Developments in International Arbitration Prompt an Update of Arbitral Rules in Bahrain

Two key goals set out in the Kingdom of Bahrain’s development plan, the Economic Vision 2030, are the enhancement of the legal system and the promotion of alternative dispute resolution procedures within the Kingdom.

Recent developments include the issuance of a new Arbitration Law in 2015 (Legislative Decree No. 9/2015), and the establishment in September 2016 of specialist divisions within the existing Civil Courts system, presided over by Judges with extensive experience in commercial and investment disputes.

Against this backdrop, the Bahrain Chamber for Dispute Resolution (“BCDR”) recently opened a consultation on its new draft Arbitration Rules 2016 (“Draft Rules”).

The current BCDR Arbitration Rules, in force since 2010, are based largely upon the equivalent rules of the international arm of the American Arbitration Association (“AAA”), the International Centre for Dispute Resolution (”ICDR”).

The Draft Rules seek to incorporate new measures ensuring the equitable treatment of the parties, reflecting recent trends in international commercial arbitration that have been given recognition by other arbitral institutions when amending their rules, such as the International Chamber of Commerce, which adopted new rules in 2012, and the London Court of International Arbitration and the ICDR, which each adopted new rules in 2014.

By way of example, Article 4 of the Draft Rules directs that a respondent initially file a response to arbitration, which need not set out the defence in full. Further written statements are submitted once the tribunal has been appointed. In contrast, the current rules provide a 30 day timeline from commencement of the arbitration for the filing of a defence, which a respondent may feel is unduly restrictive, given that a claimant might have taken many months to prepare a statement of claim.

Article 15 contains detailed provisions relating to the summary disposal of all or part of claims or defences, ensuring that the arbitral process can be conducted fairly and efficiently by giving tribunals the power to strike out unmeritous claims early on in proceedings.

A further example is at Article 18, which sets out rules governing parties’ legal representatives, adopting principles set out in the International Bar Association’s Guidelines on party representation. These provisions will be particularly relevant where a dispute involves legal representatives who are not governed by a professional regulatory body, and ensure that a minimum standard of honesty and integrity is maintained throughout the arbitral process.

Finally, in recognition of the trend towards transparency in international commercial arbitration, Article 37 permits the BCDR to publish awards, without the respective parties’ consent, provided that confidential information relating to the identities of the parties has been redacted.

It is anticipated that the Draft Rules will be formalised in the near future and will come into force in the first half of 2017.

In the meantime, it is clear that Bahrain continues to be at the forefront of developments in international commercial dispute resolution in the MENA region.