Known

BAHRAIN
If, however, as is provided for under the legislative decree, another set
of arbitration rules or other sets of arbitration rules are promulgated, the
material scope of the BCDR-AAA rules will be constricted.
When it comes to challenging awards arising from classic BCDR-AAA
arbitrations, it is noteworthy that the list of grounds is so short that it does
not expressly include lack of arbitrability and the improper composition of
the arbitral tribunal. The explanation is probably that these two grounds are
nonetheless bases upon which a challenge can be made, but they are simply
assimilated to aspects of jurisdiction. As has been noted, the arbitral tribunal’s
jurisdiction can be challenged before the Bahrain Court of Cassation. It
seems clear that this includes post-award challenges to jurisdiction.
It is also possible that the composition of the arbitral tribunal is treated
as a matter of jurisdiction, as under English
arbitration law, whereas arbitrability is treated as
a matter of public policy. An award’s repugnance
to public policy is indeed a stipulated ground of
challenge. Much the better approach, practically if
not conceptually, is to treat lack of arbitrability as a
matter of jurisdiction and not public policy, so that
it can be raised at an early stage, and there is no
need to wait till the award to attack it.
The exclusion of challenges: how does it
work?
Perhaps the most important issue arising from
the legislative decree is how its exclusion of all
challenges to the award in an agreed (classic)
arbitration functions. The English translation of
the relevant provision (article 25 of the legislative
decree) says the exclusion applies when “the parties
have agreed in writing to choose a foreign law
concerning the dispute”. The question is what
law is being referred to: the law applying to the
arbitration clause, the substantive law, the procedural
law, or even the lex arbitrii more broadly?
The original Arabic is apparently of no greater
determinacy, by accident or design.
The law applicable to an arbitration agreement is of little significance in
attaching an arbitration to a legal order. Moreover, it serves the precise and
circumscribed purpose of aiding the interpretation of the arbitration clause.
It therefore seems unlikely that the choice of a foreign law to govern the
arbitration clause determines whether or not the right to challenge an award
is excluded.
As for the law of the contract – that is, the law applicable to substantive
matters – this is functionally distinct and isolated from aspects of the award
which might cause a state to make a challenge available. In arbitration there
is notably little concern with the substantive accuracy of the award, which is
why appeals on the merits are almost universally excluded. This too, then, is
unlikely to be the law referenced in the exclusion clause.
It would be incoherent to read the provision as referring to a choice
of lex arbitrii in a broad sense – since, if none of the Bahraini lex arbitrii
applies then the legislative decree, with its exclusionary rule, does not itself
apply.
Götaverken
What the legislator may be contemplating in excluding parties’ jurisdiction
to review arbitral awards in this way is the Paris Court of Appeal’s line of
thinking in the famous Götaverken decision of 21 February 1980. In that
decision the Paris court refused to accept jurisdiction to review an ICC
award rendered in Paris on the basis that there was nothing linking the
arbitration to France (the stipulated place of arbitration being insufficient for
these purposes). According to the court, it is only when French law is the
law of the arbitration proceedings (la loi de la procédure arbitrale) that French
Perhaps the most
important issue
arising from the
legislative decree is
how its exclusion of
all challenges to the
award in an agreed
arbitration functions
courts will accept jurisdiction to review arbitral awards. The mere choice
of France as the place of arbitration creates no more than a rebuttable
presumption that French law is the law of the arbitration proceedings.
It is true that it does not necessarily follow from the parties’ choice of
place of arbitration that they have selected the law of that place to govern
the arbitration. Indeed, the text of the New York Convention (article
V(e)) seems to make a distinction between the two. To admit and apply
this distinction, however, sacrifices the legal predictability that comes from
equating the place of arbitration and the law governing the proceedings.
If the law excluding review has been understood correctly in this
article, Bahrain appears not to be plagued by this concern. Unless the
parties expressly stipulate a foreign law to govern their arbitration, then it is
assumed, from their choice of Bahrain as the place of
arbitration, that Bahraini law governs the procedure.
Therefore actions for review of the award lie with
the Bahraini court.
Review available somewhere else?
Götaverken raises a second concern relating to
the Bahraini exclusion of review of awards. If a
foreign law may be chosen to govern an arbitration
proceeding taking place in Bahrain, how much
Bahraini arbitration law will continue to apply? And
at what point do you cease to apply one and start to
apply the other?
Because only the (written) choice of a foreign
law to govern the arbitral proceedings will exclude
Bahraini review of the award, it will almost always
be the case that review will be available at the place
of that foreign law, as well as at the enforcement
stage. Consequently, this provision of the legislative
decree does not appear straightforwardly to exclude
all review of arbitration awards as Belgian law
automatically did for a time, and as parties to Swiss
arbitration can still do by unambiguous agreement.
Moreover it does not appear possible, under
this Bahraini provision, to exclude some but not
all grounds of review – unless, for example, the parties chose Swiss law to
govern their arbitration and then expressly excluded certain grounds of
review under Swiss arbitration law.
BCDR-AAA: THE ENDURING IMPACT?
What is most striking about the new Bahraini instruments relating to
arbitration is how confidently and maturely they embrace the quintessential
non-interventionism of modern arbitration. Comparisons will certainly be
made with the DIFC-LCIA system, and it is true that there are similarities.
In both cases, Gulf states have created structures which will deliver expertise
on the practical workings of state-of-the-art modern arbitration. In Dubai,
there is the immediate advantage of the finest judicial supervision of
arbitrations and review of arbitration awards available around the globe.
In Bahrain, on the other hand, experienced local judges will continue to
supervise classic arbitrations by agreement, and will only review awards
proceeding from them if there is no exclusion of all review at the place of
arbitration because of a certain detachment of the award from the Bahraini
legal order.
Local Bahraini judges will also benefit from deciding substantive
commercial matters alongside leading international lawyers. And it appears
that, in reviewing statutory arbitration awards, they will also gain familiarity
with the process of reviewing arbitral awards – because of the similarities
between this procedure and modern review of arbitration awards upon
agreement. Perhaps, ultimately, it will be this that has the most enduring
constructive impact in the country.
28 Volume 5 • Issue 1