Bangladesh’s Commercial Court Act, 2026: Can Specialized Commercial Justice Transform the Country’s Business Climate?

The Economic Urgency for Judicial Reform

For decades, one of the most persistent complaints from businesses operating in Bangladesh has been the painfully slow dispute resolution process. Commercial cases involving unpaid debts, shareholder conflicts, infrastructure disputes, insurance claims, contractual breaches, intellectual property violations, and failed business transactions often remained trapped in the ordinary civil court system for years. In many instances, disputes continued for five to ten years before reaching final resolution. By that stage, business relationships had collapsed, projects had stalled, financial losses had multiplied, and the practical value of justice itself had significantly diminished.

Against this backdrop, the enactment of the <strong>Commercial Court Act, 2026</strong> represents one of the most significant procedural reforms in Bangladesh’s judicial system in recent years. The legislation seeks to establish a specialized framework for adjudicating commercial disputes through dedicated courts, streamlined procedures, strict timelines, mandatory mediation, digital processes, and modern case management techniques.

The reform comes at an important time for Bangladesh’s economy. As the country moves toward post-LDC graduation and seeks to attract greater foreign investment, the need for predictable, efficient, and reliable commercial justice has become increasingly urgent. Investors rarely evaluate economic opportunities based solely on tax incentives or market size; they also assess whether contracts can be enforced quickly, fairly, and consistently when disputes arise. In that sense, the effectiveness of a country’s commercial justice system often becomes a direct indicator of credibility and investor confidence.

International Context and Comparative Development

Before the enactment of the new law, most commercial disputes in Bangladesh were resolved under the ordinary civil court system, governed primarily by the Code of Civil Procedure, 1908. Although specialized forums such as the Artha Rin Adalat existed for certain banking disputes, there remained no comprehensive institutional framework dedicated exclusively to broader commercial litigation.

This created immense practical difficulties, as commercial disputes are often document-heavy, technically sophisticated, and financially sensitive. Legal analysts and business communities had long argued that the absence of specialized commercial courts weakened contract enforcement, increased delays, and raised the overall cost of doing business in Bangladesh. Media outlets like The Daily Star described the new framework as opening “a new chapter in reform” for commercial adjudication.

The establishment of specialized commercial courts is a recognized global approach to maintaining investor confidence and strengthening economic competitiveness:

Bangladesh’s new framework directly reflects an effort to align its commercial justice system with these evolving international standards.

A Broad and Modern Definition of Commercial Dispute

One of the most important features of the Act is its expansive definition of the term “commercial dispute” under section 2(d). Rather than limiting jurisdiction to conventional trade disagreements, the legislation adopts a broad and commercially realistic approach.

The Act comprehensively covers disputes arising from:

• Banking transactions and export-import activities;
• Construction, infrastructure projects, joint ventures, and investment agreements;
• Shareholder agreements, franchising arrangements, partnership disputes, and distribution contracts;
• Insurance matters, shipping contracts, and technology development agreements;
• Intellectual property disputes involving trademarks, copyrights, patents, industrial designs, geographical indications, and domain name-related claims.

Particularly significant is the explanatory clause attached to the definition. The law expressly clarifies that a dispute does not lose its commercial character merely because immovable property has been used as security or because one of the parties is the government or a public authority. By adopting a wide and carefully structured definition, the legislation attempts to reduce uncertainty and prevent avoidable jurisdictional disputes that frequently delay litigation.

How the Commercial Court System Works

The most transformative aspect of the Commercial Court Act, 2026 lies in the deep structural and procedural reforms introduced across the entire litigation process.

Mandatory Pre-Suit Mediation: One of the first major innovations is mandatory pre-suit mediation in cases where urgent interim relief is not required. Before filing a commercial suit, parties must attempt mediation in accordance with prescribed rules. In commercial relationships, parties often have continuing business interests and may prefer preserving those relationships over engaging in prolonged adversarial proceedings.

Suit Management Hearing: Perhaps the most progressive feature of the Act is the introduction of the “Suit Management Hearing.” Shortly after the defendant files a written statement, the Commercial Court conducts a dedicated hearing where both parties briefly present their claims. At this stage, the court actively intervenes to:

• Identify the core issues for determination;
• Separate factual disputes from legal questions;
• Determine which matters can be resolved through documents alone; and
• Limit the number of witnesses and fix hard timelines for all remaining stages.

Limited Adjournments and Strict Timelines: The legislation directly addresses the issue of endless adjournments by codifying strict statutory boundaries:

Summary Judgment: Where the court is satisfied that there is no genuine prospect of success for either party and that oral testimony is unnecessary, the dispute may be decided solely on the basis of pleadings and documentary evidence. The law extensively encourages affidavit-based evidence, limited cross-examination, and ongoing voluntary mediation at any stage before judgment.

Appeals, Costs, Enforcement, and Digitalization

The Act introduces several critical reforms regarding appeals, costs, and technology integration:

• Appeals and Penalties: Appeals against interim orders are generally restricted. Final appeals are to be heard by specially constituted Commercial Appellate Benches in the High Court Division within 60 days. Furthermore, the Act strengthens powers relating to execution of decrees, allowing courts to direct judgment-debtors to disclose assets under penalty.
• The “Loser Pays” Principle: The legislation adopts a modified “loser pays” framework. As a general rule, unsuccessful parties are required to bear litigation costs, including lawyer’s fees and reasonable litigation expenses. Commercial Courts are additionally empowered to award contractual interest or post-judgment interest calculated at 2% above the prevailing bank rate.
• Judicial Digitalization: Virtual hearings, electronic filing, digital summons, and online submission of documents are expressly encouraged under the framework of the Information Technology Use in Courts Act, 2020. The Act additionally mandates the publication of monthly case statistics on the Supreme Court website to ensure institutional accountability.

The Practical Challenges Ahead

Despite its progressive structure, the Commercial Court Act, 2026 faces several serious practical challenges that may determine its ultimate success:

• Judicial Capacity and Training: Complex commercial disputes require deep expertise in corporate finance, intellectual property, and maritime laws. Bangladesh currently has a limited pool of judges with extensive expertise in these specialized areas, requiring sustained institutional training.
• Infrastructure Gaps: Many courtrooms outside major urban centers like Dhaka and Chattogram face shortages of basic technological support, reliable internet connectivity, and trained administrative staff, which may cause uneven implementation.
• Small and Medium Enterprises (SMEs): While the new framework heavily benefits large corporations and foreign investors, smaller businesses may still struggle with the upfront procedural complexity and litigation expenses.

Final Thoughts

The Commercial Court Act, 2026 represents an important shift in the legal and economic landscape of Bangladesh. By establishing specialized courts with stricter timelines, structured case management, mandatory mediation, summary procedures, and digital mechanisms, the legislation seeks to create a more efficient and commercially responsive justice system.

Whether the Commercial Court Act, 2026 ultimately succeeds will depend not only upon the text of the law, but upon implementation, institutional commitment, judicial training, infrastructure development, and administrative efficiency. The next few years will be absolutely critical in determining whether this framework genuinely transforms commercial justice or struggles under systemic administrative realities.

As discussed in the document “SSA Article_Wills and Inheritance in Bangladesh_Revised_AC.docx”, navigating evolving procedural systems in Bangladesh requires localized specialized legal expertise. At Sadat Sarwat and Associates, we regularly advise clients on commercial disputes, contract enforcement, corporate matters, and litigation strategy, with a focus on delivering practical and effective legal solutions for all our clients.

References:

Commercial Court Act, 2026
Code of Civil Procedure, 1908
Arbitration Act, 2001
Information Technology Use in Courts Act, 2020
The Daily Star – Commercial courts introduced to settle business disputes faster
The Daily Star – A review of the Commercial Court Ordinance 2026
The Financial Express – Commercial Court Ordinance issued
The Business Standard – Supreme Court, UNDP push draft commercial court ordinance
Bangladesh Pratidin English – Commercial court ordinance and trade justice

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