Bahrain’s new dispute resolution centre deemed the world’s first arbitration “free zone”
The Bahrain Centre of Dispute Resolution (BCDR), recently launched by the Ministry of Justice and delivered by the American Arbitration Association (AAA), will be governed by rules codified by Bahrain’s domestic legislation and is expected to increase investors’ confidence in the market. As such, the centre has been deemed an arbitration “free zone” by the AAA: “Awards made by arbitrators at BCDR-AAA, when the parties agreed in writing to be bound by the outcome, will not be subject to challenge in Bahrain. This is a world first and overcomes a problem that has plagued other such centres internationally. Too often in the past, awards have been set aside, impeding the whole process of resolution,” said BCDR-AAA CEO James MacPherson.
“BCDR-AAA will provide speedy, effective dispute resolution options for the myriad disputes that are part of every sector of the construction industry,” he added.
In fact, it is thought that the average time taken to resolve disputes through arbitration in Bahrain is 365 days. In the various national courts, the length of time can extend to several years, which can be very expensive. But, MacPherson claimed the average time it takes to resolve disputes through mediation is 60 days.
“Whether a mediation results in a binding settlement agreement or arbitration delivers an enforceable award, parties have relied on Alternative Dispute Resolution (ADR) for decades in order to provide the desired resolution of their disputes or claims,” he said.
The centre is expected to feed the demand of increased disputes, such as unpaid contracts, in the Middle East. MacPherson said it was natural that there were increasing pressures on businesses worldwide, which had led to an inevitable increase in demand for effective regional and international resolutions.
He told The Big Project that Bahrain had wanted to provide a mechanism that was tailor made for those doing business in the kingdom and the wider region, offering a degree of certainty in the legal system to multi-national businesses. BCDR-AAA will manage cases ranging from major infrastructure-, power- and utility projects to smaller building contracts between state agencies, private employers, constructors and design professionals.
“Historically, the construction industry has been among the most active users of arbitration and mediation services globally – and the wider Middle East is no exception,” asserted MacPherson.
He recommended that parties contact BCDR-AAA in the early stages of a development for assistance in drafting a ‘future disputes clause’ addressing the party’s specific needs for the contract.
However, if the contract already exists, the centre can administer the arbitration or mediation clause, or assist in bringing parties to the table when there is no mention of ADR in the contract.
Over the coming months, MacPherson said the centre’s employee base will increase two-fold, with ongoing investment into training Bahraini lawyers. The team includes eight Bahraini national lawyers trained in case management at AAA’s New York head office: “We will continue to work with London’s Chartered Institute of Arbitrators to train arbitrators in Arabic,” he added.