Bahrain: International Arbitration Comparative Guide

Last Updated: 22 February 2019
Article by Patrick Gearon
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1
Legal framework
1.1
What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
 

The relevant legislation governing arbitration in Bahrain is Legislative Decree 9 of 2015, promulgating the Bahraini Arbitration Law.

In 2009 Bahrain established the Bahrain Chamber for Dispute Resolution in partnership with the American Arbitration Association (BCDR-AAA), as an international arbitration centre. The BCDR-AAA is governed by Legislative Decree 30 of 2009 with respect to the Bahrain Chamber for Economic, Financial and Investment Dispute Resolution (the BCDR Law). If an arbitration is conducted in the BCDR by the parties' agreement, then the BCDR Law will govern the arbitration.

Certain other laws contain provisions relating to statutory arbitration, such as Legislative Decree 48 of 2002 promulgating the Telecommunications Law.

1.2
Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
 

The Arbitration Law does not differentiate substantively between domestic arbitration and international arbitration, and governs both forms of arbitration in Bahrain.

Domestic and international arbitrations conducted at the BCDR-AAA are also governed by the BCDR Law.

1.3
Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
 

The Arbitration Law adopts the UNCITRAL Model Law on International Commercial Arbitration in its entirety.

1.4
Are all provisions of the legislation in your jurisdiction mandatory?
 

Yes.

1.5
Are there any current plans to amend the arbitration legislation in your jurisdiction?
 

We are not aware of any plans to amend the arbitration legislation in Bahrain. As the Arbitration Law was issued quite recently (2015) and adopts the UNCITRAL Model Law in its entirety, we do not expect there to be any significant changes to the Bahraini arbitration legislation in the near to medium future.

1.6
Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
 

Yes, Bahrain has been a signatory to the New York Convention since 6 April 1988.

Bahrain applies the commerciality and reciprocity reservations, and the New York Convention therefore applies only to:

  • disputes which are considered commercial under Bahraini law; and
  • the recognition and enforcement of awards made in the territory of another contracting state.
1.7
Is your jurisdiction a signatory to any other treaties relevant to arbitration?
 

Bahrain is a party to a number of other treaties relevant to arbitration, including:

  • the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965;
  • the Riyadh Arab Agreement for Judicial Cooperation 1983;
  • the Gulf Cooperation Council Convention for the Execution of Judgments, Delegations and Judicial Notifications 1995;
  • the Hague Convention for the Pacific Settlement of International Disputes 1907; and
  • various bilateral investment treaties.
2
Arbitrability and restrictions on arbitration
2.1
How is it determined whether a dispute is arbitrable in your jurisdiction?
 

Although there are no legislative proscriptions, certain disputes may not be arbitrable in practice, including some family and inheritance matters and disputes that may involve public policy issues.

Subject to the chosen arbitration rules adopted, the parties are free to contest the arbitrability of a dispute before the arbitral tribunal or the Bahraini Civil High Court.

Under the Arbitration Law, the tribunal is permitted to determine and rule upon its own jurisdiction.

2.2
Are there any restrictions on the choice of seat of arbitration for certain disputes?
 

There are no restrictions on the choice of seat of arbitration.

3
Arbitration agreement
3.1
What are the validity requirements for an arbitration agreement in your jurisdiction?
 

To be valid in Bahrain, an arbitration agreement must be in writing. This requirement will be satisfied if the content of the agreement is recorded in any form, whether the arbitration agreement or contract was initially concluded orally, by conduct or by any other means.

An arbitration agreement may be validly recorded in an electronic communication if the information contained therein is accessible for subsequent reference.

A reference in a contract to any document containing an arbitration clause constitutes a written arbitration agreement, provided that the reference is such as to make that clause part of the contract.

3.2
Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
 

As the Arbitration Law incorporates the UNCITRAL Model Law on International Commercial Arbitration in its entirety, the provisions relating to separability contained in the UNCITRAL Model Law apply. Effectively, an arbitration clause which forms part of a contract will be treated as an agreement independent of the other terms of the contract, and a decision by the tribunal that a contract is null and void will not entail the invalidity of the arbitration clause.

3.3
Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
 

In the absence of agreement between the parties, the tribunal will determine the place of arbitration and/or language or languages to be used in the proceedings, having regard to the circumstances of the case, including the convenience of the parties.

4
Objections to jurisdiction
4.1
When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
 

An objection to the jurisdiction of the tribunal must be raised no later than the date on which the statement of defence is submitted. A party is not precluded from raising such a plea by the fact that it has appointed, or participated in the appointment of, an arbitrator. Any plea that the tribunal has exceeded the scope of its authority must be raised as soon as the relevant matter is raised in the arbitration proceedings. A tribunal may, however, admit a later objection if it considers the delay justified.

4.2
Can a tribunal rule on its own jurisdiction?
 

A tribunal may rule on its own jurisdiction, either as a preliminary issue or in an award on the merits.

4.3
Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
 

If the tribunal rules as a preliminary issue that it has jurisdiction, any party may request the Bahraini Civil High Court to rule conclusively on the jurisdiction of the tribunal within 30 days of receiving notice of the ruling. The court's ruling cannot be appealed.

While a request to the court is pending, the tribunal may continue the proceedings and make an award.

If the tribunal decides to combine its decision on jurisdiction with an award on the merits, any party may request the court to rule conclusively on the jurisdiction of the tribunal in proceedings challenging the award and in proceedings to enforce the award.

5
The parties
5.1
Are there any restrictions on who can be a party to an arbitration agreement?
 

There are no express statutory restrictions on who can be a party to an arbitration agreement. It would be prudent to ensure that prospective parties to arbitration agreements have the power and authority to enter into them, and that they are not minors and do not lack capacity.

5.2
Are the parties under any duties in relation to the arbitration?
 

The parties are generally free to decide on what duties and standards will apply. Certain arbitral institutions (eg, the International Court of Arbitration of the International Chamber of Commerce) stipulate requirements relating, for example, to conduct that will apply to all arbitrations conducted under their administration.

Arbitration in Bahrain is also subject to the general duties and procedural rules contained within the UNCITRAL Model Law on International Commercial Arbitration. For example, Article 24(3) of the UNCITRAL Model Law requires that all statements, documents and other information supplied to the tribunal by one party be communicated to the other party, to ensure fairness, objectivity and impartiality in the arbitration proceedings.

5.3
Are there any provisions of law which deal with multi-party disputes?
 

No provisions of Bahraini law restrict multi-party disputes.

6
Applicable law issues
6.1
How is the law of the arbitration agreement determined in your jurisdiction?
 

As arbitration agreements under Bahraini law are separable from the contract in which they are contained, it is possible for the law of the arbitration agreement to differ from both the law of the seat and the governing law of the contract. The law of the arbitration agreement may be specified in the arbitration agreement or the contract in which the arbitration agreement is contained. If a disagreement between the parties occurs as to the law governing the arbitration agreement, the parties are obliged to seek a ruling from either the tribunal or the Bahraini Civil High Court.

6.2
Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
 

The tribunal will uphold the parties' agreement as to the substantive law of the dispute. Where the substantive law is unclear or the parties have not chosen the applicable law, the tribunal will apply the substantive law determined by the conflict of laws rules which it considers applicable.

The tribunal may decide ex aequo et bono or as amiable compositeur if the parties have expressly authorised it to do so.

7
Consolidation and third parties
7.1
Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
 

Bahraini law does not prohibit the consolidation of arbitration proceedings. Subject to the procedural rules agreed between the parties or determined by the tribunal, separate arbitration proceedings may therefore be consolidated, either with the consent of the parties or where the proceedings arise from the same arbitration agreement or involve the same parties.

7.2
Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
 

Bahraini law does not prohibit the joinder of additional parties to arbitration proceedings. Subject to the procedural rules agreed between the parties or determined by the tribunal, third parties may therefore be joined to arbitration proceedings. It is generally necessary for them to consent to this.

7.3
Does an arbitration agreement bind assignees or other third parties?
 

An arbitration agreement or award is binding only on the parties and the tribunal therefore has limited scope to assume jurisdiction over third parties.

8
The tribunal
8.1
How is the tribunal appointed?
 

The parties are free to agree on the procedure for appointing the tribunal. In the absence of an agreement between the parties, the following default procedure will apply:

  • In the case of a three-arbitrator tribunal, the parties will each appoint one arbitrator and those arbitrators will appoint the third arbitrator. If a party fails to appoint an arbitrator within 30 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment shall be made by the Bahraini Civil High Court on the request of a party.
  • In the case of a sole arbitrator, any party may apply to the Bahraini Civil High Court for it to appoint the arbitrator.

In the case of a failure to comply with the appointment procedure agreed upon by the parties, any party may apply to the court for it to appoint the arbitrator, unless the agreement on the appointment procedure provides other means for securing the appointment.

8.2
Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
 

In the absence of agreement between the parties as to the number of arbitrators, the tribunal will comprise three arbitrators. There are no requirements as to the qualifications of arbitrators; but in practice, an arbitrator should be suitably qualified to rule on the dispute.

8.3
Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
 

An arbitrator may be challenged in Bahrain only if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess the qualifications agreed as necessary for the arbitrator by the parties. A party may challenge an arbitrator that it appointed itself only for reasons it becomes aware of after the appointment has been made.

The parties may agree on a procedure for challenging an arbitrator's appointment. In the absence of such agreement, the challenging party must, within 15 days of the information relating to the challenge coming to light, send a written statement of the reasons for the challenge to the tribunal. Unless the challenged arbitrator withdraws from office or the other party agrees to the challenge, the tribunal will decide on the challenge. If a challenge is unsuccessful, the challenging party has 30 days from receiving notice of the decision to request that the Bahraini Civil High Court decide on the challenge.

If an arbitrator is or becomes unable to perform his or her functions, or for other reasons fails to act without undue delay, his or her mandate will terminate when he or she withdraws from the post or by agreement between the parties.

8.4
If a challenge is successful, how is the arbitrator replaced?
 

A substitute arbitrator will be appointed according to the rules applicable to the appointment of the arbitrator who is being replaced.

8.5
What duties are imposed on arbitrators? Are these all imposed by legislation?
 

An arbitrator is obliged under Bahraini law to treat parties equally and give each party a full opportunity to present its case, and is also obliged to disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence.

8.6
What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
 

(a) procedure, including evidence?

Subject to any prior agreement on the arbitrators' powers or arbitration procedures, the tribunal may conduct the arbitration in whatever manner it considers appropriate. The power conferred on the tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence. The tribunal may appoint one or more experts to report on specific issues to be determined by the tribunal, and may require a party to give the expert any information or documents that it considers relevant to the issues surrounding the arbitration.

(b) interim relief?

An arbitrator has the power to order interim relief, including in relation to the preservation of assets and evidence and in order to prevent any prejudice to the arbitration proceedings. An arbitrator may require the party requesting an interim measure to provide appropriate security and may modify, suspend or terminate an interim measure either on application by one of the parties or, in exceptional circumstances, on its own initiative.

(c) parties which do not comply with its orders?

An arbitrator has limited powers in relation to a party's non-compliance with its orders. Subject to the powers agreed between the parties, an arbitrator may take steps such as awarding adverse costs, drawing adverse inferences or refusing to admit evidence.

If any party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make an award on the evidence before it.

An arbitrator may also request the Bahraini Civil High Court to assist in taking evidence.

(d) issuing partial final awards?

In general, subject to the powers agreed between the parties, an arbitrator is not precluded from making a partial final award.

(e) the remedies it can grant in a final award?

While the most common remedy is that of damages, subject to the powers agreed between the parties, an arbitrator is not precluded from granting other remedies. In practice, the non-damages remedies available will depend on the governing law of the contract and the law of the jurisdiction in which enforcement of any award will be sought. Any remedy considered unenforceable under Bahraini law or contrary to the public policy or ethics of Bahrain will be excluded from enforcement.

(f) interest?

Although Sharia law prohibits the recovery of interest, Bahrain's commercial laws recognise interest as an international business concept and, subject to what has been agreed between the parties, an arbitrator will therefore have the power to award interest. Consideration should, however, be given when claiming interest to the law of the jurisdiction in which enforcement of any award will be sought.

8.7
How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
 

Subject to the procedural rules agreed between the parties, where:

  • a claimant fails to communicate a statement of claim, the tribunal may terminate the proceedings;
  • a respondent fails to communicate a statement of defence, the tribunal may continue the proceedings without treating the failure in itself as an admission; and
  • a party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the award on the evidence before it.
8.8
Are arbitrators immune from liability?
 

In general, arbitrators are immune from liability for any action or non-action in the course of undertaking their duty, unless it was undertaken in ill will or resulted from gross negligence. An arbitrator will not benefit from immunity in the event that he or she withdraws from office without good reason.

9
The role of the court during an arbitration
9.1
Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
 

Where proceedings are issued in the Bahraini courts in a matter which is the subject of an arbitration agreement, the courts shall, if a party so requests (no later than when submitting its first statement on the substance of the dispute), refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

9.2
Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
 

The Bahraini Civil High Court has a number of powers in relation to an arbitration seated in Bahrain, including in relation to:

  • recognition of the arbitration agreement;
  • the appointment of and challenges to arbitrators;
  • the jurisdiction of the tribunal;
  • the taking of evidence;
  • the setting aside of awards; and
  • the recognition and/or enforcement of interim measures and final awards.

These powers are exercisable only at the request of a party or an arbitrator. The extent to which these powers are applicable to arbitrations seated outside of Bahrain will depend on a number of factors - primarily the extent to which parties or their assets are located within the jurisdiction of Bahrain.

9.3
Can the parties exclude the court's powers by agreement?
 

The parties cannot in principle exclude the Bahraini Civil High Court's powers by agreement, although in practice the court's powers will generally be exercised at the request of a party; if no such request is made, then the court is unlikely to intervene.

10
Costs
10.1
How will the tribunal approach the issue of costs?
 

Subject to what has been agreed between the parties, the tribunal has broad discretion in the making of an award for costs.

Many arbitral institutions, including the Bahrain Chamber for Dispute Resolution in partnership with the American Arbitration Association, expressly provide for the calculation and allocation of administrative fees and tribunal fees.

10.2
Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
 

There are no express restrictions on what the parties can agree in terms of costs in an arbitration seated in Bahrain, although any court fees for intervention by the Bahraini Civil High Court are subject to the Bahraini Judicial Fees Law and will be payable regardless of what the parties have agreed.

11
Funding
11.1
Is third-party funding permitted for arbitrations seated in your jurisdiction?
 

There are no restrictions on third-party funding for arbitrations seated in Bahrain. However, the concept of third-party funding for arbitrations seated in Bahrain is not widely developed.

12
Award
12.1
What procedural and substantive requirements must be met by an award?
 

An award must be made in writing and signed by the arbitrator(s). In arbitration proceedings with more than one arbitrator, the signatures of a majority will suffice, provided that the reason for any omitted signature(s) is stated.

The award must state the reasons on which it is based, unless the parties have agreed that no reasons are needed or the award is an award on agreed terms. The award must also state the date and the place of arbitration, and will be deemed to have been made at that place. After the award has been made, a copy signed by the arbitrators must be delivered to each party.

12.2
Must the award be produced within a certain timeframe?
 

Bahraini law imposes no specific time limits on the production of awards. The parties may agree that the tribunal is subject to a time limit - for example, by adopting arbitration rules that stipulate a timeframe with which an award must be made (eg, the rules of the Bahrain Chamber for Dispute Resolution in partnership with the American Arbitration Association).

13
Enforcement of awards
13.1
Are awards enforced in your jurisdiction? Under what procedure?
 

Arbitral awards are recognised in Bahrain as binding, irrespective of the country in which they were made (as long as that country is a signatory to the New York Convention). A party seeking enforcement of an award should make a written application for enforcement, enclosing the original or a copy of the award, to the Bahraini Civil High Court. Available methods of enforcement include:

  • issuing an attachment order on property;
  • ordering the forced sale of property subject to the attachment order;
  • ordering the payment of amounts under the judgment;
  • collecting payment and transferring it to the successful party;
  • authorising the use of force, where required;
  • seeking assistance from the police, if necessary;
  • ordering the arrest of the debtor;
  • levying a distraint on the debtor's property (including stocks and bonds) in order to satisfy the debt; and
  • ordering the sale of any property (movable and immovable) by public auction.
14
Grounds for challenging an award
14.1
What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
 

Under Bahraini law, a party can apply to the Bahraini Civil High Court to set aside an award if:

  • the party making the application can prove that:
    • a party to the arbitration agreement was under some incapacity; or
    • the agreement is invalid under the law to which the parties have subjected it or, failing any indication thereof, under Bahraini law;
  • the party making the application was not given proper notice of the appointment of an arbitrator or the arbitral proceedings, or was otherwise unable to present its case;
  • the award:
    • deals with a dispute not contemplated by, or not falling within, the terms of the agreement to arbitrate;
    • contains decisions on matters that are beyond the scope of the arbitration; however, if these can be separated from the rest of the award, only that part of the award which contains decisions on matters not submitted to arbitration will be set aside; or
    • conflicts with Bahraini public policy;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties' agreement (unless the agreement conflicts with Bahraini law) or, failing such agreement, was not in accordance with Bahraini law; or
  • the court finds that the subject matter of the dispute is not arbitrable under Bahraini law.
14.2
Are there are any time limits and/or other requirements to bring a challenge?
 

An application to set aside an award must be made within three months of either the date of the challenging party's receipt of the award or the date on which a party's request for correction or interpretation of an award, or for an additional award, is disposed of by the tribunal.

14.3
Are parties permitted to exclude any rights of challenge or appeal?
 

Parties are not permitted to exclude any rights of challenge or appeal.

15
Confidentiality
15.1
Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
 

The Arbitration Law contains no express provision regarding the confidentiality of arbitration proceedings. This will therefore be a matter for the parties to agree on or, in the absence of any agreement, for the tribunal to decide. In practice, confidentiality is often expressly prescribed in the arbitration agreement.

In cases where confidentiality has not been expressly provided for in the arbitration agreement, many institutional arbitration rules recognise at least a partial principle of confidentiality in international arbitrations. For example, the Bahrain Chamber for Dispute Resolution in partnership with the American Arbitration Association (BCDR-AAA) Arbitration Rules 2017 state that an award may be made public only with the consent of all parties; and that unless otherwise agreed by the parties, all matters concerning the arbitration shall be kept confidential by the tribunal, the BCDR-AAA and any experts (but not the parties themselves). However, in arbitrations conducted under the International Chamber of Commerce Arbitration Rules 2017, no immediate confidentiality of proceedings exists and confidentiality must therefore be expressly ordered by the tribunal at the request of a party.

15.2
Are there any exceptions to confidentiality?
 

There are no exceptions to confidentiality under the Arbitration Law.

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