John M. Townsend, a partner in the Washington, D.C., office of Hughes Hubbard & Reed LLP, chairs that firm's Arbitration and ADR Group. He is also chairman of the Board of Directors of the American Arbitration Association. Mr. Townsend consulted with the Ministry of Justice of Bahrain concerning the enactment of the legislation discussed in this article. He wishes to thank Daniel McLaughlin, an associate in the Washington, D.C. office of Hughes Hubbard & Reed LLP, for his help with this article.
How Bahrain's new Arbitration Law and "Free Arbitration Zone" address concerns that multi-national companies have about arbitrating international commercial disputes in the Middle East.
New arbitration legislation enacted by the Kingdom of Bahrain on July 2, 2009 makes it the first country in the world to create the equivalent of a free trade zone for arbitration. That legislation, Legislative Decree No. 30 (The Decree), gives parties to an agreement calling for international arbitration the option of holding the arbitration in Bahrain without concern that the courts of Bahrain might interfere with, or set aside, the resulting award, as long as the parties seek to enforce the award only in another country. The result is the creation of what this article will call the Bahrain “Free Arbitration Zone.”