Getting the Deal Through - Arbitration 2011

June 2011

Summary

Reproduced with permission from Law Business Research. This article was first published in Getting the Deal Through - Arbitration 2011, (published in February 2011; contributing editors: Gerhard Wegen and Stephan Wilske). For further information please visit www.GettingTheDealThrough.com.

Laws and institutions

1. Multilateral conventions

Is your country a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Since when has the Convention been in force? Were any declarations or notifications made under articles I, X and XI of the Convention? What other multilateral conventions relating to international commercial and investment arbitration is your country a party to?

Bahrain is a contracting state to the New York Convention. The Convention came into force in Bahrain on 5 July 1988 with the following reservations:

  • Bahrain will apply the Convention only with regard to recognition and enforcement of awards made in the territory of another contracting state.
  • Bahrain will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under Bahraini law.

Other relevant multilateral conventions that Bahrain is a party to include:

  • the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications.
  • the Riyadh Convention on Judicial Cooperation between States of the Arab League.
  • the ICSID Convention (also known as the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States).

2. Bilateral treaties

Do bilateral investment treaties exist with other countries?

Bahrain has signed a total of 26 bilateral investment treaties with Algeria, Belarus, Belgium and Luxembourg, China, Czech Republic, Egypt, France, Germany, India, Iran, Italy, Jordan, Lebanon, Malaysia, Morocco, Netherlands, Singapore, Spain, Sudan, Syria, Thailand, Turkey, United Kingdom, United States, Uzbekistan and Yemen.

3. Domestic arbitration law

What are the primary domestic sources of law relating to domestic and foreign arbitral proceedings, and recognition and enforcement of awards?

In Bahrain, domestic and international arbitration is governed by separate legislation. Domestic arbitration is subject to the rules set out in the Civil and Commercial Procedures Law of 1971 articles 233 to 243 (the Domestic Arbitration Law). International arbitration is governed by the International Commercial Arbitration Law, promulgated by Legislative Decree No. 9 of 1994 (the International Arbitration Law).

In international commercial arbitration, the International Arbitration Law specifically disapplies the rules governing domestic arbitration. Arbitration proceedings are considered to be international if the parties to the dispute conduct their business in different states; if the contract is performed, or the seat of the arbitration is situated, in a state outside one or both of the parties’ places of business; or if the parties have agreed that the subject matter of the arbitration agreement relates to more than one country.

Following the entry into force of a new law promulgated by Decree No. 30 of 2009, a new dispute resolution regime, which combines aspects of litigation and arbitration in certain circumstances, was introduced in Bahrain. Decree No. 30 establishes the Bahrain Chamber for Dispute Resolution (BCDR), which is a new dispute resolution centre offering arbitration, mediation and other ADR services. The BCDR has jurisdiction to hear disputes where it has been chosen by the parties as the place of arbitration (under Section 2 of Decree No. 30), but also has automatic and mandatory jurisdiction (under section 1 of Decree No. 30) over any claim exceeding 500,000 Bahraini dinars which:

  • would but for the existence of the BCDR have come within the jurisdiction of the courts of Bahrain; and
  • involves either an international commercial dispute or a party licensed by the Central Bank of Bahrain.

4. Domestic arbitration and UNCITRAL

Is your domestic arbitration law based on the UNCITRAL Model Law? What are the major differences between your domestic arbitration law and the UNCITRAL Model Law?

The Domestic Arbitration Law is not based on the UNCITRAL Model Law (unlike the International Arbitration Law which is based on the Model Law). The main differences between the Model Law and the Domestic Arbitration Law are:

  • article 234 of the Domestic Arbitration Law provides that an arbitrator must not be a minor, incapacitated or deprived of his civil rights as a result of having been imprisoned or made bankrupt. These restrictions are not mentioned in the Model Law;
  • under article 11 of the Model Law parties are free to agree on a procedure for appointing the tribunal. In the absence of such an agreement the Model Law specifies the appointment procedure and the circumstances in which the national court may be approached for the appointment of arbitrators. In contrast the Domestic Arbitration Law states that the court that would have had jurisdiction in the absence of an arbitration agreement shall appoint the tribunal where:
  • there is no agreement between the parties;
  • if one of the agreed arbitrators has abstained, withdrawn or been dismissed; or
  • an impediment has arisen to prevent an arbitrator from acting; and
  • article 237 of the Domestic Arbitration Law states that if the parties fail to agree on the law applicable to the elements of the dispute in relation to arbitration taking place in Bahrain, then the laws of Bahrain will apply. In contrast, article 28 of the Model Law provides that, failing any designation by parties, the arbitral tribunal shall apply the law it considers appropriate through the application of the conflict of laws rules.

5. Mandatory provisions

What are the mandatory domestic arbitration law provisions on procedure from which parties may not deviate?

According to article 233 of the Domestic Arbitration Law, a valid arbitration agreement must be made in writing and must have a subject matter capable of being dealt with by arbitration. The subject of the arbitration must be specified in the written arbitration agreement or during the pleadings phase.

Arbitration can only take place in relation to areas of the law where amicable resolution is possible. Also arbitration is only permissible between parties that have legal capacity to deal with resolution of the dispute via arbitration.

Pursuant to article 234 of the Domestic Arbitration Law the arbitration shall be considered void unless there are an odd number of arbitrators.

6. Substantive law

Is there any rule in your domestic arbitration law that provides the arbitral tribunal with guidance as to which substantive law to apply to the merits of the dispute?

Bahraini law permits the parties to agree on the law that is applicable to their dispute. Under article 237 of the Domestic Arbitration Law the tribunal shall apply the substantive law of the contract between the parties when deciding issues in dispute under the contract and if the law governing a contractual claim is not clear from the agreement between the parties then, in relation to domestic arbitration, the law of Bahrain shall apply (unless the parties agree otherwise).

It is explicit in Decree No. 30 in relation to proceedings before the BCDR under section 2 (ie, arbitration by agreement of the parties) that the tribunal shall apply conflicts of laws principles and decide the law that it deems applicable to the subject matter of the dispute if the parties have not made the applicable law clear in their agreement.

7. Arbitral institutions

What are the most prominent arbitral institutions situated in your country?

Bahrain Chamber for Dispute Resolution
Park Plaza
PO Box 20006
Diplomatic Area
Kingdom of Bahrain
Tel: +973 17 511 311
Fax: +973 17 511 300
www.bcdr-aaa.org

The BCDR was established by Legislative Decree No. 30 for 2009 in partnership with the America Arbitration Association (AAA). The BCDR has jurisdiction to hear disputes either where it has been chosen by the parties as the place of arbitration (under section 2 of Decree No. 30), but also has automatic and mandatory jurisdiction (under section 1 of Decree No. 30) in the circumstances described above in question 3.

Gulf Cooperation Council Commercial Arbitration Centre
PO Box 16100
Aladliya
Kingdom of Bahrain
Tel: +973 17825540
Fax: +973 17825580
www.gcac.biz/new/index.php

The Gulf Cooperation Council (GCC) Commercial Arbitration Centre (GCAC) was jointly established by the chambers of commerce of each of the GCC countries in 1993, and became fully operational in 1995. The aim of the GCAC is to establish strong relationships with other Arab and international arbitration centres.

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Arbitration agreement

8. Arbitrability

Are there any types of disputes that are not arbitrable?

There is a range of judicial opinion on what matters may be dealt with by arbitration, and Bahraini law does not contain any provision which specifies those matters on which conciliation (and therefore arbitration) cannot be used. As a ‘rule of thumb’, it appears that where it is possible to resolve a dispute by agreement, that dispute will be ‘arbitrable’. This formulation excludes, for example, matters arising out of criminal law and relating to issues such as public order.

9. Requirements

What formal and other requirements exist for an arbitration agreement?

Pursuant to article 233 of the Domestic Arbitration Law, an arbitration agreement must be made in writing and must have a subject matter capable of being dealt with by arbitration. The subject of the arbitration must be specified in the written arbitration agreement or during the pleadings phase, otherwise the arbitration agreement will be null and void. Arbitration is only permissible between parties that have capacity to dispose of their rights.

The International Arbitration Law and Decree No. 30 require the arbitration agreement to be in writing.

10. Enforceability

In what circumstances is an arbitration agreement no longer enforceable?

Under Bahraini law an arbitration agreement is deemed no longer enforceable if it violates the mandatory requirements specified by the law (please see question 5 above).

11. Third parties – bound by arbitration agreement

In which instances can third parties or non-signatories be bound by an arbitration agreement?

The Bahraini law does not contain any specific provision related to third parties or non-signatories being bound by an arbitration agreement.

12. Third parties – participation

Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice?

Bahraini law does not contain any specific provisions related to the participation of third parties in arbitration.

13. Groups of companies

Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine?

Bahraini law is silent on this matter.

14. Multiparty arbitration agreements

What are the requirements for a valid multiparty arbitration agreement?

Bahraini law does not include any specific provisions related to multiparty arbitration agreements but such agreements are permitted in practice.

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Constitution of arbitral tribunal

15. Appointment of arbitrators

Are there any restrictions as to who may act as an arbitrator?

In many respects, the requirements for selection as an arbitrator in Bahrain are less stringent than those faced by the Bahraini judiciary. In accordance with article 234 of the Domestic Arbitration Law, an arbitrator may not be a minor, incapacitated or deprived of his civil rights as a result of having been imprisoned or made bankrupt. There is no requirement under Bahraini law as to an arbitrator’s religion or gender.

Article 11(2) of the International Arbitration Law and the BCDR rules relating to arbitration under section 2 of Decree No. 30 state that the parties are free to agree on the appointment of arbitrators.

16. Appointment of arbitrators

Failing prior agreement of the parties, what is the default mechanism for the appointment of arbitrators?

Article 235 of the Domestic Arbitration Law provides that if a dispute arises and the parties have not agreed on the arbitrators, or if one or more of the proposed arbitrators has abstained, withdrawn or been dismissed, or an impediment has arisen to prevent him from acting and there is no agreement between the parties, the Bahraini Court that would have jurisdiction to examine the dispute in the absence of the arbitration agreement shall appoint the necessary arbitrators.

The International Arbitration Law enables the Bahraini High Civil Court of Appeal to perform certain functions regarding international arbitrations. These include (under article 11(3)) the appointment of arbitrators if the parties cannot agree on their appointment, and (under article 13(3)) hearing appeals on any unsuccessful challenge to the appointment of an arbitrator should the tribunal refuse the challenge.

Under article 6 of the BCDR Arbitration Rules if, within 45 days of the commencement of the arbitration, all of the parties have not mutually agreed on a procedure for appointing the arbitrators, or have not mutually agreed on the designation of the arbitrators, the administrator shall, at the written request of any party, appoint the arbitrators and designate the presiding arbitrator.

The GCAC rules state that the applicant should include the name of his proposed arbitrator in the application for arbitration (article 9). The respondent then has 20 days from notification of the application to respond (although he may obtain an extension of 20 days) and, among other things, provide the name of his proposed arbitrator (article 11). If the tribunal is made up of a sole arbitrator and the parties cannot agree on an appointment within the time period described in this paragraph then the secretary general of the GCAC shall make the appointment from the GCAC’s list of approved arbitrators within two weeks (article 12). If either the applicant or respondent does not nominate an arbitrator within the time frames prescribed in this paragraph then the secretary general shall appoint an arbitrator for each party from the GCAC’s approved list within two weeks and invite the two arbitrators to appoint a third member of the tribunal. If the appointed arbitrators fail to agree on the appointment of the third member of the tribunal within 20 days then the secretary general shall make the appointment within two weeks (article 12).

17. Challenge and replacement of arbitrators

On what grounds and how can an arbitrator be challenged and replaced? Please discuss in particular the grounds for challenge and replacement and the procedure, including challenge in court.

The Domestic Arbitration Law provides only that arbitrators may be dismissed by the mutual consent of the parties or by court order (article 234).

The International Arbitration Law states that arbitrators must disclose any circumstances that may give rise to doubts as to their impartiality or independence (article 12). If the parties have not agreed to a procedure for challenging the appointment of the arbitrators, there is a mechanism for the tribunal to decide on the challenge, subject to appeal to the High Civil Court of Appeal (article 13).

The appointment of an arbitrator may be challenged if doubts have arisen as to their impartiality or independence, or if they do not possess the qualifications agreed to by the parties. Neither of the parties may challenge an arbitrator they have themselves appointed, or in whose appointment they have participated, unless they discover a reason to doubt the arbitrator’s independence after the appointment has been made.

If an arbitrator has become unable to perform their functions or fails to act without undue delay, the parties may ask the High Civil Court of Appeal to decide on the termination of their mandate (article 14).

Article 8 of the BCDR Arbitration Rules provides that a party may challenge any arbitrator whenever circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence.

18. Relationship between parties and arbitrators

What is the relationship between parties and arbitrators? Please elaborate on the contractual relationship between parties and arbitrators, neutrality of party-appointed arbitrators, remuneration, and expenses and liability of arbitrators.

The relationship between the parties and the arbitrators is not mentioned in the Domestic Arbitration Law.

Under both the International Arbitration Law and the BCDR Decree No. 30, arbitrators are required (whether party-appointed or not) to be neutral and independent. Pursuant to article 12 of the International Arbitration Law, arbitrators are required when approached with a possible appointment to disclose circumstances likely to give rise to justifiable doubts as to their impartiality or independence.

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Jurisdiction

19. Court proceedings contrary to arbitration agreements

What is the procedure for disputes over jurisdiction if court proceedings are initiated despite an existing arbitration agreement, and what time limits exist for jurisdictional objections?

Pursuant to article 236 of the Domestic Arbitration Law respondents shall, in circumstances where a valid arbitration clause exists, relinquish their rights of recourse to the Court that would have jurisdiction to deal with the dispute but for the arbitration clause.

If a dispute arises concerning the execution of a contract containing an arbitration clause and one of the parties commences proceedings in a Bahraini Court, the other party may rely on the above as a valid basis on which the case should not to be heard by the court and should be dealt with by arbitration.

If a party brings proceedings relating to an international commercial dispute before the Bahraini courts despite the existence of an arbitration clause, then article 8 of the International Arbitration Law allows the courts to refer the parties to arbitration, if requested to do so by one of the parties no later than the first statement to the court in the proceedings unless they find that the arbitration agreement is null and void, inoperative or incapable of being performed.

20. Jurisdiction of arbitral tribunal

What is the procedure for disputes over jurisdiction of the arbitral tribunal once arbitral proceedings have been initiated and what time limits exist for jurisdictional objections?

Article 16 of the International Arbitration Law expressly empowers the arbitral tribunal in an international arbitration to rule on its own jurisdiction. A party must object to the jurisdiction of the tribunal or to the arbitrability of a claim or counterclaim no later than the filing of the statement of defence. The ability of the tribunal to rule on their own jurisdiction is also recognised in the GCAC and BCDR Rules.

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Arbitral proceedings

21. Place and language of arbitration

Failing prior agreement of the parties, what is the default mechanism for the place of arbitration and the language of the arbitral proceedings?

The Domestic Arbitration Law does not deal with a default mechanism for the place and language of arbitration but in the absence of agreement Arabic is likely to be the language used and Bahrain will be the place of arbitration.

Articles 20 and 21 of the International Arbitration Law provide that the parties are free to agree on the language used and place of arbitration. In the absence of party agreement on these matters the tribunal has the ability to decide the language to be used and place of the arbitration.

Article 13 of the BCDR Arbitration Rules provides that if the parties disagree as to the place of arbitration, the administrator may initially determine the place of arbitration, subject to the power of the tribunal to determine finally the place of arbitration within 60 days after its constitution.

Article 14 of the BCDR Arbitration Rules provides that if the parties have not agreed otherwise, the language of the arbitration shall be that of the documents containing the arbitration agreement, subject to the power of the tribunal to determine otherwise based upon the contentions of the parties and the circumstances of the arbitration.

Article 6 and 7 of the GCAC rules provide that in the absence of party agreement, the tribunal has the ability to determine the language and place of arbitration.

22. Commencement of arbitration

How are arbitral proceedings initiated?

The Domestic Arbitration Law does not include any specific provision related to the commencement of arbitral proceedings.

Article 22 of the International Arbitration Law provides that unless otherwise agreed by the parties, arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

Article 2 of the BCDR Arbitration Rules provides that arbitral proceedings are deemed to commence on the date on which the administrator receives the notice of arbitration. Upon receipt of the notice of arbitration, the administrator must communicate with all parties with respect to the arbitration and acknowledge the commencement of the arbitration.

The notice of arbitration must contain a statement of claim including the following:

  • a demand that the dispute be referred to arbitration;
  • the names, addresses and telephone numbers of the parties;
  • a reference to the arbitration clause or agreement that is invoked;
  • a reference to any contract in relation to which the dispute arises;
  • a description of the claim and an indication of the facts supporting it;
  • the relief or remedy sought and the amount claimed; and
  • may include proposals as to the means of designating and the number of arbitrators, the place of arbitration and the language of the arbitration.

23. Hearing

Is a hearing required and what rules apply?

The Domestic Arbitration Law is silent on the requirement for a hearing and on the rules that apply to such hearings.

The International Arbitration Law gives the parties wide scope to agree on the procedure to be followed by the tribunal in conducting arbitration proceedings, including hearings (article 19(1)).

Where the parties do not determine any rules of a particular arbitral institution to govern the proceedings, the tribunal may conduct the proceedings in such manner as it sees fit (article 19(2)). However, it is bound (by article 18) to treat the parties with equality and to give each party a full opportunity to present its case. As a result, each party must be given reasonable notice of any hearing (though the tribunal may of course proceed with the hearing in that party’s absence provided it considers that it has given the party in question a full opportunity to present its case).

Article 20 of the BCDR Arbitration Rules provides that the tribunal shall give the parties at least 30 days advance notice of the date, time and place of the initial oral hearing.

Article 21 of the GCAC rules provide that the tribunal shall hold, at the request of either party, at any stage of the proceedings, a hearing for oral submissions or for hearing testimony from witnesses or experts. If neither party makes such a request, the tribunal shall have the option either to hold such a hearing or to proceed on the basis of documents alone, provided that at least one hearing has already been held.

24. Evidence

By what rules is the arbitral tribunal bound in establishing the facts of the case? What types of evidence are admitted and how is the taking of evidence conducted?

Article 238 of the Domestic Arbitration Law states that the parties must submit all documents and written evidence in their possession or charge, and do all that the tribunal requires of them but is silent (and as such leaves it to the discretion of the parties) as to the meaning of ‘all’. The parties or the tribunal may also file an application with the Court requesting production of any document necessary to the arbitration that is in the possession of ‘others’ or the attendance of a particular witness to give evidence before the arbitration.

Article 238 also states that the tribunal may require that witnesses take an oath or make a formal declaration of truth. Anyone giving false evidence concerning an ‘essential issue’ before a tribunal could be held to have committed perjury and punished accordingly.

In international arbitrations, subject to any rules of procedure agreed by the parties, the tribunal has discretion to conduct the proceedings in the manner it considers appropriate (article 19 of the International Arbitration Law).

The BCDR rules (article 19) state that the claiming party has the burden of proving the facts relied on to support its claims. The tribunal may order the parties to deliver a summary of the documents and other evidence which the party intends to rely upon and may order the parties to produce other documents as necessary.

Article 22 of the GCAC rules states that with regard to witness testimony, the party upon which the burden of proof falls, shall notify the tribunal and the other parties at least seven days before the hearing date and provide the names and addresses of witnesses, the matters on which they will testify and the language to be used for the testimony. Furthermore, article 24 refers to the ability of the tribunal at any stage to request the parties to produce additional documents or evidence (than already submitted) or to conduct an inspection of any premises that are the subject of the dispute and make investigations if it deems necessary.

25. Court involvement

In what instances can the arbitral tribunal request assistance from a court and in what instances may courts intervene?

The Domestic Arbitration Law (article 236) states that the parties (in consequence of a valid arbitration clause) relinquish their rights of recourse to the Courts to examine the dispute. As a result, Bahraini courts are not permitted to intervene in domestic arbitrations. However, the tribunal may request assistance from a court in relation to witness testimony and disclosure of documents (see the answer to question 24).

Court assistance in domestic arbitrations is limited by article 235 of the Domestic Arbitration Law to:

  • production of documents in the possession of ‘others’ which are ‘necessary’;
  • the sending of notices requiring a witness to attend to give evidence before the tribunal;
  • instances where the parties have not agreed on the constitution of the tribunal, or if one or more of the agreed arbitrators has abstained, withdrawn or been dismissed, or an impediment has arisen to prevent him from acting. In such instances the court that would have had jurisdiction to examine the dispute (in the absence of a valid arbitration agreement) shall appoint the necessary arbitrators at the request of the party concerned with expediting the matter, and this decision may not be challenged or appealed.

Similarly, article 5 of the International Arbitration Law also prevents the courts from intervening in international arbitrations. However, the court may assist in:

  • ordering disclosure of relevant documents or assisting with witness evidence at the request of the tribunal (article 27);
  • appointing arbitrators where there is no party agreement or where the tribunal fail to do so (in instances specified in article 6);
  • challenges to the suitability of arbitrators (in instances specified in article 6);
  • issuing a ruling on jurisdiction (in instances specified in article 6);
  • annulling an award (in accordance with the instances described in article 34).

26. Confidentiality

Is confidentiality ensured?

The Domestic Arbitration Law does not contain any specific provisions on the confidentiality of arbitration proceedings.

By virtue of article 31 of the International Arbitration Law, publication of arbitration awards (or partial awards) is only permitted when the parties agree.

Hearings held before the BCDR and GCAC are private and this privacy extends to the information disclosed by the parties or by witnesses as well as all matters relating to the award. Pursuant to article 34 of the BCDR regulation, the BCDR administrator may publish or otherwise make publicly available selected awards, decisions and rulings that have been edited to conceal the names of the parties and other identifying details or that have been made publicly available in the course of the enforcement or otherwise unless otherwise agreed by the parties. Confidential information disclosed during proceedings by the parties or by witnesses is kept private and confidential, unless otherwise agreed by the parties or required by the applicable law.

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Interim measures

27. Interim measures by the courts

What interim measures may be ordered by courts before and after arbitration proceedings have been initiated?

The Domestic Arbitration Law does not contain any specific provisions on interim measures issued by the courts, but the BCDR rules include provisions whereby a judge appointed by the supreme judicial council has jurisdiction to deal with interim measures which arise between the submission of the dispute to the BCDR and the constitution of the tribunal.

In international arbitration, the courts may grant preliminary or interim orders in support of the arbitration. Bahraini law provides that the parties may request interim measures from the courts either before or during arbitration proceedings but that such applications should not impact on the jurisdiction of the tribunal.

28. Interim measures by the arbitral tribunal

What interim measures may the arbitral tribunal order after it is constituted? In which instances can security for costs be ordered by an arbitral tribunal?

The Domestic Arbitration Law does not address this issue.

A tribunal operating under the BCDR rules (article 21) may take whatever interim measures it deems necessary (including injunctive relief for protection or conservation of property). Such interim measure awards may require security for costs and it is at the discretion of the tribunal to apportion costs in any interim award or final award.

Pursuant to the International Arbitration Law (article 17) the tribunal may order any of the parties to take ‘any interim measure of protection’ it deems necessary for the subject matter of the dispute and may also require any party to provide security in connection with such an interim measure.

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Awards

29. Decisions by the arbitral tribunal

Failing party agreement, is it sufficient if decisions by the arbitral tribunal are made by a majority of all its members or is a unanimous vote required? What are the consequences for the award if an arbitrator dissents?

The Domestic Arbitration Law (article 239) permits the award to be made by a majority of the tribunal. However, the law includes a requirement that if one or more of the arbitrators refuses to sign the award, this should be stated in the award.

The International Arbitration Law (article 29) permits an award to be made by a majority of the tribunal.

The rules of the BCDR and GCAC also state that decisions of the tribunal shall be made by a majority of the tribunal. Article 26 of the BCDR regulation also requires the award to include a statement to explain (if applicable) why one of the tribunal has not signed the award.

30. Dissenting opinions

How does your domestic arbitration law deal with dissenting opinions?

See question 29 above.

31. Form and content requirements

What form and content requirements exist for an award?

Article 239 of the Domestic Arbitration Law provides that the award must be in writing, based on principles of law and made on the basis of the parties’ submissions. The award must also include a copy of the arbitration agreement, a summary of the parties’ pleaded case and documents relied upon, the reasons for the award, the decision and the date of issue plus the signatures of each of the arbitrators.

Furthermore, awards must be filed, together with the original arbitration agreement, at the office of the court that would have had jurisdiction to hear the case in the absence of an arbitration agreement, within three days of being issued.

Awards issued by the BCDR are required to be in writing, contain the reasons for the award and, unless the parties agreed otherwise, must also contain the date and the place the award was made. The GCAC rules contain similar requirements but also requires the award to contain the names of the parties and the arbitrators.

The International Arbitration Law (article 31) requires the award to be in writing and signed by the arbitrator and by the majority where there is more than one arbitrator (provided the award states why the signature of an arbitrator is missing).

32. Time limit for award

Does the award have to be rendered within a certain time limit under your domestic arbitration law?

Under the Domestic Arbitration Law (article 237), if the parties do not specify a time limit for the award in the arbitration agreement, the arbitrators must hand down an award within three months of the tribunal agreeing to arbitrate. The parties may agree to extend this time limit.

33. Date of award

For what time limits is the date of the award decisive and for what time limits is the date of delivery of the award decisive?

Article 242 of the Domestic Arbitration Law requires any challenge to the award to be filed within 30 days of the date when the tribunal was informed that the award had been filed with the court.

Article 33 of the International Arbitration Law requires any request for the tribunal to make a correction to the award or explain a particular point in the decision to be made within 30 days of the date of receipt of the award (unless the parties agree an extension).

Article 34 of the International Arbitration Law requires any request for annulment of an award to be made within three months of receipt of the award by the applicant or the date of the tribunal’s decision in response to a request for explanation or correction made under article 33.

34. Types of awards

What types of awards are possible and what types of relief may the arbitral tribunal grant?

Bahraini law does not specify the types of awards that may be issued by arbitral tribunals but the BCDR rules provide for interim, interlocutory or partial orders and awards in addition to final awards.

35. Termination of proceedings

By what other means than an award can proceedings be terminated?

The Domestic Arbitration Law is not prescriptive regarding termination of proceedings.

The International Arbitration Law (article 30) states that if parties agree to settle the dispute, the tribunal shall terminate the proceedings and accept the settlement in the form of an award on agreed terms.

The BCDR rules state that the tribunal may terminate the arbitration if requested by all parties following a settlement in the form of an award on agreed terms.

In addition, the BCDR rules (article 29) state that if the continuation of the proceedings becomes unnecessary or impossible for any other reason, the tribunal shall issue an order terminating the arbitration, unless a party raises justifiable grounds to object.

36. Cost allocation and recovery

How are the costs of the arbitral proceedings allocated in awards? What costs are recoverable?

The Bahraini law has no set policy for allocating costs (it is at the discretion of the tribunal) but the BCDR rules provide for the tribunal to fix the costs of the arbitration in its award, which may include the fees and expenses of the tribunal and costs associated with assistance required by the tribunal, for example experts, fees and expenses of the administrator, reasonable costs for legal representation of a successful party and any costs incurred in connection with an application for interim or emergency relief.

37. Interest

May interest be awarded for principal claims and for costs and at what rate?

Bahraini law does not expressly address issues of interest in this con-text. The issue of interest is left to the discretion of the tribunal.

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Proceedings subsequent to issuance of award

38. Interpretation and correction of awards

Does the arbitral tribunal have the power to correct or interpret an award on its own or at the parties’ initiative? What time limits apply?

See question 33 above.

39. Challenge of awards

How and on what grounds can awards be challenged and set aside?

The Domestic Arbitration Law (articles 239 and 242) states that arbitral awards may not be ‘challenged’ but can be appealed by way of an application for nullification. Article 243 provides a number of instances where an award may be nullified:

  • if the award was issued on the basis of an invalid arbitration agreement or the award departed from the boundaries of a valid agreement;
  • if the award was issued by arbitrators who were not appointed in accordance with the Bahraini law;
  • if the court considers that any reasons for rehearing the case are established; or
  • if an ‘invalidating fact’ in the award or the proceedings affects the award (no guidance is given in the law as to what might amount to an invalidating fact).

Article 242 of Domestic Arbitration Law requires a party to file any application to invalidate the award within thirty days from the date that the arbitrators were notified of the filing of the original award with the Bahraini Court.

Update and trends

The most significant trend in Bahrain is the increased prominence of the BCDR as a centre for dispute resolution (particularly as a result of its mandatory jurisdiction in certain disputes (see question 3)).

Under article 34 of the International Arbitration Law an award may be set aside if:

  • the parties were incapable of entering the agreement or the agreement was invalid under the applicable law;
  • a party did not receive proper notice of the appointment of the tribunal or the arbitral proceedings or was not given an opportunity to present its case;
  • the arbitrators exceeded their authority or decided on issues outside the terms of the arbitration agreement;
  • the arbitral tribunal was not properly constituted or the arbitrators were not properly appointed (in accordance with the Inter-national Arbitration Law or the parties’ agreement); or
  • the court finds that the subject matter of the dispute is not capable of settlement by arbitration or the award conflicts with Bahraini public policy.

Pursuant to article 25 of Decree No. 30 awards issued by the BCDR may be challenged before the Court of Cassation but it is possible for the parties to agree in writing that no challenge may be made to the Bahraini courts provided they agree in writing for a foreign law to govern their dispute, state that the parties shall not be entitled to challenge the award in the Bahraini courts and that any challenges should be made to the competent authority in another state.

40. Levels of appeal

How many levels of appeal are there? How long does it generally take until a challenge is decided at each level? Approximately what costs are incurred at each level? How are costs apportioned among the parties?

As mentioned in question 39 domestic arbitration awards may be appealed to the competent Court of Appeal (subject to the parties waiving this right).

Subject to the point made above in relation to arbitral awards issued by the BCDR, international arbitration awards may be appealed on a limited number of grounds as outlined above to an appeal court as well, after the payment of the fees determined by the court.

41. Recognition and enforcement

What requirements exist for recognition and enforcement of domestic and foreign awards, what grounds exist for refusing recognition and enforcement, and what is the procedure?

Under article 241 of the Domestic Arbitration Law, an award is not executable without an order issued by the president of the court competent for the appeal and after assurances that there is nothing to prevent its execution after 30 days.

International arbitration awards are binding and enforceable by submitting a written request to the High Civil Court together with authenticated originals of the arbitration agreement and the award. Enforcement is only possible after the expiration of the date for filing an application for setting aside of the award or a decision on such an application to set aside the award.

The grounds for refusing recognition or enforcement of international awards are:

  • a party did not have adequate capacity or the arbitration agreement was not valid under the applicable law;
  • a party was not informed properly regarding the appointment of an arbitrator or the arbitration proceedings or did not have an adequate opportunity to present its case;
  • the award deals with a dispute not included in the parties’ submissions;
  • the constitution of the tribunal or the arbitral procedure was contrary to the parties’ agreement;
  • the award did not become binding, was set aside or its execution suspended in the country where the award was issued; or
  • if the court decides that the arbitration was not permissible in matters where conciliation is not allowed or if the award conflicts with Bahraini public policy.

An award issued by a BCDR tribunal is immediately enforceable in the Bahraini courts.

42. Enforcement of foreign awards

What is the attitude of domestic courts to the enforcement of foreign awards set aside by the courts at the place of arbitration?

Generally, the Bahraini court will not enforce a foreign arbitral award if it has been set aside by the courts at the place of arbitration.

43. Cost of enforcement

What costs are incurred in enforcing awards?

Bahraini law states that parties seeking to enforce awards must pay 1 per cent of the value awarded to obtain an enforcement order.

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Other

44. Judicial system influence

What dominant features of your judicial system might exert an influence on an arbitrator from your country?

Bahraini law does not provide for US-style discovery but production of specified documents is possible if the requesting party can persuade the tribunal that the other party has in its possession documents that are important to the dispute. Written witness statements may be used but are not common.

45. Regulation of activities

What particularities exist in your jurisdiction that a foreign practitioner should be aware of?

Foreign practitioners would be advised to obtain legal advice on the requirements for obtaining a working visa and the ability to appear before a tribunal in Bahrain or sit as an arbitrator. The BCDR rules permit foreign practitioners to appear before the BCDR.

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