Spotlight on the new BCDR Arbitration Rules
2022 was a big year for the Bahrain’s international dispute resolution centre, the Bahrain Chamber for Dispute Resolution (the “BCDR”).
When the BCDR launched in 2009 it partnered with the American Arbitration Association, enabling it to quickly establish itself as a credible and attractive arbitration centre with robust and tested rules (the AAA being almost 100 years old). It was known as the BCDR-AAA, but in a sign of how far the institution has come the partnership was amicably concluded in 2022 and the centre is now known simply as the BCDR, an independent arbitral centre able to compete on the global stage in its own right.
It was therefore fitting that towards the end of 2022 the BCDR issued new arbitration rules to replace the previous 2017 rules. The new Rules automatically apply to any arbitration commenced before the BCDR on or after 1 October 2022.
The new Rules cement the BCDR’s independent identity and represent a significant development for the BCDR as it continues to make its mark as a preferred institution for dispute resolution in the region. The Centre retains the benefit of being overseen by a board of trustees chaired by Sheikha Haya Bint Rashed Al-Khalifa (a former president of the UN General Assembly and one of the first female lawyers in Bahrain), with a secretariate run by noted international arbitration specialist Professor Nassib Ziadé. The chief registrar, Ahmed Husain, has been with the BCDR since 2010, meaning that whilst the BCDR continues to change and grow, there is a level of continuity, experience and expertise throughout its management.
The 2022 Rules have introduced some key provisions to address issues not previously covered in the 2017 rules, in addition to amending several other provisions to provide more clarity as well as procedural efficiency. Some of the key features of the Rules are highlighted below:
- Security for costs: defendants don’t get to choose whether a claim is brought against them, and whilst the claimant may eventually be ordered to pay the defendant’s costs, such an order is meaningless if the claimant is unable to pay them (or has assets in a jurisdiction where enforcement of awards is challenging). A possible solution to this unfairness is for the defendant to seek an order that the claimant pay at an early stage in the proceedings security for the defendant’s costs, else the claim won’t proceed. The Rules now include at Article 26-bis an express provision regarding the tribunal’s authority to order security for costs once a written application is filed by a party, and all parties will have a reasonable opportunity to respond to an application for security for costs. The tribunal also has the authority to stay or dismiss a party’s claim in the event the party fails to comply with an order to provide security.
- Third-party funding: the Rules now contain at Article 21-bis a rule requiring parties to disclose the existence of any third-party funding arrangements and the identity of the third-party funder. This is a significant rule as it enables arbitrators to assess any conflicts of interest which may arise as a result of the third-party funder’s involvement in the arbitration. It also allows the tribunal to consider whether those arrangements may have any potential effects on the arbitration costs.
- Case management fee: in the event that the case management fee is not paid promptly and in full by the party (or parties) directed to pay it, the Rules at Article 5.4 allow the tribunal to ask the other party (or parties) to make payment, as otherwise the tribunal may resort to suspending or terminating the proceedings.
- Selecting arbitrators: the Rules at Article 9.4 now provide more clarity as regards the BCDR’s power to select an arbitrator, or arbitrators in the case of a three-member tribunal. In essence, if the parties do not agree on the method for nominating the co-arbitrators or if the parties agree that each party will nominate an arbitrator and the claimant or respondent fail to do so, the BCDR will select an arbitrator or arbitrators on behalf of the defaulting party or parties.
- Technology: the Rules make several references to the use of technology, which is in line with the BCDR’s guidelines which encourage tribunals and parties to make greater use of electronic communications. The Rules explicitly provide for the prompt communication of electronic versions of arbitral awards and orders (Articles 14.10 and 35.6). Moreover, the tribunal and parties are directed to consider how technology, including electronic communications, can be utilised to increase the efficiency and economy of the arbitral proceedings (Article 16.3). The tribunal may also conduct hearings and meetings by any electronic means (Article 22.1).
- Tribunal-appointed experts: the Rules now include at Article 25.1 a requirement that experts appointed by a tribunal sign a statement of impartiality and independence prior to accepting the appointment. Experts must disclose any circumstances that could give rise to reasonable doubts as to their impartiality or independence.
- Termination of arbitration: the tribunal, or the BCDR if the tribunal has not yet been appointed, has the power to issue an order terminating the arbitration, after providing notice to the parties, if the parties have taken no steps in the arbitration for at least six months and no justifiable objections have been raised by the parties (Article 38.2).
- Administrative fees: whilst the administrative fees remain the same as before, it is worth noting that the Rules specify that the filing fee is fixed at US $3,000, regardless of the value of the claim, whereas the case management fee is dependent on the type and value of the claim.
The new 2022 Rules mean that the BCDR remains a compelling choice for commercial arbitration. The BCDR is also branching out into other areas. In 2022 the BCDR launched specialised sports arbitration rules, and it has plans to publish new rules specifically to govern Islamic finance disputes, as well as rules for the administration of proceedings under non-institutional rules (such as UNCITRAL). These innovative plans point to a promising future for the BCDR and will enable it to continue growing and distinguishing itself as a leading regional and international dispute resolution centre.