The New Bahrain Arbitration Law and the Bahrain "Free Arbitration Zone" - Part 1 - Chapter 4 - ICDR Awards and Commentaries
John M. Townsend is a Partner in the Washington office of Hughes Hubbard & Reed LLP and chair of the Firm's Arbitration and ADR Group. He was the Chairman of the Board of Directors of the American Arbitration Association from 2007 to 2010 and previously chaired the AAA's Executive Committee and Law Committee. Currently, Mr. Townsend chairs the AAA's Nominating and Governance Committee. Mr. Townsend was named by President Bush to the Panel of Arbitrators of ICSID in 2008. He is a Trustee as well as a member of the Arbitration and Competition Law Committees of the U.S. Council for International Business and chairs the USCIB's European Privilege Task Force. He was the first Chair of the Mediation Committee of the International Bar Association (2005-2006), and is also a member of the College of Commercial Arbitrators. Mr. Townsend is a member of the American Law Institute and serves as an Adviser to the ALI's project to prepare a Restatement of the Law of International Commercial Arbitration. Mr. Townsend is a graduate of Yale University (B.A., 1968) and Yale Law School (J.D., 1971).
Originally from ICDR Awards and Commentaries
How Bahrain's new Arbitration Law and “Free Arbitration Zone” address concerns that multinational 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.”
The new legislation also creates a new Bahrain Chamber for Dispute Resolution (BCDR), which is intended to become both a Bahraini national and a Middle Eastern regional arbitration center that will be run with the help of the American Arbitration Association (AAA). Creating an international arbitration center from scratch is not an easy proposition, especially in a part of the world in which users of arbitration have been critical of the judicial structure within which arbitration has up to now had to be conducted. In spite of the convenience of having regional arbitration centers in the Middle East, many corporations have remained cautious about sitting arbitrations there out of concerns that local courts are inexperienced in dealing with arbitration and that awards against influential local parties (especially those connected with or favored by governments) might simply be set aside.
I The Problem: Lack of Confidence in the Local Courts
A The Bechtel Case
B Set-Aside Proceedings under the New York Convention
II Designing a Solution to the Problem: The Free Arbitration Zone
A The BCDR's Two Types of Jurisdiction
B The Free Arbitration Zone
III A Remaining Role for the Courts