FAQ

Arbitration

Agreements on Arbitration

What are the formal requirements for an arbitration agreement to be enforceable?

Arbitration agreements must be in writing to be enforceable, and the parties must have an established legal connection, whether contractual or not. The need that an agreement be in writing will be met by:

an arbitration clause in the underlying contract; or a letter, telegram, or email communication in which the parties agree to arbitrate.

If a party submits to an arbitration action as a respondent without contesting the initiation of arbitration, the parties are presumed to have entered into an arbitration agreement.

Arbitration process

Is there any substantive requirement for the method to be followed in domestic law?

• The arbitration agreement’s arbitration procedure must be followed. If no procedure has been agreed upon, the parties must follow the Arbitration Act 1999. If there are procedural issues that are not addressed in the agreement or the statute, the parties may decide how to continue. 
• If the parties cannot reach an agreement, the arbitrators will decide on the procedural issues. However, in arbitrations controlled by the Arbitration Act, the following steps must be followed:
• The arbitration must begin as soon as a claim, response, counterclaim, and rejoinder are filed.
• The arbitrator must create a timeline for the proceedings and provide it to the parties ahead of time.
• The arbitration must begin as soon as a claim, response, counterclaim, and rejoinder are filed.
• The arbitrator must create a timeline for the proceedings and provide it to the parties ahead of time.
• If either party fails to appear in the proceeding by the deadline, the arbitration might proceed and an order can be issued.
• Once the hearings are completed, the arbitrator must issue an end of hearing order, after which no more hearings or evidence can be taken.
• Ex aequo et bono and affable compositeur can only be used if both parties openly agree.
• Each party must be given an equal and sufficient opportunity to state their case.
• Each side must be allowed to be represented by legal advice and representatives.

Award

When and how should the award be presented?

In general, the tribunal must render an award within 120 days of receiving the last of the claim, response, counterclaim, and rejoinder. The award must be in writing and include all of the information specified in the arbitration agreement. If there is no consensus, the award must:

include a brief explanation of the dispute that has been referred to arbitration; establish jurisdiction over the arbitration; include the arbitrators’ conclusion as well as the reasons and grounds for reaching the result; include claims that must be realized and the amount that must be compensated
Include the location and date of the decision, as well as any interest payable for late payment of realized amounts.

Appeal

On what grounds can an award be challenged in court?

• A party to an arbitration may file an application with the appropriate high court to vacate an award within 35 days of its issuing if:

• The arbitration agreement is invalid under the governing law; the arbitration agreement is invalid under Nepalese law, where it is unclear which law governs the parties; the applicant has not received a notice to appoint its arbitrator or notice is not provided in a timely manner; the arbitration decides on issues not submitted to it; the arbitration gives an order outside the scope of the arbitration.

• The arbitration breaches the terms of the arbitration agreement; or the arbitrator’s appointment or the arbitration proceedings are not completed in accordance with the agreement or, in the absence of an agreement, the Arbitration Act.

• The high courts have the authority to either annul the award or order the panel to deliberate. If the verdict is unarbitrable under Nepalese law or is contrary to public good or policy, the courts will vacate the award. There is no alternative way to challenge an arbitration award. However, if the award infringes a party’s constitutional rights, the party may file a writ petition with the Supreme Court challenging the high court’s decision.

Enforcement

What processes are in place to enforce international and domestic awards?

• Domestic arbitration parties have 35 days from the date of the order’s issuing to comply with the order voluntarily. If the parties do not voluntarily comply, the aggrieved party may file an application with the appropriate district court within 30 days after the day the 35-day time limit expires. The award shall be enforced as the district court’s own decision.
• A party may petition the competent high court to vacate the award. If the issue is not arbitrable under Nepalese law, or if the award is contrary to public good or policy, the high court will vacate the award.
• A foreign award will be enforced under the Arbitration Act if it meets the following criteria:
• Arbitrators must have been appointed in accordance with the laws or processes outlined in the arbitration agreement.
• The parties must have been properly apprised of the proceedings.
• The arbitration must be restricted to the terms of the arbitration agreement or to the matters presented to arbitration.
• The arbitration award must be final and binding in the seat country, and Nepalese awards must be recognized reciprocally by the applicant’s or seat nation.
• The application for recognition of a foreign award must be lodged within 90 days of the award’s issuing.
• The upper courts will decide whether or not the aforementioned conditions have been met. If they have, the award will be enforced by the court, unless the dispute is not arbitrable under Nepalese law or the award is contrary to public policy.

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