relationships of
commercial nature, whether contractual or not, shall be
arbitrated. Provided that no arbitration shall be permitted
on matter of insolvency and winding up, subject of
taxation and other matters which are against public policy,
morality or any other existing provisions of the law in
force in Bhutan.

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CHAPTER IV
COMPOSITION OF ARBITRAL TRIBUNAL

Number of arbitrators

48. The parties are free to agree on the number of arbitrators
provided that such number shall not be even.

49. If the parties fail to agree on the number of arbitrators, the
arbitral tribunal shall consist of three arbitrators.

Nationality of arbitrators

50. Unless otherwise agreed by the parties, no person shall be
precluded by reason of his or her nationality from acting
as arbitrator for international commercial arbitration.

51. In the case of domestic arbitration, the arbitrator shall be
a citizen of Bhutan.

Appointment of arbitrators

52. The parties are free to agree on the procedures for the
appointment of the arbitrator or arbitrators in accordance
with this Act.

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53. If the parties fail to agree on the number of arbitrators,
within thirty working days of receipt of a request by
any party, the Centre shall appoint three arbitrators, in
consultation with the parties.

54. In an arbitral proceeding with three arbitrators, each party
shall appoint an arbitrator each and the two arbitrators
thus appointed shall appoint the third arbitrator from the
list maintained by the Centre or any other person who
shall act as the presiding arbitrator.

55. If more than three arbitrators have been provided for, each
party shall appoint the same number of arbitrators. The
arbitrators thus appointed shall appoint another arbitrator
from the list maintained by the Center or any other person
who shall act as the presiding arbitrator.

56. If a party fails to appoint an arbitrator within thirty
working days of a receipt of a written request to do so from
the other party, the Centre shall, upon request by a party,
appoint the arbitrator.

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57. Upon appointment of the arbitrators by the parties, if the
arbitrators do not communicate to the parties regarding
the appointment of the presiding arbitrator within thirty
working days of their appointment, the Centre shall, upon
request by a party, appoint the presiding arbitrator.

58. A party may request the Centre to appoint the arbitrators,
where the parties have agreed on the appointment
procedures, and

(1) The party fails to act as required under such
procedure;

(2) The parties or the arbitrators are unable to reach an

agreement in accordance with such procedure; or

(3) A third party fails to perform any function entrusted

to it under such procedure within thirty working
days on receipt of a written notice.

59. Section 58 of this Act shall not apply if the agreed
appointment procedures between the parties provide for
other means of securing the appointment.

60. While appointing the arbitrators, the Centre shall consider
qualifications required of the arbitrator by the agreement
of the parties and relevant qualifications to secure the
appointment of independent and impartial arbitrators.

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61. A decision by which an arbitrator is appointed shall not be
subject to appeal before the Centre or any court.

62. The parties may appoint arbitrators from the list of
arbitrators maintained by the Centre or any other arbitrator
of the party’s choice.

Acceptance by the arbitrators

63. Unless the parties have agreed otherwise, each arbitrator,
within seven working days of communication of
nomination, shall communicate his or her acceptance to
whoever nominated him or her. If within the fixed period,
an acceptance is not communicated, the arbitrator shall be
deemed to have not accepted his or her nomination.

Conflict of interest

64. When a person is approached in connection with his or
her possible appointment as an arbitrator, he or she shall
disclose any circumstances likely to give rise to justifiable
doubts as to his or her impartiality or independence or
circumstances which may be in conflict with the agreement
of the parties.

65. During the arbitral proceedings, an arbitrator shall,
without delay, disclose any circumstances under section
64 of this Act to the parties.

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Grounds for challenging arbitrators

66. An arbitrator may be challenged only if circumstances
exist that give rise to justifiable doubts as to his or her
impartiality or independence, or if he or she doesn’t
possess qualifications agreed to by the parties.

67. A party may challenge an arbitrator appointed by him or
her, or in whose appointment he or she has participated,
only for reasons of which he or she becomes aware after
the appointment has been made.

Challenge procedure

68. The parties may agree on a procedure to challenge an
arbitrator. If the parties fail to agree, the party who intends
to challenge an arbitrator shall notify in writing of his
or her challenge within fifteen working days after the
appointment of the challenged arbitrator is notified to that
party or within fifteen working days after the circumstances
mentioned in section 66 of this Act is known to that party.

69. The other party, the arbitrator who is challenged, and
other members of the arbitral tribunal shall be notified of
the challenge.

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70. Unless the challenged arbitrator withdraws from his or
her office or the other party agrees to the challenge, the
arbitral tribunal shall decide on the challenge. In the case
of a sole arbitrator, the Centre at the request of any party
shall decide on the challenge.

71. The party, who is aggrieved by the decision of the arbitral
tribunal or Centre on the challenge under section 70 of
this Act may, within ten working days of receipt of the
decision, appeal to the High Court.

72. Upon appeal under section 71 of this Act, the High Court
shall decide and direct the parties to either continue with
the arbitral proceeding with the appointed arbitrators or
substitute the arbitrator.

Termination of the arbitrator

73. The mandate of an arbitrator may be terminated:

(1) Upon finding inefficient or incapable of performing
his or her duty;

(2) Upon finding misbehavior or irregularity in the

discharge of his or her functions;

(3) If he or she withdraws from the office;

(4) If the parties agree to terminate; or

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(5) In other cases of termination of the arbitrator.

74. Unless otherwise agreed by the parties, if controversy
arises under section 73 of this Act, a party may apply to
the Centre to decide on the termination and the decision
of the Centre shall be final and binding and no judicial
review shall be allowed.

Appointment of substitute arbitrator

75. A substitute arbitrator shall be appointed according to
the agreed procedure of appointment of arbitrators if the
arbitrator is terminated under section 73 of this Act.

76. The arbitral tribunal, when reconstituted, shall determine
whether and to what extent the previous proceedings may
stand.

77. The reconstitution of the arbitral tribunal shall not affect
the right of a party to challenge the previous proceeding
on any ground which had arisen before the arbitrator
ceased to hold office.

78. Unless otherwise agreed by the parties, an order or ruling
of the arbitral tribunal made prior to the substitution of an

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arbitrator shall not be invalid solely due to a change in the
composition of arbitral tribunal.

Registration of arbitration with the Centre

79. Upon appointment of arbitrators, the arbitration shall be
registered with the Centre by the arbitral tribunal having
due regard to confidentiality of arbitration.

CHAPTER V
JURISDICTION OF ARBITRAL TRIBUNAL

Competence to rule on jurisdiction

80. The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the
existence or validity of the arbitration agreement, and for
that purpose:

(1) An arbitration clause which forms part of a contract
shall be treated as an agreement independent of the
other terms of the contract; and

(2) A decision that the contract is null and void shall not
necessarily invalidate the arbitration clause.

81. A plea that the arbitral tribunal does not have jurisdiction
shall be raised not later than the first pleading on the
substance of the dispute.

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82. A party shall not be precluded from challenging the
jurisdiction of the arbitral tribunal merely on the grounds
that the party appointed or participated in the appointment
of an arbitrator.

83. A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged
to be beyond the scope of its authority is raised during the
arbitral proceedings.

84. Notwithstanding sections 81 and 83 of this Act, the arbitral
tribunal may admit the plea later in the proceeding if the
delay is justified.

85. If the arbitral tribunal rules on a plea that it has jurisdiction,
any party, within ten working days of receipt of decision,
may appeal to the High court to decide the matter.

CHAPTER VI
CONDUCT OF PROCEEDING

Notice of arbitration

86. Unless otherwise agreed by the parties, the arbitral
proceedings for a particular dispute shall commence on

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the date on which a notice of arbitration for that dispute is
received by the respondent.

87. The notice of arbitration may include:

(1) A demand that the dispute be referred to arbitration;

(2) The names and addresses of the parties;

(3) A reference to the arbitration clause or the separate
arbitration agreement that is invoked;

(4) A reference to the contract out of which the defined
legal relationship in respect to which the dispute
arises;

(5) The general nature of the claim and an indication of
the amount involved, if any;

(6) The relief or remedy sought;

(7) A proposal as to the number of arbitrators if the
parties have not previously agreed thereon;

(8) The proposals for the appointment of arbitrators;
and

(9) The notification of the appointment of an arbitrator.

Representation by lawyer

88. The parties to the arbitration may be represented or
assisted by persons of their choice or a lawyer.

Equal treatment

89. The arbitral tribunal shall act fairly and impartially and

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shall give each party an equal and reasonable opportunity
of presenting his or her case.

Confidentiality

90. The arbitrators, parties and Centre, if applicable, shall
maintain the confidentiality of information coming to
their knowledge in the course of the arbitral proceedings,
unless required to reveal such information before the
court of law.

Determination of procedures

91. Unless otherwise provided in this Chapter, the arbitral
tribunal may not be bound by the Civil and Criminal
Procedure Code of the Kingdom of Bhutan.

92. Subject to the provisions of this Chapter, the parties are
free to agree on the procedure to be followed by the arbitral
tribunal in conducting the arbitral proceedings.

93. If the parties fail to agree on the arbitral procedures, the
arbitral tribunal may conduct the arbitral proceedings in
such manner it deems appropriate.

94. The power of the arbitral tribunal to determine arbitral
procedures includes the power to determine the
admissibility, relevance, materiality and weight of any
evidence.

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Venue of the arbitration

95. Unless otherwise agreed by the parties, the venue of
arbitration shall be at the premises determined having
regard to the circumstances of the arbitration by the
Centre.

96. Notwithstanding section 95 of this Act, the arbitral tribunal
may, unless otherwise agreed by the parties, meet at any
place it considers appropriate for consultation among its
members, for hearing witnesses, experts or the parties, or
for inspection of documents, goods or other property.

Language of the arbitral proceeding

97. The parties are free to agree on the language to be used
in the arbitral proceeding. If the parties fail to agree, the
arbitral tribunal shall determine the language to be used
in the arbitral proceeding.

98. The agreement or determination on the language of
arbitral proceedings, unless otherwise specified therein,
shall apply to any written statement by a party, any hearing
or arbitral award, decision or other communication of the
arbitral tribunal.

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99. The arbitral tribunal may order that any documentary
evidence be accompanied by a translation into the
language agreed upon by the parties or determined by the
arbitral tribunal.

Claim

100. Within the period of time agreed by the parties, or failing
such agreement as determined by the arbitral tribunal,
the claimant shall submit his or her statement of claim in
writing to the other party and the arbitral tribunal, and
may include:

(1) The names and addresses of the parties;

(2) A statement of facts supporting the claim;

(3) The points at issue;

(4) The relief or remedy sought;

(5) The statements, documents or other evidence to
the arbitral tribunal.

Counter-claim and defense

101. Within the period of time agreed by the parties, or failing

such agreement as determined by the arbitral tribunal,
the respondent after receipt of the copy of the statement
of claim from the arbitral tribunal or the claimant under
section 100 of this Act, shall submit his or her statement of

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defense in writing to the claimant and the arbitral tribunal,
and may include:

(1) A reply to the statement of claim;

(2) Any counter-claim;

(3) Statement of facts and legal points supporting the

reply and the counter-claim; and

(4) The statements, documents or other evidence to the

arbitral tribunal.

102. A party may amend or supplement the claim or defense
during the course of the arbitral proceeding, unless the
arbitral tribunal considers it inappropriate to allow such
amendment having regard to the delay.

Oral hearings and proceedings with written submissions

103. Unless the parties have agreed otherwise, the arbitral
tribunal shall decide whether to hold the hearings in the
form of oral hearings or in written submissions. Where
the parties have not excluded an oral hearing, the arbitral
tribunal shall hold such a hearing at an appropriate stage
of the arbitral proceeding if so requested by a party.

104. The parties shall be given notice in advance of any hearing
and of any meeting of the arbitral tribunal.

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Disclosure of all statements, documents and other evidence to
both parties

105. Any statement or document submitted to the arbitral
tribunal by a party shall be communicated to the other
party by the arbitral tribunal, and any expert report or
evidentiary document on which the arbitral tribunal may
base its decision, shall be communicated to the parties.

Powers of the arbitral tribunal upon default of the parties

106. Unless otherwise agreed by the parties, if without sufficient
cause, in the opinion of the arbitral tribunal:

(1) The claimant fails to communicate his or her
statement of claim in time, the arbitral tribunal shall
terminate the arbitral proceedings;

(2) The respondent fails to communicate his or her

statement of defense in time, the arbitral tribunal
shall continue the arbitral proceedings without
treating such failure as an acceptance or admission
of the facts alleged by the claimant; or

(3) Any party fails to appear at a hearing or produce

documentary evidence, the arbitral tribunal may
continue the arbitral proceedings and make an
award on the evidence before it.

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Power to appoint expert

107. The arbitral tribunal may appoint one or more experts
to report to it on specific issues to be determined by the
arbitral tribunal.

108. The parties shall give the expert any relevant information or
produce for his or her inspection any relevant documents
or goods or any other property that he or she may require
of them.

109. Unless otherwise agreed by the parties, if a party so requests
or if the arbitral tribunal considers it necessary, the expert
shall, after delivery of his or her written report, participate
in a hearing where the parties may question him or her
and the parties may present other expert witnesses in
order to testify on the points at issue.

110. Sections 107, 108 and 109 of this Act shall be understood
as being without prejudice to the power of the parties,
unless otherwise agreed, to submit expert reports by
experts freely appointed by them.

Assistance of court

111. The arbitral tribunal or a party with the approval of the
arbitral tribunal may request assistance of any competent

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court of the Kingdom of Bhutan to take evidence or
summon and direct witness to testify in accordance with
the applicable laws on evidence.

112. The court may, in accordance with the applicable laws,
issue order on the request made under section 111 of this
Act.

Closure of hearings

113. The arbitral tribunal may enquire parties if they have
any further proof to offer or witnesses to produce or
submissions to make and, if there are none, it shall declare
the hearings closed.

CHAPTER VII
INTERIM MEASURES

Arbitral tribunal to order interim measures

114. At any time before the settlement of dispute or final
arbitral award is rendered, the arbitral tribunal may grant
an interim measure that may order a party to:

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(1) Maintain or restore the status quo pending
determination of the dispute;

(2) Take action that would prevent, or refrain from

taking action that is likely to cause, current or
imminent harm or prejudice to the arbitral process
itself;

(3) Provide a means of preserving assets out of which a

subsequent award may be satisfied; or

(4) Preserve evidence that may be relevant and material

to the resolution of the dispute.

Conditions for granting interim measures

115. The party, which request an interim measure shall satisfy
the arbitral tribunal that:

(1) Harm not adequately reparable by an award of
damages is likely to result if the measure is not
granted and such harm substantially outweighs the
harm that is likely to result to the party against whom
the measure is directed if the measure is granted; and

(2) There is a reasonable possibility that the requesting

party will succeed on the merits of the claim.

116. The determination on the possibility under section 115
(2) of this Act shall not affect the discretion of the arbitral
tribunal in making any subsequent determination.

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117. With regard to a request for an interim measure under
section 114 (4) of this Act, the requirements in sections
115 and 116 of this Act shall apply only to the extent the
arbitral tribunal considers appropriate.

Modification, suspension, and cancellation

118. The arbitral tribunal may modify, suspend, or cancel the
interim measure on:

(1) The application of a party; or

(2) Its own initiative, but only in exceptional

circumstances after giving prior notice to the parties.

119. The arbitral tribunal may require the party requesting
an interim measure to provide appropriate security in
connection with the measure.

Disclosure of material circumstances

120. The arbitral tribunal may require a party to promptly
disclose a material change in the circumstances upon
which an interim measure was requested or granted.

Cost and damages

121. An applicant for an interim measure is liable for any costs

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and damages caused to any party by the measure if the
arbitral tribunal later determines that, in the circumstances,
the measure should not have been granted or issued.

122. The arbitral tribunal may award costs and damages at any
time during the arbitral proceedings.

Recognition and enforcement of interim measures

123. Unless otherwise provided by the arbitral tribunal, an
interim measure granted by an arbitral tribunal shall be
recognized as binding and enforced upon application to
the competent court, irrespective of the country in which
it was granted subject to the provisions of section 125 of
this Act.

124. The party who seeks or has obtained recognition or
enforcement of an interim measure shall promptly inform
the court of any termination, suspension or modification
of that interim measure.

Grounds for refusing recognition or enforcement

125. The recognition or enforcement of an interim measure
may be refused at the request of the respondent if the
court is satisfied that:

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(1) The refusal is warranted on the grounds set out in
section 150 of this Act; or

(2) The interim measure has been suspended or
cancelled by the arbitral tribunal or, if so empowered,
by the competent court of the country in which the
arbitration took place or under the law of which that
interim measure was granted.

Appeal from recognition or enforcement of interim measure

126. An appeal against a decision on recognition or enforcement
of interim measure by a competent court may be submitted
to the High Court within ten working days from the
delivery of such decision on recognition or enforcement.

CHAPTER VIII
MAKING OF AWARD

Applicable substantive law

127. In domestic arbitration, the arbitral tribunal shall apply the

substantive law of Bhutan to decide the dispute submitted
for arbitration.

128. For the purpose of international commercial arbitration,

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the arbitral tribunal shall apply, subject to the provisions
of this Act, the substantive law agreed by the parties as
applicable to substance of the dispute.

129. If the parties fail to agree on the applicable laws, the arbitral

tribunal shall apply the law determined by the conflict of
law rules that it considers appropriate.

130. The arbitral tribunal shall decide the dispute in accordance
with the terms of the contract and shall take into account
the relevant applicable trade usages.

Decision by arbitral tribunal

131. Unless otherwise agreed by the parties, in arbitral

proceedings with more than one arbitrator, any award or
the decision of the arbitral tribunal shall be made with a
simple majority.

132. Notwithstanding section 131 of this Act, if authorized
by the parties or by all members of the arbitral tribunal,
questions of procedure may be decided by the presiding
arbitrator alone.

Settlement

133. If, during arbitral proceedings, the parties settle the

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dispute, the arbitral tribunal shall terminate the arbitral
proceedings and, if requested by the parties and not
objected to by the arbitral tribunal, record the settlement
in the form of an arbitral award on agreed terms.

134. An award on agreed terms shall be made in accordance
with the provisions of sections 135, 136 and 137 of this Act
and shall state that it is an award. Such an award has the
same status and effect as any other award on the merits of
the case.

Award

135. After completion of the submission of the parties, the
arbitral tribunal shall render award in writing and shall be
signed by the arbitrator.

136. In arbitral proceedings with more than one arbitrator, the
signatures of the majority of all members of the arbitral
tribunal shall suffice, provided that the reason for any
omitted signature shall be stated.

137. The award shall contain the reasons, date and the venue of
the arbitral tribunal, and each party and the Centre shall
be given a copy of the award.

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Cost of Arbitration

138. Unless otherwise agreed by the parties, the arbitral award
may provide for the costs of the arbitration as the arbitral
tribunal considers just and appropriate taking into account
the amount in dispute, the complexity of the subject-
matter, the time spent by the arbitrators and any other
relevant circumstances of the case.

Fees of arbitrator

139. The parties to the arbitration shall jointly and severally
pay such reasonable or agreed fees and expenses to the
arbitrators.

Cost of aborted arbitration

140. Unless otherwise agreed by the parties to the arbitration
agreement, where arbitration is commenced but for
any reason the arbitration fails, the court may, on the
application of a party, make such orders in relation to the
costs of the arbitration as it deems just.

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CHAPTER IX
TERMINATION OF ARBITRAL PROCEEDINGS

Termination of the arbitral proceedings

141. The arbitral proceedings shall be terminated:

(1) On the day of the final award or an order of the
arbitral tribunal;

(2) If the claimant withdraws his or her claim, unless the

respondent objects thereto and the arbitral tribunal
recognizes a legitimate interest on his or her part in
obtaining a final award in the dispute;

(3) If the parties agree on the termination of the arbitral

proceedings; or

(4) If the arbitral tribunal finds that the continuation

of the arbitral proceedings has for any other reason
become unnecessary or impossible.

142. The mandate of the arbitral tribunal terminates with the
termination of the arbitral proceedings, subject to the
provisions of the sections 143, 144, 145, 146 and 147 of
this Act. In such cases, the arbitral tribunal’s mandate will
be terminated when the respective decision is rendered.

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Correction, clarification and award

143. Within ten working days of receipt of the award, unless
another period of time has been agreed upon by the parties,
any party, with notice to the other party, may request the
arbitral tribunal to:

(1) Correct in the award any errors in computation,
any clerical or typographical errors or any errors of
similar nature;

(2) Clarify a point or a specific part of the award; or

(3) Make an additional arbitral award as to claims
presented in the arbitral proceedings and not
resolved in the award.

144. If the arbitral tribunal considers that the request made
under section 143 of this Act is justified, it shall make
the corrections or give the requested clarification within
ten working days, in case of domestic arbitration award,
from the receipt of the request and the corrections and/or
clarifications shall form part of the arbitral award.

145. If the arbitral tribunal considers the request made under
section 143 (3) of this Act to be justified, it shall make

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the additional arbitral award within twenty working days
from the receipt of such request.

146. Within ten working days of the award, the arbitral tribunal
on its own motion, may correct any of the errors referred
to under section 143 (1) of this Act.

147. Where the arbitration is international commercial
arbitration, the duration of ten and twenty working days
provided under sections 144 and 145 of this Act, shall be
twenty and forty working days respectively.

148. The provisions of sections 135, 136 and 137 of this Act
shall apply to arbitral decisions relating to the correction,
clarification or the issue of a supplement to the award.

CHAPTER X
RECOURSE AGAINST ARBITRAL AWARD

Application to set aside the award

149. Any recourse to the High Court against an arbitral award
may be made only by an application for setting aside such
award in accordance with section 150 of this Act.

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Grounds for setting award aside

150. An arbitral award may be set aside by the High Court if:
(1) The party making the application alleges and proves

that:

(a) A party to the arbitration agreement was
under some incapacity to enter the arbitration
agreement;

(b) The arbitration agreement was not valid under
the law to which the parties have subjected it
or, failing any indication thereon, under the
law of the Kingdom of Bhutan;

(c) A party making an application was not given
proper notice of the appointment of an
arbitrator or of the arbitral proceedings or
was otherwise impeded from presenting his
or her case;

(d) The award deals with a dispute not
contemplated by or not falling within the
terms of the submission to arbitration, or
contains decisions on matters beyond the
scope of the submission to arbitration;

(e) The composition of the arbitral tribunal or
the arbitral procedure was not in accordance
with the agreement of the parties or with this
Act; or

(2) The court finds that:

(a) The subject-matter of the dispute is not
capable of settlement by arbitration; or

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(b) The award is manifestly contrary to the public
policy of the Kingdom of Bhutan.

151. If a ground for setting aside an award concerns only part
of the arbitral award, only that part may be set aside.

152. An application for setting aside an award may not be
made after thirty working days for domestic arbitration
and ninety working days for international commercial
arbitration have elapsed from the date on which the party
making that application had received the arbitral award or
if a request had been made under section 149 of this Act,
from the date on which that request had been disposed of
by the arbitral tribunal.

Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application
within the prescribed period of three months it may
entertain the application within a further period of fifteen
working days, but not thereafter.

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153. The High Court may, on a recourse under section 149 of
this Act :

(1) Confirm the award; or

(2) Set aside the award in whole or in part and itself
determine the matter.

154. An appeal from setting aside or refusing to set aside an
arbitral award under section 153 of this Act shall lie to the
Supreme Court of Bhutan.

CHAPTER XI
RECOGNITION AND ENFORCEMENT

OF ARBITRAL AWARDS

Nationality of the Award

155. The award of an arbitral tribunal shall have the nationality
of the country in which the place of arbitration is situated.

Enforcement of domestic Award

156. Where the time for making an application to set aside
arbitral award under section 152 of this Act has expired
or application under section 149 of this Act is dismissed
by the High Court, the award shall have a binding force of
judgment and shall be enforced by the court in accordance
with the provisions of the Civil and Criminal Procedure
Code of Bhutan as if it were a decree of the Court.

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157. An appeal shall lie to the higher court against the decision
of the court under section 156 of this Act.

Recognition and enforcement of foreign award

158. The recognition of foreign award shall be governed by
any international conventions, multilateral or bilateral
agreements concerning the recognition and enforcement
of arbitral awards entered into by the Kingdom of Bhutan.

159. A foreign award shall be recognized as binding and shall
be enforced in the Kingdom of Bhutan by the High Court
in accordance with the Civil and Criminal Procedure
Code unless the High Court establishes, upon a request
by the opposing party the existence of a ground referred
to in section 150 of this Act, or if it finds that the award
has not yet become binding on the parties or is set aside or
suspended by a court of the country in which, or under the
law of which, that award was made.

160. The party relying on an award or applying for its
enforcement shall submit a duly certified copy of the award
and of the arbitration agreement if the agreement is in
writing. The documents may, if necessary, be accompanied
by a duly certified translation into Dzongkha.

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Appeal on recognition or enforcement

161. An appeal against a decision rendered by the High
Court under section 159 of this Act, may be submitted
to the Supreme Court of the Kingdom of Bhutan within
ten working days from the delivery of such decision on
recognition

CHAPTER XII
NEGOTIATED SETTLEMENT

Application

162. This Chapter shall apply to both domestic and international
negotiated settlement.

163. “Negotiated settlement” means a process, whether
referred to by the expression ‘conciliation’, ‘mediation’ or
an expression of similar import, whereby parties request
negotiator to assist the parties to settle dispute arising out
of or relating to a contractual or other legal relationship,
amicably.

Domestic negotiated settlement

164. For the purpose of domestic negotiated settlement, the
parties may resort to negotiated settlement in accordance
with the laws in force in Bhutan.

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International negotiated settlement

165. For the purpose of international negotiated settlement, only
those disputes arising from relationships of commercial
nature, whether contractual or not, shall be negotiated.

Provided that no negotiated settlement shall be permitted
on matter of insolvency and winding up, subject of
taxation or other matters which are against public policy,
morality or any other existing provisions of the law in
force in Bhutan.

Resort to arbitral or judicial proceedings

166. During the negotiated settlement proceeding, the parties
shall not initiate any arbitral or judicial proceedings in
respect of a dispute that is the subject of the negotiated
settlement process. Provided that a party may initiate
arbitral or judicial proceedings, where in his or her
opinion, such proceedings are necessary to preserve his or
her rights.

Parties to act in good faith

167. The parties shall participate in the negotiated settlement
proceeding in good faith with the intention to settle the
dispute.

Adjournment of court proceedings

168. At any stage of the court proceedings, the parties may
pursue negotiated settlement and the court shall adjourn
the proceedings upon request of the parties.

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Disclosure and inadmissibility of information

169. The parties or any other third person, including those
involved in the administration of the negotiated settlement
proceeding, shall maintain confidentiality with respect to
all events that transpired during the settlement proceedings
and shall not in arbitral, judicial or similar proceedings
rely on, introduce as evidence or give testimony as to:

(1) Views expressed by a party in the course of the
negotiated settlement proceedings;

(2) Statements or admissions made by a party in the
course of the negotiated settlement proceedings;

(3) Proposals or the views expressed by the negotiator;

(4) The fact that a party had or had not indicated
willingness to accept a proposal; or

(5) A document prepared solely for the purposes of the
negotiated settlement processes.

170. There shall be no stenographic or audio or video recording
of the negotiated settlement proceedings.

Inapplicability of laws

171. The negotiated settlement proceeding may not be bound
by the provisions of the Civil and Criminal Procedure
Code and the Evidence Act.

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Role of the Conciliator or Mediator

172. Any person who facilitates conciliation, mediation or
other forms of settlement of dispute:

(1) Shall not impose his or her views or solution to the
parties;

(2) Shall assist and facilitate the parties in an independent
and impartial manner in their attempt to reach an
amicable settlement of their dispute; and

(3) May explain to the parties the merits and drawbacks
of resorting to the formal legal proceedings.

173. The third party who facilitates settlement of dispute shall
be guided by principles of objectivity, fairness and justice,
giving consideration to, among other things, the rights and
obligations of the parties, the usages of the trade concerned
and the circumstances surrounding the dispute, including
any previous business practices between the parties.

Settlement agreement

174. When there is a possibility of settlement which may be
acceptable to the parties, the negotiator may:

(1) Formulate the terms of settlement and suggest them
to the parties for their observations; and

(2) After receiving the observations of the parties,
reformulate the terms of a possible settlement.

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175. The negotiated settlement shall be by voluntary consent
and if the parties reach an agreement on the dispute, it
shall be signed by the parties and the negotiators without
alteration of the agreed terms and conditions.

176. The conciliator or mediator shall authenticate the
settlement agreement and furnish a copy thereof to each
of the parties.

Enforcement of Settlement Agreement

177. The settlement agreement shall be enforced by the court
of competent jurisdiction in accordance with the laws in
force in Bhutan.

Termination of negotiated settlement proceeding

178. The negotiated settlement proceeding shall be terminated:

(1) By the conclusion of a settlement agreement by the
parties, on the date of the agreement;

(2) By a declaration of the negotiator, after consultation
with the parties, to the effect that further efforts at
negotiation are no longer justified, on the date of the
declaration;

(3) By a written declaration of the parties addressed
to the negotiator to the effect that the negotiation
proceedings are terminated, on the date of the
declaration; or

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(4) By a written declaration of a party to the other party
and the negotiator, if appointed, to the effect that the
negotiation proceedings are terminated, on the date
of the declaration.

CHAPTER XIII
MISCELLANEOUS

Amendment

179. The amendment of this Act by way of addition, variation
or repeal shall be effected by a simple majority of the
respective Houses or vote of not less than two-thirds of
the total members of Parliament present and voting on a
motion submitted by one-third of the members of either
House.

Rule making power

180. The Centre in consultation with the National Judicial
Commission may, from time to time, frame rules for
the effective administration of the alternative dispute
resolution or as it deems necessary to carry out and give
effect to this Act.

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Authoritative text

181. The Dzongkha text shall be the authoritative text, if there
exists any difference in meaning between the Dzongkha
and the English text.

Definitions

182. In this Act unless context otherwise requires,-

(1) “Arbitration” shall refer to the process by which an
arbitrator appointed by parties or by the Centre, as
the case may be, adjudicates the disputes between the
parties and gives an award by applying the provisions
of this Act insofar as they refer to arbitration;

(2) “Arbitral tribunal” means a sole arbitrator or a
panel of arbitrators appointed in accordance with
the provisions of this Act;

(3) “Award” refers to the final decision of the arbitral
tribunal on the merit of the dispute;

(4) “Centre” means the Bhutan Alternative Dispute
Resolution Centre;

(5) “Commercial” includes all matters arising from
relationships of a commercial nature whether
contractual or not and shall mean to include, but are
not limited to the following transactions: any trade
transaction for the supply or exchange of goods
or services; distribution agreement; commercial

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representation or agency; factoring; leasing;
construction of works; consulting; engineering;
licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture
and other forms of industrial or business cooperation;
carriage of goods or passengers by air, sea, rail or
road;

(6) “Costs” means charges relating to:
(a) The fees and expenses of the arbitrators,

negotiators and witnesses;
(b) Legal fees and expenses;
(c) Any administration fees of the institution

supervising the arbitration and negotiated
settlement; and

(d) Any other expenses incurred in connection
with the arbitral proceedings, arbitral award
and negotiated settlement proceedings.

(7) “Court” means the Dungkhag and District courts in
the Kingdom of Bhutan;

(8) “Employee” means the employee of Bhutan
Alternative Dispute Resolution Centre;

(9) “Foreign award” means an award which is made

outside the Kingdom of Bhutan.

(10) “High Court” means High Court of the Kingdom of

Bhutan;