This country-specific Q&A provides an overview of International Arbitration laws and regulations applicable in Bahrain.
What legislation applies to arbitration in your country? Are there any mandatory laws?
Law no. 9 of 2015 Promulgating the Arbitration Law (Arbitration Law) applies to: (i) an arbitration seated in the Kingdom of Bahrain (Bahrain); or (b) an arbitration seated outside of Bahrain if the parties have agreed to the application of the Arbitration Law.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Bahrain is a signatory to the New York Convention subject to the following reservations:
(i) the recognition and enforcement of foreign awards will be limited to awards issued:
a. in countries that are party to the New York Convention; and
b. in relation to contractual or non-contractual commercial disputes as determined by the laws of Bahrain; and
(ii) the signing of the New York Convention shall not be considered as recognition of the State of Israel or lead to the establishment of diplomatic relationships.
However, following the signing of the Abraham Accords by Bahrain and the State of Israel, this reservation will likely be repealed in the future.
What other arbitration-related treaties and conventions is your country a party to?
In addition to the New York Convention, Bahrain is a party to the following treaties and conventions concerning arbitration:
(i) the International Centre for Settlement of Investment Disputes (ICSID) Convention of 1965;
(ii) the Riyadh Arab Treaty for Judicial Cooperation of 1983;
(iii) the Execution of Judicial Judgements, Delegations and Notifications Treaty for the Cooperation Council for the Arab States of the Gulf;
(iv) the Convention for Pacific Settlement of International Disputes (Hague Convention I); and
(v) the Commercial Arbitration Centre Regulation for the Cooperation Council for the Arab States of the Gulf.
Moreover, Bahrain has ratified several bilateral investment treaties with other states.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The Arbitration Law adopted the UNCITRAL Model Law on International Commercial Arbitration (1985) as amended in 2006 (Model Law).
Article 1(1) of the Model Law restricts its application to commercial international arbitration. However, the Arbitration Law amends Article 1(1) of the Model Law by extending the scope of application to all arbitrations seated in Bahrain or seated outside of Bahrain if the parties have agreed to its application, irrespective of the nature of the legal relationship between the parties to the dispute.
Are there any impending plans to reform the arbitration laws in your country?
We are not aware of any such plans.
What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
The following institutions are based in Bahrain:
(i) the Bahrain Chamber of Dispute Resolution (BCDR) in partnership with the American Arbitration Association. The BCDR Arbitration Rules were last amended in 2017 (BCDR 2017 Arbitration Rules); and
(ii) the Gulf Cooperation Council Commercial Arbitration Centre (GCCCAC). The GCCCAC Rules were last amended in 1999 (GCCCAC Arbitral Rules of Procedure).
Is there a specialist arbitration court in your country?
What are the validity requirements for an arbitration agreement under the laws of your country?
An arbitration agreement is an agreement between parties to refer to arbitration all or some disputes that have arisen or that may arise between the parties in respect of a specific legal relationship, whether the disputes are contractual or non-contractual. The arbitration agreement can be entered into in any form, including verbally, as long as its contents are documented in writing.
The Model Law additionally confirms that the following agreements shall be considered as documented in writing:
(i) an arbitration agreement documented in electronic communication that is accessible and can be retrieved later on;
(ii) if, in the course of exchanging pleadings, a party alleges that an arbitration agreement exists and the other party does not deny its existence; or
(iii) if an agreement incorporates, by way of reference, an arbitration clause in another document.
Are arbitration clauses considered separable from the main contract?
Yes, an arbitration clause must be considered separately from other clauses in an agreement. A decision by the tribunal that an agreement is null and void does not automatically render the arbitration clause contained therein to also be null and void.
Do the courts of your country apply a validation principle under which an arbitration agreement should be considered valid and enforceable if it would be so considered under at least one of the national laws potentially applicable to it?
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
The Arbitration Law does not address multi-party arbitrations, or arbitrations related to multiple agreements. The BCDR 2017 Arbitration Rules include provisions that govern the nomination of arbitrators in a multi-party arbitration, the consolidation of multiple arbitrations that are subject to different arbitration agreements and joinder rules. Additionally, the GCCCAC Arbitral Rules of Procedure also include provisions that address the nomination of arbitrators in a multi-party arbitration.
In what instances can third parties or non-signatories be bound by an arbitration agreement? Are there any recent court decisions on these issues?
The legal effects of an arbitration agreement are limited to the parties of that agreement and do not extend to third parties.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Prior to the Arbitration Law, the Court of Cassation considered disputes that relate to public order as ‘non-arbitrable’. The Court of Cassation interpreted public order as rules that are legislated in mandatory provisions that cannot be waived, settled or resolved by arbitration. This was consistent with article 233 of Legislative Decree no. 12 of 1971 Promulgating the Civil and Commercial Procedures Law, which was repealed by the Arbitration Law. The Arbitration Law does not restrict the parties from referring certain types of disputes to arbitration. The Court of Cassation may provide more guidance on this matter moving forward.
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
The tribunal must apply the governing law selected by the parties. If the parties have not selected a governing law, the tribunal must determine the governing law in accordance with the conflict of law rules the tribunal deems to be applicable.
It is important to note that the parties’ choice of governing law must not be interpreted as an agreement by the parties to apply the conflict of law rules of that jurisdiction, unless this has been explicitly set out in the agreement between the parties.
Bahrain’s conflict of law rules are legislated in Law no. 6 of 2015 on Conflict of Laws in Civil and Commercial Matters with a Foreign Element (Conflict of Law Rules).
Have the courts in your country applied the UNIDROIT or any other transnational principles as the substantive law? If so, in what circumstances have such principles been applied?
There is no publicly available precedent of the Court of Cassation (the only court whose judgements are available to the public) considering a case in accordance with transnational principles. However, the Conflict of Law Rules allow contractual parties to choose international trade law as the governing law.
In your country, are there any restrictions in the appointment of arbitrators?
There are no restrictions on the appointment of arbitrators under the Arbitration Law but the parties may agree to restrict the nationality of arbitrators that could be appointed. Moreover, when considering a request by one of the parties to appoint an arbitrator as discussed in more detail below, the court must consider the appropriateness of appointing an arbitrator from a different nationality to that of either party.
Are there any default requirements as to the selection of a tribunal?
Any arbitrator appointed must be independent and impartial and must hold any qualifications required by the parties, otherwise the arbitrator may be subject to removal.
Can the local courts intervene in the selection of arbitrators? If so, how?
If the parties have not agreed on the process of selecting arbitrators, a party may request the High Civil Court to appoint an arbitrator:
(i) in a three-members tribunal, if the other party fails to select an arbitrator or if the party-selected arbitrators are unable to agree on the third member of the tribunal; or
(ii) in a one-member tribunal, if the parties are unable to agree on an arbitrator.
If the parties have agreed on a selection process, a party may still request the High Civil Court to appoint an arbitrator if:
(i) the other party fails to act as required pursuant to the selection process;
(ii) the parties or the party-selected arbitrators are unable to agree on the appointment of the third member of the tribunal; or
(iii) a third party, such as an arbitration institution, does not perform any act required by the selection process.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?
A party may challenge the appointment of an arbitrator if circumstances that raise suspicion regarding the arbitrator’s independence or impartiality have arisen or if the arbitrator does not hold the qualifications agreed on by the parties. However, a party is prohibited from seeking the removal of an arbitrator if it appointed or participated in the appointment of that arbitrator, unless such challenge is based on reasons that have arisen after the arbitrator’s appointment.
The parties may agree on the procedure to challenge the appointment of an arbitrator. In the absence of an agreement, a party may challenge the appointment of an arbitrator within 15 days from the date the party is notified of the constitution of the tribunal or becomes aware of the circumstances concerning his impartiality, independence or qualifications.
The tribunal must decide on the challenge if the arbitrator does not step down or if the other party does not agree to the challenge raised by the opposing party. If the tribunal rejects the challenge, the party that submitted the challenge may request the High Civil Court, within 30 days from the date that party is notified of the tribunal’s decision, to consider the matter. The tribunal may proceed with the arbitration and issue an award while the High Civil Court is considering the challenge raised by one of the parties.
Have there been any recent developments concerning the duty of independence and impartiality of the arbitrators
There are no recent developments on the independence or impartiality of arbitrators.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
The Arbitration Law does not address the case of a truncated tribunal. Moreover, there is no precedent in which the Court of Cassation considered the validity of proceedings overseen by a truncated tribunal following the issuance of the Arbitration Law.
Nonetheless, under the Arbitration Law, the tribunal’s decisions are made by a majority vote of its members, unless agreed otherwise by the parties in the arbitration agreement. Moreover, there is no requirement for all members of the tribunal to sign the award; the Arbitration Law only requires the award to be signed by a majority of the tribunal’s members. In any event, the Arbitration law allows the parties to remove an arbitrator by mutual agreement if the arbitrator is unable to perform his or her duties or if the performance of his or her duties is unduly delayed
Are arbitrators immune from liability?
Arbitrators appointed pursuant to the Arbitration Law are not liable for any act or omission relating to the performance of their duties, unless such act or omission was made in bad faith or caused by gross wrongdoing. Individuals employed by an arbitrator or directly authorised to carry out activities related to an arbitrator’s duties are liable in a similar manner.
Is the principle of competence-competence recognized in your country?
Yes, the Arbitration Law authorises a tribunal to rule on its jurisdiction. If the tribunal rules that it has the jurisdiction to consider a dispute before ruling on its merits, either party may request the High Civil Court to rule on the jurisdiction of the tribunal within 30 days from the date the party is notified of the tribunal’s decision.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
A court in Bahrain is required by the Arbitration Law to refer the parties to arbitration if requested by either party in the litigation. The party’s request must be raised in its pleading on the merits of the case. The court may dismiss any such request if it concludes that the arbitration agreement is null and void, unenforceable or has no effect.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
The state is not entitled to invoke sovereign immunity in connection with the commencement of arbitration proceedings. While the state’s public and private assets may not be subject to enforcement or attachment, this provision cannot be relied on to halt arbitration proceedings.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?
Unless agreed otherwise, the tribunal may continue the arbitration proceedings if the respondent fails to submit its statement of defense, attend a hearing or provide supporting evidence. There is no provision in the Arbitration Law that the courts can rely on to compel the respondent’s participation.
Can third parties voluntarily join arbitration proceedings? If all parties agree to the intervention, is the tribunal bound by this agreement? If all parties do not agree to the intervention, can the tribunal allow for it?
Can local courts order third parties to participate in arbitration proceedings in your country?
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
The tribunal, unless agreed otherwise by the parties, may issue interim measures based on a request from one of the parties. The tribunal may order a party to:
(i) maintain or restore the status quo pending the resolution of the dispute;
(ii) take action that would prevent current or imminent harm or interference with the arbitration proceedings, or to refrain from any action that may cause such harm or interference;
(iii) provide means to preserve assets that may be subject to a future decision; or
(iv) preserve evidence that may be crucial and material to the resolution of the dispute.
The courts of Bahrain may order interim measures before or during the arbitration proceedings based on a request from one of the parties.
Are anti-suit and/or anti-arbitration injunctions available and enforceable in your country?
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
The parties’ counsels are subject to Legislative Decree no. 26 of 1980 Promulgating the Advocacy Law.
In your country, are there any rules with respect to the confidentiality of arbitration proceedings?
There are no provisions in the Arbitration Law regarding confidentiality. The confidentiality of the arbitration proceedings is usually addressed in the institutional rules selected by the parties and/or in any agreement between them.
How are the costs of arbitration proceedings estimated and allocated?
The party requesting an interim measure or a preliminary order shall be liable for costs and damages caused by such measure or order, if the tribunal later determines that issuing the measure or order was inappropriate in the circumstances. The Tribunal may award such costs at any stage of the arbitration. The Arbitration Law is otherwise silent on costs. However, the tribunal may award costs in accordance with the applicable institutional rules.
Can pre- and post-award interest be included on the principal claim and costs incurred?
Awarding interest on the principal claim is subject to the law governing the merits of the dispute. If the merits of the dispute are governed by the laws of Bahrain, the tribunal may award interest as damages. Awarding interest on costs is not a common practice in Bahrain.
What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts
The High Civil Court will not recognise or enforce any remedies that conflict with public policy in Bahrain.
Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?
Yes, awards can be challenged based on the following grounds:
(i) if the party challenging the award can demonstrate using supporting evidence:
a. that either party to the arbitration agreement did not have the required legal capacity or that the arbitration agreement is invalid under the governing law selected by the parties or, if the parties have not agreed on a governing law, the arbitration agreement is invalid under the laws of Bahrain;
b. the same grounds to reject the recognition and enforcement of an award as set out in points (i) (b) and (i) (c) in question 35 above; or
c. the constitution of the tribunal or the arbitration proceedings contravened with the provisions of the arbitration agreement (to the extent such provisions do not breach a mandatory provision of the Arbitration Law) or if such matters were not agreed in the arbitration agreement, contravened with the Arbitration Law; or
(ii) if the High Civil Court finds that:
a. the dispute cannot be resolved by arbitration under the laws of Bahrain; or
b. the award contravenes with public policy as applicable in Bahrain.
The party challenging the award must submit its challenge to the High Civil Court within 3 months from the date of the party’s receipt of the award or from the date the tribunal rules on a request for a correction or an interpretation of an award, or a supplemental award
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
The Court of Cassation has not yet considered the enforceability of a waiver of the parties’ rights to challenge an award under article 34 of the Arbitration Law. However, article 34 of the Model Law as adopted by the Arbitration Law does not contemplate any such waiver. Consequently, it is yet to be tested whether a waiver of a party’s right to challenge the award would be enforceable.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Public and private assets of the state benefit from sovereign immunity at the enforcement stage as discussed above in question 24.
In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?
There are no legal provisions or published precedents regarding the enforceability of awards against third parties. By comparison, court judgements are only enforceable against real or provisional (e.g. successors or heirs) parties to the relevant dispute. The party benefitting from the judgement may not enforce it against a third-party that was not represented in the dispute. However, a party may use the judgement as supporting evidence in another case. The persuasiveness of the party’s reliance on a previous judgement as supporting evidence is subject to the discretion of the court.
The Arbitration Law does not entitle third parties to challenge the recognition or enforcement of an award.
Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?
Is emergency arbitrator relief available in your country? Is this frequently used?
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
Have there been any recent court decisions in your country considering the issue of corruption? What standard do local courts apply for proving of corruption? Which party bears the burden of proving corruption?
Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?
The Court of Cassation has not yet considered the definition or application of public policy in setting aside or rejecting the enforcement of an award following the issuance of the Arbitration Law in 2015.
Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?
Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & Ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?
What measures, if any, have arbitral institutions in your country taken in response to the COVID-19 pandemic?
Arbitral institutions implemented certain measures in terms of social distancing and the use of masks in compliance with the applicable guidelines of Bahrain’s Ministry of Health. Further, the Ministry of Justice and Islamic Affairs in cooperation with the Information and eGovernment Authority has launched the court’s eservices whereby parties are able to file cases, pay court fees, submit pleadings and received judgment online without the need for them to be present at the Ministry of Justice and Islamic Affairs.
In your country, does the insolvency of a party affect the enforceability of an arbitration agreement?
Enforcement of an award against a party that is subject to reorganisation or bankruptcy proceedings pursuant to the laws of Bahrain is suspended following the court’s approval to commence reorganisation or bankruptcy proceedings. However, such suspension does not apply to ongoing arbitration proceedings or restrict a party’s right to refer a dispute to arbitration.
Is your country a Contracting Party to the Energy Charter Treaty? If so, has it expressed any specific views as to the current negotiations on the modernization of the Treaty?
Have there been any recent developments in your jurisdiction with regard to disputes on climate change and/or human rights?
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