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Career Summit is a TV Program sponsored by Islington College and hosted by Mr. Saugat Nepal, one of the finest host of Nepal. I was invited to participate in the program as one of the speaker or interviewee. The objective of this program was to guide students or graduates seeking opportunity in building up their career.
THE FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER ACT, 2049 (1992)
AN ACT MADE TO PROVIDE FOR MATTERS RELATING TO FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER
Preamble: Whereas, in the process of industrialization of the country, it is expedient to promote foreign investment and technology transfer for making the economy viable, dynamic and competitive through the maximum mobilization of the limited capital, human and the other natural resources.
1. Short Title and Commencement:
(1) This Act may be called “The Foreign Investment and Technology Transfer Act, 2049 (1992)”
(2) This Act shall come into force immediately .
2. Definitions: Unless the subject or context otherwise requires, in this Act:-
(a) “Industry” means any industry as referred to in Section 3 of the Industrial Enterprises Act, 2049 (1992).
(b) “Foreign Investment” means the following investment made by a foreign investor in any industry”
(1) Investment in Share (Equity)
(2) Reinvestment of the earnings derived from the investment as referred to in Sub-section (1) above,
(3) Investment made in the form of loan or loan facilities.
(c) “Technology Transfer” means any transfer of technology to be made under an agreement between an industry and a foreign investor on the following matters:
(1) Use of any technological right, specialization, formula, process, patent or technical know-how of foreign origin.
(2) Use of any trademark of foreign ownership.
(3) Acquiring any foreign technical, consultancy, management and marketing service.
(d) “Foreign Investor” means any foreign individual, firm, company or corporate body involved in foreign investment or technology transfer including foreign government or international agency.
(e) “Board” means the Industrial Promotion Board Constituted under Section 12 of the Industrial Enterprises Act, 1992.
(f) “Department” means the Department of Industries or Department of cottage and Small Industries of Government of Nepal or any other department office or agency as specified by Government of Nepal.
(g) “Prescribed” or “As prescribed” means prescribed or as prescribed in the Rules made under this Act or in an order issued by the Government of Nepal by notification published in Nepal Gazette.
3. Permission to be Obtained:
(1) Permission of the Department shall be required to be obtained for foreign investment or technology transfer.
(2) A person desiring to avail the foreign investment or technology transfer shall be required to make an application to the Department in the prescribed form along with the prescribed particulars for obtaining permission in that behalf.
(3) If an application is made pursuant to Sub-section (2) the Department shall, in the case of an industry with fixed assists up to five hundred million rupees, itself, and in the case of an industry with fixed assets in excess thereof, in accordance with the decision of the Board, grant permission within thirty days from the date of application. The Department shall communicate the decision made in regard to such permission to the applicant.
(4) Notwithstanding anything contained in Sub-section (1) and (2) no permission shall be granted for making foreign investment in the industries set forth in the Annex.
Provided that permission may be granted for the transfer of technology in such industries.
5. Facilities and Concessions: (1) ……………………
(2) A foreign investor making investment in foreign currency shall be entitled to repatriate the following amount outside Nepal:-
a) The amount received by the sale of the share of foreign investment as a whole or any part thereof.
b) The amount received as profit or divided in lieu of the foreign investment.
c) The amount received as the payment of the principal of and interest on any foreign loan.
(3) A foreign investor shall be entitled to repatriate outside Nepal the amount received under an agreement for the transfer of technology in such currency as set forth in the concerned agreement.
6. Provisions Relating to Visa:
(1) A foreign national visiting Nepal in connection with undertaking any study or carrying out any research with the objective of making investment in Nepal shall be provided a non tourist visa for up to six months.
(2) A foreign investor or dependent family or authorized representative of such a foreign investor and department family of such authorized representative shall for the purpose of stay in Nepal be provided a business visa until the foreign investment is retained.
Provided that a foreign investor who, at a time, makes investment in an
amount no less than one hundred thousand United States dollar or in convertible foreign currency equivalent thereto, and his/her dependent family shall be granted a residential visa until such investment is retained.
7. Settlement of Disputes:
(1) If any dispute arises between a foreign investor, national investor or the concerned industry, the concerned parties shall be required to settle the dispute by mutual consultations in the presence of the Department.
(2) If the dispute could not be settled in the manner as referred to in Sub-section (1) it shall be settled by arbitration in accordance with the prevailing arbitration Rules of the United Nations commission on International Trade Law (UNCITRAL).
(3) The arbitration shall be held in Kathmandu. The laws of Nepal shall be applicable in the arbitration.
(4) Notwithstanding anything contained in Sub-sections (1), (2) and (3) above, disputes arising in regard to foreign investment made in the industries with investment as prescribed may be settled as mentioned in the foreign investment agreement.
8. Power to Frame Rules: Government of Nepal may frame necessary Rules for carrying out the objectives of this Act.
9. This Act to Prevail: Notwithstanding anything contained in the existing laws, matters stipulated under this Act and Rules made there under shall be dealt accordingly.
9A. Power to Make Alternation or Amendment in Annex: Government of Nepal may, by notification in the Nepal Gazette, make necessary alterations or amendments in Part (B) of the Annex.
10. Repeal and Savings:
(1) The Foreign Investment and Technology Act, 1981 is hereby repealed.
(2) All acts performed or action taken under the Foreign Investment and Technology Act, 1981 shall deemed to have been performed or taken under this Act.
(Relating to Sub-section (4) of Section (3) Industries not to be granted permission for making foreign investment)
1. Cottage Industries.
2. Personal Service Business (Business such as Hair Cutting, Beauty Parlour, Tailoring, Driving Training etc.)
3. Arms and Ammunition Industries.
4. Explosives, Gunpowder
5. Industries related to Radio-Active Materials.
6. Real Estate Business (Excluding Construction Industries)
7. Motion Pictures Business (Produced in _……….. the language of the nation)
8. Security Printing
9. Currencies and Coinage Business
1. _Other Retail Business except the Retail Business instantly conducted more than
Two countries as International transaction.
7. _……………, Bidi (Tobacco), _………… (excluding those exporting more that 90%)
8. Internal Courier Service
9. Atomic Energy
11. Poultry Farming
14. Other Consultancy Services such as Management, Accounting, Engineering and Legal Services besides Consultancy Services having the foreign investment up to Fifty One percent.
15. Beauty paler
16. Domestic food processing methods in rent .
17. Local catering Service
18. Rural tourism
Act No. 9 of the year 2049 B.S.
An Act to provide for Labour
Preamble: Whereas it is expedient to make timely provisions relating to labour by making provisions for the rights, interests, facilities and safety of workers and employees working in enterprises of various sectors.
1. Short title and commencement:
(1) This Act may be called as the “Labour Act, 2048 (1992)”.
(2) It shall come into force immediately.
2. Definitions. In this Act, unless the subject or context otherwise requires :-:
(a) “Production process” means any of the following processes:
(i) works relating to making, altering, repairing, ornamenting, engraving, finishing, packing, oiling, washing, cleaning, breaking-up, dismantling or other kinds of activities given to any article or substance with a view of bringing it to its use, sale, distribution, transportation, or disposal.
(ii) pumping of oil, water, or sewage;
(iii) generating, transforming, and transmitting energy; or
(iv) printing, lithography, photography, book-binding and other similar work.
(b) “Enterprise” means any factory, _company, organisation, association, firm, or group thereof, established under the prevailing laws for the purpose of operating any industry, profession or service, where ten or more workers or employees are engaged and this expression also includes:
(1) Tea estates, established under the law for commercial purpose;
(2) Enterprise operating within the industrial districts established by government of Nepal where less than ten workers or employees are engaged.
(c) “Employee” means persons engaged in the administrative functions of the enterprise.
(d) “Worker” means a person employed on the basis of remuneration _…………to work in any building, premises, machinery or any part thereof used for any productions process or providing service, or any act relating to such work or for any unscheduled works and this expression also includes any worker working at piece-rate, contract or agreement.
(e) “Manager” means a person appointed for performing the functions in the Enterprise.
(f) “Proprietor” means the person having final authority on the activities of the Enterprise and this expression also includes any person appointed as the Chief of any §branch or unit of the Enterprise with powers to exercise final responsibility or authority in respect thereof.
(g) “Factory Inspector” means a factory inspector appointed by Government of Nepal and this expression also includes the Senior Factory Inspector.
(i) “Minor” means a person who has attained the Ôage of sixteen years but has not completed the age of eighteen years.
(j) “Adult” means a person who has completed the age of eighteen years.
(k) “Energy” means electrical or mechanical energy. Provided that, this word shall not include any energy generated from human or animal sources.
(l) “Seasonal Enterprise” means an Enterprise which cannot be operated or which is not feasible to operate in any season other than the specific season and this expression also includes a Seasonal enterprise which cannot operate more than one hundred and eighty days in one year.
(m) “Day” means period of twenty-four hours starting from any midnight and ending at another midnight.
(n) “Week” means a period of seven days starting from midnight on Saturday or from midnight of such other day as prescribed by the Department of Labour.
(o) “Welfare Officer” means the welfare officer appointed under this Act.
(p) “Labour Officer:” means the Labour Office appointed under this Act and this expression also includes the Senior Labour Officer.
(q) “Labour Court” means the Labour Court under this Act.
(r) ” Remuneration” means the remuneration or wage to be received in cash or kind from the Enterprise by the worker or employee for the works performed in the Enterprise and this expression also includes any amount to be received in cash or kind for the works done under piece-rate or contract. Provided that, this expression does not include any kind of allowance or facility
(s) “Prescribed” or “as prescribed” means prescribed or as prescribed in the Rules framed under this Act.
CHAPTER – 2
Employment and Security of Service
3. Classification of Job:
(1) The Proprietor shall classify the job of the workers and employees of the Enterprise according to the nature of production process, service or functions of the Enterprise and shall provide the information thereof to the concerned Labour Office.
(2) If the classification done pursuant to Sub-section (1) requires any amendment, the Labour Officer may, stating the reasons thereof, issue a directive to the Proprietor and it shall be the duty of the Proprietor to abide by such directive.
4. Appointment of Worker and Employee:
(1) In cases where it is required to appoint a worker or employee in any post classified pursuant to Section 3, the Manager Shall have to advertise in order to select such a worker or employee and the worker or employee so selected shall have to be provided with appointment letter and be engaged at work..
(2) The worker and employee appointed under Sub-section (1), §shall be kept on probation period unless he/she completes the continuous service period of one year and, based on, his/her efficiency, sincerity discipline, diligence towards works, punctuality, etc in this period he/she shall be appointed permanently. An appointment letter shall be provided with the name of the post of the worker or employee and his/her remuneration and conditions of service while making such appointment. Information thereof shall also be provided to the Labour Office.
Clarification: For the purpose of this Sub-section, the words ” the continuous service period of one year” means the period of two hundred forty days engaged at work during a period of twelve months in an Enterprise, or the period served continuously in a Seasonal Enterprise during the period of such a running season, by a worker or employee and, while calculating the said two hundred forty days, public and weekly holidays shall also be counted.
(3) The worker or employee engaged on piece-rate or contract in the works of permanent nature of an Enterprise shall also be appointed permanently under Sub-section (2).
(4) The workers or employee engaged under Sub-section (3) shall be entitled to facilities provided in this Act according to the scale of his/her post.
4A. Prohibition of Engaging Non-Nepalese Citizens at Work:
(1) Non-Nepalese citizens shall not be permitted to be engaged at work in any of the posts classified pursuant to Section 3.
(2) Notwithstanding anything contained in Sub-section (1), if a Nepalese citizen could not be available for any skilled technical post even after publishing an advertisement in national level public newspapers and journals, the Manager may submit an application to the Department of Labour along with the evidence of such fact for the approval to appoint a non-Nepalese citizen.
(3) If it is found, in conduction of an inquiry upon the submission of any application pursuant to Sub-section (2), that a Nepalese citizen would not be available for the skilled technical post mentioned in the application, the Department of Labour may, on the recommendation of the Labour Office, grant approval to engage a non-Nepalese citizen at work years for a maximum period of upto five years not exceeding two years at a time and, in the specialized kind of skilled technical post, for a period upto seven years.
(4) The Manager, who engages non-Nepalese citizens at work pursuant to Sub-section (3), shall have to make arrangements for making the Nepalese citizens skilled and for replacing the non-Nepalese citizens gradually by them. ”
5. Engagement in Work:
(2) Minors and females may be engaged in the works normally from six o’clock in the morning till six o,clock in the evening, except in the prescribed conditions.
(3) By making an appropriate arrangement with mutual consent between the proprietor and the worker or employee, the females may also be engaged in the works similar to the males.
(4) The Manager may transfer a worker or employee to any branch or unit of the Enterprise without causing any difference in the nature or standard of work. .
(6) Computation of period of Works: For the purpose of computing the period of
works performed in the Enterprise by any worker or employee, the following
period shall also be counted.
(a) the period remained in reserve under Section 11; and
(b) the period stayed §with remuneration leave.
7. Appointment in Contract Service: If an Enterprise needs to increase in production or service immediately, any person may be appointed in contract, by fixing a time period and setting forth the remuneration to be received by him/her and the terms of service, for any specified work other than the works of the Enterprise which are permanent in nature.
8. Change of Ownership shall not Adversely Affect: Any change in the ownership of the Enterprise shall not be deemed to have affected on the terms and conditions of service of the workers and employees of the Enterprise.
9. Separate Registers of the Workers and Employee to be Kept: (1) In each Enterprise, the Proprietor shall maintain separate registers of the workers and employees mentioning the following particulars –
(a) Name of the worker or employee,
(b) Nature of job,
(c) Remuneration and method of its payment,
(d) Other prescribed particulars.
(2) The register maintained under Sub-section (1) shall have to be submitted when demanded by the Labour Officer, Factory Inspector or any other person designated by the Labour Office.
10. Security of Service: The service of any permanent worker or employee may not be terminated without following the procedures prescribed by this Act or the Rules or Bylaws made under this Act.
11. Keeping on Reserve: (1) In case where the curtailment of production or service in any Enterprise for some period is necessary or where operation of the Enterprise cannot be continued for some special circumstance, the Proprietor, under Subsection (2), may curtail its production or service or may close the Enterprise or a part of thereof.
(2) Permission from the Labour Office in case of a period up to fifteen days and from the Department of Labour in case of a period for more than that shall have to be taken while curtailing the production or service or closing the Enterprise or any part thereof as mentioned in Sub-section (1). The Labour Office shall, inform the Department of Labour of such permission in case it has given permission.
(3) While doing curtailment in the production or service pursuant to Subsection (1), any worker working on shifts or on wages or §permanent worker or employee of the Enterprise except the employee shall be kept reserve on the condition of receiving half of his/her remuneration.
Provided that, such worker or employee shall continue to receive the appropriate facilities which he/she is receiving.
(4) If any worker or employee kept in reserve pursuant to Sub-section (3) refuse to work on another assignment or similar nature equal §on remuneration offered by the proprietor in the same Enterprise or another Enterprise under his/her control or if he/her does not come in the Enterprise once a day during office hours or on other situations as prescribed, the Proprietor may withheld the remuneration and facility of such worker and employee.
12. Retrenchment and reinstatement: (1) If, for any special circumstances, the production or service of the Enterprise had to be curtailed or the Enterprise has to be closed party or wholly for more than three months, the Proprietor may, with the approval of Government of Nepal through the Department of Labour, retrench in the number of the workers and employees, partly or wholly, of the Enterprise.
(1A) If the Manager makes a demand to Government of Nepal for approval in respect of the retrenchment of workers or employees pursuant to Sub-section (1), Government of Nepal shall have to make decision within two months on whether such retrenchment of employees to be made or not.
(2) While retrenching the workers or employees under Sub-section (1), engaged in similar type of works, those §permanent workers or employees who were appointed in the last shall be retrenched first.
Provided that, if it is required to retrench some of the workers or employees appointed earlier, not following the prescribed order of retrenchment such retrenchment may be made by specifying the reasons thereof.
(3) While doing retrenchment as per Sub-section (2), it shall be done as
(a) By providing a notice with the reasons or retrenchment either one month in advance or paying the remuneration of one month in case of worker or employee who is permanent _…………… and
(b) By paying a lump sum compensation to each worker or employee of the amount of remuneration calculated by multiplying the number of each year of service performed at the Enterprise by the amount of his/her present remuneration for 30 days.
Explanation: For the purposes of this Clause, the work performed for at least six months in any year shall be counted as one year of service.
(4) The provisions of Sub-section (3) shall not applicable to any worker or employee appointed under contract service.
(5) If anybody has to be engaged in the job of worker or employee retrenched earlier, priority shall be given to the retrenched workers or employees.
Explanation: For the purposes of Section 11 and 12 the “Special Circumstance” shall mean damage, break down or failure of machines or the Enterprise and thereby causing stoppage in the production or failure in the supply of fuel, electricity, coal or similar energy or due to any kind of force majeure or insufficient supply of raw materials or stock piling of the produced goods due to loss of sale or other similar situations.
13. Seasonal Enterprise: (1) The workers or employees of a seasonal Enterprise shall not be deemed to be on reserve during off-season period.
(2) The beginning and closure of operation of seasonal Enterprise shall be informed to the Labour Office.
(3) The permanent worker of employee shall have to be paid with at least twenty five percent of his/her remuneration as retaining allowance for the period of closure of a seasonal Enterprise during off-season..
(4) The decision of the Department of Labour shall be final in relation to any dispute as to whether any Enterprise is a seasonal or not.
Explanation: While computing the period of two hundred and forty days, the public Holidays and weekly holidays shall also be counted.
15. Compulsory Retirement: The Proprietor may compulsorily retire any worker or employee who has crossed the age of fifty five years.
Provided that he/she may extend the period of service of any worker of employee by five years, in case the worker or employee is indispensable for the operation of the functions Enterprise.
CHAPTER – 3
16. Working Hours: No worker or employee shall be deployed in work for more than eight hours per day or forty eight hours per week and they shall be provided one day as weekly holiday for every week.
17. Computation of Commencement of Working Hour: The time for starting of work by worker or employee shall be as prescribed by the Proprietor.
18. Intervals for Refreshment and Rest: In any Enterprise where work may be interrupt, no worker or employee shall be deployed in work for more than five hours continuously without providing an interval of half an hour for tiffin. In any Enterprise where works have to be carried out continuously without interruption, such intervals shall be provided on rotation basis. Such interval of half an hour shall be deemed to have been included within the daily working hours.
19. Extra Wages for overtime to be Provided: (1) Where any worker or employee is engaged to work for more than eight hours in a day or forty eight hours in a week, he/she shall be paid overtime wages at the rate of one and one-half time of his/her ordinary rate of wages.
Provided that, no worker or employee shall be compelled to work overtime.
(2) While deploying any worker or employee to work overtime, generally the duration shall not exceed four hours per day and twenty hours per week.
20. Attendance Register to be Kept: Each Enterprise shall keep attendance register of its workers and employees.
CHAPTER – 4Remuneration
- 21. Minimum Remuneration Fixation Committee: (1) Government of Nepal may fix the minimum remuneration, dearness allowances and facilities of workers or employees or Enterprises on the recommendation of the Minimum Remuneration Fixation Committee and the notification on rates so fixed shall be published in the Nepal Gazette.
(2) Government of Nepal shall, in order to fix the minimum remuneration, dearness allowances and facilities, constitute a Minimum Remuneration Fixation Committee consisting of the equal number of representatives of workers or employees, Managers and Government of Nepal.
(3) While making recommendation in regard to dearness allowances and facilities of workers or employees, the Minimum Remuneration Fixation Committee constituted under Sub-section (2) may do so on the basis of geographical areas.
(4) The rates of minimum remuneration, dearness allowances and facilities fixed pursuant to Sub-section (1) shall be effective only from the date of publication of a notification to that effect in the Nepal Gazette.
(5) In cases where the Minimum Remuneration Fixation Committee could not be constituted or even if it is constituted, it could not make recommendation, nothing contained in the foregoing Sub-sections shall be deemed to have barred fixing the minimum remuneration, dearness allowances and facilities of workers and employees of Enterprises by Government of Nepal.
(6) No agreement may be entered into between the manager and workers or employees in a way to make the minimum remuneration, dearness allowances and facilities lesser than those fixed pursuant to Sub-section (1).
(7) The other functions, duties and powers of the Minimum Remuneration fixation Committee shall be as prescribed.
21A. Annual Increment in Remuneration: (1) The worker and employee appointed permanently pursuant to Sub-section (2) of Section 4 shall receive an increment in remuneration each year.
(2) The amount of increment in remuneration to be received pursuant to Sub-section (1) shall be equal to the half day’s remuneration of the concerned worker or employee.
(3) Notwithstanding anything contained in Sub-section (1) above, such increment in remuneration shall not be provided in cases where the remuneration is withheld pursuant to subsection (2) of Section 52.
22. Payment of Remuneration, Allowances and Facilities: It shall be the responsibility of the concerned Manager to provide the remuneration, allowances and facilities to be received by a worker or employee of the Enterprise.
23. Period of Remuneration: The Proprietor may fix the period of payment of remuneration to the workers or employees on weekly, fortnightly or monthly basis in way not exceeding the period of one month.
Provided that, this provision shall not apply in respect of the persons who are working on daily wages, piece-rate or contract basis.
24. Prohibition on Deduction of Remuneration: (1) The remuneration of workers or employees shall not be deducted expect under the following circumstances –
(a) In case it is required to realize any fine.
(b) In case it is required to deduct against absence;
(c) In case it is required to deduct against loss or damage of cash or kind of the Enterprise caused intentionally or negligently;
(d) In case it is required deduct in respect of providing prescribed facilities;
(e) In case it is required to deduct in respect of advance or over payment of remuneration;
(f) In case it is required to deduct in respect of the period of suspension;
(g) In case it is required to deduct under the order of government office or court’
(h) In case it is required to deduct as per the notification of Government of Nepal published in the Nepal Gazette; or
(i) In case it is required to deduct in respect of income tax or any other tax levied under prevailing laws.
(2) The limit of amount to be deducted pursuant to Sub-section (1) the method of deduction, the period of deduction and other related matters shall be as prescribed.
25. Petition to be Filed in cases a Deduction in Remuneration Made or Delay
Caused in Payment or other Facilities not provided or Delay Caused in
providing such Facilities in an Undue Manner: (1) Except in cases of happening of a mistake or failure to fix the remuneration amount or inability to pay the remuneration due to the occurrence of an unforeseen incident or of special circumstance or failure on part of the concerned worker or employee to come to receive his/her remuneration or his/her refusal to receive the same; if, in an undue manner, a deduction in remuneration is made or a delay is caused in payment or in case of release from suspension or annulment o f expulsion by a judgment of a court, the remuneration for the period of such expulsion or suspension is not paid or a delay is caused in such payment or the allowance, gratuity or the amount of provident fund or compensation to be received by a worker or employee is not paid or delay is caused in such payment, the concerned worker or employee him/herself or through his/her attorney may file a petition in the Labour Office.
(2) The petition as referred to in Sub-section (1) shall have to be filed within six months from the date of deduction in remuneration or causing delay in payment or non payment of allowance, gratuity, amount of provident fund or compensation or causing delay in such payment.
(3) While conducting necessary inquiry and examination on the petition filed pursuant to Sub-section (1), if it is proven that the remuneration has been deducted in an undue manner or a delay has been caused in payment or the amount of allowance, gratuity, provident fund or compensation has not been paid or a delay has been caused in such payment, the Labour Office may give order requiring to make payment of such remuneration, allowance, gratuity, amount of provident fund or compensation to the concerned worker or employee and to pay the concerned worker or employee amount upto three times of such amount in default for atonement thereof.
(4) If it is proven that the petition under Sub-section (1) has been filed with a malicious motive or with an intention of causing unnecessary trouble or distress to the Manager, the Labour Office may give order requiring the petitioner to pay not exceeding one thousand rupees for compensation to the Manager.
(5) The Labour Office shall make available to the concerned party the amount to be paid or handed over in accordance with the order issued under Subsection (3) or (4) by getting recovered and realized the same by taking all or any of the following action:-
(a) By keeping withheld the movable and immovable properties of the concerned Enterprise, worker or employee in accordance with the prevailing law
(b) By keeping withheld the deposit amount of the concerned Enterprise, worker or employee being kept in any Government Office or in any Corporate body with the ownership of Government of Nepal or the amount to be paid or handed over the concerned Enterprise, worker or employee by such Office or corporate body,
(c) By keeping withheld the import or export of the concerned Enterprise, worker or employee.
(d) By keeping withheld the discount, facilities or concessions of the concerned Enterprise, worker or employee to be obtained under the prevailing law.
26. Appeal: The party dissatisfied with the Order issued pursuant to Sub-section (3) or (4) may file an appeal to the Labour Court within thirty five days of the receipt of information of such order and the decision of the Labour Court shall be final.
In April, 1999, Nepal enacted the Arbitration Act, 1999, which came into force at once. The principal object of the Act is to up-date the current legal provisions relating to arbitration (as stated in the Preamble). The Act borrows some propositions incorporated in the UNCITRAL Model Law on the subject. But it does not blindly copy them. Besides this, it tries to put, in simple language, the governing principles, without a slavish imitation of the conservative style of drafting. A look at some of its important provisions would be useful.
Arbitration agreement is the foundation of arbitration under the Nepal Act. It must be an agreement for the settlement (through arbitration) of any dispute concerning any specific legal issue, arising under a contract or otherwise. The Act avoids the vague words defined legal relationship occurring in the UNCITRAL Model Law (and in the Indian Act of 1996). It is clarified that letters, telex, telegrams or telefax messages, or any other similar messages whose records can be maintained in a written form can form an arbitration agreement. Not raising an objection to the other party’s claim for reference to arbitration also amounts to arbitration agreement .
Counter-claim is expressly recognised, and so is a Rejoinder to a counter-claim . Once there is an arbitration agreement in respect of a dispute, then resort to arbitration is mandatory . Arbitration in a pending suit is permitted by agreement [sections 3(2) and 4].
Arbitrators and chief arbitrator
The number of arbitrators can be determined by agreement, failing which, it should ordinarily be three .
If an even number is provided for, then the arbitrators must choose an additional arbitrator . Subject to agreement, the process of appointing arbitrators must be started within 30 days from the date when the reason for the settlement of a dispute through arbitration arises .
The method of appointment is left to the agreement. Failing agreement, each party shall appoint one arbitrator and the arbitrators so appointed shall appoint a third arbitrator, who shall work as chief arbitrator .
The concept of chief arbitrator is not to be found in the Indian Act of 1996. The presiding arbitrator mentioned in the Indian Act does not have that status.
Under the Nepal Act, where the agreement is silent about the appointment of arbitrators or where no arbitrator can be appointed according to the agreement, then a party may apply to the Appellate Court for appointing three arbitrators (section 7).
Appropriate provision is made for filling up of vacancies in the post of arbitrators . Here also, the Appellate Court has a role to play, if the parties fail to act .
Oath to be taken by arbitrators
The Nepal Act contains an interesting provision (not usually found in Arbitration Acts) requiring the arbitrator to take a written oath of impartiality and honesty, for which a Form is provided in the Schedule. A copy is to be sent to the Appellate Court. Any matters raising a reasonable doubt about impartiality or independence of an arbitrator must be cleared by the arbitrator before signing the oath (section 9).
A very interesting provision, found in the Nepal Act, relates to the qualifications of arbitrators. The following persons shall not be qualified for appointment as arbitrators:
(a) Those who are disqualified for entering into contracts under current law a phrase which pithily expresses the concept of any law for the time being in force.
(b) Those who have been punished by a court on criminal charges involving a moral turpitude. This is a very interesting provision, not found in most Arbitration Acts.
(c) Those who have become insolvent or who have been declared bankrupt.
(d) Those who have any personal interest in the dispute that is to be settled through arbitration.
(e) Those who do not possess the specific qualifications laid down in the arbitration agreement (section 10).
Removal of arbitrators
The Nepal Arbitration Act contains a rather drastic provision, for the removal of arbitrators. The matter can, of course, be dealt with by agreement. But, failing that, the Act provides that a party may apply to the arbitrator, requesting for permission to remove the arbitrator.[The wording is a quaint but polite form of language. The gist seems to be, that the arbitrator can be called upon to resign].
This procedure can be resorted to, in the following circumstances:
(a) Where the arbitrator clearly shows bias instead of working in an impartial manner.
(b) Where the arbitrator engages in improper actions or commits fraud in the course of arbitration.
(c) In case any arbitrator frequently commits mistakes or irregularities in the arbitration proceedings. [This is rather an extreme provision, as mistake is a very wide word].
(d) If the arbitrator does not attend meetings for more than three months, without furnishing satisfactory reasons, in order to delay the proceedings in an improper manner.
(e) If the arbitrator takes any action opposed to the principle or rules of natural justice.
(f) If the arbitrator lacks the requisite qualifications or ceases to be qualified.
The arbitrator must take a decision (on the application to remove him) within 30 days. Against his decision, an appeal may be filed with the Appellate Court, whose decision shall be final (section 11).
The office of the arbitrator under the Nepal Act is to be located at the place chosen by the parties. If the parties fail to agree, then the office shall be at the place, specified by the arbitrator in the light of all the circumstances. However, (unless the parties have made other arrangement), the arbitrator may record the statements of witnesses, obtain opinion of experts and inspect any document, object or place at any other appropriate place (section 12).
Language of the arbitration proceedings shall be that chosen by the parties. Failing such choice, it will be the language used in the agreement. (section13). Claim, objection, counter-claim and rejoinder
A noteworthy feature of the Nepal Arbitration Act is the detailed provisions, which it makes, regarding the claim, and subsequent pleadings of the parties, and annexures thereto. The rather long provision in the Act (section 14) can be summarised for the present purpose as under:
(a) The claim must be made in writing, explicitly mentioning the details of the subject matter of the dispute and the remedy sought, along with the evidence. Copy is to be given to the other party.
(b) To the claim so filed, the other party shall submit its objection (defence).
(c) The other party can, along with the objection, submit a counter-claim.
(d) To the counter-claim, the claimant can file a rejoinder (with copy to the opposite party) (section 14).
Time limits for various pleadings and claims
The Nepal Act also lays down time limits for filing the various categories of claims mentioned above. Subject to an agreement between the parties laying down a different time limit, these time limits are as under:
� to be filed within three months from the date when the dispute arose or when the arbitrator is appointed (whichever is later] ;
� to be filed within thirty days from the date of receipt of the claim ;
� same time limit as is mentioned in (b) above ;
� to counter, claim to be filed within 15 days from date on which counter claim is filed ;
The arbitrator is empowered to extend the time limit for not more than seven days (section 14).
Material to accompany the pleadings
The Nepal Act has a provision of considerable practical use, regarding the material that should accompany the pleadings (i.e., claim, objection, counter-claim or rejoinder). The following must be submitted along with the pleadings:�
(a) documents intended to be relied upon,
(b) evidence substantiating the documents,
(c) list of witnesses proposed to be produced. .
Failure to submit claims
If there is failure to submit the claim within the prescribed time limit, the arbitration proceedings shall terminate unless the agreement provides to the contrary. If there is failure to submit the objection (i.e., the defence) within the specified time limits, then the arbitrator must still proceed to determine the claim on the merits (section 15).
Challenge to jurisdiction
The Nepal Act contains a fairly elaborate provision as to the procedure to be followed, where a party raises an objection:
(i) that the arbitrator has no jurisdiction over the dispute referred to him, or
(ii) that the contract because of which the dispute has emerged is itself illegal or null and void. Such objection must be raised before expiry of the time limit laid down for filing the defence to the main case.
Any party not satisfied with the arbitrator’s decision on such an objection may appeal to the Appellate Court within thirty days. The decision of the Appellate Court is final. But the filing of the appeal shall not be deemed to have prejudiced the power of the arbitrator to continue his proceedings and to pronounce his decision before the petition is finally disposed of by the court (section 16).
One may be permitted to add here, that, generally, the question of the procedure to be followed in respect of objections to jurisdiction is a vexing one. The Indian Act of 1996 does not permit an interim appeal against the decision of the arbitrator, rejecting the objection to jurisdiction. The proceedings must go on, but the aggrieved party can raise the point again, when he challenges the award before the competent court. .
The position under the Nepal Act is somewhat different. An interim appeal can be taken to the Appellate Court, as stated above. But the Nepal Act also takes care to expressly provide that the proceedings must go on, in the meantime. This is a good compromise; and whoever thought of it, deserves the grateful compliments of the business community. Of course, lovers of legalism are likely to argue that if the objection to jurisdiction is ultimately allowed by the Appellate Court, then the arbitration proceedings (which are allowed to be held in the meantime) would become infructuous. This is theoretically true. But, in practice, it is found that more often than not, the objections to jurisdiction or to arbitrability are ill-founded (if not totally frivolous).
The Nepal Act deals with the procedure to be followed by the arbitrator, as under:
(a) The parties may, in the arbitration agreement, lay down the procedure. Failing agreement, the procedure laid down in the Act shall be followed.
(b) If, on a particular matter, the Act is silent, the arbitrator can seek the consent of the parties consent on that matter.
If the parties fail to reach an agreement on any procedural matter, the procedure (in that respect) �shall be as prescribed by the arbitrator himself� [Section 17(1)].
The arbitrator must start the arbitration proceedings �immediately� after receiving the pleadings .
He has to keep records of the proceedings in the case file. .
Absence of one arbitrator
A very useful provision in the Nepal Act deals with the absence of one of the arbitrators at a particular hearing. It is provided that where the dispute is referred to three or more arbitrators, the arbitrators who are present may conduct all arbitration proceedings, other than taking the final decision or issuing the final order .
Ex parte proceedings
It is further provided in the Nepal Act that if any party does not present itself at the arbitration proceedings after due notice, the arbitrator may nevertheless continue the arbitration proceedings and pronounce his decision on the basis of the available material .
Conclusion of the proceedings
On completion of the hearing, the arbitrator has to issue an order that the hearing has concluded. The Act lays down that �evidence may not be examined or the parties heard thereafter .
Unless the agreement provides otherwise, the arbitrator must read out his written decision, within 30 days of the order closing the hearing. . This provision in the Nepal Act (as to reading out the award) does not occur in the Indian Act of 1996. [See also �Award: time limit, infra].
Hearing in camera
The Nepal Act expressly provides that the arbitration proceedings shall be held in camera, unless the parties otherwise decide (Section 19).
The Nepal Act provides that the Nepal law shall be the substantive law applicable, unless the agreement provides otherwise. But the arbitrator must settle the dispute according to the �conditions stipulated in the concerned contract� He has also to take into account the applicable commercial usages (Section 18).
Bank guarantee from foreigners
An interesting provision found in the Nepal Act relates to foreigners. If any of the parties is a foreigner, so that the decision pronounced by the arbitrator is not likely to be implemented, then the arbitrator has power to obtain a bank guarantee or other appropriate guarantee, as prescribed by the arbitrator [Section 21(1)(d)].
The Nepal Act also confers on the arbitrator power to issue (on the request of a party) preliminary orders or interim or provisional orders, in respect of any matter connected with the dispute or to take a �conditional decision� [Section 21(1)(g)]. The Act does not, however, elaborate this provision. Case law on the subject has to be awaited.
The Nepal Act also confers on the arbitrator power to issue certified copies [Section 21(1)(h)]. This is a very useful provision, as many documents tend to be locked up before the arbitrator.
Against the various, interim orders issued by the arbitrator under section 21(1), of the Nepal Act an appeal lies to the Appellate Court [Section 21(2)].
The Nepal Act provides that each party shall be provided with an equal and adequate opportunity to present its case, �subject to this Act�. . With this, one may compare section 18 of the Indian Act of 1996, which reads as under:
�18. The parties shall be treated with equality and each party shall be given a full opportunity to present his case.�
Two points of difference may be noted:
(a) The Indian Act contemplates �full opportunity�, while the Nepal Act provides for �equal and adequate� opportunity. The Nepal wording is preferable.
(b) The Nepal Act makes the provision subject to the Act, which also is more precise than the Indian provision.
Appearance by the parties
Under the Nepal Act, any party may attend the arbitration proceedings:�
(a) either personally, or
(b) by proxy, or
(c) through legal practitioner, [Section 22(2)].
Court assistance may be requested by the arbitrator, to examine any evidence concerning the dispute, (section 23).
Award: time limit
The Nepal Act does contain provisions regarding the time
limit for pronouncing the award, as under:
(a) Subject to agreement between the parties, the award must be pronounced within 120 days from the date on which the process of submission of pleadings is complete, (section 24).
(b) However, this is subject to the provision (already noted above) in section 17(7), under which the award must be pronounced within 30 days of the date on which the hearing is �closed� by a formal order, [Section 24, read with section 17(7)]. [See �Award�, supra].
Majority and minority decision
The Nepal Act provides that where there are three or more arbitrators, the decision of the majority prevails. But what about cases where there is no majority view on a particular matter? This situation, not dealt with specifically in the Indian Act of 1996, is specifically dealt with in the Nepal Act. It provides that in such cases, the decision of the chief arbitrator prevails.
It may be recalled that the Nepal Act specifically contemplates the designation of an arbitrator as, �chief arbitrator� under section 6(4). [See �Arbitrator’s and chief arbitrator�, supra].
Finally, the Nepal Act requires every arbitrator to sign the award. If there is any special reason for his not signing, the other arbitrators, while signing shall explicitly mention that fact. Dissent is, of course, allowed.
Contents of the award
Subject to a contrary provision in the agreement, the award under the Nepal Act must give brief particulars of the matter referred to arbitration, the grounds for deciding that the arbitrator had jurisdiction (where such a point had been raised) and reasons for the decision, (section 27).
The amount awarded and interest, etc. should be mentioned, (section 27).
The decision of the arbitrator has to be read out, (section 28).
Corrections in the award
Correction of arithmetical or clerical mistakes in the award is permitted, under the Nepal Act. If a point made in the claim has not been decided by the arbitrator, he can be requested to do so, within the prescribed period, (Section 29).
Challenge to the award
An award may be challenged on a petition filed before the Appellate Court within 35 days from receipt of a copy by the petitioner. The grounds of challenge are as under:
(a) Incompetence of a party to sign the agreement or invalidity of the agreement.
(b) Notice of arbitration proceedings not given to the petitioner.
(c) Decision has been rendered:
(i) on a matter not referred to the arbitrator; or
(ii) in a manner contrary to the prescribed conditions; or
(iii) by acting beyond the arbitrator’s jurisdiction.
(d) Procedure of designation of arbitrators or their functions and actions do not conform to the agreement or the Act.
(e) The matter is not arbitrable under the law of Nepal.
(f) The award is likely to prove detrimental to the �public interests or policies� (section 30).
In a monetary award (subject to agreement to the contrary), award of interest is compulsory under the Nepal Act. The interest is to be paid at the rate prescribed by the arbitrator in the light of the nature of the business connected with the dispute, ensuring that it is not higher than the rate of interest currently charged by commercial banks in respect of similar transactions (section 33).
Implementation of the award
The award is to be implemented by the District Court, under the Nepal Act on a petition filed within 30 days from the date of expiry of the time limit prescribed for implementing it. (The time limit is 45 days) (sections 31and 32).
Interest not award
The Nepal Act is silent as to the situation where the award itself is silent about interest. The situation does not fall within the power of �correction� conferred by section 29. In fact, section 29(1) expressly prohibits review in points of substance.
It would have been better if the Act had contained a provision that if the award is silent on this point, then it shall be deemed to have awarded interest at the rate of, say, 12 per cent per annum. The date from which interest is to run, is also not mentioned in the Nepal Act.
Notwithstanding some minor omissions, the Nepal Arbitration Act of 1999 is likely to prove an eminently workable measure. It has struck a compromise between a doctrinnaire approach and a practical one. The grounds for setting aside the award should, however, be made more narrow, by providing that substantial injustice should be proved, before setting aside an award. There should also be a provision that if the award is silent as to interest, the interest shall run at 12 per cent per annum from the date on which the cause of action arose.
Reference: http://www.supremecourt.gov.np/main.php?d=lawmaterial&f=arbitration_law_in_nepal (10-March-2013)
The History of law of contract in Nepal is not very long due to belated development of industry and commerce some provisions relating to contract could be found in Muluki Ain 1853. However the provisions of said Act were not sufficient
There was pressing need to enact new Contract Act to cope with the demand of commercial sector. As a result, separate Contract Act was enacted in 1966 a fairly detailed enactment on the law relating to contracts
The Contract Act 1966
The Contract Act 1966 had defined contract as an agreement act between two or more parties to do or not to do any act. Similarly, the Act had defined proposal, consent . It had made incompetence of parties to enter in to contract who was under the age of 16 years and person of unsound mind .
However it was very short insufficient and contradictory in some respects in comparison to the principle of law of contract .So It was pressed to enact new Contract Act by the stakeholders to address the growing demands of industry and commerce . As a result new, Contract Act was enacted in 1999 and came in to force on 2000 .
The Contract Act 1999
The Act has made effort to address the new aspects of contract law developed in the developed countries as the demand of industry and Commerce. The Act contains 90 sections in all. Section 2 has defined ‘contract’ as an agreement concluded between two or more parties for performing or not performing any act which could be executed according to law . Similarly other terms offer acceptance and considerations has been defined.
Reference: http://www.supremecourt.gov.np/main.php?d=lawmaterial&f=law_of_contract_in_nepal (10-March-2013)
4. Application to be made for incorporation of company:
(1) Any person desirous of incorporating a company pursuant to Section 3 shall make an application to the Office, in such format and accompanied by such fees as prescribed, and along with the following documents, as well:
(a) The memorandum of association of the proposed company,
(b) The articles of association of the proposed company,
(c) In the case of a public company, a copy of the agreement, if any, entered into between the promoters prior to the incorporation of the company,
(d) In the case of a private company, a copy of the consensus agreement, if any, entered into ,
(e) Where prior approval or license has to be obtained from anybody under the prevailing law prior to the registration of a company carrying on any particular type of business or transaction pursuant to the prevailing law, such approval or license,
(f) Where the promoter is a Nepalese citizen, a certified copy of the citizenship certificate and where a corporate body is a promoter, a certificate of registration of incorporation, decision of the Board of directors, regulating The incorporation of the company and major documents regarding incorporation.
(g) Where the promoter is a foreign person or company or body, permission obtained under the prevailing law to make investment or carry on business or transaction in Nepal,
(h) Where the promoters is a foreign person, a document proving the country of his citizenship,
(i) Where the promoter is a foreign company or body, a certified copy of the incorporation of such company or body and major documents relating to such
(2) Notwithstanding anything contained in Sub-section(1), if the promoter agrees to accept the articles of association in the format prescribed for the incorporation of a company with a single promoter of single shareholder, it shall not be required to submit the articles of association of the proposed company.
As per the Chapter 2, The Companies Act 2006, one can register company in Nepal under following criterias.
(1) Any person desirous of undertaking any enterprise with profit motive may, either singly or jointly with others, incorporate a company for the attainment of one or more objecttves set forth in the memorandum of association.
(2) There shall be a minimum of seven promoters for the incorporation of a public company. Provided, however, that seven promoters shall not be required for the incorporation of another public company by any public company.
(3) Notwithstanding anything contained elsewhere in this Section, a company not distributing profits may, subject to the provisions contained in Chapter-19, be incorporated for the attainment of one or more objectives.
Below are some preliminary or terminology used in Company Act, 2063. It is wise to learn below definition to be familiar with such terminologies as per Company Act of Nepal.
1. Short title and commencement:
(1) This act may be called as the “Companies Act, 2063(2006)”.
(2) This Act shall be deemed to have come into force on 20 Ashwin 2063 (6 October 2006).
2. Definitions: In this Act, unless the subject or the context otherwise requires,
(a) “Company” means a company incorporated under this Act.
(b) “Private company” means a private company incorporated under this Act.
(c) “Public company” means a company other than a private company.
(d) “Holding company” means a company-having control over a subsidiary company.
(e) “Subsidiary company” means a company controlled by a holding company.
(f) “Foreign company” means a company incorporated outside Nepal.
(g) “Listed company” means public company which has its securities listed in the stock exchange.
(h) “company not distributing profits” means company incorporated under Chapter 19 on conditions that it shall not be entitled to distribute or pay to its members any dividends or any other moneys out of the profits earned or savings made for the attainment of any objectives.
(i) “Promoter” means a person who, having consented to the matters contained in the memorandum of association and the articles of association to be furnished in the Office for the incorporation of a company, signs the same in the capacity of promoter.
(j) “Officer” includes director, chief executive, manager, company secretary, liquidator and any employee undertaking departmental responsibility of thecompany.
(k) “Memorandum of association” means the memorandum of association of a company.
(l) “Articles of association” means the articles of association of a company.
(m) “Prospectus” means a prospectus to be published by a company pursuant to Section 23.
(n) “Share” means the divided portion of the share capital of a company.
(o) “Preference share” means a share issued as a preference share pursuant to this Act.
(p) “Ordinary share” means a share other than a preference share.
(q) “Bonus share” means a share issued as an additional share to shareholders, by capitalizing the saving earned from the profits or the reserve fund of a company, and this term includes the increase of the paid up value of a share by capitalizing the saving or reserve fund.
(r) “Shareholder” means a person having ownership in the share of a company.
(s) “Debenture” means any bond issued by accompany whether putting its assets as collateral or not.
(t) “Debenture trustee” means a body corporate undertaking the responsibility for the protection of interests of debenture-holders at the time of issuance of debentures by a company.
(u) “Register” means a register of shareholders or debenture-holders maintained under Section 46.
(v) “Seal of company” means the seal of a company to be used by it.
(w) “Securities Board” means the securities board established under the prevailing law to regulate and manage securities.
(x) “Securities” means any shares, bonds, debentures or stocks issued by a company, and this term includes the receipt relating to deposits of securities and the rights and entitlement relating to securities.
(y) “Director” means any director of a company and this term includes any alternate director.
(z) “Board of directors” means the board of directors of a company.
(z1) “Managing director” means a managing director of a company.
(z2) “Premium share” means a share so issued by a company as to sell it for a value in excess of its face value.
(z3) “Net worth” means the assets of a company remaining after deducting the paid up capital, reserve, fund or free reserve of whatever designation to which shareholders have right or all other liabilities other than goodwill, if any, of the company as well as loss provisions , if any, from the total assets of the company for the time being.
(z4) “Consensus agreement” means an agreement made unanimously by all the shareholders of a private company existing for the time being in respect of the operation of the company.
(z5) “Office” means the Company Registrar’s Office set up by the Government of Nepal for the administration of companies.
(z6) “Register” means the Registrar of the Office.
(z7) “Independent director” means any independent director appointed under Sub-section (3) of Section 86.
(z8) “Court” means the commercial bench of a court specified by the Government Nepal by a notification in the Nepal Gazette, with the consent of the Supreme Court.
(z9) “Close relative” means a partition shareholder in joint family or husband, wife, father, mother, mother-in -law, father-in- law, elder brother, younger brother, elder sister, younger sister, sisterin– law ,(elder or younger brother’s wife), brother-in– law , sister–in–law, brother-in- law, (husband of elder sister), uncle, aunt, maternal uncle, maternal aunt, son, daughter, daughter-in-law ,grand–son, grand-daughter, grand-daughter-in– law or son-in–law.
(z10) “Prescribed” or “as prescribed” means prescribed or as prescribed by the Government of Nepal by anotification in the Nepal Gazette.
Marriage Act is an Act made to provide for the Registration of Marriage.
Preamble: Whereas, it is expedient to provide for legal provisions to conclude the marriage through registration and to register the marriage to provide legal certainty as per the need of the changing society,
Be it enacted by His Majesty’s King Mahendra Bir Bikram Shah Dev with the advise and consent of Rastriya Panchayat.
Marriage through Registration
Marriage may be concluded: Except otherwise prohibited to get marriage pursuant to prevailing law, the following male and female may conclude marriage pursuant to this Act,-
(a) In case any of the male or female does not have husband or wife,
(b) In case one of the male or female has not gone mad, and
(c) In case both the male and female have completed the age of twenty years.
Application for Marriage:
(1) The male and female, who are interested to conclude a marriage under this Act, shall submit an application at least fifteen
days earlier, in a prescribed format before the Marriage Registration Officer.
(2) To submit an application pursuant to Sub-section (1), both the male or female or one of them must have resided in the area (jurisdiction) of the concerned Marriage Registration Officer, since at least fifteen days before to submit such application.
Marriage Application Detail Register:
(1) The Marriage Registration Officer shall maintain the detail of the application, received pursuant to Section 5, in the marriage application detail register so prescribed and shall also keep the application in the official record. Such application detail register shall be shown to
the person interested to inspect the register without charging any fees.
(2) The Marriage Registration Officer shall make a decision regarding whether or not to conclude the marriage, within seven days upon receiving the application pursuant to Section 5.
(3) In case, the Marriage Registration Officer denies to conclude the proposed marriage, for finding it in against of the prevailing law, any of the
Officer has been designated by a Notification of 2028.8.17.