Legal Update: Amendment to the BCDR Law
Our Associate, Hisham Almansoor explains the changes to the BCDR Law
Hisham Almansoor – Associate ([email protected])
The Bahrain Chamber for Dispute Resolution (“BCDR”) was established under Legislative Decree No. (30) of 2009 (“BCDR Law”) and operates in partnership with the American Arbitration Association (AAA). Since its establishment in 2009, the BCDR-AAA has played a powerful role in facilitating the dispute resolution process and has administered 350 cases through the BCDR Court alone under its scope of operation prior to the latest amendment.
The Bahrain Chamber for Dispute Resolution (“BCDR”) was established under Legislative Decree No. (30) of 2009 (“BCDR Law”) and operates in partnership with the American Arbitration Association (AAA). Since its establishment in 2009, the BCDR-AAA has played a powerful role in facilitating the dispute resolution process and has administered 350 cases through the BCDR Court alone under its scope of operation prior to the latest amendment.
Prior to the amendment implemented by Legislative Decree No. (26) of 2021, the BCDR only accepted cases where the claim amount exceeded BHD 500,000 (approximately $1.3m) and at least one party is a financial institution licensed by the Central Bank of Bahrain, or the dispute is of an international commercial nature. We elaborate on the latter below.
Under Article 9 of the BCDR Law, a dispute is deemed ‘international’ where the location of one of the disputant parties or the place where a substantial part of the obligations of the commercial relationship is to be performed, or the location most closely connected with the dispute is outside the Kingdom. A dispute is deemed ‘commercial’ where its subject matter, contractual or non-contractual, concerns relationships of a commercial nature including any transaction of supplying and/or exchange of goods or services, distribution agreements, commercial representation or commercial agency, managing rights before others, hiring to purchase, construction of factories, consultation services, engineering works, issuing licenses, investment and financing, banking transactions, insurance, franchising agreements, joint ventures, any other forms of industrial or commercial cooperation, and transporting commodities or passengers by air, sea or land.
As of 1 October 2021, the BCDR may administer a broader range of cases since commercial companies licensed under Legislative Decree No. (21) of 2001 on the Issuance of the Commercial Companies Law now fall under the scope of cases which may be heard by the BCDR. This is likely to have a modest impact on reducing the load under the traditional court system given that the claim amount would still need to exceed BHD 500,000 as stipulated by Article 9 of the BCDR Law.
Article 31 of the BCDR Law, regarding judges appointed by the Supreme Judicial Council, has also been amended such that any decision or order issued by that judge is treated as equivalent to the determinations of the Dispute Resolution Committee of the BCDR. Should any grievance be filed on any of those decisions and order, any outcome is final and not subject to appeal.
Concluding remarks
The BCDR-AAA is renowned for being a major component in facilitating the dispute resolution process in the Kingdom of Bahrain. It is recognized for being able to provide efficient and cost-effective administration of commercial and investment arbitration, mediation and other forms of alternative dispute resolution (ADR). With the latest amendment coming into force, commercial companies with claims exceeding BHD 500,000 will now be able to benefit from the efficiency of the BCDR, and this is particularly welcome where parties to the proceedings are seeking an expedient conclusion to the dispute as the judgments rendered are final and may only be challenged under limited grounds before the Bahraini Court of Cassation.