Bahrain: Ad Hoc v International Arbitration

Last Updated: 29 April 2013
Article by Simon Green and David Savage


International arbitration remains the preferred dispute resolution mechanism for crossborder disputes for major international corporations. In industries such as shipping, energy, oil and gas and insurance, international arbitration is the most commonly used dispute resolution mechanism.

The immediate benefits to international arbitration have been cited as enforceability of arbitral awards, the flexibility of the procedure and the depth of expertise of arbitrators as the major advantages.

From research undertaken on this matter, the organisations who prefer ad hoc arbitrations are corporations with a gross annual turn over of more than $50 billion. Such organisations are likely to have large, sophisticated in-house legal departments with experience of managing arbitration proceedings.

This article will consider ad hoc versus institutional arbitration provisions, and describe the new institutional arbitration option now available in Bahrain.

Ad Hoc Arbitration

Quite simply ad hoc arbitration is where parties agree upon a form of arbitration that is specific to a particular contract or dispute, without referring to any arbitral institution. The parties may choose (in contract negotiations or following the crystallisation of a dispute) to devise and agree a bespoke arbitral process or alternatively to incorporate existing rules of procedure. In practice, existing rules are often incorporated as the negotiation of bespoke provisions has time and money implications in addition to the potential danger that a tailor-made process may prove to be unworkable in practice.

The main features of ad hoc arbitration are:

(a) Independent proceedings giving parties maximum flexibility;

(b) The Tribunal is chosen by the parties (although if agreement cannot be reached the matter may be referred to an appointing authority); and

(c) There is no review of the award by an arbitral institution.

Institutional Arbitration

Institutional arbitration, as the name suggests, refers to arbitrations conducted in accordance with the rules and procedures of an arbitration institution. Examples of arbitral institutions include:

(a) The ICC based in Paris;

(b) The London Court of International Arbitration, as the name implies is based in London however, the choice of seat, or legal place, is entirely up to the parties;

(c) The Dubai International Arbitration Centre (DIAC) created in 1994; and

(d) The Bahrain Chamber for Dispute Resolution (BCDR) created on 10 January 2010.

Each institution has its own characteristics and parties should consider the relevant rules and fee structures in addition to investigating the level of administrative support before deciding on a particular institution.

Institutional Arbitration in Bahrain

In December 2008 the American Arbitration Association (AAA) signed a memorandum of understanding with the Bahrain Ministry of Justice (BMoJ) in view of their joint development of the BCDR-AAA.

There is some confusion even within Bahrain as to the precise purview of the BCDR-AAA to adjudicate on disputes given its dual role as, firstly, a court of first instance of the Kingdom of Bahrain when certain specific criteria are met (referred to locally as "Section 1" cases) and, secondly, as a typical institutional arbitration centre demonstrating many similar characteristics to the other institutions listed above ("Section 2" cases).

This confusion is potentially exacerbated by the fact that the Procedural Rules of the BCDR relating to Section 1 cases use very similar terminology to the BCDR-AAA Rules governing arbitrations which apply in relation to Section 2 cases.

Under Royal Decree No.(30) of 2009, when hearing Section 1 cases, the BCDR has jurisdiction, in respect of claims exceeding BHD 500,000 (about USD 1,326,612) if in addition the dispute falls into one or more of the following categories:

a) International disputes (one of the parties, or the place where a substantial part of the obligation to be performed is outside Bahrain, or the location most closely connected with the dispute is outside Bahrain).

b) Commercial disputes (where subject matter concerns relationships of a commercial nature, whether contractual or non-contractual).

c) Disputes amongst financial institutions licensed by the Central Bank of Bahrain (CBB) or disputes between a CBB licensee other institution, company or individual.

Section 1 cases are heard in Arabic and (although they are heard in the same venue), unlike Section 2 cases there is no selection of the tribunal members who are drawn from the local judiciary. In addition Section 1 cases have their own fee scale in line with the local courts that is higher than those fees applying to Section 2 cases.

Section 2 cases follow a similar procedural pattern to normal institutional arbitrations and (in the absence of agreement of alternative arbitration rules) the stipulations of the BCDR-AAA Arbitration Rules (and the associated fees) apply.

It should also be noted that the BCDR provides separate rules relating to mediation services, although an examination of such falls without the scope of this note.

Ad Hoc v Institutional - Pros and Cons

The purpose of this paper is not to determine what is the better option, ad hoc or institutional arbitration, as this will be dependent upon the parties themselves, the nature of the contractual relationship and the dispute itself.

The two different processes are considered to have specific advantages and disadvantages as follows:

(a) Flexibility - A particular advantage of ad hoc arbitration is that it can be tailored to the specific needs of the parties and the nature of the dispute. However, the drafting of bespoke provisions may involve lengthy negotiations and therefore may be more expensive and time consuming. Great care is needed to ensure that any arbitral process is both enforceable and workable.

(b) Procedural control/certainty - Institutional arbitration gives the parties the benefit of using a tried and tested process and a proven set of terms and conditions to rely upon. This means that the fundamental steps of the process, including costs, are managed and controlled by the institution.

In contrast, ad hoc arbitration depends, to a certain extent, on the co-operation of the parties which may be difficult to achieve if the relationship has broken down. Generally ad hoc arbitrations are more vulnerable to procedural challenges and obstructive tactics. Parties may seek redress from the applicable procedural law but this will be both time consuming and expensive.

(c) Knowledge of arbitrators - It is correct that arbitral institutions do have access to a large pool of experienced arbitrators. However, in practice the parties and their legal advisers, with particular knowledge of the relevant industry, are just as able to make a suitable appointment.

(d) Administration - Some arbitration institutions have the benefit of a professional administration service which, in theory, ensures the smooth running of the proceedings, however with ad hoc arbitrations the appointment of an administration secretary may achieve the same result.

(e) Costs - The choice of ad hoc or institutional arbitration is unlikely to have a fundamental impact on the costs of the proceedings as this largely depends on the method and rate adopted by the institution or tribunal. However it may be argued that institutional arbitration offers more clarity on the issue of costs as the institutions have in place a framework of charges for administration services and arbitrators. A further advantage of institutional arbitration is that the major institutions can hold funds on behalf of the parties if appropriate.

(f) Speed - In practice there is unlikely to be little difference between the processes.

(g) Confidentiality - One of the main advantages of arbitration is that awards are confidential to the parties and are not made available to the general public - therefore there is no significant difference between the processes.

(h) Enforcement - There is a perception that there is an advantage in the award emanating from an internationally respected institution. There is no statistical evidence to support this view.


In practice, the choice of ad hoc arbitration or institutional arbitration depends on the parties, the contractual circumstances and the nature of the dispute. The research shows that the majority of corporations prefer institutional arbitration and that the use of institutions is on the increase. Similarly, there is a growing confidence and need for regional institutions reflected in the launch of bodies such as the Bahrain Chamber for Dispute Resolution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions