Swift resolution: A new centre offers a confidential forum for mediation and arbitration

Bahrain provides an excellent environment for alternative dispute resolution (ADR) due to its reliable, professional, and effective legal system.

Since 2010, the Bahrain Chamber for Dispute Resolution (BCDR), in partnership with the American Arbitration Association (AAA), has built a robust centre for the provision of ADR services to cater for the needs of Bahrain and the region as a whole. The Chamber identified a unique opportunity in being the only centre in the region to offer an arbitration “free zone” which allows parties to choose the law under which the dispute takes place. The zone guarantees that all international disputes under the chamber will be final, binding and not subject to legal challenge in Bahrain; those involved agree to be bound by the outcome and where the law governing the dispute is not Bahraini. This is the first centre its kind in the region and overcomes a problem that has hampered other international sites where decisions have been challenged in local courts.

MEDIATION: Mediation is the most cost-effective, timely and consultative form of ADR; as such, is witnessing a surge in popularity in the region. These efficiencies have provided commercial entities with a clear alternative to appearing before regional courts that are frequently overburdened.

Furthermore, the privacy and confidentiality of the mediation process can be of great value to businesses operating at the centre. Subject to applicable law or the parties’ agreement, confidential information disclosed to a mediator by the parties or by other participants in the course of the mediation cannot be later divulged by the mediator. The mediator must maintain the confidentiality of all information obtained in the mediation, and all records, reports, or other documents received by a mediator while serving in that capacity must remain confidential.

Furthermore, parties are obliged to maintain the confidentiality of the mediation and must not introduce it in any arbitral, judicial or other proceedings. This comprises views, admissions or proposals of the other party unless agreed to by the parties or otherwise required by applicable law.

ARBITRATION: Alongside the region’s rapid economic development, alternatives to traditional forms of dispute resolution are growing in popularity in the Middle East as businesses seek the swift, secure and cost-effective resolution of commercial disputes.

The country is well-poised to serve as a site of arbitration because the kingdom’s commercial laws and legal system are under continuous review with ongoing consultations with businesses, lawyers and other stockholders to ensure that they are consistent with international standards.

In another global first, Bahrain, through its ADR legislation, also became one of the first countries to introduce the concept of statutory dispute resolution tribunals. Disputes involving international financial and commercial entities licensed by Bahrain’s central bank where the disputed sum exceeds BD500,000 ($1.3m), will automatically be heard by the BCDR-AAA for final and binding resolution.

Arbitration as a means to dispute settlement now enjoys growing recognition among local and international parties. In March 1995, the Bahrain-based GCC Commercial Arbitration Centre was founded by GCC leaders in order to fill the vacuum in the region by providing expeditious and effective arbitration services. Other institutions have also distinguished themselves, such as the Qatar International Centre for Arbitration, established in 2006; the Dubai International Arbitration Centre (DIAC), which was established in 2007; and the BCDR-AAA, established in 2010, are now not only championing arbitration practice across the region, but are adhering to the highest international standards and best practices.

OBG would like to thank Zu'bi & Partners Attorneys & Legal Consultants for their contribution to THE REPORT Bahrain 2013