In 2019, the judicial system in the Kingdom of Bahrain witnessed a significant development with the issuance of Decree-Law No. (22) of 2019 concerning the Commercial Mediation Law in Bahrain for dispute settlement, which introduced mediation as an alternative method for resolving civil and commercial disputes.
This law defines mediation as a process in which the parties request a third party, known as the mediator, to assist them in reaching a settlement regarding an existing dispute between them, without granting the mediator the authority to impose a solution on the dispute.
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Table of Content
The Legal Framework of the Commercial Mediation Law in Bahrain
The Commercial Mediation Law in Bahrain applies to both domestic and international mediation procedures for settling civil and commercial disputes, in addition to foreign settlement agreements resulting from such mediation.
Mediation is considered international when the places of business of the parties to the mediation agreement, at the time of its conclusion, are located in different countries. It is also considered international when the country where the parties’ places of business are located differs from the country in which a substantial part of the obligations arising from the commercial relationship will be performed, or from the country most closely connected to the subject matter of the mediation, unless the parties agree otherwise.
The law establishes a register of approved mediators at the ministry responsible for justice affairs. Individuals requesting registration must be fully legally competent, possess the required qualifications, and be recognized for their integrity and impartiality.
The applicant must also not have been convicted of any crime involving dishonesty or breach of trust, and must not have previously been dismissed from employment or removed from a position pursuant to a judgment or disciplinary decision.
How Does Mediation Contribute to Resolving Commercial Disputes?
Commercial mediation is an effective method for resolving disputes between parties through an amicable and quick process without the need to resort to courts.
Mediation helps settle commercial disputes through the following:
- Reducing costs:
Mediation is generally less expensive compared to traditional litigation, helping companies and individuals reduce legal expenses. - Speeding up dispute resolution:
Mediation is characterized by faster procedures compared with court proceedings, as a settlement can often be reached within weeks or a few months instead of several years. - Enhancing confidentiality:
Mediation provides a confidential environment for discussions, protecting the reputation of commercial parties and preserving their sensitive information. - Maintaining commercial relationships:
Mediation assists in resolving disputes in an amicable manner, which helps maintain business relationships between parties instead of escalating conflicts through court proceedings. - Giving parties control over the solution:
Unlike judicial judgments, mediation gives the parties the freedom to negotiate and reach a mutually acceptable solution instead of having a binding decision imposed by the court. - Facilitating agreement enforcement:
Once a settlement agreement is reached, it can be documented and granted enforceable status before the competent court, ensuring compliance by all parties.
Commercial mediation is an ideal option for companies and individuals seeking to resolve their commercial disputes with flexibility and efficiency while preserving their business relationships and common interests.
Conditions of Commercial Mediation in Bahrain
To ensure the effectiveness of commercial mediation in Bahrain, the following conditions must be fulfilled:
- Agreement of the parties to mediation:
There must be a written agreement between the parties to resort to mediation, whether before the dispute arises or after it has occurred. - Existence of a civil or commercial dispute that can be settled:
The dispute must be of a type that the law allows to be resolved through mediation and must not relate to rights that cannot be subject to settlement, such as personal status matters or criminal cases. - Appointment of an approved mediator:
The mediator must be registered in the approved mediators’ register maintained by the Ministry of Justice and must be independent and neutral towards all parties. - Commitment to confidentiality:
All information exchanged during the mediation process remains confidential and cannot be used as evidence before the courts if the mediation fails. - Absence of conflicts of interest:
The mediator must disclose any potential conflict of interest with any party before commencing the mediation procedures. - Compliance with the specified time period:
The mediation process must be completed within the period agreed upon by the parties or determined by law to prevent unnecessary delay in resolving the dispute. - Documentation of the settlement agreement:
If mediation is successful, the settlement agreement must be documented in writing. The parties may submit it to the competent court to grant it enforceable status.
Commercial Mediation Procedures in Bahrain
The commercial mediation process in Bahrain goes through several stages aimed at resolving disputes between parties in an effective and amicable manner. These procedures include:
- Submitting a mediation request:
A mediation request may be submitted by one of the parties or based on a prior agreement between both parties to use mediation as a method for resolving the dispute. - Appointing the mediator:
An approved mediator is selected from the register of mediators maintained by the Ministry of Justice, while ensuring the mediator’s neutrality and independence. - Preliminary meeting:
The mediator conducts an initial session with the parties to explain the mediation rules and procedures and define the scope of the dispute. - Holding mediation sessions:
Sessions are conducted with the attendance of the parties or their representatives. They may be held in person or through electronic means, where the mediator assists in bringing viewpoints closer. - Reaching a settlement agreement:
If the mediation succeeds, the settlement agreement is prepared, agreed upon, and signed by the parties. - Documenting and enforcing the agreement:
The parties may submit the settlement agreement to the competent court to grant it enforceable status, giving it the legal force of an enforcement instrument. - Resorting to litigation if mediation fails:
If no agreement is reached, the parties may refer the dispute to the courts or arbitration to resolve their claims.
FAQ About the Commercial Mediation Law in Bahrain
What is Commercial Mediation?
Commercial mediation is an alternative dispute resolution method where a neutral mediator is appointed to help the parties reach an amicable settlement without going to court.
Is Commercial Mediation Mandatory in Bahrain?
Mediation is voluntary; however, the parties may agree to use it before or during a dispute. The court may also suggest mediation in certain cases to help achieve a faster resolution.
Does a Settlement Agreement Resulting from Mediation Have Legal Effect?
Yes. If it is documented and approved by the competent court, it gains the force of an enforceable instrument, meaning it can be legally enforced.
How Long Do Mediation Procedures Take?
The duration of mediation depends on the nature of the dispute and the parties’ agreement, but it is usually faster than court litigation.
Can Parties Go to Court After Mediation?
If no agreement is reached through mediation, the parties may proceed with court proceedings or use other dispute resolution methods.
The Commercial Mediation Law in Bahrain has become an important tool for strengthening the business environment and providing effective alternatives for dispute resolution.
Through adopting this law, Bahrain confirms its commitment to developing its legal system in line with global economic developments, which enhances investor confidence and contributes to achieving sustainable development.
We invite you to contact a lawyer in Bahrain by clicking the WhatsApp button located at the bottom of the screen.
For further reading, follow:
Key steps for establishing a financial brokerage company in Bahrain and its licensing requirements.
Conditions of arbitration in commercial contracts in Bahrain.
Commercial lawyer in Bahrain.
A Bahraini lawyer and the founder of a legal consultancy firm established in February 2019. He holds a Higher Degree in Sharia and Law from Al-Azhar University. He has extensive experience in court representation and providing legal advice in criminal, personal status, civil, and commercial matters. He is known for delivering clear, practical, and effective legal advice aimed at protecting his clients’ rights and interests, and has achieved tangible results in notable cases, including commercial litigation and inheritance matters
