Section 40: Settlement of Disputes

1) If there arises any dispute between a Nepali investor and a foreign investor in relation to foreign investment, the Department may make it necessary to facilitate such a dispute in order that such a dispute is settled by the concerned parties through mutual discussions or negotiations.

2) If the dispute cannot be settled through the process referred to in sub-section (1) within a period of forty-five days after the dispute has arisen, and a joint investment or dispute settlement agreement exists between the parties to the dispute for the resolution of such a dispute, the dispute shall be settled in accordance with such an agreement.

3) The parties shall give information about the settlement of the dispute in accordance with sub-section (2) to the Foreign Investment Approving body not later than fifteen days after its settlement.

Provided that the parties shall not be bound to give information about what terms and conditions such a settlement has been made.

4) If the agreement concluded between the parties in accordance with sub-section (2) has no provision about the settlement of disputes, such a dispute shall be settled by arbitration in accordance with the arbitration law of Nepal

5) Any dispute arising in connection with any foreign investment shall be settled by arbitration in accordance with the prevailing Rules or Procedures of the United Nations Commission on International Trade Law (UNCITRAL) unless otherwise agreed upon by the parties to the dispute.

6) Arbitration to be conducted in accordance with this Section shall be held in Nepal, and the substantive law of Nepal relating to arbitration shall apply.

Provided that with respect to the case referred to in sub-section (2), the provision contained in that sub-section shall apply.

7) If no agreement was made between the parties on the settlement of the dispute prior to the arising of the dispute or if they realise that the agreement if any made, is inadequate, the concerned parties may make an agreement for the settlement of a dispute even after the dispute has arisen. Information of the agreement so made shall be given to the body registering the industry.

8) Any dispute with respect to the agreement made in accordance with sub-section (7) may also be settled in accordance with this Section