A new government-drafted law on arbitration by Bahrain's parliament is the latest in a series of positive indicators that show the growth in the popularity of arbitration as a means of resolving commercial disputes in the GCC, an expert has said.

According to London headquartered law firm Charles Russell Speechlys senior associate Gareth Mills, the announcement also reflects a growing and positive trend throughout the wider region, said a report in the Gulf Daily News (GDN), our sister publication.

"Of particular note is the fact that the Bahrain parliament, at the same time as approving the new Arbitration Law, also approved another government drafted law relating to 'commercial terms disputes involving foreign elements'," Mills said.

The precise terms of the new bills are yet to be formally released, but Justice, Islamic Affairs and Endowments Minister Shaikh Khalid bin Ali Al Khalifa was quoted in the national Press as affirming that, "the new bills will affect operations involving foreign companies and firms, who are now investing in Bahrain or have plans to invest in future... We will now follow international arbitration and allow foreign companies to have their own representation, something that will bring confidence to our judicial system of arbitration".

Mills believes that the move which not only encourages international arbitration, but also permits foreign parties to use "their own representation" in such disputes has obvious positive ramifications on encouraging commercial investment into Bahrain and is another sign of the approaches taken by the Bahrain government to encourage such investment.

He said while it is true that until relatively recently GCC states had been slow to recognise the benefits of formal arbitration as a resolution to international commercial disputes.

"There were a number of (well founded) historical reasons for the mistrust of the arbitration process, but as GCC governments, families and institutions become more global in their outlook and approach, a recognition has developed that legislative frameworks underpinning alternative dispute procedures are helpful for attracting inward investment and to developing and strengthening pan jurisdictional commercial relationships.

"Whilst all GCC states are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the willingness to amend or produce legislation to reflect a desire to enshrine arbitration in law is a relatively new approach," Mr Mills said.

"In that context the announcements by the kingdom that its parliament had approved a new government-drafted law on arbitration is significant." - TradeArabia News Service