Cassation Court disregards arbitration clause and imposes BCDR-AAA mandatory jurisdiction

Bahrain Cassation Court issued a controversial ruling in case 328-2014 when it recognised an arbitration clause and simultaneously established the mandatory jurisdiction of the BCDR-AAA court.  The case began when the Plaintiff filed a motion before the Urgent Matters Court to obtain interim measures against the Respondent.  The Court ruled in favour of the Plaintiff and the judgement was subsequently challenged by the Respondent before the Appellate Court which confirmed the judgement issued by the Urgent Matters Court.  The Respondent then petitioned the Cassation Court which reversed the judgement and found that the application for interim measures should be filed before the BCDR-AAA court.

The Cassation Court applied Article 12 of the Cassation Court Law which states: “Grounds for the challenge not stated in the petition may not be invoked unless they relate to public order, which may be invoked at any time.  The Court shall be empowered to admit such grounds on its own initiative.”  The Court maintained that the Urgent Matters Court is part of the national courts of Bahrain and that the its jurisdiction can only be established in extension of the jurisdiction of the national courts.  As such, if the national courts lack jurisdiction to hear the case, the Urgent Matters Court would lack the jurisdiction to grant any interim applications in connection to the case.  The Cassation Court raised two fundamental issues with regard to jurisdiction in the above-mentioned case, first it acknowledged the existence of an arbitration clause in the contract concluded between the parties and second established the mandatory jurisdiction of the Bahrain Chamber for Dispute Resolution (“BCDR-AAA”) court (mandatory litigation jurisdiction).

The judgement issued by the Cassation Court did not mention any details regarding the nature of the arbitration clause, however, it disregarded the clause despite the fact that the parties did not waive their right to arbitrate the dispute and applied the BCDR-AAA Law which provides for mandatory litigation.  The Court maintained that the jurisdiction of the BCDR-AAA court is separate from the conventional national court and as a result, the Urgent Matters Court did not have the jurisdiction to issue interim measures.  Indeed, the court expressly declared that the BCDR-AAA court is an “independent judicial authority”.  The Court established that under Article 58 of the BCDR-AAA Regulations, the deputized judge who serves at the BCDR-AAA has the authority to grant such interim measures.

The judgement has created some confusion since it admits the existence of an arbitration clause and then establishes the mandatory jurisdiction of a BCDR-AAA court.  The judgement did however address one issue which has been occupying practitioners with regard to whether or not the BCDR-AAA was in fact an independent judicial authority.