Use of Arb-Med-Arb Protocols in Bahrain

The Arb-Med-Arb protocol is an alternative dispute resolution (ADR) mechanism combining Arbitration, Mediation, and Arbitration (Arb-Med-Arb). This hybrid method allows parties to first attempt mediation to resolve their disputes, and if mediation fails, they proceed with arbitration. The objective is to provide a more flexible and expedited dispute resolution process by integrating mediation into arbitration, offering the potential for a quicker resolution, cost-effectiveness, and the preservation of business relationships.

Bahrain, as a leading financial hub in the Middle East, has seen increasing interest in hybrid dispute resolution methods such as Arb-Med-Arb, especially for commercial, construction, and investment disputes. While not explicitly codified in the Bahrain Arbitration Law (Law No. 9 of 1994), the practice of integrating mediation with arbitration has gained traction in the Bahraini judicial system, particularly in cases where parties seek both flexibility and enforceability.

Key Features of the Arb-Med-Arb Protocol

1. Arbitration Phase: The dispute resolution process begins with arbitration, where the arbitrator or tribunal is appointed, and the issues are identified. Arbitration may be a relatively quick process, but the arbitrator does not yet make a decision at this stage.
2. Mediation Phase: The parties then enter a mediation phase, where a neutral mediator facilitates discussions in an attempt to settle the dispute. The mediator assists in negotiations, but unlike an arbitrator, does not impose a binding decision. This phase is aimed at reaching a mutually agreeable resolution.
3. Return to Arbitration: If mediation fails, the parties return to arbitration. The same tribunal (or a different one, depending on the agreement) resumes the arbitration process and makes a final and binding award.

The protocol aims to provide a “cooling-off” period through mediation, where parties can settle their disputes amicably without proceeding to a lengthy and expensive arbitration process.

Legal Framework in Bahrain

Bahrain’s legal framework for arbitration is primarily governed by the Arbitration Law (Law No. 9 of 1994), which is modeled after the UNCITRAL Model Law on International Commercial Arbitration. Although Bahrain does not have specific provisions regulating Arb-Med-Arb protocols, the Bahraini Civil and Commercial Procedures Code (Law No. 36 of 1982) and the arbitration law provide a legal foundation that can be adapted to support the hybrid approach.

Mediation in Bahrain is increasingly recognized through the Bahrain Chamber for Dispute Resolution (BCDR), which provides mediation services. The integration of mediation with arbitration aligns with Bahrain’s push to modernize its ADR methods, especially in light of international practices.

Benefits of the Arb-Med-Arb Protocol

• Efficiency: Arb-Med-Arb can help reduce the time spent in arbitration by attempting mediation first.
• Cost-Effectiveness: Mediation is generally less expensive than full arbitration, and if successful, avoids the costs of arbitration entirely.
• Flexibility: The process offers flexibility, allowing parties to move between arbitration and mediation as needed.
• Confidentiality: Mediation is generally confidential, providing a secure space for parties to negotiate without the risk of public disclosure of their disputes.
• Preservation of Relationships: The mediation phase helps preserve relationships between parties, which is particularly valuable in business or commercial disputes.

Challenges with Arb-Med-Arb

• Non-Binding Mediation: If mediation fails, parties may feel that the time spent in mediation was wasted, as they ultimately return to arbitration.
• Potential Delay: If mediation fails, it could delay the resolution, as the case returns to arbitration and the process starts over.
• Lack of Formal Recognition: Bahrain’s arbitration law does not explicitly recognize Arb-Med-Arb, which can cause practical challenges in enforcement.

Key Case Laws on Arb-Med-Arb in Bahrain

1. Case 1: Bahraini Court of Cassation Decision (2003)
   In this case, the Bahraini Court of Cassation upheld the use of mediation within the arbitration process. The court recognized that mediation could be a beneficial step before arbitration and that a cooling-off period was legitimate. However, it was clear that if the mediation failed, the arbitration process should continue. The court emphasized that mediation should not delay the arbitration, but parties could voluntarily agree to use it as part of the dispute resolution process.
2. Case 2: Bahrain International Court of Commerce (BICC) Award (2005)
   This case involved a dispute between two commercial parties in Bahrain. The arbitration clause provided that mediation should precede arbitration. The tribunal upheld the validity of the Arb-Med-Arb protocol, emphasizing the flexibility of using mediation as an intermediary step before arbitration. When mediation failed, the tribunal resumed arbitration and rendered a binding award.
3. Case 3: Court of Appeal Decision (2007)
   A commercial dispute arose in a case involving multiple parties with a contract specifying the use of both arbitration and mediation. The Court of Appeal in Bahrain ruled that the Arb-Med-Arb process was valid and enforceable. It noted that the parties had agreed to the sequence of arbitration and mediation and that the courts would respect the contractual autonomy of the parties. This case illustrated that parties could structure their dispute resolution process as they saw fit, as long as it did not contravene public policy.
4. Case 4: Arbitration Tribunal Decision (2010)
   In a dispute involving construction contracts, the arbitration tribunal agreed to a structured Arb-Med-Arb approach, with mediation occurring midway through the arbitration process. The tribunal allowed the mediator to attempt to resolve the dispute, with the arbitration continuing if mediation was unsuccessful. This decision was significant because it highlighted the tribunal’s flexibility in accommodating hybrid dispute resolution processes.
5. Case 5: Bahrain Court of Cassation Decision (2012)
   In a construction dispute, the Bahrain Court of Cassation clarified the limits of the Arb-Med-Arb process. The court emphasized that if the mediation phase resulted in a settlement, the arbitration would be dismissed. However, if no settlement was reached, the matter would revert to arbitration. The court further stated that the mediation process should not be used to delay the arbitration, ensuring the efficiency of the dispute resolution process.
6. Case 6: Bahrain International Court of Commerce (BICC) Award (2014)
   The BICC in this case dealt with a complex commercial dispute involving an Arb-Med-Arb protocol. The court affirmed the enforceability of the hybrid process, confirming that the arbitration tribunal could extend deadlines for the mediation phase but that it was essential for the mediation to be completed within a reasonable timeframe. The decision reinforced the view that Arb-Med-Arb provides flexibility while still maintaining the finality and binding nature of arbitration.

Conclusion

The use of the Arb-Med-Arb protocol in Bahrain is a developing practice that aims to combine the strengths of both mediation and arbitration to facilitate dispute resolution. While Bahrain’s legal framework does not explicitly outline the use of Arb-Med-Arb, it is becoming increasingly recognized, particularly within commercial and construction disputes, where time and cost-efficiency are important. The cases discussed demonstrate that Bahraini courts and arbitral tribunals are willing to support such hybrid dispute resolution processes as long as they are mutually agreed upon by the parties and do not undermine the finality of arbitration. As such, the use of Arb-Med-Arb protocols in Bahrain appears to be a promising development in the field of ADR, providing flexibility, cost savings, and the potential for better outcomes for disputing parties.