BCDR launches 2022 arbitration rules

On 1 October 2022, the new Rules of Arbitration of the Bahrain Chamber for Dispute Resolution ("BCDR") came into effect. As prescribed by Article 1.1 of the 2017 BCDR Rules of Arbitration, which immediately preceded the 2022 Rules, these new rules will automatically be applied in any arbitration commenced with BCDR on or after 1 October 2022.

The 2022 Rules include two important entirely new provisions reflecting developing practice and procedures.

Article 21-bis Third-Party Funding

In common with a number of other leading institutions, including the International Court of Arbitration of the International Chamber of Commerce (ICC) and the Hong Kong International Arbitration Centre (HKIAC), BCDR has introduced a new rule requiring the disclosure by the relevant party of the existence of any third-party funding arrangement entered into at any time before or during the arbitration, and of the identity of the third-party funder.

The purpose of this provision is to ensure that arbitrators (or prospective arbitrators) can fully assess the existence of any conflict of interest that may arise from the involvement of a third-party funder in support of one or more of the disputing parties, and that the tribunal may take account of the impact (if any) of a funding arrangement on the costs of the arbitration.

Article 26-bis Security for Costs

Whilst it is generally accepted that an arbitral tribunal has the inherent authority to order a party to provide security for costs, including  as part of its powers to order interim or conservatory measures, there is a movement  towards regulating security for costs in stand-alone provisions, which can be found in the rules of a number of institutions, including the Singapore International Arbitration Centre (SIAC), the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) and the London Court of International Arbitration (LCIA).

BCDR's new Article 26-bis provides expressly that the tribunal shall have the power to order security for costs on the written application of a party, and that all parties will have a reasonable opportunity to respond to the application. This Article also provides that the tribunal may stay or dismiss a party's claim in the event of failure by that party to comply promptly and in full with an order to provide the security as directed.

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In addition to these new stand-alone provisions, a number of amendments have been made for greater clarity and/or procedural efficiency, including:

Article 5.4 of the Rules and Paragraph 10 of the Fee Schedule

The redrafting of this provision codifies BCDR's practice of allowing a non-defaulting party to cover a defaulting party's portion of the case management fee before BCDR resorts to the suspension or termination of the proceedings for failure to pay these fees.

Article 9.4

Amended text at Article 9.4 removes any previous ambiguity about BCDR's power, in the case of a three-member tribunal, to select an arbitrator in default of a nomination by a party entitled to nominate, or where the parties have not reached agreement on party nomination. (There was and is no such ambiguity about BCDR's parallel power in the case of a sole or presiding arbitrator.)

Articles 14.10, 16.3, 22.1 and 35.6

In line with BCDR's published guidelines encouraging parties and tribunals to make greater use of electronic communications, Articles 14.10 and 35.6 provide expressly for the prompt communication of electronic versions of orders and awards.

Article 16.3 mandates the tribunal and the parties, at the preliminary procedural conference, to consider how technology may best be used to improve efficiency and economy.

Article 22.1 states unequivocally that hearings and meetings may be conducted in person or by any electronic means directed by the tribunal that allow all those who should attend to do so.

Article 25.1

This new Article corrects an omission in the 2017 rules in requiring (in accordance with BCDR's established practice) that, before accepting appointment, a tribunal-appointed expert must sign a statement of impartiality and independence and disclose any circumstances that may give rise to justifiable doubts as to his or her impartiality or independence, in line with the parallel requirement for arbitrators and tribunal secretaries.

Article 38.2

A re-worked Article 38.2 allows the arbitral tribunal, or BCDR if the tribunal is not yet appointed, to issue an order terminating the arbitration if no steps have been taken in the arbitration for at least six months and no justifiable objections to termination are raised by the parties.

Note

This brief review of the 2022 Rules is not an exhaustive exposition of all the changes to the previous version of the rules. It is for contracting or disputing parties carefully to consider the 2022 Rules as a whole.