This country-specific Q&A provides an overview to Litigation laws and regulations that may occur in Bahrain.
What are the main methods of resolving commercial disputes?
The main methods of resolving commercial disputes in the Kingdom of Bahrain (‘Bahrain’) are:
Commercial courts: the commercial courts form part of the civil courts which are considered the general courts in the Bahraini legal system, which consists of (i) minor courts, (ii) high courts, as well as (iii) a newly introduced commercial case management system whereby the case managers prepare the commercial case before it goes to court.
Bahrain Chamber for Disputes Resolution (‘BCDR’): established by virtue of legislative decree No. 30 of the year 2009 (under section 2 thereof) as a designated court specialized in commercial disputes exceeding 500,000 Bahraini Dinars and including and international trade element or parties that are licensed by the Central Bank of Bahrain (‘CBB’).
Arbitration: arbitration is becoming a popular method of resolving commercial disputes due to the fact that Bahrain recently adopted the United Nations Commission for International Trade Law (‘UNCITRAL’) model arbitration law. Moreover, Bahrain is the domicile of two regionally recognized arbitration centers: (i) the Gulf Cooperation Council (‘GCC’) Commercial Arbitration Centre, and (ii) BCDR-AAA (established under section 1 of legislative decree No. 30 of the year 2009).
What are the main procedural rules governing commercial litigation?
The main procedural rules governing the commercial litigation in Bahrain are:
Legislative decree No. 12 of the year 1971 promulgating the civil and commercial procedural law (‘CCPL’).
Legislative decree No. 30 of the year 2009 with respect to the Bahrain chamber for economic, financial and investment dispute resolution (‘BCDR law’).
Resolution No. 65 of the year 2009 with respect the procedures of BCDR (‘BCDR Rules’).
Law No. 9 of the year 2015 promulgating the arbitration law.
Ministerial decision No. 62 of the year 2018 with respect to the case management procedures.
Legislative decree No. 14 of the year 1996 with respect to the law of evidence (‘Law of Evidence’).
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
The structure of the local courts in Bahrain is the following:
The commercial courts:
The commercial courts starts with the case management phase which is a phase dedicated to collation of submissions, arguments and defenses to prepare the case file before submitting the same to courts. The case shall then be submitted to the first instance court which shall be either the minor commercial court or the high commercial court, depending on the nature of the case or the value of the claim as detailed under the CCPL.
Following issuance of the first instance court judgment, any of the parties may appeal the judgment issued by the Minor Commercial Court before the High Court of Appeal, or the judgment issued by the High Commercial Court before the Upper Court of Appeal.
The final stage of appeal in Bahrain is the Court of Cassation which may not be categorised as a litigation stage as it is specialized in reviewing the application of the law by the lower courts and does not rule on the merits of the case.
The BCDR on the other hand consists of a case management phase which is also a preparatory phase of the case before it is referred to the BCDR Tribunal, the BCDR Tribunal which will deliberate the merits of the case and render a final judgment. The BCDR Tribunal judgment may be appealed before the Court of Cassation only for the reasons provided under Article (13) of the BCDR law.
How long does it typically take from commencing proceedings to get to trial?
The commercial courts: within two months.
BCDR: within four months.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
According to Article 55 of the CCPL and Article 50 of the BCDR, generally the courts hearings before the commercial courts and BCDR are held in public. However, the court or BCDR Tribunal may decide to hold the hearings privately at its own discretion or based on a request of a part to preserve the public interest and morality.
However, the documents submitted to courts shall not be available to public and only parties the case, or those proving interest therein shall have the right to examine the same.
What, if any, are the relevant limitation periods?
There are different limitation periods in Bahraini laws depending on the type of the claim and grounds thereof. However, as a general rule, all civil claims are subject to the general statute of limitation which is 15 years unless the law provides for another period, such as traders’ rights which are subject to a limitation period of 10 years.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
Unless the contracts provide for a mediation or amicable settlement before initiating a case, under Bahraini law, there are no pre-action requirements before filing the proceeding in Bahrain, except the legal notice in certain claims such as the payment order request. If a legal notice is not served, the court will not issue an expedite payment order but will hear it as a normal case.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
The commercial proceedings commence by registering the statement of claim and paying the applicable court fees. Service is the first step in the proceedings and the same is done by the court. If the court clerks fail to conduct the service, the court may decide that the service is done by the court clerks with the guidance of the party in the interest of whom the service is being conducted (i.e. the plaintiff in the case of a statement of claim).
How does the court determine whether it has jurisdiction over a claim?
Bahraini law provides various basis for jurisdiction to be determined. The CCPL is the main reference in this respect, under which jurisdiction is determined geographically, based on the nature of the dispute/claim and the value thereof. Specific laws may regulate jurisdiction of specific nature, such as the BCDR Law for banking or international trade disputes exceeding 500,000 Bahraini Dinars in value.
How does the court determine what law will apply to the claims?
The court shall first refer to the parties’ agreement on the applicable law to their contract. Should this law be a foreign law, the party relying on the same shall prove the relevant texts of the law (or precedents in case of Common Law) to the satisfaction of the court (in terms of language and form). The court/BCDR will not apply the agreed upon law if the same contradicts with the public order, morality or mandatory provisions under Bahraini law.
In the absence of an agreement as to the applicable law, the applicable law will be decided in accordance with the Law No. 6 of the year 2015 with respect to Conflict of Laws in Civil and Commercial Foreign Matters, and foreign law provisions shall be subject to the same requirements provided herein above, otherwise Bahraini law will be applied.
In what circumstances, if any, can claims be disposed of without a full trial?
The case may be disposed without a full trial in case of the settlement between the parties whether outside the court, whereby the settlement deed may be submitted for ratification, or before it whereby the settlement will be minuted in the court hearing minutes.
Another situation of disposing the claim without a full trail is the lapse of 60 days after striking off the case due to the failure of the parties to attend the scheduled hearing or the request of the defendant to strike it after the failure of the plaintiff to attend.
What, if any, are the main types of interim remedies available?
The law does not list all available interim remedy measures. Practically, the main types of interim remedies are as follows: (i) travel ban, (ii) attachment of all the debtors’ assets such as: bank accounts, properties, movables assets (shares, parts etc.), (iii) status quo, (iv) ban of disposal of assets, etc.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
Before commercial courts: the parties are entitled to submit their pleadings and supporting documents to prove their claims, within the periods stated in the case management schedule. The case management phase before commercial courts typically last up to 2 months. Once the case is referred to the court, the parties may not submit any new documents unless they prove their inability to submit these previously, or if new developments occur in the case requiring such submission to be made, or if the court allows such submission.
Before the BCDR: the parties are entitled to submit their pleadings and supporting documents to prove their claims, within the deadlines specified in the case management schedule. The case management phase in the BCDR should not exceed 4 months (as per Article 37 of the BCDR Regulations) which may be extended for an additional period of 4 months upon a request by the case manager to the chief executive officer of the BCDR. No new arguments, pleadings or evidences may be submitted after the matter is referred to the BCDR Tribunal, unless such submission is permissible under Article 49 of the BCDR Regulations.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Bahraini law does not contain any disclosure requirements (in the same way common law systems do). Yet, courts have the right to oblige the parties in some situations to submit documents even if they are covered by non-discloser agreements.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Articles 61-96 of the Law of Evidence provide the rules relating to the witness testimonies in the civil and commercial cases as a way of evidence. In light of the type of the witness evidence, Article 88 of the Law of Evidence stipulates that “Evidence by witnesses shall be given orally. Written statements may not be referred to in giving evidence unless the Court or the designated judge authorizes this and the nature of the case justifies it”. Cross-examinations are conducted by the court only or the designated judge whereby the party’s attorney raises the questions to the court and the court addresses the same to the witness with the ability to formulate the question as it deems appropriate.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
According to Articles 132-158 of the Law of Evidence, expert evidence is permitted and regulated in Bahrain. Experts are appointed by the court and their mandate is described in the decision of their appointment issued by the court. The appointment of an expert by the court is done from the roaster of experts in the field available at the court. Such appointment may be at the request of a party to the case, or by the court at its own discretion. In some instances, the parties may both agree on an expert.
The Ministry of Justice sets the criteria required for experts in each field. The experts are bound by the mandate for which they are appointed and they shall be subject to the general requirements of impartiality and other required qualities for such an appointment.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
All final and interim decisions are subject to appeal. Depending on the nature of the decision and the issuing authority, the number of appeals and the appeal mechanism (Whether by way of grievance or otherwise) shall differ.
What are the rules governing enforcement of foreign judgments?
Pursuant to Article 252 of the CCPL, foreign judgments are enforced in Bahrain after filing a case before the High Civil Court requesting the court to acknowledge and recognize the foreign judgment. Article 252 of the CCPL provides that:
“Court judgements and orders passed in any foreign country may be ordered to be enforced on the same conditions as are laid down in the law of that country for enforcing court judgements and orders issued in Bahrain.
Application for issue of an enforcement order shall be filed with the High Court in accordance with the terms and conditions for filing court action after payment of the prescribed fees.
No enforcement order may be passed except after ascertaining the following:
that the Bahrain law courts are not competent to hear the case in respect of which the court judgement or order was passed and that the foreign courts which passed it are competent in accordance with the international rules of jurisdiction set down in the laws thereof.
that the litigants to the case in respect of which the judgement was issued were duly summoned and properly represented.
that the court judgement or order has become final in accordance with the law of the court that passed it.
that the court judgement is in no way inconsistent with any judgement or order previously passed by the Bahrain courts and does not provide for anything which constitutes a breach of public order or ethics”
In the absence of a treaty regulating the judicial relationship between the two jurisdictions, or in the absence of reciprocity between Bahrain and the jurisdiction in which the foreign judgment is issued, a fresh claim shall be filed before the competent court, whereby the foreign judgment may be used as a piece of evidence.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
Courts order the losing party to pay the court fees as well as nominal lawyers’ fees. These may be recovered at the time of execution of the judgment. In addition, parties may submit a claim for other expenses within the same case or by way of filing a separate claim for the remainder costs.
What, if any, are the collective redress (e.g. class action) mechanisms?
There are no mechanisms for collective redress in Bahrain in commercial disputes.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Third party has the right to join or be joined in ongoing proceedings by submitting a joinder memorandum and paying the applicable fees. The court may at its discretion join third party in cases of fraud.
Consolidation of cases is permissible when the cases are linked or for good procedural conduct.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Bahraini law does not regulate this mechanism, yet, we see no prohibition in funding litigation. However, given that we do not have a third part funding system established in Bahrain, we are of the view that litigants will be the only visible parties in the case and the funders may not be made liable for costs incurred by the other side.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
With the new developments in the case management process for both the commercial courts and BCDR, cases are settled in a fairly good range of time. This is in our view one of the main advantages of our developing judicial systems. The main disadvantage in our view is the delays in executing judgments and the mechanisms of enforcement, although these are being addressed and developed continuously.
What, in your opinion, is the most likely growth area for disputes for the next five years?
The insurance claims and technology related disputes.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
The use of technology is currently assisting in facilitating and expediting the litigation process. There are near future plans to enhance the technologies and systems currently used and applying the same on various streams and steps within the process, with the ultimate aim of automating the system to the extent possible. This will eventually lead to limiting the delays and complications caused by bureaucracy.