Arbitration in Nepal is regulated under the provisions of the Arbitration Act 2055 (1999).
Arbitration as practiced in Nepal is an alternate dispute mechanism where parties choose the following:
- disputes/issues to be submitted for resolution
- rules for resolution of dispute
- arbitrator(s) who will adjudicate the dispute and the number
- venue of arbitration
Arbitration process shall be applied in the existence of an agreement between the parties to this effect. The parties are required to cooperate in appointment of arbitrators and to participate in the arbitration process. However, non-cooperation of either party shall not necessarily affect the legality of the arbitration process and the either party may approach the court for assistance in proceeding with the arbitration process. Court may pass number of orders to facilitate arbitration process such as – order appointing/removing arbitrator(s), order concerning jurisdiction of arbitrator, review of interlocutory order of arbitrator, recordal of evidence.
Parties are free to conduct arbitration privately or through institutions such as Nepal Council of Arbitration or Dispute Resolution Center Nepal.
An arbitral award is enforceable in the same manner as a court order. An arbitral award may be challenged for the following reasons:
- invalid agreement
- failure to issue relevant notices in the proper manner
- arbitrator acting outside of one’s jurisdiction
- arbitration procedure not in accordance with the agreement
An arbitral award that is passed in a foreign country may be enforced in Nepal subject to the following conditions:
- both Nepal and the country where the award is passed are party to a treaty that permits enforcement of foreign arbitral awards
- when the arbitration procedure is in accordance with the appropriate rules (appointment, notices, jurisdiction)
- when the award is final and binding on parties in the country where it is passed
- In case the laws of the country of the petitioner or the laws of the country where arbitration proceedings have been conducted, do not contain provision under which arbitration award taken in Nepal cannot be implemented.
- when enforcement petition is filed within 90 days from the date o passing of award
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