A bilateral investment treaty in Bangladesh gives qualifying foreign investors rights that sit above domestic law: fair and equitable treatment, compensation for expropriation, free transfer of returns and, crucially, the right to take the State to international arbitration. Knowing which treaty covers you, and what it actually says, should shape how you invest.

What a bilateral investment treaty in Bangladesh does

A bilateral investment treaty (BIT) is an agreement between two States under which each promises to treat investors from the other State according to agreed standards. If the host State breaks those promises, the investor can usually claim compensation directly against the State before an international tribunal, without needing its own government to take up the case.

For a foreign investor, a bilateral investment treaty in Bangladesh works as an insurance policy written in international law. It does not replace the contract, the licence or domestic law. It adds a second layer of protection that applies when government action, such as cancelling a licence, refusing payment through State bodies or changing rules in an arbitrary way, destroys the value of an investment.

Treaty rights and contract rights

Contract claims and claims under a bilateral investment treaty in Bangladesh are different. A power purchase agreement with a State utility may give you contract claims under its own arbitration clause. A BIT gives you claims for breach of the State's international obligations. The same facts can support both, but the tribunals, the applicable law and the remedies differ, and some treaties force you to choose a single route.

The treaty network: who is covered

Bangladesh signed its first BIT, with the United Kingdom, in 1980. According to the UNCTAD Investment Policy Hub, Bangladesh has signed 34 BITs, of which 25 are in force, seven are signed but not in force, and two older treaties (with Thailand and Turkey) have been replaced. Figures change as treaties are signed or terminated, so check the treaty text and status before relying on it.

Other treaties in force include those with Austria, Belgium-Luxembourg, Denmark, France, Indonesia, Iran, Korea, Malaysia, the Philippines, Poland, Romania, Switzerland, Thailand and Uzbekistan. Treaties signed but not yet in force include those with Bahrain, Belarus, Cambodia, Kuwait, Pakistan and Viet Nam.

Recent developments

On 9 September 2026, Hong Kong and Bangladesh signed an Investment Promotion and Protection Agreement covering fair and equitable treatment, compensation for expropriation, free transfers and dispute settlement by mediation and arbitration. It enters into force only after both sides complete their internal procedures, so it does not yet protect investors.

Core protections in a bilateral investment treaty in Bangladesh

Wording varies from one bilateral investment treaty in Bangladesh to another, and small drafting differences decide cases. The protections below appear in most treaties, but you must read the specific treaty that applies to your investment.

Fair and equitable treatment

Fair and equitable treatment (FET) is the standard most often invoked in investment arbitration worldwide. Tribunals have read it to protect against arbitrary or discriminatory conduct, denial of justice, lack of due process and, in some formulations, the frustration of legitimate expectations created by specific government assurances. Some newer treaties narrow FET to a defined list of breaches.

Full protection and security

This obligates the State to exercise due diligence to protect investments, traditionally against physical harm such as violence, riots or destruction of property. Some tribunals have extended it to legal security, but that wider reading depends on the treaty wording.

National treatment and most-favoured-nation treatment

Many treaties require Bangladesh to treat covered investors no less favourably than its own nationals (national treatment) or investors from any third State (most-favoured-nation treatment), in like circumstances. Some treaties limit these standards to investments already made, rather than the right to invest, and many carve out tax measures and regional economic arrangements.

Expropriation

Almost every BIT prohibits expropriation unless it is for a public purpose, non-discriminatory, carried out under due process and accompanied by compensation. Expropriation can be direct, such as nationalisation, or indirect, where measures deprive the investor of the use or value of the investment without formal transfer of title.

Free transfer of funds

Treaties usually guarantee the right to transfer capital, profits, dividends, loan repayments and sale proceeds in freely convertible currency, often subject to balance-of-payments safeguards and compliance with reporting rules. In practice, transfers still pass through Bangladesh Bank's foreign exchange framework, so documentation matters.

Umbrella clauses

Some treaties include a clause requiring the State to observe obligations it has entered into regarding investments. Where present, an umbrella clause may allow certain contract breaches by the State to be pursued as treaty breaches. Whether a given treaty has one, and how far it reaches, must be checked case by case.

Who qualifies as an investor and an investment

A treaty claim fails at the first hurdle if the claimant is not a protected investor or the asset is not a protected investment. Each bilateral investment treaty in Bangladesh defines both terms, and the definitions differ.

Investor

Individuals usually qualify by nationality. Companies usually qualify by incorporation in the treaty partner, sometimes with an added requirement of a seat or substantial business activity there. Dual nationals and companies controlled by Bangladeshi nationals raise particular issues.

Investment

Most treaties use a broad asset-based definition covering shares, loans, movable and immovable property, contractual rights, concessions and intellectual property. Many require that the investment be made in accordance with the laws of Bangladesh. An investment made without required BIDA, Bangladesh Bank or sector approvals may therefore lose treaty protection.

Denial of benefits

Some treaties allow the State to deny benefits to a company that is owned or controlled by third-country nationals and has no substantial business activity in the treaty partner. Mailbox companies are vulnerable.

Structuring investments for treaty protection

Because the protection of a bilateral investment treaty in Bangladesh depends on nationality, investors often hold Bangladeshi operations through a company in a State with a strong treaty. Singapore, the Netherlands and the UK are common choices for regional holding structures, though tax, corporate and commercial factors matter just as much.

Timing is critical. Tribunals generally accept restructuring done for legitimate planning before a dispute arises. They regularly reject claims where the restructuring took place once a specific dispute was foreseeable, treating it as an abuse of process. Plan your position under a bilateral investment treaty in Bangladesh at the time of investment, not when a problem appears.

Investment structure also interacts with domestic approvals. Changes of shareholding may need BIDA notification, Bangladesh Bank reporting for foreign currency flows and RJSC filings. Our foreign direct investment practice handles these alongside treaty planning.

Domestic protection alongside treaties

Rights under a bilateral investment treaty in Bangladesh operate alongside domestic law. The Foreign Private Investment (Promotion and Protection) Act 1980 gives foreign private investment protection against expropriation and nationalisation without adequate compensation, and guarantees the repatriation of capital and returns, subject to the law. Investors in economic zones and export processing zones also rely on the Bangladesh Economic Zones Act 2010 and the zone authorities' rules.

Domestic protection can be enforced in Bangladeshi courts, including through writ petitions in the High Court Division against unlawful public action. A bilateral investment treaty in Bangladesh adds an international forum that is independent of the domestic courts, which is why investors in high-value or politically sensitive sectors value it.

How a treaty claim against Bangladesh works

Almost every bilateral investment treaty in Bangladesh sets out a staged dispute process. The details differ, but the sequence below is typical.

1. Identify the measure. Pinpoint the government act or omission complained of and the treaty standards it breaches.
2. Serve notice. Send formal written notice of the dispute to the Government of Bangladesh, as the treaty requires.
3. Observe cooling-off. Negotiate in good faith for the treaty period, often three to six months, before starting arbitration.
4. Check preconditions. Some treaties require recourse to local courts for a period or contain a fork-in-the-road clause that makes a domestic court choice final.
5. Choose the forum. File with ICSID or start ad hoc arbitration under the UNCITRAL Rules, depending on what the treaty offers.
6. Constitute the tribunal. Each side normally appoints one arbitrator and the presiding arbitrator is agreed or appointed by an appointing authority.
7. Enforce the award. ICSID awards are binding under the ICSID Convention; non-ICSID awards are enforced under the New York Convention.

ICSID and Bangladesh

Bangladesh is a Contracting State to the ICSID Convention, which it ratified in 1980. ICSID awards are not subject to review by national courts; the only post-award remedy is annulment by an ICSID ad hoc committee on narrow grounds. Every Contracting State must recognise an ICSID award as binding and enforce its pecuniary obligations as if it were a final judgment of its own courts.

Lessons from past cases

Bangladesh's best-known treaty case is Saipem v Bangladesh (ICSID Case No. ARB/05/7), brought under the Italy BIT. The tribunal held that Bangladeshi court decisions revoking the authority of an ICC tribunal, and treating the resulting ICC award as a nullity, amounted to an expropriation of the investor's rights under the award. The case is cited worldwide on how national court interference with arbitration can breach investment treaties.

Other well-known disputes involving Bangladesh, including the Niko cases at ICSID, arose from contracts with State entities rather than BITs, which shows how contract and treaty routes sit side by side in the energy sector.

Practical steps for investors before a dispute

Most treaty cases are won or lost on documents created long before the dispute. Investors relying on a bilateral investment treaty in Bangladesh should build the record from day one.

• Keep approvals. Retain BIDA registrations, sector licences, Bangladesh Bank permissions and board resolutions showing the investment was lawfully made.
• Record assurances. Specific written assurances from ministries or regulators are far stronger evidence of legitimate expectations than general policy statements.
• Track capital. Keep evidence of every inward remittance, encashment certificate and capital contribution.
• Engage early. Raise concerns in writing with the responsible authority; a measured paper trail helps both settlement and any later claim.
• Avoid waivers. Be careful with settlement agreements or court filings that might waive treaty rights or trigger a fork-in-the-road clause.

Sector focus: energy, infrastructure and PPP projects

Treaty protection matters most where investors deal directly with the State. In Bangladesh that means power generation, LNG and gas, ports, telecoms and public-private partnership projects, where the counterparty is often a State utility or authority and the project depends on licences, tariffs and payment by public bodies.

The repeal of the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 by ordinance in late November 2024, with existing contracts remaining valid subject to government review, is a reminder that the legal framework around State contracts can shift. When contracts are reviewed, renegotiated or terminated, investors should assess both their contractual remedies and whether a bilateral investment treaty in Bangladesh adds protection, for example against arbitrary or discriminatory treatment.

Project documents should be drafted with treaties in mind: stabilisation and change-in-law clauses, a neutral arbitration seat, express consent to ICSID jurisdiction where possible, and clear rules on the effect of any treaty claim on contract remedies.

Choosing your route: contract, court or treaty

When a State measure harms an investment, investors usually have several options, and they are not mutually exclusive. The right sequence depends on the treaty, the contract and the commercial relationship.

A bilateral investment treaty in Bangladesh is therefore one tool among several. Mapping all routes at the outset helps avoid steps, such as a domestic filing, that might close the treaty route later.

Limits and risks of treaty claims

Arbitration under a bilateral investment treaty in Bangladesh is powerful but slow and expensive. Cases commonly run for several years, and costs for counsel, experts and the tribunal are substantial. Tribunals may award costs against an unsuccessful claimant.

A claim against the host State can also affect an ongoing business relationship, licences and future approvals. Many investors use the treaty as leverage in negotiation and commence arbitration only when the investment is already lost or talks have broken down. Collecting on an award against a State may require enforcement proceedings in several countries, and assets used for sovereign purposes are generally immune from execution.

Frequently asked questions about a bilateral investment treaty in Bangladesh

How we can help

We advise foreign investors on coverage under each bilateral investment treaty in Bangladesh when they structure investments, assess claims when government measures cause loss, and work with international counsel on notices, negotiations, ICSID and UNCITRAL proceedings and enforcement. Learn more about our investment treaty arbitration practice.

Primary sources: the ICSID Convention and case records; the UNCITRAL Arbitration Rules; investment registration with BIDA; treaty texts and status as listed by the UNCTAD Investment Policy Hub; the Foreign Private Investment (Promotion and Protection) Act 1980 on the Laws of Bangladesh portal.

This article is general information about Bangladeshi and international investment law as of 2026 and is not legal advice. Treaty texts differ and their status changes; confirm the applicable treaty and current position with a qualified lawyer before acting.