Worldlaw Profiles 2008

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Bangladesh

With its largely corrupt political classes in jail or in exile, Bangladesh has the chance of a lifetime to create a new democratic order. However, protests and violence since the beginning of an emergency imposed by a military-backed administration in late 2006 could plunge the country into further chaos.

According to Bangladesh ’s constitution, when an election is called at the end of the prime minister’s five-year term, the chief justice of the Supreme Court forms a caretaker government to oversee the election and holds the position of the government’s chief adviser. When Bangladesh National Party leader Khaleda Zia reached the mandatory end of her prime-ministerial term in late 2006, then-Chief Justice K.M. Hasan declined the post due to ill health, so President Iajuddin Ahmed appointed himself chief adviser.

Zia’s archrival, Sheikh Hasina Wajed — who heads the Awami League and was prime minister from 1996 to 2001 — objected, accusing Ahmed of being biased towards Zia and the BNP, and announced that her Awami League would boycott the election. When the resulting violence broke out across Bangladesh , security forces stepped in. Ahmed stepped down and respected economist Fakruddin Ahmed became chief adviser.

However, General Moeen U Ahmed, the army chief of staff, holds effective power. The military-backed government has taken action against the corruption and legislative gridlock that resulted from the two women’s political rivalry. Leading figures from both parties have been arrested and special anti-corruption courts have sentenced five former ministers to jail terms for amassing illegal wealth and consorting with Islamic militants.

The crackdown on the parties by the army-backed
regime, though welcomed by the middle class and intelligentsia, has done much to alienate the Bangladeshi masses. By August 2007, the army was trying to impose order on the streets and major cities were under curfew. Both Zia and Hasina have been under house arrest, although pressure from the courts forced the generals to back down from a plan in April 2007 to keep Hasina in exile in London .

The overall economy is largely untouched by the emergency, except that Bangladesh ’s endemic graft is less prevalent. “The current government is trying hard to make regulatory sectors free of corruption,” acknowledges A.B.M. Nasirud Doulah, a partner in Doulah & Doulah, Dhaka ’s biggest law firm. One by-product of the constitutional crisis has been a rise in investor confidence, he adds. “Due to less harassment in regulatory sectors, no strikes and no political unrest, we have identified a recent surge in foreign direct investments.”

The International Monetary Fund is forecasting 6.6% gross domestic product for 2007, the same as in 2006. The 6% it has averaged since 2001 is far short of the 8-9% that the country needs to absorb new workforce entrants and lift its masses out of poverty.  Bangladesh ’s economy is still largely dependent on textiles. Bangladesh manufacturers have forecast that garment exports would double to more than US$15 billion annually between 2006 and 2011.

LEGAL & REGULATORY DEVELOPMENTS

Bangladesh inherited an English common-law system that had been adapted over the years to include shari’a legal provisions by Pakistan , of which Bangladesh was a part until 1971.

The Labour Law 2006 is the only significant new piece of legislation, say lawyers. It limits collective bargaining in industries and prescribes minimum wages for workers.

LOCAL LAW FIRMS

Doulah & Doulah, originally an intellectual-property house, has grown into one of Bangladesh ’s largest full-service legal practices with a range of large multinational and domestic clients. It also advises multilateral lenders such as the World Bank and KfW.

Lee Khan & Associates is a corporate and commercial firm that advises domestic companies such as GSP Finance Co and overseas employee agency Bengal Gulf International. Moniruzzaman Khan is the firm’s senior partner.

Advisers’ Legal Alliance is a five-member general corporate firm that also undertakes admiralty and taxation transactions. Its clients include Sony Corporation, Toshiba Corporation and Singapore Telecommunications. Bangladesh IP Law Office is the firm’s IP unit.

Huq & Co is another major corporate firm and counsels Beximco Pharmaceuticals , Bangladesh ’s world-class drug-maker listed on London ’s Alternative Investment Market.

Chancery Chambers is a Dhaka-based full-service firm, whose head, Sigma Huda, has been the United Nations special rapporteur on human trafficking since 2004.

Kabir & Associates, which began as a maritime practice, is a full-service operation with offices in Chittagong , Dhaka and Khulna .

Tawfique Nawaz, who heads banking and litigation firm Juris Counsel, is senior counsel to the central Bangladesh Bank.

Other commercial firms in Dhaka include: Azizul Haq and Associates; MRI Chowdhury & Associates; Sobhan Hussain & Co and The Law Counsel.

Intellectual property (IP) houses include: Islam & Associates; Afsana Wahab; Karim & Co; Muquith Khan & Associates and Muhiuddin & Colleagues.

FOREIGN LAW FIRMS

No foreign law firms have permanent representation in Dhaka . Jones Day, Shearman & Sterling and Orrick, Herrington & Sutcliffe are among the few global firms to have undertaken recent Bangladesh-related work, mostly in project financing.

AREAS OF EXPERTISE

Banking

Doulah & Doulah is acting for Citigroup entering into various over-the-counter equity derivatives transactions, such as swaps and options. The firm also advises Wachovia Bank, United States , in a number of foreign-exchange transactions (spot, forward or options) and advises on a cross-border basis with banks and corporates in Bangladesh .

Capital Markets & Corporate Finance

Doulah & Doulah has recently advised Hewlett Packard Bangladesh , Feteks Chemical of Turkey , Bangkok-based Advance Agro, US apparel-maker Steve & Barry’s, British chemical company Connell Brothers, Abu Dhabi-based Etihad Airways and Singapore wireless technology company Consistel Solutions. The firm is also working for US fast food giant KFC in its South Asian franchise programme; advised on a US$2.5 million equity investment by PEB Steel Asia in PEB Steel Alliance; and acted for Morgan Stanley International to acquire a US-dollar loan granted to Oras Investment.

Cleary Gottlieb Steen & Hamilton represents the Grameen Foundation USA , a US unit of
Bangladesh ’s Grameen Bank, in its Growth Guarantees programme, a financing venture for microfinance institutions.

Dispute Resolution

In October 2006, Shearman & Sterling client Lahmeyer International Pally Power Services secured an award of more than US$20 million in arbitration against Rural Power Co, a state-owned Bangladeshi power producer. The dispute arose from the abrupt termination by Rural Power of a 15-year agreement with Lahmeyer for the operation and maintenance of a power plant in Mymensingh. A Singapore tribunal ruled that Rural Power had wrongfully terminated the contract.

Doulah & Doulah advised Dell in its damaged-product recall throughout South Asia and acts for Reed Exhibitions, Cargill International, BNP Paribas and Omnicon Freight Management in various matters.

IT, Telecommunications & Media

Orrick, Herrington & Sutcliffe is international counsel to Telenor, the Norwegian telecommunications provider that acquired a 62% stake in Bangladesh ’s GrameenPhone. Telenor and Grameen Bank microfinance pioneer founder, the Nobel Peace Prize-winning Muhammad Yunus, have clashed over GrameenPhone’s ownership structure.

Intellectual Property

Doulah & Doulah has been involved in large-scale infringement and enforcement matters on behalf of Microsoft Corporation, US retailer Costco, Delphi Technologies, Sony Corporation, Colgate Palmolive Co, Nokia Corporation and Indian food group

Britannia Industries.

Labour & Employment

Doulah & Doulah is advising Selex Sensors and Airborne Systems, GAP Asia , Hewlett Packard, Consistel Solutions and Etihad Airways on a range of labour issues.

Bingham McCutchen acted for Bangladeshi employees of Wal-Mart suppliers in Jane Doe I, et al, vs. Wal-Mart Stores. While a US District Court issued a tentative decision dismissing all claims in December 2006, it has yet to issue a final decision on the motion.

M&A

Doulah & Doulah is acting for ZingMobile in its acquisition of B 2M Technologies and advising on Singer Asia’s sale of assets in Bangladesh . The firm also acts for PEB Steel Asia, Alliance Holdings and Nekan Engineering as well as representing Al Aqeelah Group of Kuwait in its US$30 million equity investment in IPSSL Group.

Project Finance, Infrastructure & Energy

Jones Day is advising a consortium led by Malaysian power supplier Tanjong on the US$493 million acquisition in August 2007 of Globeleq, a subsidiary of CDC Group, which owns power plants in Bangladesh , Pakistan and Sri Lanka .

Doulah & Doulah is representing Coastal Petroleum in its acquisition of United Summit Coastal Oil, and also advised El Paso CGP Co in the acquisition of Khulna Power Co and EPED Holding Co in the acquisition of NEPC Consortium Power.

Regulatory & Government

Doulah & Doulah was appointed to advise on a World Bank project — Impediments to International Integration — to analyze laws, regulations, procedures and policy, and regulatory barriers in certain investment sectors in Bangladesh. The firm also advised Selex, Toyota Motor Co and BAe Systems Overseas on regulatory matters.

Restructuring, Insolvency & Bankruptcy

Doulah & Doulah is advising on the reorganization of Khulna Power Co.

Shipping, Maritime & Aviation

Doulah & Doulah acted for Al Aqeeq Aviation, a Kuwait company, in its merger with Best Air Aviation of Bangladesh. The firm also advised General Electric Commercial Aviation Service on supplier financing and leasing matters with GMG Airlines.

Bangladesh

Fact File