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Kuwait Finance House (Bahrain) BSC v Teece [2017] NZHC 1308; [2018] 2 NZLR 257 (14 June 2017)

Last Updated: 4 April 2018

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY




CIV-2013-442-289 [2017] NZHC 1308

BETWEEN
KUWAIT FINANCE HOUSE
(BAHRAIN) BSC Plaintiff
AND
DAVID JOHN TEECE Defendant


Hearing:
6-8 March 2017
Appearances:
JBM Smith QC, R G Smedley and JLW Wass for the Plaintiff
S J Mills QC, R J Hollyman and T F Cleary for the Defendant
Judgment:
14 June 2017




JUDGMENT OF MANDER J






































KUWAIT FINANCE HOUSE (BAHRAIN) BSC v TEECE [2017] NZHC 1308 [14 June 2017]

Table of Contents


Introduction [1] Background [4] Enforcement of foreign judgments in New Zealand [11] Approach to issue [13] The Bahrain Chamber for Dispute Resolution (BCDR) [17] The task of identifying whether a foreign tribunal is a court [32] The BCDR’s dual arbitral and adjudicative character [35] The establishment of the BCDR [38]

The decision of the Constitutional Court [44] Conclusions regarding the establishment of the BCDR [52] Assessment of domestic tribunals [54] The rationale for recognition of foreign judgments [62] The place, structure and character of the BCDR’s Section (1) jurisdiction [75] The place of the BCDR in Bahrain’s court system [75] Structure of the BCDR [83]

The formation of a tribunal and the appointment of its members [87] The BCDR produces self-executing judgments [103] Terminology [109] Appeal rights [113] Other features [121]

Conclusion [126]

Introduction

[1] The plaintiff, Kuwait Finance House (Bahrain) BSC (KFH), seeks to enforce a decision of the Bahrain Chamber for Dispute Resolution (BCDR) against the defendant, Dr David Teece. Dr Teece maintains the BCDR is not a court and therefore its decisions cannot be recognised and enforced in New Zealand.

[2] Dr Teece opposes enforcement on a number of grounds, including that the BCDR did not have jurisdiction over the dispute, and alleged breaches of natural justice and public policy. However, a preliminary question to be determined separately prior to trial is whether the BCDR is a court for the purposes of enforcing the award made against Dr Teece in New Zealand.

[3] Such a finding is a prerequisite to enforcement of the BCDR’s decision. This judgment addresses that question. KFH submits the BCDR qualifies as a court for the purposes of New Zealand’s private international law rules for the recognition of foreign judgments. Dr Teece maintains the BCDR is not a court either in Bahrain or for the purposes of recognition in New Zealand.

Background

[4] It is not necessary to set out in detail the background to the dispute that resulted in the BCDR ordering Dr Teece to pay USD 3,400,000 to KFH. The following particulars will be sufficient to provide context.

[5] KFH is a Bahraini subsidiary of a Kuwaiti finance house which provides Islamic banking services. Dr Teece is a New Zealand citizen who is resident in the United States. KFH’s claim against Dr Teece is based on an Islamic funding agreement, referred to as a Murabaha Agreement, which was entered into by the parties as a means of providing funds from KFH to a New Zealand registered clothing company, Canterbury Limited (Canterbury). The parties were both shareholders in Canterbury, and the Murabaha Agreement was one of a number of contracts structured to enable funds to be advanced to Canterbury.

[6] During 2007 and 2008 Canterbury struggled financially and both parties advanced funds to the company. In an attempt to address Canterbury’s deteriorating position a series of related transactions were entered into to provide further financial support. The Murabaha Agreement relied upon by KFH in its claim to the BCDR was one of six agreements that made up this funding arrangement.

[7] Despite the funding advanced to Canterbury the company did not recover. In August 2009, KFH placed Canterbury into receivership. Canterbury was unable to repay the amount KFH had provided, and Dr Teece was advised that it may seek to enforce the Murabaha Agreement against him. Dr Teece’s position was that his part in the transaction was simply as a conduit to provide what was in substance an advance by KFH to Canterbury.

[8] In January 2011, KFH filed proceedings in the BCDR against Dr Teece. A

clause of the Murabaha Agreement provides:

18.1 Bahrain Courts

The courts of Bahrain have non-exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or the consequences of its nullity).

[9] In 2012, the BCDR ruled that Dr Teece was liable to pay KFH the outstanding sum. The extent to which Dr Teece was permitted to participate in the process before the BCDR and the adequacy and legitimacy of the procedures it followed in reaching its decision which KFH now seeks to enforce is in issue between the parties.

[10] In 2014, KFH applied to this Court to enforce the award obtained from the BCDR. Associate Judge Matthews declined its application for summary judgment. He was not satisfied that KFH had established to the standard required for the entry of summary judgment that the BCDR is a court for the purposes of enforcement in

New Zealand.1




1 Kuwait Finance House (Bahrain) BSC(c) v Teece [2014] NZHC 3162, [2015] NZAR 36.

Enforcement of foreign judgments in New Zealand

[11] Bahrain is not a specified country for the purposes of the Reciprocal Enforcement of Judgments Act 1934 or the Senior Courts Act 2016.2 Under the common law to enforce the BCDR’s decision in New Zealand KFH must satisfy three requirements:3

(a) the award must be a foreign judgment issued by a foreign court of competent jurisdiction,

(b) the foreign judgment must be for a definite sum of money, and


(c) the foreign judgment must be final and conclusive.

[12] It is the first criterion which is in issue and gives rise to the preliminary question of whether the BCDR is a court for the purposes of enforcement in New Zealand.

Approach to issue

[13] In examining whether the BCDR is a court, Dr Teece sought to take a two stage approach. He maintained it was a necessary prerequisite that the BCDR be recognised as a court in Bahrain. Secondly, even if the BCDR is considered to be a court in that jurisdiction, it must be a body which can be recognised as such in New Zealand. KFH was critical of that bifurcated approach. It submitted that how the foreign legal system categorises the body is not determinative, and that the issue must be examined not as a matter of form but whether in substance the body in question constitutes a judicial tribunal which forms part of the overseas jurisdiction’s legal system capable of being recognised in New Zealand as a court.

[14] Dr Teece referred to the need for this Court to determine whether the BCDR

is a court in Bahrain as a separate first step because that issue is central to whether he agreed in the Murabaha Agreement to submit to the jurisdiction of the BCDR when

2 Reciprocal Enforcement of Judgments Act 1934, s 3; Senior Courts Act 2016, s 172, previously

Judicature Act 1908, s 56.

3 Reeves v One World Challenge LLC [2005] NZCA 314; [2006] 2 NZLR 184 (CA) at [36].

he agreed to the non-exclusive jurisdiction of the “Courts of Bahrain”, as provided by clause 18.1 of that agreement.4 I accept that may be an important question in this case, but it goes to the different issue of whether the BCDR was competent to exercise jurisdiction over Dr Teece’s dispute in Bahrain, and not whether the BCDR is a court for the purposes of enforcement of its decision in this jurisdiction.

[15] Both New Zealand and Bahraini law are relevant to that question. In order to address the issue it is necessary to examine the Bahraini law which created the BCDR and regulates its operation, and to understand its role and status in the Bahraini legal system. However, ultimately it will be a question of New Zealand law whether the BCDR meets the criteria to be recognised as a court for the purpose of enforcement in this jurisdiction. It is that question which has been framed for determination prior to trial.

[16] I accept a “foreign court cannot haul itself up by its own bootstraps” in order to meet the requirements of recognition in New Zealand.5 Equally, the appellation given to a tribunal within the foreign jurisdiction will not be determinative. What is required is an assessment of the tribunal’s nature and function within the setting of Bahrain’s domestic legal system to determine whether the BCDR meets the criteria of a judicial tribunal and has the fundamental attributes to be recognised as a Court

in this jurisdiction for the purpose of enforcing one of its decisions.

The Bahrain Chamber for Dispute Resolution (BCDR)

[17] The BCDR was established by a Legislative Decree of the Kingdom of

Bahrain in 2009 (the Decree).6 The Decree is supplemented by Resolution 65 of

2009 (the Bylaws) which provides detailed bylaws or procedural provisions that apply to the BCDR.7





4 Set out at [8].

5 Jet Holdings Inc v Patel [1990] 1 QB 335 (CA) at 344.

6 Legislative Decree (30) for the year 2009 with respect to the Bahrain Chamber for Economic, Financial and Investment Dispute Resolution [Bahrain Chamber for Dispute Resolution Decree].

7 Resolution (65) for the year 2009 on Issuing the Rules of Procedures for Dispute Resolution for which the Bahrain Chamber for Dispute Resolution has Jurisdiction [Bahrain Chamber for Dispute Resolution Rules].

[18] Article (2) of the Decree provides:

An independent Chamber shall be established for the settlement of economic, financial and investment disputes and shall be called the “Bahrain Chamber for Dispute Resolution” it shall have legal entity, and be subject to the administrative supervision and oversight of the Minister.

The Decree provides that the BCDR shall be composed of “a - The Board of Trustees” and “b – The Administrative and Technical apparatus”.8 It anticipates the formation of dispute resolution tribunals designated to settle individual disputes.

[19] The Decree defines a Dispute Resolution Tribunal as follows:9

Dispute Resolution Tribunal: One or more natural person(s) designated to settle the disputes. In all disputes conducted under the provisions of Section

1 of Chapter 2 of this law, the Tribunal shall include one or more Judges deputized by the Supreme Judicial Council upon a request from the Minister.

A majority of the Tribunal shall consist of deputized Judges.

[20] The Decree provides the BCDR with two separate forms of jurisdiction. It exercises a mandatory jurisdiction as a matter of law over a prescribed category of commercial disputes (Section (1) disputes) and a voluntary jurisdiction by agreement of the parties (Section (2) disputes):

Chamber Jurisdiction

Section (1)

Chamber Jurisdiction by law

Article (9)

The Chamber shall have jurisdiction to settle the following disputes originally within the jurisdiction of Bahrain courts or other entities having

judicial jurisdiction, for cases in which the value of the claim exceeds Five

Hundred Thousand Dinars:

1. Disputes among financial institutions licensed according to the provisions of the Law of Central Bank of Bahrain or between these institutions and other institutions, companies, and individuals.

2. International Commercial Disputes. The dispute shall be deemed international if the location of one of the disputant parties or the place where a substantial part of the obligations of the commercial relationship is to be performed, or the location most closely connected with the dispute is outside the Kingdom.



8 Article (3).

9 Article (1).

And:

Section (2) Chamber Jurisdiction by Parties Agreement

Article (19)

The Chamber shall be competent in disputes that the parties agree in writing

to settle by the Chamber.

[21] The award against Dr Teece was made by the BCDR pursuant to its jurisdiction under Section (1). KFH submitted that in doing so the BCDR was exercising its jurisdiction as a court. Dr Teece maintained Section (1) provides for a form of statutory or compulsory arbitration, and that the BCDR was acting as an arbitral tribunal, and not as a court, when exercising jurisdiction over the dispute.

[22] Under the Decree the BCDR has exclusive jurisdiction over Section (1) disputes. The Decree provides that “the courts and entities that have judicial jurisdiction” in respect of cases that will now fall within the jurisdiction of the BCDR would only retain that jurisdiction until final judgment in relation to existing

cases.10 The Court of Cassation is provided with jurisdiction to determine whether

the BCDR or “one of the courts” has jurisdiction “to settle a dispute”.11

[23] Article (18) of the Decree provides as follows:

The Supreme Judicial Counsel [sic] shall oversee the conduct of the work in the Chamber in connection with the disputes under its jurisdiction, as an entity with a judicial jurisdiction in accordance with the provisions of [Section (1)] and pursuant to the provisions stipulated in the regulation.

[24] A dispute before the BCDR under Section (1) is commenced by the filing of a plaint which takes a similar form as a statement of claim but which additionally includes a portfolio of evidentiary documents upon which the plaintiff bases its case.12 The plaintiff is required to pay all relevant fees at the time of initiating the Section (1) jurisdiction. These fees are determined in accordance with the Decree

and amount to approximately two per cent (but not exceeding five per cent) of the



10 Article (16).

11 Article (17).

12 Bahrain Chamber for Dispute Resolution Rules, above n 7, art (8).

total claim.13 A cap of BHD 30,000 (approximately USD 79,600) is applied to initial filing fees with the remaining balance becoming due after the decision has been made.14

[25] The Bylaws provide for the formation of the Tribunal for Section (1)

disputes. Article 40 of the Bylaws reads:

Formation of the Tribunal

a. The Tribunal shall be formed of three members within two months from the date of submittal of summons to the Chamber. The members shall be designated pursuant to a resolution issued by the Registrar, and the parties to the case shall receive a copy of the resolution upon the issuance thereof.

b. Three members shall form the Tribunal; two of them shall be judges whose names are included in the list stipulated in Paragraph (d) of this Article. The Tribunal shall be chaired by the senior judge, and shall include a member whose name is listed in the relevant table at the Chamber or at any institution accredited by the Chamber.

c. Notwithstanding paragraph (b) of this article both parties may agree Within one month from sending the summons to the Defendant, both parties may agree that each one of them appoints a member in the Tribunal, provided that they equally incur the fees and expenses of the two appointed members, without prejudice to Article (84) of this Regulation. The Tribunal shall be chaired by one of the judges whose names are included in the list stipulated in Paragraph (d) of this Article.

d. The Chief Executive shall prepare a list of judges who are delegated by the Supreme Judicial Council, upon the Minister’s request, provided that each judge should be at least a judge at the High Court of Appeals.

e. The Tribunal members should be neutral and independent. Each member should, when designated as member, disclose to the Registrar any conditions or suspicions that may raise doubts about his/her/its neutrality or independence. If any such conditions or suspicions occur, after the member is appointed, he/she/it should disclose them to the Registrar.

[26] The Decree permits the parties to agree on the law to be applied to determine the dispute:15





13 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (10); Bahrain Chamber for

Dispute Resolution By Law, arts (9) and (10).

14 Bahrain Chamber for Dispute Resolution Rules, above n 7, arts (9) and (10).

15 Article (11).

a) Parties to the dispute before the Chamber, in accordance with the provisions of this section, may agree upon the applicable law relevant to the subject matter of the dispute provided that the provisions of the agreed law do not contradict the public order in the Kingdom. If the parties did not agree upon the applicable law, the Law of Bahrain shall be the applicable law to the subject matter of the dispute.

[27] The parties may also agree on the language to be used in the dispute resolution procedures, otherwise Arabic will be the language used.16 Only foreign languages approved by the Minister of Justice can be agreed to be used.17 Presently, the Minister has not approved any foreign language and all proceedings must be conducted in Arabic.

[28] Under Chapter (3) of the Decree, entitled “Regulation of Procedures before the Chamber”, provision is made for the rules specified in the Civil and Commercial Procedures Law and the Evidence Law in Civil and Commercial Matters, insofar as they do not contradict “the nature of the Chamber’s jurisdiction and the situations before it” to apply to the BCDR’s Section (1) jurisdiction.18

[29] The Decree requires that in respect of a dispute conducted in accordance with the provisions of Section (1) a party must be represented by at least one Bahraini lawyer licensed before the Cassation Court.19 That requirement does not apply to disputes submitted in accordance with the provisions of the BCDR’s Section (2) jurisdiction.

[30] The Decree further provides as follows:20

Without prejudice to provision of Articles [sic] (14) of this law, the award issued by the Dispute Resolution Tribunal in accordance with the provisions of [Section (1)], shall be deemed a final judgment issued by the courts of Bahrain, and the regulation shall stipulate the provisions attesting the enforcement of the award.

The Dispute Resolution Tribunal’s award issued in accordance with the provisions of this section shall be enforceable unless the Cassation Court suspends its enforcement upon the request of the challenger in a Challenge plaint.

16 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (12).

17 Bahrain Chamber for Dispute Resolution Rules, above n 7, arts (5) and (32).

18 Article (26).

19 Article (30).

20 Article (15).

[31] A party may challenge a decision of the Tribunal to the Court of Cassation, however, there is no general right of appeal. A challenge to the Tribunal’s decision is limited to eight specified grounds.21 The party challenging the Tribunal’s decision before the Court of Cassation must deposit the greater of two per cent of the sum determined under the ruling by the Tribunal or BHD 10,000 (approximately USD

26,500).22


The task of identifying whether a foreign tribunal is a court

[32] Whether an overseas tribunal qualifies to be recognised as a court for the purpose of enforcement in New Zealand will largely turn on its nature and function. The presence or absence of certain features will inform that assessment. Some elements are essential to that status, others may provide some indication, being either consistent or inconsistent with the tribunal having the status of a court, but be of variable influence. Lord Edmund-Davies observed in Attorney-General v British

Broadcasting Corporation (British Broadcasting):23

It is comparatively easy to identify and discard those tests which are not sure guides to the true meaning of “court” for our present purposes. In Shell Co of Australia Ltd v Federal Commissioner of Taxation [1931] AC 275, Lord Sankey LC said, at pp. 296-297:

“The authorities are clear to show that there are tribunals with many of the trappings of a court which, nevertheless, are not courts in the strict sense of exercising judicial power .... In that connection it may be useful to enumerate some negative propositions on this subject: 1. A tribunal is not necessarily a court in this strict sense because it gives a final decision. 2. Nor because it hears witnesses on oath. 3. Nor because two or more contending parties appear before it between whom it has to decide. 4. Nor because it gives decisions which affect the rights of subjects. 5. Nor because there is an appeal to a court. 6. Nor because it is a body to which a matter is referred by another body.”

It may, however, be open to doubt if a tribunal which lacks any of those

“trappings” is a court...

[33] Lord Edmund-Davies concluded there is no sure guide or unmistakable hallmark by which a court may unerringly be identified and that it is “largely a

matter of impression”.24 However, amongst the various factors that can be taken into


21 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (13).

22 Bahrain Chamber for Dispute Resolution Decree, above n 7, art (14).

23 Attorney-General v British Broadcasting Corporation [1981] AC 303 (HL) at 348.

24 At 351.

account, there are some fundamental features which in combination are likely to either oblige the domestic jurisdiction to recognise a foreign tribunal as a court for the purpose of enforcement, or disqualify it from having that status.

[34] In attempting to sort the wheat from the chaff it is necessary to examine the following matters.

(a) The genesis of the BCDR and the tension between its adjudicative and arbitral character.

(b) The approach taken by New Zealand courts to the identification of domestic bodies as courts.

(c) The rationale for recognition of judgments of foreign tribunals and what, in that context, is considered central to such recognition.

(d) The place, structure and character of the BCDR’s Section (1)

jurisdiction and its processes.


The BCDR’s dual arbitral and adjudicative character

[35] Central to the issue of whether the BCDR is a court are the competing views of the parties as to whether a dispute resolution tribunal established to exercise the BCDR’s Section (1) jurisdiction is an arbitral body. Dr Teece argued the BCDR is an arbitral body and that the difference between its Section (1) and Section (2) jurisdictions is that between voluntary arbitration and a compulsory form of arbitration which requires certain categories of dispute previously heard before the courts of Bahrain to be placed before the BCDR. KFH, to the contrary, submitted the compulsory characteristic of the BCDR’s Section (1) jurisdiction reflects a fundamental distinction between a court and an arbitral body.

[36] KFH submitted the primary difference between a court and an arbitral body is the source of the tribunal’s jurisdiction. In the case of the latter, the legitimacy of the exercise of jurisdiction is derived from the agreement of the parties to submit their

dispute to arbitration.25 This is recognised by the Decree itself, which describes the BCDR’s Section (2) jurisdiction as “Chamber Jurisdiction by Parties’ Agreement” whereas its Section (1) jurisdiction is described as “Chamber Jurisdiction by law”.

[37] KFH acknowledged the modern development of mandatory arbitration in the form of statutory arbitration where legislation makes it clear that a body is to act as an arbitral tribunal. Often those situations involve pre-existing relationships such as between a ratepayer and a local authority or between members of statutory corporations or between subscribers to securities. Although in such situations there is no reliance on an agreed arbitration clause, they are still voluntary “in the sense that the individual party can choose whether or not to become a member, subscriber

or security holder of the body in question”.26 The element of voluntariness invokes a

recognition of the need for agreement between the parties as opposed to the compulsory exercise of jurisdiction by a court. This, it was submitted, is further reflected in the Arbitration Act 1996, which provides that where there is explicit reference to arbitration in a statute there is deemed to be an arbitration agreement.27

The establishment of the BCDR

[38] Dr Teece called expert evidence from Professor Chibli Mallat, a professor of Middle Eastern law and politics at the University of Utah and an expert on Middle Eastern and Islamic law. Professor Mallat described the BCDR as an example of an established trend by states in the Arabian Gulf to develop and promote commercial arbitration as an alternative system to the courts. The commercial sector in that region has been instrumental in creating competing arbitration venues, either self- standing or attached to existing private institutions such as national chambers of commerce. He referred to most Arab states as having sought to establish their own venue for regional and international commercial arbitration, and of their being strong competition between these venues. He cited the BCDR as an example of that

development.


25 Dalian Deep Water Developer Ltd v Dybdahl [2015] NZHC 151, [2015] 3 NZLR 260 at [34].

26 Law Commission Arbitration: a discussion paper (NZLC PP7, 1988) at [177].

27 Arbitration Act 1996, s 9(2). It was submitted a further example is provided by the Arbitration Act 1996 (UK). Section 95 applies that legislation to statutory arbitrations “as if the arbitration were pursuant to an arbitration agreement” and “as if the persons... were parties to that agreement”.

[39] Mr Ian Edge, an English barrister and Director of the Centre of Islamic and Middle Eastern Law at the University of London, described how the BCDR had been established by the Bahrain Ministry of Justice in partnership with the American Arbitration Association (AAA) as a new approach to the settlement of international commercial cases involving Bahrain. He referred to a perception that foreign companies had, in the past, been reluctant to submit their disputes to the Bahraini courts, which were perceived as being slow and incapable of dealing with the technicalities of complex international contracts. In 1993, the Bahrain International Arbitration Centre was formed to respond to this issue, however, that initiative was unsuccessful and was replaced by the BCDR in 2009.

[40] Mr Edge cited various publications and articles which referred to the BCDR as providing “statutory arbitration” for commercial and financial disputes, and that the BCDR was intended to operate as an international and domestic centre for alternative dispute resolution services. These articles and public statements promoting the BCDR and publicising its services include references to the BCDR’s Section (1) jurisdiction which is described as providing “binding arbitration” or “statutory arbitration”. Care is required in terms of the weight to be afforded to these sources but the promotional material provides some context to what appears to have been behind the inception of the BCDR and the function and service it was at least initially designed to provide.

[41] The involvement of the AAA is heavily emphasised both in promotional material and in the BCDR’s formal publications, including its own website in which it refers to itself as a body to promote alternative dispute resolution services. Throughout the website (as it was in 2011) it refers to itself as the BCDR-AAA and as an independent institution guided by an international board of trustees with a senior management team of experts to administer the arbitration and mediation of commercial cases. The self-described BCDR-AAA refers to its “unique ADR legislation” and as being made up of “two sections”:

Section One: Statutory ADR Tribunals

For any claim exceeding BD500,000 (approximately US$1.3 million) which would have come within the jurisdiction of the Courts of Bahrain, and involves either an international commercial dispute or a party licensed by the Central Bank of Bahrain (CBB).

Section Two: Mediation and Arbitration

BCDR-AAA provides international best practices in ADR services such as mediation and arbitration in its unique “Free Arbitration Zone” which offers jurisdictional and legal certainty to the recognition of arbitration awards, along with time and cost-effective resolutions to disputes.

[42] Mr Ahmed Husain was until December 2015 the chief registrar and assistant chief executive of arbitration at the BCDR. He is its current chief operating officer and acting chief registrar. He gave evidence that the AAA had no involvement in the establishment of the BCDR’s Section (1) jurisdiction. However, the acronym “BCDR-AAA” is endorsed on all its decisions and correspondence, and it appears clear the emphasis placed on the AAA’s involvement was part of the promotion of the BCDR to instil confidence in the new body and attract business. This appears to have extended to its so-called “statutory arbitration” jurisdiction as referred to by the Bahrain Minister of Justice in promotional material for the opening of the BCDR in January 2010.

[43] Dr Teece may legitimately point to the emphasis placed on the involvement of the AAA as an indicator of the nature of the body’s intended function. However, decisions emanating from the BCDR’s Section (1) jurisdiction bear the shield or emblem of the Bahraini courts, which is the emblem of the Kingdom, and may only be used by official public bodies on their official records. Further, such decisions are handed down in the name of the King, as required by art 5 of the Bahraini Law of

Judicial Authority 2002.28 In contrast, awards made pursuant to its Section (2)

jurisdiction only bear the emblem BCDR-AAA, not that of the Kingdom, and are not issued in the name of the King.







28 Legislative Decree (42) of the year 2002 with respect to promulgating the judicial authority

[Law of Judicial Authority], art 5.

The decision of the Constitutional Court

[44] Whether the BCDR is exclusively for the purpose of providing a commercial arbitration facility, or has a dual role pursuant to its Section (1) jurisdiction to exercise judicial authority as part of the Bahraini legal system, is able to be considered in light of a decision of Bahrain’s Constitutional Court. This considered whether the BCDR as initially proposed in an earlier draft of the Decree (the draft

Decree) was compliant with the Bahraini constitution.29

[45] There was no requirement in the draft Decree for dispute resolution tribunals constituted under its Section (1) jurisdiction to include Judges. Under the articles of the draft Decree a dispute resolution tribunal was defined simply as “one or more natural person(s) designated to settle the disputes”. No provision was made for a judicial quorum as is now required to constitute a dispute resolution tribunal exercising Section (1) jurisdiction. Articles (2), (9) and (18) of the draft Decree did

not differ from their final form, as set out earlier in this judgment.30 In particular, Art

(18) provided that:

the Supreme Judicial Counsel [sic] shall oversee the conduct of the work in the Chamber in connection with the disputes under its jurisdiction, as an entity with a judicial jurisdiction in accordance with the provisions of [Section (1)] and pursuant to the provision stipulated in the [Bylaw].

[46] The Constitutional Court, after recognising that arbitration requires the agreement of parties to have disputed rights or matters in question between them determined and to comply with such a determination, considered the BCDR’s Section (1) jurisdiction in the draft Decree. The Constitutional Court held as follows:

Whereas it is clear from viewing the proposed draft law, especially Articles (1), (2) and (9) above that the Dispute Resolution Tribunal constitutes of one or more natural person(s) designated to settle some disputes, originally within the jurisdiction of Bahrain Courts, that explained by Article (9) of the draft law, in which the legislator obliges arbitration in the legal relationship between the parties in such disputes. Such type of arbitration contradicts with the legal basis as the arbitration shall be by the free will of the parties and it is not anticipated to be applied obligatory such as each arbitration that is filed without an agreement or based on an agreement not set out the

29 Royal referral (AHM/1/09) of the seventh judicial year (Official Gazette 2901, 25 June 2009).

30 At [18], [20] and [23].

jurisdiction of arbitration, so it is just a burden without a constitutional basis, and therefore it is not related to the jurisdiction of determining the disputes, whatever their subjects. So, the Chamber of Dispute Resolution jurisdiction consider the disputes stipulated by the draft law in Article (9) thereof, is an addition to is (sic) its jurisdiction on the account of the Bahrain courts’ jurisdiction and is a means of draining the jurisdiction of those courts, depriving the parties of those disputes the right to refer to them, however those Courts are given by Constitution in Article 105 thereof, the power to resolve all disputes, except for the military crimes.

(Emphasis added)

[47] Because Art (18) required the Supreme Judicial Council to exercise oversight over the conduct of the BCDR’s Section (1) work as an entity with “judicial jurisdiction”, the Constitutional Court held the members of such an entity should be judicial, thereby providing the accompanying “guarantees” of competency, impartiality and independence, and appointed in the ordinary way by resolution of the Supreme Judicial Council upon the request of the Minister of Justice. The Court explained that because of the protections provided in the Constitution of the right to litigate and equality of access to the courts to litigate, a dispute resolution tribunal formed to exercise Section (1) jurisdiction needed to be judicial. Because the draft Decree failed to require that judicial element for the purpose of exercising its compulsory jurisdiction, Art (1) of the draft Decree breached the Constitution.


[48] The Constitutional Court interpreted the draft Decree in its original form as imposing arbitration which it held: 31


31 The articles of the amended Bahrain Constitution referred to are reproduced as follows:

Article 4 [State Principles]

Justice is the basis of government. Cooperation and mutual respect provide a firm bond between

citizens. Freedom, equality, security, trust, knowledge, social solidarity and equality of opportunity for citizens are pillars of society guaranteed by the State.

Article 18 [Human Dignity, Equality]

People are equal in human dignity, and citizens are equal before the law in public rights and

duties. There shall be no discrimination among them on the basis of sex, origin, language, religion or creed.

Article 20 [Criminal Trials]

...

f. The right to litigate is guaranteed under the law.

Article 104 [Independence, Public Prosecutor]

a. The honour of the judiciary, and the probity and impartiality of judges, is the basis of

government and the guarantee of rights and freedoms.

b. No authority shall prevail over the judgment of a judge, and under no circumstances may the course of justice be interfered with. The law guarantees the independence of the judiciary, and the law shall lay down the guarantees of judges and the provisions pertaining to them.

...leads to differentiation between the litigants who are equal in their legal positions to refer to courts in contradiction with the principle of equality set out in Articles (4) and (18) of the amended constitution, as well as it contradicts with paragraph (f) in Article (20) of the amended constitution that states “The right to litigate is guaranteed under the law”, paragraph (a) in Article (32) that states “a. The system of government rests on a separation of the legislative, executive and judicial authorities while maintaining cooperation between them in accordance with the provisions of this Constitution. None of the three authorities may assign all or part of its powers stated in this Constitution.....”, and paragraphs (a) and (b) in Article (104) of the said amended constitution stating “a. The honor of the judiciary and the probity and impartiality of judges, is the basis of government and the guarantee of rights and freedoms. b. No power shall prevail over the judgment of a judge, and under no circumstances may the course of justice be interfered with. The law guarantees the independence of the judiciary and the law shall lay down the guarantees of judges and the provisions pertaining to them.”

[49] As a result of these conclusions the Constitutional Court held the draft Decree breached the Constitution by purporting to compel parties to submit to the BCDR’s Section (1) jurisdiction without providing the essential “judicial element” necessary to legitimately exercise such a compulsory form of jurisdiction. As a result of the Constitutional Court’s findings, the draft Decree was amended to include the requirement that for all disputes falling under the BCDR’s compulsory Section (1) jurisdiction, the tribunal must include a majority of Judges deputised by

the Supreme Judicial Council upon a request from the Minister.32

[50] The Constitutional Court was not asked directly to opine on whether the BCDR constituted a court. However, it is apparent from the Court’s decision that because the BCDR was exercising a compulsory form of jurisdiction under Section (1) which would otherwise have been the responsibility of the Bahrain Courts, and because the Decree excluded parties from accessing those courts for a particular category of case, then in order to be constitutionally compliant any substitute tribunal formed to exercise that jurisdiction was required to meet the standards expected of a body exercising the Kingdom’s judicial jurisdiction. This appears to have already been the expectation of art (18) which provides that the Supreme Judicial Council oversees the conduct of the BCDR’s Section (1)

jurisdiction “as an entity with a judicial jurisdiction”.



...

32 Bahrain Chamber for Dispute Resolution Decree, above n 6, art 1.

[51] A further concern of the Constitutional Court was that the power to issue regulations detailing the rules and procedures of the tribunal, contained in Art (26) of the draft Decree, bestowed that power on the Minister. This was considered to be an impermissible delegation of power from the Legislature to the Executive. It was addressed in the final Decree by requiring that such regulations (the Bylaws) be based on the existing Civil and Commercial Procedures Law 1971 and the Law of Evidence that presently governs court proceedings.

Conclusions regarding the establishment of the BCDR

[52] The Bahraini Government may well have intended to introduce a form of “compulsory arbitration” in respect of a certain category of commercial disputes that had previously been the responsibility of the Kingdom’s existing courts. The BCDR was established to exercise two different types of jurisdiction: Section (1) “Chamber jurisdiction by law” and Section (2) “Chamber jurisdiction by parties agreement”. The first was in substitution of the Kingdom’s existing compulsory judicial jurisdiction. The second offered a dispute resolution facility to which parties could agree to submit their dispute. The Constitutional Court recognised the significant constitutional difference between the orthodox situation where parties have agreed to arbitrate and the provision of an arbitral tribunal as a facility to service such agreements on the one hand, and the imposition by the State of a compulsory form of jurisdiction on the other.

[53] The Constitutional Court held the draft Decree failed the constitutional test because in order for the BCDR’s compulsory Section (1) jurisdiction to be compliant, it was required to be invested with certain fundamental standards or features that could only be achieved by a tribunal comprising Judges, or at least a majority of Judges. The Constitutional Court required the BCDR, in the exercise of its Section (1) jurisdiction, to be furnished with judicial authority. That requirement provides a strong indication that the BCDR, when exercising its mandatory Section (1) jurisdiction, was required to act as a judicial body rather than an arbitral tribunal.

Assessment of domestic tribunals

[54] Despite the relative frequency of applications to enforce foreign judgments it appears this is the first case where this Court has been required to examine whether a foreign tribunal is a court for the purpose of enforcement of an overseas judgment. However, the issue has been examined on a number of occasions in relation to domestic dispute resolution bodies.

[55] In Complaints Committee of the Waikato/Bay Of Plenty District Law Society v Harris (District Law Society Case) the Court of Appeal examined whether the Law Practitioners Disciplinary Tribunal was a court.33 Dr Teece placed some emphasis on that authority, which examined the House of Lords’ approach in British Broadcasting when attempting to identify the principal features of a court.34

[56] KFH considered the approach taken to distinguishing between inferior courts and tribunals in a domestic setting to be of limited assistance in the present context. It emphasised that whether a foreign tribunal qualifies as a court for the purposes of enforcement needs to be examined in light of the underlying rationale for the enforcement of foreign judgments and the principle of comity required to be afforded

to foreign legal systems.35 I accept that is a significant consideration, which I

consider later in this judgment, however, the factors examined when assessing a domestic tribunal’s status also have application to a foreign tribunal and the cases provide a useful starting point.

[57] In British Broadcasting, the House of Lords was required to decide whether a local Valuation Court was a “court” for the purposes of powers relating to contempt. In holding that the Valuation Court was not a court of judicature, the House of Lords emphasised that neither the label “court”, nor the requirement that the body exercise its functions judicially, means that Parliament intended a particular tribunal to be part

of the country’s judicial system.36 When a body is entrusted by the Legislature with



33 Complaints Committee of the Waikato/Bay Of Plenty District Law Society v Harris [2006] 3

NZLR 755 (CA).

34 Attorney-General v British Broadcasting Corporation, above n 21.

35 Chen v Lin [2016] NZCA 113, [2016] NZAR 606 at [18].

36 Attorney-General v British Broadcasting Corporation, above n 23, at 358.

a judicial function it is necessary to examine the legislation to discover the tribunal’s

purpose. Lord Scarman held:37

I would identify a court in (or ‘of’) law, i.e. a court of judicature, as a body established by law to exercise, either generally or subject to defined limits, the judicial power of the state. In this context judicial power is to be contrasted with legislative and executive (i.e. administrative) power. If the body under review is established for a purely legislative or administrative purpose, it is part of the legislative or administrative system of the state, even though it has to perform duties which are judicial in character. Though the ubiquitous presence of the state makes itself felt in all sorts of situations never envisaged when our law was in its formative stage, the judicial power of the state exercised through judges appointed by the state remains an independent, and recognisably separate, function of government. Unless a body exercising judicial functions can be demonstrated to be part of this judicial system, it is not, in my judgment, a court in law.

[58] The House of Lords held the function of the local Valuation Court was essentially administrative. It was required to act judicially in discharging its task of hearing and determining objections, however, that did not alter its administrative purpose, nor make it part of the judicial system of “the Kingdom”.38 Features of the tribunal, including an ability to hear witnesses on oath, give a final decision which affect the rights of parties, and a right of appeal from its decision, were not determinative.39 The presence or absence of such factors may provide some indication of whether a tribunal is a Court but they will not be determinative.40 The essential focus must be on whether the tribunal was established to exercise generally,

or within defined limits, the judicial power of the State. This is to be contrasted with the legislative, and executive or administrative power of the system of the State notwithstanding the requirement that the body act judicially.41

[59] In the District Law Society Case, Chambers J identified relevant principles from Lord Scarman’s speech which he considered to be material to the identification of a body as a court. British Broadcasting had previously been applied by a full bench of this Court in Attorney-General v Reid, which concluded that the

Employment Tribunal, as established under the Employment Contracts Act 1991,



37 At 358.

38 At 360.

39 At 347, per Lord Edmond Davies.

40 At 348.

41 At 359, per Lord Scarman.

was “a court of judicature”. 42 From Lord Scarman’s analysis, and by way of comparison with the full bench’s decision regarding the status of the Employment Tribunal, Chambers J considered the following factors in deciding the New Zealand Law Practitioners Disciplinary Tribunal was not an inferior court for the purpose of an appeal brought pursuant to s 67 of the Judicature Act 1908:

(a) A chief characteristic of a court of judicature is the exercise of judicial power of the state through Judges appointed by the state. The appointment of members of the tribunal by the Council of the New Zealand Law Society was contrasted with members of the Employment Tribunal being appointed by the Governor-General on the recommendation of the Minister of Labour under the Employment

Contracts Act 1991.43

(b) The public function of the tribunals in question. The Employment Tribunal determines disputes between parties to employment contracts which would otherwise have to be dealt with by the ordinary courts, whereas the Law Practitioners Disciplinary Tribunal’s responsibility was to maintain standards within the legal profession. The important public benefit in maintaining those standards was acknowledged but the primary beneficiary was the profession itself, which was why most professions and service industries develop their own disciplinary

regimes.44

(c) The ability to enforce its own orders. The Law Practitioners Disciplinary Tribunal has no power to enforce its own orders. Orders were required to be filed in the High Court and could only then take effect as if they were orders of this Court. This was to be compared with the position of the Employment Tribunal which possessed the

power to enforce its own orders.45


42 Attorney-General v Reid [2000] 2 NZLR 377.

  1. Complaints Committee of the Waikato/Bay Of Plenty District Law Society v Harris, above n 33, at [148].

44 At [149].

45 At [150].

(d) The omission by Parliament to include in the Law Practitioners Disciplinary Tribunal’s constitutive statute a provision declaring its proceedings to be “judicial proceedings” as it had for the Employment Tribunal in the Employment Contracts Act 1991. To the contrary, under s 127 of the Law Practitioners Act 1982 immunity was conferred on witnesses and counsel in relation to disciplinary proceedings “as if they were proceedings in a Court of law”; the implication being that disciplinary proceedings under that regime

were not in fact “proceedings in a Court of law”.46

[60] These identified factors were applied more recently by the Court of Appeal in Daimler AG v Sany Group Co Ltd.47 The Court acknowledged that processes adopted by the Commissioner of Trademarks in relation to trademark registration disputes were consistent with those adopted by courts exercising judicial authority. A relevant consideration were aspects of the Commissioner’s powers and procedures, some of which were consistent with the hallmarks of a court, and others less so.

[61] In determining that the Commissioner of Trademarks was not a “Court of judicature” within s 2 of the Judicature Act 1908, and therefore not “an inferior Court” for the purposes of an appeal brought pursuant to that Act, the Court of Appeal noted the primarily administrative statutory functions of the Commissioner and his status as an employee of the Ministry of Justice rather than as an independent

officer. These features were considered to be telling.48


The rationale for recognition of foreign judgments

[62] In examining whether a foreign tribunal qualifies as a court for the purpose of enforcement of its decisions in this jurisdiction, KFH submitted respect was required to be shown to a foreign state’s sovereignty by ensuring appropriate deference was afforded to a sovereign state’s legal system. It submitted that care is required to

ensure differences with New Zealand procedures, and the fact a case may have been

46 At [151].

47 Daimler AG v Sany Group Co Ltd [2014] NZCA 421, [2013] NZAR 1159.

48 At [26].

decided by a different process or in a different way from under New Zealand law, did not result in the drawing of an unfavourable comparison.49 However, Dr Teece cautioned the Court from being too sensitive to this aspect and said that it must not shy away from its objective assessment of whether the foreign tribunal is capable of being recognised as a court in this country for fear of appearing to criticise the overseas body.

[63] As already observed, it will ultimately be a question of New Zealand law whether the character of the foreign tribunal and its role within the foreign jurisdiction is sufficient to constitute what is considered to be a Court in this country. However, the principle of comity requires the domestic Court to be circumspect before denying recognition to a foreign tribunal created by the legislative authority of a sovereign state to exercise that state’s judicial power as a component part of its legal system. Arguably, that description ought to be sufficient.

[64] Part of the rationale for affording due respect to a state’s sovereignty by recognising the decision of a foreign judicial tribunal arises because a party has either submitted to the jurisdiction of that state or has travelled to the country and thereby invested “himself [or herself] by tacit consent with the rights and obligations

stemming from local laws as administered by the local court”.50 Dr Teece disputes

he submitted himself to the jurisdiction of the BCDR and, even more fundamentally, that the BCDR has jurisdiction over the dispute. Similarly, the fairness of the foreign tribunal’s approach to his case, the procedures applied in terms of the requirements of natural justice, and whether the BCDR’s decision should be enforced as a matter of public policy, are matters which he also puts in dispute and which he will contend are reasons why the New Zealand court should not be prepared to enforce the BCDR’s decision.

[65] However, the argument that the BCDR is entitled to have its decisions enforced in New Zealand is premised on it having jurisdiction as a result of Dr Teece agreeing the clause of the Murabaha Agreement which provided “the Courts of

Bahrain” with a non-exclusive jurisdiction to settle disputes arising out of the

49 Reeves v One World Challenge LLC, above n 3, at [56], citing with approval Cardozo J’s

observation in Loucks v Standard Oil Company New York 224 NY 99 (1918) at 111.

50 Adams v Cape Industries Plc [1990] 1 CH 433 (CA) at 455.

agreement, and him having therefore, to that extent, submitted to the jurisdiction of a foreign state. Whether that is so is an issue for trial.

[66] I accept that a critical part of the inquiry in assessing whether a foreign tribunal such as the BCDR should be recognised by this jurisdiction as a court for the purpose of enforcement is whether the body forms part of the sovereign state’s legal system and is a manifestation of the exercise of that state’s sovereignty to determine how particular disputes are to be dealt with within that jurisdiction. I acknowledge procedures adopted by that tribunal are likely to be secondary in that dedicated inquiry, although such considerations may be of critical importance to the other issues raised by Dr Teece which are presently reserved for trial, should it be needed, and in particular their efficacy and application in the circumstances of Dr Teece’s case.

[67] The differences between a body such as the BCDR and a New Zealand court in terms of process and procedure ought not, therefore, necessarily be greatly influential. However, some elements may be considered fundamental to a recognised judicial process. Importantly, the tribunal must have sufficient judicial attributes and act in a sufficiently judicial way to be recognised as a court by this jurisdiction. At the most fundamental level any tribunal must have employed a process which included the application of the law to the facts with an opportunity for parties to participate.

[68] A difficulty I have experienced in addressing the preliminary issue of whether the BCDR is a court for the purpose of enforcement in New Zealand is that my assessment has not been undertaken against any factual matrix of how the proceeding unfolded in Dr Teece’s case. For example, a tribunal has flexibility as to how it will proceed, including the ability to engage experts who may investigate and present evidence in the form of a report. Of itself such a process does not prevent a decision making body from being recognised as a court, but how such a process is carried out and utilised in a given case may affect whether the tribunal is acting in a manner which would be considered consistent with the expectations of a judicial body in this country. These types of issues have been reserved for trial. To the

extent there may be some overlap with the preliminary issues I must determine, I am obliged to put those aspects to one side.

[69] However, before leaving this topic, I note that some reliance was placed by KFH on a decision of the Supreme Court, New York County, which enforced a decision of the BCDR.51 Enforcement was defended on the basis of claims of violations of due process and forum conveniens grounds. The defendants argued the Chamber was the equivalent of compulsory arbitration, with evidence being unnecessarily curtailed and rights of appeal being almost non-existent. Notwithstanding that contention it appears the matter proceeded on a concession by the defendant that the tribunal was a judicial body, and there was little detailed

analysis of the BCDR’s status as a court. Importantly, however, in the circumstances of that case, with the defendant having been served and participated in the process and the tribunal having received fact-finding reports of experts, the New York Court found no breach of due process and duly enforced the BCDR’s decision.

[70] KFH also placed some reliance on a judgment of Hobhouse LJ, Midland

International Trade Services Ltd v L-Sundairy (Midland International Trade Case).52

His Lordship determined that the Saudi Arabian Chamber for the Settlement of Commercial Paper Disputes (the Saudi Arabian Chamber) was a Court whose judgment was enforceable in England. A consortium of British companies sued shareholders of a Saudi Arabian company on contracts which contained a jurisdiction clause which permitted one of the British companies to sue in Saudi Arabia.

[71] In holding that the decision of the Riyadh Chamber for Settlement of Commercial Disputes (the Riyadh Chamber) was the judgment of a court and therefore gave rise to a judgment debt, Hobhouse LJ placed weight on the nature of the decision and the process by which it had been obtained. In particular, that the decision contained a clear order that the defendant pay sums of money to the plaintiffs. Secondly, that it was based upon a “recognisably judicial process” during which the parties had been fully heard through their legal representatives. Thirdly,

that the facts had been investigated and findings made to which the relevant law had

51 Standard Chartered Bank v Ahmad Hamad Al Gosaibi & Bros Co 957 NYS 2d 602 (2012).

52 Midland International Trade Services Ltd v Sundairy Financial Times, 11 April 1990 (QB).

been applied. Fourthly, that a final determination of the legal rights of the parties had been arrived at.

[72] Evidence before the English Court explained that the Saudi Arabian judicial system was dual, and that it was composed, on the one hand, of Islamic Courts and, on the other, specialised committees and tribunals. The jurisdiction of the Islamic Courts was general, and that of committees and tribunals limited to that conferred by their constituting decrees. In rejecting that the Riyadh Chamber was merely an administrative tribunal, the English Court observed that it had been constituted under the law and was composed of a Judge trained in commercial law or Islamic law to make enforceable decisions against which the parties were entitled to appeal to a legal committee of the Ministry of Commerce.

[73] Dr Teece was critical of KFH’s reliance on the Midland International Trade Case. He submitted whether the Riyadh Chamber was a court was decided without reference to the laws of Saudia Arabia which may have identified what the Kingdom considered to be its courts, and that the issue was examined in a vacuum. In contrast, Dr Teece submitted, in the present case the status of the BCDR can be examined against the principal pieces of legislation dealing with the identification of the civil courts of Bahrain which show the BCDR is not one. Further, that the “Saudi Committee” was the creature of a Ministry, and that the approach taken by Hobhouse LJ cannot be squared with that of the Court of Appeal in Daimler, where the Assistant Commissioner of Trademarks was held not to be a Court partly because of the Commissioner’s status as an employee of a Government Ministry, thereby

lacking the necessary independence to have judicial status.53

[74] I accept that it is difficult, in the absence of a comprehensive understanding of the legal framework of Saudi Arabia and knowledge of the precise content of the evidence before the English Court, to confidently draw parallels between that case and the present. However, the approach taken by Hobhouse LJ in his assessment of

the foreign tribunal is largely consistent with the matters upon which the Court of




53 Daimler AG v Sany Group Co Ltd, above n 47. See also Misick v R (PC) [2015] UKCPC 31 at

[22].

Appeal have focussed for the purpose of assessing whether domestic adjudicative bodies constitute courts.

The place, structure and character of the BCDR’s Section (1) jurisdiction

The place of the BCDR in Bahrain’s court system

[75] Dr Teece submitted that as a matter of Bahraini law the BCDR does not form part of its civil court system. He points to both the Bahrain Constitution and the Law of the Judicial Authority, which were promulgated in 2002, as authority for this proposition. The Constitution provides that “the various types and degrees of the courts shall be regulated by law, and the law shall state their functions and

jurisdictions”.54 The Law of the Judicial Authority provides that “Courts shall

exercise the authority of the judiciary in accordance with the provisions of this

Law”.55 Under the heading “Law Courts Order, Organisation and Jurisdiction”, Art

6 provides that “the civil law Courts shall consist of the following”:

1. Court of Cassation.

2. High Civil Court of Appeal.

3. High Civil Court.

4. Lower Court.

[76] To similar effect is the Civil and Commercial Procedures Law 1971 which provides that the Civil Courts consist of the Cassation Court, the High Court of Appeal, the High Court, the courts of minor causes, and courts of execution.56

[77] Dr Teece submitted the use of the term “shall consist” in art 6 of the Law of Judicial Authority means this is an exhaustive list of the Civil Law Courts of Bahrain. Each of those courts “shall have jurisdiction to resolve all civil, commercial and administrative matters that are referred thereto in accordance with

the law”.57 Dr Teece maintained the effect of the Law of Judicial Authority is that

the BCDR is not a civil court and does not have the judicial authority of Bahrain.


54 Bahrain Constitution, art 105.

55 Law of Judicial Authority, above n 28, art (1).

56 Legistlative Decree (12) of the year 1971 on Civil and Commercial Procedures, art (7).

57 Law of Judicial Authority, above n 28, art (6).

Had it been intended to include the BCDR as a civil law court exercising the authority of the judiciary, Dr Teece submitted it would have been a simple matter to have amended the Law of Judicial Authority.

[78] It is undisputed that neither the Civil and Commercial Procedures Law, nor the Law of the Judicial Authority 2002 include the BCDR as a civil law Court. Those laws were, however, passed before the 2009 Decree. Each of the three laws sit at the same level in the legislative hierarchy, subordinate to the Constitution. KFH contested that the provisions of the Civil and Commercial Procedures Law, or the Law on the Judicial Authority constituted an exhaustive description of all bodies in Bahrain that were to be regarded as courts. It submitted there was no conflict between the list of courts set out in the earlier legislation and the creation of a specialised “commercial Court” by the 2009 Decree which it submitted the BCDR in the exercise of its Section (1) jurisdiction constituted.

[79] In support of that submission, KFH noted the 2009 Decree expressly provided for the BCDR under its Section (1) jurisdiction to be an “entity with judicial jurisdiction” under the supervision of the Supreme Judicial Council.58 The Decree confers on a dispute resolution tribunal exercising the BCDR’s Section (1) jurisdiction the exclusive authority to determine certain categories of dispute which previously had been within the jurisdiction of the Bahraini courts. KFH submitted

that in so doing, and as a result of the requirement of the Constitutional Court in its ruling on the draft Decree that such a tribunal be constituted by a majority of Judges, the BCDR inherently carried the judicial authority of the state to perform a public function. As such that aspect of its jurisdiction was required to be recognised as forming part of Bahrain’s Court system.

[80] The position of the BCDR when exercising its Section (1) jurisdiction as part of the Kingdom’s legal system, it was submitted, is confirmed by its relationship with the civil courts which previously had jurisdiction. If proceedings that are within the jurisdiction of the BCDR are incorrectly commenced in another court that court is obliged to transfer them to the BCDR. Commencement of proceedings in

the BCDR is treated as estopping the limitation period in respect of all courts, even

58 Article (18).

where the proceedings are subsequently found to be outside its jurisdiction and transferred to another “court”, and vice versa. Similarly, where proceedings are transferred from the BCDR to another “court” for lack of jurisdiction, the BCDR transfers fees that it has collected, and the position is the same in the converse situation. It was submitted that statutory arrangement applied because it was recognised that these fees are collected and held by the BCDR on behalf of the State. This is to be contrasted with the ordinary situation where if an arbitral tribunal is found not to possess jurisdiction, it has no effect on its ability to recover its fees from the parties.

[81] I accept as untenable the contention made by Mr Husain in his evidence that the Law of the Judicial Authority was implicitly amended by the Decree to include the BCDR. However, the obvious effect of the 2009 Decree is that if the BCDR does not qualify as a court there is no other court in Bahrain which has jurisdiction to hear disputes of the kind the BCDR is charged with determining under its Section (1) jurisdiction.59 As a consequence, an important category of case would fall outside the Bahraini Court system and, as a corollary, beyond the judicial authority of the Kingdom. This would deprive litigants of any right of recourse under Bahraini law

to a judicial determination, leaving only compulsory arbitration.

[82] That consequence was of fundamental concern to the Constitutional Court when it ruled that the absence of Judges from a dispute resolution tribunal formed for the purpose of exercising the BCDR’s mandatory Section (1) jurisdiction was unconstitutional. I consider that to be a strong indication that this gap in the Kingdom’s judicial jurisdiction, created by the draft Decree, could not be tolerated. I also note that the constitution referred to “various types and degrees of the Courts” and required that they be “regulated by law” which will state “their functions and

jurisdictions”.60 The Decree which established the BCDR’s Section (1) jurisdiction

complies with that requirement.







59 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (9).

60 Article (105).

Structure of the BCDR

[83] Dr Teece submitted the establishment and structure of the BCDR is not consistent with it being a court of Bahrain, but rather a statutory arbitral tribunal. The Decree promulgated the BCDR as an “independent Chamber... for the settlement of economic, financial and investment disputes” as a legal entity subject to the administrative supervision and oversight of the Minister concerned with justice

affairs.61 This is to be contrasted with Bahraini Courts which have no separate legal

personality from the State. As Professor Mallat opined, the BCDR with its separate legal personality can be sued independently from the State. This is anticipated by the Decree itself which provides that the Chief Executive of the BCDR, who is the head of the “Administrative and Technical apparatus”, is able to “represent the Chamber before the courts and in dealings with others”.62

[84] KFH submitted that Dr Teece’s reliance on the composition of the BCDR fails to distinguish between the BCDR as an administrative body and the dispute resolution tribunals it administers under its bifurcated jurisdiction. It was contended the fact that the BCDR has an independent existence and separate legal personality for the purpose of administering its two separate jurisdictions ought not affect the proper characterisation of a tribunal constituted to exercise the BCDR’s Section (1) jurisdiction as a court.

[85] I accept that it is unusual to house a “court” within an independent administrative body with a separate legal personality, overseen by a board of trustees. That is reinforced by the hybrid funding arrangements. The BCDR receives state funding, and Judges appointed to sit on tribunals for the purpose of its Section (1) jurisdiction continue to receive their judicial salaries. However, the BCDR receives funding from both public and private sources as a result of the significant fees paid by the parties. Profits can be carried forward by the Chamber and are not required to be held in the general State coffers.

[86] Its administrative management and governance have the hallmarks of a business unit designed to manage an arbitral facility and to market itself in

61 Article (2).

62 Article (7).

competition with similar bodies in the region, as Professor Mallat and Mr Edge explained in their evidence. However, the question remains whether this administrative or structural arrangement, which endured notwithstanding the Constitutional Court’s ruling regarding the constitutionality of the draft Decree and its subsequent amendment, prevents a tribunal constituted to exercise the BCDR’s Section (1) jurisdiction from being recognised domestically in New Zealand as a Court.

The formation of a tribunal and the appointment of its members

[87] KFH’s argument that the BCDR is a court for the purpose of enforcing its awards in this country is dependent on being able to isolate the exercise of its Section (1) jurisdiction from its acknowledged function as an arbitral tribunal under Section (2). Linked to that proposition is a second distinction, namely, the need to separate the BCDR’s function as an administrative body from the dispute resolution tribunals constituted as adjudicatory bodies under its bifurcated jurisdiction to exercise jurisdiction in respect of individual cases. There is no permanent tribunal exercising Section (1) jurisdiction. Dr Teece submitted this is an important feature of the BCDR which prevents its recognition as a court.

[88] In describing the composition of the Chamber, the Decree refers only to the Board of Trustees and the “Administrative and Technical apparatus”.63 No mention is made of the dispute resolution tribunals as defined in Art (1) of the Decree. A tribunal must be formed for each dispute. Only after the ruling of the Constitutional Court did it become a requirement for a tribunal exercising jurisdiction under Section (1) to include Judges deputised by the Supreme Judicial Council. Judges are

not members of the BCDR and their jurisdiction is limited to the particular case to which they have been appointed to decide. Apart from their status as a Judge deputised by the Supreme Judicial Council to be available to sit as a tribunal member, the Judges do not have any ongoing role as a member of the BCDR, with their appointment to a particular tribunal ending once the dispute has been

determined.



63 Article (3).

[89] Related to this character of the BCDR tribunals is the manner by which Judges are appointed to a dispute resolution tribunal for the purposes of the BCDR’s Section (1) jurisdiction. Dr Teece emphasised both the role of the registrar and the parties in the selection of Judges for the purpose of exercising that jurisdiction as being incompatible with the characteristics of independence and impartiality considered to be the hallmark of a Court. KFH submitted that neither the processes by which Judges were appointed to sit on a tribunal, nor the terms of their appointment, changed the nature of their judicial role.

[90] In Bahrain the King appoints all higher Judges on the nomination of the Supreme Judicial Council which is responsible for their supervision. The Council selects particular Judges who must be of the rank of the Court of Appeal or above to be placed on a list of Judges available to sit on the BCDR.64 Presently, there are two Judges on this list. Judges who wish to step down from a BCDR case are required to seek the permission of the Judicial Council. In contrast, arbitrators determining

disputes within the Section (2) jurisdiction are chosen by the parties, either from the BCDR-AAA roster of arbitrators which includes high ranking barristers, former Judges and others from around the world, or, alternatively, the parties may agree on someone from outside the roster.

[91] When a dispute comes before the BCDR under its Section (1) jurisdiction the registrar is required to form a tribunal to hear the dispute.65 The Tribunal is to consist of two deputised Judges and one lay expert member.66 Dr Teece emphasised that while the Supreme Judicial Council deputises the Judges available for appointment, it does not itself appoint them to the individual tribunals. The appointments are temporary and last only so long as the tribunal is seized of the

dispute.

[92] An unusual aspect of the appointment process is the parties’ ability, should

they agree, to each appoint a member to the tribunal, including the power to appoint one or both of the Judges.67 Dr Teece submitted the ability of parties to appoint

64 Bahrain Chamber for Dispute Resolution Rules, above n 7, art (40)(d).

65 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (40).

66 Bahrain Chamber for Dispute Resolution Rules, above n 7, art (40)(b).

67 Bahrain Chamber for Dispute Resolution Rules, above n 7, art 40(c).

Judges is contrary to the ordinary expectation that a Judge will be permanently appointed by the State and allocated to cases without involvement of the parties. He submitted it was antithetical to a court being impartial and independent for Judges to become seized of disputes in such a way. Dr Teece submitted that a further feature against its being a court is the process by which Judges are paid “an honorarium” for sitting on a tribunal.

[93] KFH, to the contrary, submitted the broader feature of the appointment of Judges to a dispute resolution tribunal constituted for the purpose of the exercise of Section (1) jurisdiction was a strong indicator supporting such a tribunal being recognised as a court. It submitted the registrar’s role in allocating a Judge from the list of deputised Judges able to hear Section (1) cases to serve on a tribunal was an administrative task. Such a process was likened to the allocation of a case to a Judge in New Zealand’s domestic Courts. It was submitted the role of the registrar in the BCDR does not compromise a Judge’s independence, nor does it undermine the judicial status of the tribunal, with the Decree expressly providing for the oversight of the conduct of the BCDR’s Section (1) work by the Supreme Judicial Council as

an “entity with judicial jurisdiction”.68

[94] Insofar as Judges are assigned to individual cases by the registrar from the list of Judges appointed by the Supreme Judicial Council, I accept this is an administrative role not dissimilar to that carried out by a registrar in a New Zealand court. I acknowledge that until a tribunal is formed for an individual dispute there is no tribunal in being. The tribunal is formed when the registrar and/or party appoint members to resolve a particular dispute.69 However, I reject the suggestion that because Judges are allocated to tribunals by a non-judicial officer and sit on a tribunal only for the period of the dispute that they will lack independence.

[95] As already noted, there is no permanent dispute resolution tribunal and a Judge, despite being on the list of Judges available to sit on a tribunal, is not a member of the BCDR. However, I do not consider that impacts on an individual

Judge’s security of tenure. Higher Judges are appointed by the King on the

68 Article (18).

69 Bahrain Chamber for Dispute Resolution Rules, above n 7, art 40.

nomination of the Supreme Judicial Council, and Judges selected to sit on a Section (1) tribunal retain their security of tenure whether or not they are appointed to a tribunal. Their continued judicial status and their ordinary judicial salary is not dependent upon appointment to a BCDR tribunal.

[96] Deputised Judges receive a payment separate from their judicial salary which is paid by the state upon their appointment to a tribunal. Until recently, deputised Judges were paid BHD 3,000 (approximately USD 8,000) per case, along with a monthly stipend of BHD 750-1,000 (approximately USD 2,000-2,700) for being available on-call to sit on a tribunal. This was in addition to their salary as Judges. Earlier this year the honorarium was stopped. Mr Husain explained the position is presently under review and that any such payment is a matter of discretion for the Board of Trustees, rather than the State.

[97] Where parties agree to appoint a member to the tribunal, they are required to equally share the “expenses and fees of the two elected members”.70 These are paid to the BCDR, but Dr Teece submitted it was notable that, like arbitrators, when members of the tribunal, including Judges, are selected by the parties they become responsible for their fees. It was submitted this must inherently impact on the perception of their impartiality and independence, and is inconsistent with the

conventional role of a Judge.

[98] KFH rejects these factors undermine the fundamental consideration that Judges who sit on a dispute resolution tribunal under Section (1) are Judges appointed by the State. Mr Husain explained that it is usual practice within the Bahraini judicial system generally for Judges to receive an additional allowance for performing particular duties. KFH submitted the additional fixed remuneration or designation allowance received by a Judge for each case they hear at the BCDR is neither unusual, nor does it impact on their judicial status. The allowance is paid directly by the BCDR and not by the parties. Where the parties have agreed to choose two of the members of the tribunal, it is acknowledged they must pay the

designation allowance for the appointed Judges, however, that is paid to the BCDR,



70 Bahrain Chamber for Dispute Resolution Decree, above n 6, art 40(c).

and that at least one of the appointed members must also be a designated Judge to ensure that a majority of the tribunal consists of Judges.

[99] I consider it necessary to distinguish between the process by which Judges are appointed and the allocation or nomination of Judges to individual tribunals. The former is the prerogative of the state in the form of the King and the Supreme Judicial Council. The essential feature therefore of the composition of a tribunal exercising Section (1) jurisdiction is that a majority of its members are Judges appointed by the State. Furthermore, such Judges have been designated by the Supreme Judicial Council to be available to sit on a Section (1) tribunal.

[100] The arrangements regarding the payment of Judges allocated or nominated to sit on a tribunal may appear to accord with arrangements normally associated with arbitrators. However, despite the novelty of each party, should they choose, nominating a tribunal member and thereby having to pay their expenses and fees, rather than the state, it is not immediately apparent how that process of payment, which must be paid to the BCDR, would result in the Judge being inappropriately rewarded. Nor is it apparent how an individual tribunal member would gain from discharging their role in a particular way, or that such an arrangement would influence the legitimate performance of that member’s judicial function.

[101] Mr Husain’s evidence was that the regular payment of a stipend or honorarium in recognition of a Judge’s appointment to be available to sit on such cases and the payment of a fee for each case, in performance of such additional duties, accords with the wider practice of the Bahraini judicial system, when Judges perform additional duties or responsibilities. The designation payment received by a Judge is unconnected with either the size or monetary value of the dispute to which the Judge is allocated. Tribunal members do not set their own fees, and such costs are determined in accordance with the allowances provided and by a standardised process.

[102] Notwithstanding Dr Teece’s criticism of the process and criteria of judicial appointment in the BCDR’s Section (1) jurisdiction, the majority of the membership of a dispute resolution tribunal must be comprised of Judges appointed and

designated by the Supreme Judicial Council, and it is therefore an adjudicative body comprised of Judges appointed by the State. While it was not contended otherwise, there is nothing unusual about the inclusion of an expert member to sit on a tribunal. That is no different to the appointment of expert lay members to sit on particular proceedings of this Court, for example expert economist members appointed to sit on appeals from the Commerce Commission. In other jurisdictions courts can be composed in a variety of ways, including the use of lay Judges and (for example in

Germany) mixed tribunals of professional and lay Judges.71

The BCDR produces self-executing judgments

[103] An important feature of the BCDR’s Section (1) jurisdiction is that rulings made by its tribunals are able to be enforced immediately without further steps. It was submitted this was a hallmark of a judgment as opposed to an arbitral award, which requires judicial endorsement to acquire the authority of the state in order to be binding and enforceable. I accept this is an important distinguishing feature between the BCDR’s Section (1) jurisdiction in terms of the nature of the decisions it produces and its Section (2) jurisdiction, which results in an arbitral award that

requires a separate decision of a Judge before the award will be recognised.72

[104] The Decree expressly provides that an award issued by the Tribunal pursuant to its Section (1) jurisdiction shall be “deemed to be a final judgment issued by the Courts of Bahrain”.73 Subject to rights of challenge, the decision is enforceable in the same way as a judgment of the Bahraini Courts. This is to be contrasted with an award made pursuant to the exercise of the BCDR’s Section (2) jurisdiction which is only enforceable by an order issued by a High Court of Appeal Judge who has examined the award and is satisfied various stipulated conditions have been met.74

Its recognition and enforcement is dependent on the subsequent substantive

involvement of a court and is not automatic.





71 Mauro Cappelletti (ed) International Encyclopaedia of Cooperative Law: Vol 16 – Civil

Procedure (International Association of Legal Science, Marinus Nijhoff, Boston, 2014).

72 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (23).

73 Article (15).

74 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (23).

[105] The differing effects of awards under the two jurisdictions is consistent with the traditional distinction recognised both domestically and internationally between the enforceability of an arbitral award and that of a court’s decision. The enforceable nature of an award under the BCDR’s Section (1) jurisdiction is inconsistent with it being categorised as an arbitral body. To the contrary, it accords with a tribunal exercising that jurisdiction as having the status of a court, being a body able to make judicial decisions that carry the authority of the state and which are able to be enforced domestically by invoking the state’s coercive powers.

[106] Dr Teece did not substantively engage with KFH’s analysis of the effect of Section (1) decisions being self-executing. However, he emphasised as a matter of some importance that it was necessary for the Decree to “deem” a tribunal’s Section (1) decision to be “a final judgment issued by the Courts of Bahrain”. There was initially some dispute between the expert witnesses regarding the interpretation of the Decree’s “deeming” provision. Mr Husain interpreted the article as meaning that “the judgment issued by the dispute resolution tribunal... is a final judgment”, and that the word translated as “deemed” from the Arabic is associated with the verb “to be”, and is more accurately translated as “a” or “in the same rank/level” of a final judgment. However, under cross-examination Mr Husain did not dispute the evidence of Mr Edge and Professor Mallat that a better translation would be that the ruling of the Tribunal is the equivalent of a final ruling of a court.

[107] The importance of the interpretation of this article of the Decree, which Dr Teece sought to stress, was that a “deeming provision” creates a statutory fiction. In the context of the present case the “fiction” being created was the extension of status to a decision of the BCDR under its Section (1) jurisdiction as a final judgment issued by the courts of Bahrain which it would not otherwise have. It was submitted the necessity of providing such a deeming provision was an indication that

the BCDR is not a Court, and the rulings not in fact a judgment.75

[108] Dr Teece’s argument is relevant to an aspect of the approach taken by the

Court of Appeal in the District Law Society Case. However, I doubt in the

  1. Complaints Committee of the Waikato/Bay of Plenty District Law Society v Harris, above n 33, at [151].

circumstances of the present case whether the language used in the Decree to declare that Section (1) awards are to be final and are to carry the status not simply of that of a Court but of a final ruling at the level of the High Court of Appeal detracts from the fact that they carry the authority of the Bahraini state and are immediately enforceable.

Terminology

[109] Dr Teece placed some emphasis on the Arabic terms which had been used in relevant pieces of Bahraini legislation. He submitted the Law of Judicial Authority and the Civil and Commercial Rules referred to the term mahkamah or mahaahim (plural). Mr Husain accepted this was the official word for court and that the Decree does not use mahkamah but, rather, uses the label ghurfah which means chamber and hai’a tajwiyya al-nizaa which means dispute resolution tribunals, with the term hai’a being used to refer both to tribunals exercising the BCDR’s Section (1) and Section (2) jurisdiction. Further, that the Decree itself distinguishes between these terms. When referring to the BCDR itself it uses the term ghurfah (chamber) and when referring to the Bahraini Courts the term mahkamah (Court) is used. Articles (9) and (17) were cited as examples of where this distinction is being made in the text of the Decree between chamber and Court.

[110] I do not consider the particular terms used to describe the BCDR’s tribunals as greatly significant to the preliminary issue. I accept the jurisdiction provided by the BCDR is considered as being distinct from Bahrain’s existing Courts, but the question remains whether in substance the BCDR when exercising its Section (1) jurisdiction is exercising the judicial power of the state and is effectively acting as a court. By concentrating on language and terminology there is a danger of form giving way to substance. Mr Edge, in evidence, acknowledged that a body may be a court (or equivalent to one) even though not described by the Arabic word mahkamah.

[111] Similar considerations arise in relation to another issue of interpretation relating to the term hokum or hukm, the plural of which is akhaam. Messrs Edge and Husain agreed that word can refer to both a judgment and an award, and that the

words “award” and “judgment”, as they appear in the official English translation of the Decree, are both derived from the same original Arabic word hukm, and that nothing turns on that distinction in the English translation. Mr Edge suggested the neutral word “ruling” could be used, however, he did acknowledge that the usual word used in the Middle East to describe an arbitral award is qarar, which is not a term used in the Decree. Again, I do not consider that is of any significance.

[112] The more important distinction to be made between the Section (1) rulings and those made pursuant to the exercise of the BCDR’s Section (2) jurisdiction is that the former is immediately enforceable, whereas the latter has no effect until reviewed and endorsed by a Court of Appeal Judge. This reflects a substantive difference between the two tribunals. The Section (1) ruling carries the public authority of the state which is consistent with the judicial composition of its tribunals. The Section (2) ruling or award does not carry the state’s judicial authority.

Appeal rights

[113] Both parties sought to garner support for their respective positions from the nature of the available rights to challenge decisions made pursuant to the Section (1) jurisdiction. Decisions of the Tribunal in the exercise of its Section (1) jurisdiction can be challenged directly to the Court of Cassation, however, there is only one tier of appeal available, and the grounds on which a decision can be appealed are

limited.76

[114] KFH submitted making Section (1) judgments final and immediately enforceable unless stayed by the Court of Cassation provided a streamlined process for the resolution of international commercial disputes by Judges of a guaranteed calibre. Such a feature does not detract from the characterisation of the BCDR in the exercise of its Section (1) jurisdiction as a Court. All Judges designated to the BCDR must have the rank of Court of Appeal Judges or above. Mr Husain’s

evidence was that a deliberate decision had been made to elevate the commercial




76 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (13).

cases over which the BCDR has jurisdiction to Court of Appeal level, and restrict the parties to a single level of challenge.

[115] It was submitted that while the grounds upon which a party may seek nullification of an award made under the BCDR’s Section (1) jurisdiction is limited to eight grounds, parties to the Section (2) jurisdiction are further limited to only five. Mr Husain informed that the Decree has been recently amended to include error of law as a further ground of appeal, as is available on ordinary appeals to the Court of Cassation.

[116] However, Dr Teece emphasised the restricted grounds of appeal from decisions issued pursuant to the BCDR’s Section (1) jurisdiction were only minimally wider than the limited appeal rights attaching to arbitral decisions, as reflected in the five grounds provided in respect of the BCDR’s Section (2) jurisdiction. Dr Teece also highlighted an issue which was of concern to the Constitutional Court when reviewing the constitutionality of the draft Decree. Article (14) of the 2009 Decree requires a party to first deposit the greater of two per cent of the sum determined under the ruling by the Tribunal or BHD 10,000 (approximately USD 26,500), whichever is the greater. That fee is to be contrasted with the amount of BHD 50 (approximately USD 133) required to be paid to file an

ordinary appeal in the Court of Cassation.77

[117] KFH submitted the Constitutional Court’s finding that it was unconstitutional for the Decree to require a greater deposit to be paid to challenge decisions to the Court of Cassation than was otherwise payable on other appeals was limited only to Section (2) proceedings before the BCDR.78 However, I accept Dr Teece’s submission that the reasoning of the Constitutional Court is equally applicable to Section (1) cases, and is a distinctive feature of challenges to BCDR cases in contrast to appeals from other decisions of the Bahraini Courts. It suggests that notwithstanding the differing consensual and compulsory nature of the two

jurisdictions, they are of a similar arbitral type.




77 Royal Referral, (AHM/1/09), above n 29.

78 Bahrain Chamber for Dispute Resolution Decree, art (24).

[118] Further support for that view in the context of the limited rights of appeal is provided when comparison is made with the de novo appeal rights available in the civil courts with a further appeal to the Court of Cassation. That distinction is to some extent mitigated by the judicial level at which cases before the BCDR are dealt with by designated Judges of the rank of the Court of Appeal. However, the limited grounds of appeal to the Court of Cassation from Section (1) decisions largely accord with the grounds for challenging an arbitral award under the UN CITRAL

Model Law on International Commercial Arbitration (Model Law).79

[119] I accept Dr Teece’s analysis that the similarities between the Decree and the Model Law are readily apparent. They contain similar language and provide similar grounds, although there are additional grounds to be found in the Decree relating to fraud, forgery, false testimony, the withholding of critical evidence by a party, and res judicata. Arguably, as submitted by Dr Teece, such grounds come within the public policy limb of the Model Law.

[120] The grounds provided in the Decree only provide the Court of Cassation with a power to nullify the decision rather than to come to its own conclusion as to the merits, or to reverse the award. That limited jurisdiction tends to reinforce the similarities of the process of appeal or challenge provided by the Decree from its Section (1) decisions with the limited grounds upon which arbitral awards can be challenged. However, as a final observation, I note the New York Supreme Court in the Standard Chartered Case did not consider the absence of a full right of appeal

offended against “due process”.80

Other features

[121] Various other aspects of the BCDR’s processes and procedures were identified by each party as favouring their argument that the BCDR’s Section (1) jurisdiction was either consistent with an arbitral tribunal or that of a court. Dr Teece

pointed to the parties being able to agree in advance of the hearing what law should



79 Model Law on International Commercial Arbitration of the United Nations Commission on

International Trade Law GA Res 40/72, A/RES/40/72 (1985), art 34.

80 Standard Chartered Bank v Ahmad Al Gosaibi and Bros Co, above n 51.

govern the dispute unless the chosen law is contrary to Bahrain’s public order.81

While parties may contractually agree on a particular law to be applied, the BCDR does not deal only with contractual claims, with its jurisdiction extending to international disputes encompassing “contractual or non-contractual” matters.82

Dr Teece submitted that it would be highly unusual for a domestic court (for example, when dealing with a tortious claim) to apply the law of a different jurisdiction.

[122] In accordance with private international law principles, a court’s procedure will be governed by its own domestic laws and rules but parties to ordinary civil proceedings are entitled to insist the applicable law which they agreed to govern their contractual relationship be applied. That will be the position whether the dispute is before the BCDR or Bahrain’s ordinary civil Courts. I accept the extension of agreement as to the choice of applicable law to non-contractual cases appears to suggest a level of party autonomy consistent with an arbitral process, however, it is not clear whether any inference can be safely drawn from that.

[123] Firstly, it remains unclear whether choice of law agreements made by parties cannot apply to non-contractual issues in ordinary Bahraini Courts or, indeed, in common law jurisdictions should, unlikely as it would appear, parties agree (for example, for the purpose of international trademarks or copyright disputes) the applicable law to be applied by the domestic Court. Secondly, whether it was envisaged the choice of law article contained in the Decree would ever have application to a non-contractual dispute is moot. Because of the specialised commercial nature of the disputes within its jurisdiction it would be rare for the BCDR to have to deal with a non-contractual dispute; prospective parties are likely to have a multinational profile and the applicable law which may be in dispute may possibly be agreed. Further, the BCDR’s Section (1) jurisdiction has application to domestic commercial disputes between financial institutions licensed in Bahrain in

addition to international commercial disputes.




81 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (11); Bahrain Chamber for

Dispute Resolution Rules, above n 7, art (38).

82 Bahrain Chamber for Dispute Resolution Decree, above n 6, art (9).

[124] This apparent flexibility as to choice of law to be applied, as with the choice of language and the ability by agreement for each party to have a role in the appointment of a tribunal member, are all indicia which underline the unique nature of the BCDR’s Section (1) process. Dr Teece submitted they, together with other elements considered in this judgment, support the arbitral character of the tribunal. However, KFH pointed to other traits of the Section (1) tribunal which are inconsistent with such a classification and favour the contrary conclusion that it is a court.

[125] A tribunal exercising Section (1) jurisdiction, like a court, sits in public and must deliver its judgment in public.83 By contrast, a feature of arbitration is its confidentiality. A tribunal exercising its Section (1) jurisdiction also possesses powers that are unavailable to an arbitral tribunal. It may join parties to a proceeding to answer a claim for contributions or to produce documents,84 and has the power to deal with cases involving multiple parties, including the authority to allow non-parties to intervene.85 The tribunal has the power to fine witnesses who fail to appear or to take an oath.86 These examples of procedural powers are inconsistent with those ordinarily available to an arbitral body which is dependent on a parties’ agreement to submit to the arbitral process. An arbitral tribunal does not

have jurisdiction beyond that consensus.

Conclusion

[126] I have concluded the BCDR in the exercise of its Section (1) jurisdiction is a court for the purposes of enforcement in New Zealand. I have reached that conclusion because I consider the BCDR in the exercise of its Section (1) jurisdiction forms part of the judicial system of the Kingdom of Bahrain, and as such is a component of that State’s legal system, exercising an independent and recognisably separate function of government.

[127] The amended Decree has resulted in a “hybrid” forum which has many of the

traits and features of an arbitral process, as I consider was likely originally intended.

83 Bahrain Chamber for Dispute Resolution Rules, above n 7, art (79).

84 Article (70).

85 Article (68).

86 Article (121).

However, the substantive role and function of the BCDR’s exclusive and mandatory domestic Section (1) jurisdiction, whereby parties are required as a matter of law to submit themselves to the decision making of a panel comprising a majority of the Kingdom’s Judges leads me to conclude that it forms part of the state judicial system of Bahrain and is therefore required to be recognised as a Court for the purpose of the enforcement of its awards in this country.

[128] In my judgment the following considerations support this conclusion:

(a) The BCDR in the exercise of its Section (1) jurisdiction was established by statute, namely by a formal decree of the Kingdom of Bahrain. The Section (1) jurisdiction of the BCDR is exercised by a tribunal which must comprise of a majority of Judges appointed by the state. This foreign tribunal is therefore a product of Bahrain’s sovereign authority which derives its adjudicatory authority from the Bahraini Kingdom to exercise the power of the state.

(b) The public function of the Section (1) tribunal. The BCDR has a compulsory and exclusive jurisdiction within Bahrain’s legal system to determine all prescribed commercial disputes that fall within its Section (1) jurisdiction. The creation of that jurisdiction is the manifestation of state sovereignty and is not derived from the parties’ consent. It is exercised by Judges with the oversight of Bahrain’s Supreme Judicial Council.

(c) The decisions of the Section (1) tribunal are self-executing or self- enforcing. The process to be followed for the execution or enforcement of one of its decisions is the same as for all Bahraini civil courts. As such, the decision of the Section (1) tribunal carries the force of a judgment capable of immediate enforcement, which is to be contrasted with that of an arbitral award. I do not consider, taken at its highest on Dr Teece’s argument, that the express deeming of an award to be a final judgment issued by the courts of Bahrain substantially detracts from my conclusions regarding the role and

function of the BCDR in the exercise of its Section (1) jurisdiction. It is the only part of the state’s legal system able to issue a final judgment in that category of case for which the BCDR has exclusive jurisdiction.

(d) The Constitutional Court held the BCDR, as originally constituted, for the purpose of exercising its Section (1) jurisdiction, to be unconstitutional. The apparent intentions of the architects of the BCDR to impose arbitration as a mandatory process denied litigants access to the state’s judicial system and was therefore unconstitutional. It was necessary to invest the BCDR in the exercise of its compulsory Section (1) jurisdiction with the same protections and guarantees provided by the state’s judicial system. This could only be achieved by a tribunal comprised of Judges appointed by the state. By so doing the fundamental hallmarks of the state’s judicial system were transplanted to the BCDR’s Section (1) jurisdiction. For that category of case which the Bahraini state legislated would be the BCDR’s exclusive jurisdiction, the substantive effect of that judicial requirement was to render the BCDR in the exercise of its Section (1) jurisdiction a component part of the state’s legal system. As a result, the BCDR in the exercise of that jurisdiction exercises a “judicial jurisdiction”, and functionally carries out the role of a court.

(e) I do not consider the structure of the BCDR or its procedures as provided by the Decree and the Bylaws, while clearly different from those of a New Zealand court and arguably of a type which may be associated with that of an arbitral body, prevent a Section (1) tribunal from being recognised as a court for the purpose of enforcement in this country. On its face, the process provided is recognisable as a judicial one involving the application of law to the facts after providing the parties the opportunity to participate. Whether that has actually occurred in the instance of Dr Teece’s case remains to be established, but, for the purpose of the preliminary question, the procedure and processes of the BCDR appear sufficient.

[129] Therefore, I answer the preliminary question in the affirmative. The BCDR is a court for the purpose of enforcing the award made against Dr Teece in New Zealand.





Solicitors:

Anthony Harper, Christchurch

MDS Law, Christchurch

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