The first footsteps towards taking resort to alternate methods of dispute resolution in the ancient India can be traced back as early as The Bengal Regulation Act,1772 which provided that in all cases of disputed accounts, parties are to submit the same to arbitrators whose decision are deemed a decree and shall be final.

The Regulation Act,1781 further envisaged that judges should recommend the parties to submit disputes to mutually agreed person and no award of arbitrator could be set aside unless there were two witnesses that arbitrator had committed gross error or was partial to a party.

A recommendation for the first time was made to the Second Law Commission by Sir Charleswood to provide for a uniform law regarding arbitration. The Code of Civil Procedure was then enacted accordingly in 1859. Sections 312, 313-325 and 326-327 laid down the permission and procedure for arbitration without the court’s intervention.

Contract Act, 1872 also recognizes arbitration agreement as an exception to Section 28, which envisages that any agreement in restraint of legal proceedings is void.

Later, the Arbitration Act, 1899 was also enacted to apply only to presidency towns to facilitate settlement of disputes out of Court.

The Arbitration Act, 1940 repealed and replaced the previous Act of 1899 on the subject. This Act of 1940 was followed in Bangladesh throughout the Pakistan period till the year 2001 when the new law on arbitration viz. the Arbitration Act, 2001 was promulgated after the Law Commission of Bangladesh proposed amendment in the law regarding Arbitration in 1999. As such, the current legislation in force in Bangladesh today regarding arbitration is the Arbitration Act, 2001.  

An important feature of the current legislation in force is that it has been codified along the lines of Model Law on International Commercial Arbitration adopted by United Nations Commission on International Trade Law (UNCITRAL) and therefore corresponds to international standards of norms.

It is worth mentioning here that during the Pakistan period, The Muslim Family Laws Ordinance, 1961 (Ordinance No. VIII Of 1961) was enacted which also provided for a reconciliation process through an arbitration council in respect of Talaq by Muslims before the Talaq could become effective.

In 1976, the Village Court Ordinance, 1976 was passed. This was also another attempt to move away from the traditional legal and administrative forums and settle certain petty civil and criminal disputes through a panel of elected representatives of the local governments. This was arguably the first legislation on ADR after the independence of Bangladesh. The Village Court Ordinance, 1976 was, subsequently, repealed by the Village Court Act, 2006 which is the law currently in force on the subject. One of the unique features of this law is that no lawyer is allowed to be appointed by the parties in any proceedings before a village Court. It is completely controlled and operated by people who are neither lawyers nor trained judges.  

Since 1985, the Family Court Ordinance, 1985 had given jurisdiction to the trial Judge to effect reconciliation between the parties both before and after the trial. This Ordinance dealt with divorce, restitution of conjugal rights, dower, maintenance and custody of children. All Assistant Judges were ex officio Family Court Judges.

There were two epoch making legislations, (i) The Code of Civil Procedure (Amendment) Act, 2003, enacted on the 27th February, 2003 and given effect to from the 1st July, 2003 and (ii) Artha Rin Adalat Ain, 2003 (Money Loan Recovery Act, 2003), effective from the 1st May, 2003.