BAHRAIN Law and Practice Contributed by: Noor Al Rayes, Fatema Sarhan, Bradley Price and Raghad Al Matrook, Al Tamimi & Company
3. Arbitration 3.1 Prevalence
• Confidentiality: Proceedings are private, protecting commercially sensitive information. • Flexibility: Parties can choose procedural rules, language, seat and arbitrators. • Expert decision-makers: Arbitrators with special- ised knowledge can be selected for complex tech- nical or commercial issues, such as construction or banking disputes. • International enforceability: Awards are recognised and enforced under the New York Convention. The enforcement process is streamlined, with awards exceeding USD1.3 million transferred to the BCDR for expedited processing in English or Arabic. • Party autonomy: Parties can agree on the govern- ing law, which the arbitrators will apply as chosen. This contrasts with court litigation, where Bahraini courts have discretion under the Conflict Law to apply Bahraini law despite a foreign choice of law clause. • Non-Bahraini representation: The Arbitration Law permits non-Bahraini lawyers to represent parties in international commercial arbitration, giving inter- national entities freedom of choice regarding legal representation. • Neutrality: International parties can select a neutral forum, avoiding concerns about local courts. 3.4 Disadvantages of Arbitration Despite its benefits, arbitration has some drawbacks. • Cost: Arbitration can be expensive, particularly international arbitrators or multiple hearings. Insti- tutional and arbitrator fees can be significant for high-value disputes. • Limited appeals: Awards are usually final, with nar- row grounds for challenge, which may disadvan- tage a party that believes the tribunal has erred. • Potential delays: Although often faster than litiga- tion, complex disputes with extensive document production or expert evidence can still take consid- erable time. • Enforcement challenges: Although awards are gen- erally enforceable under the New York Convention, enforcement may be resisted on limited grounds such as public policy or procedural irregularity.
Arbitration is widely used for commercial disputes, particularly in construction, oil and gas, banking and finance, and international trade. Many contracts include arbitration clauses for convenience, confi- dentiality and international enforceability of awards. The BCDR is the principal arbitration institution, han- dling both domestic and international cases. For international arbitration, the Arbitration Law permits non-Bahraini lawyers to represent parties, giving inter- national entities freedom of choice regarding legal representation. Bahrain is a party to the New York Convention, facilitat- ing international enforcement of awards. The enforce- ment process is streamlined: for awards exceeding USD1.3 million, applications are transferred to the BCDR, where parties may elect to proceed in English or Arabic. Awards are typically recognised or refused within seven to ten days of the hearing. Arbitration is particularly common in construction dis- putes, where complex technical issues benefit from arbitrators with relevant expertise. 3.2 Restrictions on Use of Arbitration Certain disputes cannot be referred to arbitration in • family law cases such as guardianship, divorce or inheritance, which fall within the exclusive jurisdic- tion of the Sharia courts; • matters involving public policy or administrative decisions; and • disputes concerning personal status. Bahrain, including: • criminal matters; Commercial and contractual disputes are generally fully arbitrable, provided that a valid arbitration agree- ment exists. 3.3 Advantages of Arbitration Arbitration offers several advantages.
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