Arbitration in Nepal and Enforcement of Foreign Arbitral Awards

Nepal acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 4 March 1998. It entered into force for Nepal on 2 June 1998. Nepal entered both of the reservations the Convention permits: it applies the Convention only to awards made in the territory of another contracting State, and only to disputes arising out of legal relationships that its own law treats as commercial.

Neither reservation is unusual. Together they define the two questions a Nepali court will ask before it enforces anything, and they are the questions a drafting lawyer should be answering when the clause is written rather than when the award is in hand.

The reciprocity reservation

The first reservation makes the seat of the arbitration determinative. An award made in the territory of another contracting State is within the Convention as Nepal applies it. An award made anywhere else is not, and the party seeking enforcement is left arguing from the Arbitration Act 2055 (1999) alone, without the Convention behind it.

For most commercial arbitrations this is administrative rather than difficult. Singapore, London, Hong Kong, Delhi and Paris are all in contracting States. It becomes a live problem in two situations. Where the clause names an institution but not a seat, and the seat ends up being determined later by the tribunal, the enforceability of the eventual award was left to chance. And where the clause names a place chosen for convenience rather than for its Convention status, the choice may have quietly disapplied the treaty.

We were unable to establish whether Nepal maintains and publishes a notified list of reciprocating states for this purpose. That is worth confirming with Nepali counsel before relying on a seat, because a reservation implemented through a published list operates differently from one applied by reference to the Convention’s own membership.

The commercial reservation

The second reservation limits the Convention to relationships Nepali law regards as commercial. The category is broad in practice and rarely litigated. It is still a reminder that Nepali law, not the law of the contract, decides the characterisation. Disputes touching land, family arrangements, employment or regulatory entitlements sit closer to the boundary than a supply agreement does.

Enforcing a foreign award

Enforcement of a foreign award runs through section 34 of the Arbitration Act 2055. The applicant files certified copies of the award and of the underlying agreement, with a Nepali translation where required. The award must be shown to be final and binding under the law of the country in which it was made, the parties must have had proper notice, and the award must be consistent with the terms on which the parties agreed to arbitrate.

The grounds for refusing enforcement are narrow: the dispute is not arbitrable under Nepali law, or enforcement would be contrary to public policy. That is a Convention-shaped list, and its narrowness is the whole point of arbitrating rather than litigating.

One caution about the text. The copy of the Act published by the Nepal Council of Arbitration incorporates amendments only to 2066 (2009/10), and renders the enforcement application as one made to the District Court while the challenge to a domestic award goes to the High Court. Those two cannot both be current, and the discrepancy may reflect the 2015 restructuring of Nepal’s courts, an extraction artefact, or an intended difference. Confirm the forum before filing.

Challenging a domestic award

For an award made in Nepal, section 30(1) gives 35 days from notification of the award to apply to set it aside, and names the High Court. The grounds are the familiar ones: defects in the appointment of the arbitrator, inadequate notice to a party, determination of matters beyond the arbitrator’s mandate, and procedural conduct contrary to the law governing the agreement or to Nepali law. Non-arbitrability and public policy are added to that list.

Thirty-five days is short. A party dissatisfied with a Nepali award has a little over a month to decide, instruct, and file.

The 2025 amendment

An omnibus act authenticated on 31 March 2025 amended six statutes at once, among them the Arbitration Act 2055, the Foreign Investment and Technology Transfer Act 2075 (2019), the Companies Act 2063 (2006), the Industrial Enterprises Act 2076 (2020), the Special Economic Zone Act 2073 (2016) and the Foreign Exchange (Regulation) Act. It is separately reported that a 2025 instrument barred courts from re-examining facts or evidence at the enforcement stage of an arbitral award.

We could not obtain the amending text. We could not confirm whether the change was first made by ordinance and subsequently re-enacted, which is a common sequence in Nepal and which matters because an ordinance that lapses leaves the prior law standing. And we could not confirm what the amendment says.

If the reported change is real, it is significant. Re-litigation of the merits at the enforcement stage is the single most effective way for a losing party to make an award worthless, and a statutory bar on it would move Nepal materially closer to the Convention’s intended effect. That is exactly why we will not describe a provision we have not read. Anyone structuring a Nepal-facing contract on the strength of it should obtain the gazette text.

Institutional arbitration

The Nepal Council of Arbitration, established in 1991, administers arbitration and adjudication under its own institutional rules of 2072 (2015/16), with a published code of ethics for arbitrators and a fee calculator keyed to the amount in dispute, the number of arbitrators and whether the contract is domestic or international.

Its caseload is real but modest. In FY 2080/81 (2023/24) it carried 79 cases forward from the previous year, registered 97 new ones, and gave final decisions in 48, leaving 128 pending. A pending-to-disposed ratio near three to one indicates a docket growing faster than it is being cleared, which is the same pattern visible in the general courts described in commercial dispute resolution.

That NEPCA maintains separate adjudication rules is worth noting for anyone in construction or infrastructure. Dispute boards and adjudication resolve payment disputes during a project rather than after it, and in a market where final resolution takes years, the interim mechanism often decides the commercial outcome.

Arbitrating against a state entity

A substantial share of large Nepali contracts have a government body, a state-owned enterprise or a public utility on the other side, and that changes the analysis in two ways.

Arbitrability is the first question. Where a dispute touches a regulatory entitlement, a licence, or a public procurement decision rather than a contractual obligation, the non-arbitrability ground becomes a live argument rather than a formality.

Enforcement against public assets is the second. An award against a state entity is worth what can be executed against, and public assets attract immunities and practical protections that private assets do not. Investors with treaty protection may have a separate route entirely, which is a different regime from commercial arbitration and is dealt with in investment protection.

What to put in the clause

Name a seat, and name one in a contracting State. Name the institution and the rules. Specify the language, because a Nepali translation requirement at enforcement is cheaper to plan for than to discover. Decide whether you want a Nepali seat, which gives you NEPCA and a 35-day challenge window, or a foreign seat, which gives you the Convention and a Nepali enforcement application.

And check the gazette for what the 2025 amendment actually did before assuming the enforcement stage is now closed to factual review.

Sources

1. Status: Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958)

   United Nations Commission on International Trade Law · Status table as at 26 August 2026 · Tier 3 — Multilateral institution

   Supports: Nepal's accession on 4 March 1998, entry into force on 2 June 1998, and both declarations: that Nepal will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State, and only to differences arising out of legal relationships considered commercial under its national law.

   Accessed 26 August 2026

2. Arbitration Act, 2055 (1999), Nepali text incorporating amendments to 2066

   Government of Nepal, published by the Nepal Council of Arbitration · 1999, as amended to 2066 (2009/10); does not reflect the 2025 amendment · Tier 1 — Primary legal instrument

   Supports: Section 34 on enforcement of foreign awards, including the documents to be filed and the requirement that the award be final and binding under the law of the seat; section 34(4) grounds for refusal limited to non-arbitrability under Nepali law and public policy; section 30(1) on the 35-day period to apply to set aside; and sections 30(2) and 30(3) on the grounds for setting aside.

   Accessed 26 August 2026

3. Annual report to the 33rd Annual General Meeting, FY 2080/81

   Nepal Council of Arbitration (NEPCA) · FY 2080/81 (2023/24) · Tier 4 — Audited disclosure / filing

   Supports: That 79 arbitration cases were carried forward from FY 2079/80 and 97 registered during FY 2080/81, giving 176 in total, of which 48 received final decisions and 128 remained pending.

   Accessed 26 August 2026

4. NEPCA Institutional Rules 2072 and Adjudication Rules 2072

   Nepal Council of Arbitration (NEPCA) · 2072 (2015/16) · Tier 2 — Official publication

   Supports: That NEPCA administers arbitration under its own institutional rules and separately administers adjudication under dedicated rules, and publishes a code of ethics for arbitrators and a fee calculator.

   Accessed 26 August 2026