The enactment of GMC Law No. 1 of 2024 (Application of Laws Act 2024) marks a pivotal shift for Gelephu Mindfulness City, integrating 18 Singaporean common laws and 10 financial services laws from the Abu Dhabi Global Market. Among the 28 new pieces of legislation, three contract laws are selected to  attract global investment and establishing a robust governance framework for this Special Administrative Region.

The first significant legislation is the “Contracts (Rights of Third Parties) Act”, which enables third parties to enforce contracts when they are intended beneficiaries. This law fosters collaboration and streamlines business operations by recognising the rights of parties who, while not direct signatories, have legitimate interests in contract enforcement.

The second key legislation, the Unfair Contract Terms Act, provides essential protection against exploitative conditions. This law particularly safeguards consumers and smaller businesses that might otherwise face disadvantages in negotiating power, ensuring fairness in contractual relationships and promoting a balanced business environment.

The third crucial component is the Sale of Goods Act, which clearly defines the rights and obligations of buyers and sellers. This clarity in commercial transactions builds investor confidence and provides a tested framework for business operations while ensuring predictability in commercial dealings.

As Bhutan advances its Diamond Strategy, reforming its contract law to align with GMC’s legal framework is an important step. The current Contract Act requires some key modifications to create a more conducive environment for economic development and mirror GMC’s success nationwide. These changes would ensure consistency across jurisdictions and facilitate seamless business operations throughout the country.

First, Bhutan’s Contract Act should incorporate provisions recognising third-party rights, similar to Singapore’s model. This would enhance collaboration among stakeholders and facilitate more complex business arrangements, ultimately contributing to economic growth.

Second, it should include robust regulations against unfair contract terms. incorporating similar provisions to those in GMC, Bhutan can ensure equitable treatment for all parties, particularly benefiting smaller enterprises and consumers who often face power imbalances in negotiations.

Third, the Act needs clearer sales provisions. Incorporating guidelines similar to those in the Sale of Goods Act would enhance certainty in commercial transactions, protecting both consumers and businesses while reducing potential disputes.

Further, the Contract Act 2013 should mandate transparency in contract drafting, ensuring that terms are comprehensible to all parties. This would minimise misunderstandings and reduce the likelihood of contractual disputes in both domestic and international business relationships.

As digital commerce grows, Bhutan must modernise its legal framework to accommodate technological advances. This includes recognising smart contracts and electronic transactions, positioning Bhutan as a forward-thinking nation ready for commercial innovation.

The adoption of these laws in GMC’s legal framework demonstrates the potential for transformative legal reform in Bhutan. By adopting these proven contract law principles, Bhutan can create a dynamic legal environment that supports its aspirations for sustainable growth while maintaining its unique identity and values.

As Bhutan continues its journey toward sustainable development, reforming the Contract Act is not just about legal modernisation—it is about creating a foundation for economic growth that aligns with the country’s mindful development approach. These reforms will help Bhutan create a legal framework that fosters innovation, protects stakeholders, and attracts international investment while upholding its commitment to sustainable development. This will position rest of Bhutan mirrored on GMC  as a model for balanced economic progress in the region and cultivate a resilient business ecosystem for Bhutan.

Sonam Tshering

Lawyer, Thimphu

Disclaimer: The views expressed in this article are author’s own