The Bahraini Supreme Court on Choice of Court Agreements, Bases of Jurisdiction and… Forum non Conveniens!

I. Introduction:

In a earlier put up on this weblog, I reported a call rendered by the Bahrain Excessive Courtroom during which the courtroom refused to implement a selection of courtroom settlement in favour of English courts. The refusal was primarily based on the grounds that the case was introduced in opposition to a Bahraini defendant and that guidelines of worldwide jurisdiction are obligatory. The Bahraini Supreme Courtroom’s choice reported here’s a subsequent growth on the identical case. The ruling is critical for a lot of causes. In a methodical method, the Supreme Courtroom recognized the foundational justifications for the jurisdictional guidelines utilized in Bahrain. Furthermore, it clarified the function and impact of selection of courtroom agreements, significantly their derogative impact. Lastly, and by some means surprisingly, the Courtroom supported its place by invoking to “the doctrine of discussion board non conveniens”, explicitly talked about in its choice.

The choice is especially noteworthy, because it positively highlights the openness of Bahraini judges to adopting new authorized doctrines beforehand unfamiliar throughout the nation’s authorized framework. This openness possible alerts an growing acceptance of such jurisdictional adjustment mechanisms in authorized programs outdoors the normal widespread legislation or blended jurisdictions. Nonetheless, the choice additionally negatively highlights the challenges of importing overseas doctrines, significantly when such doctrines are utilized in contexts the place they don’t seem to be absolutely built-in or correctly understood. These challenges are additional exacerbated when the reliance on the overseas authorized doctrine seems to be pushed by judicial comfort somewhat than a real dedication to the rules underlying the imported authorized doctrine.

II. Information

The details of the case have been beforehand reported (see right here) and needn’t to be repeated. It suffices to recall that the dispute concerned a breach of a pharmaceutical distribution gross sales agreements between an English firm (the plaintiff) and a Bahraini firm (the defendant). Counting on the selection of courtroom settlement included within the contract, the defendant challenged the jurisdiction of Bahraini courtroom.

The courtroom of first occasion rejected the problem on the bottom that the jurisdiction of Bahraini courts was justified by the “Bahraini nationality” of the defendant, and the obligatory nature of the Bahraini guidelines of worldwide jurisdiction (see the abstract of the case right here).

On enchantment, the Courtroom of Enchantment overturned the preliminary ruling on the grounds that Bahraini courts lacked jurisdiction.

Dissatisfied, the English firm appealed to the Supreme Courtroom, arguing that, because the defendant was a Bahraini firm registered in Bahrain, jurisdiction couldn’t be derogated by settlement because of the public coverage nature of the Bahraini jurisdictional guidelines.

III.  The Ruling

In its choice rendered within the Enchantment No. 5/00071/2024/27 of 19 August 2024, the Bahraini Supreme Courtroom admitted the enchantment and overturned the appealed choice holding as follows:

“Worldwide jurisdiction of Bahraini courts, as regulated within the Civil and Business Process Act [CCCA] (The Legislative Decree No. 12/1971, Articles 14 to twenty) and its amendments, is predicated on two basic rules: the precept of comfort (al-mula’amah) and the precept of social gathering autonomy (‘iradat al-khusum).

In regards to the precept of comfort, Article 14 of the CCCA states that Bahraini courts have jurisdiction over circumstances filed in opposition to non-Bahraini [defendants] who’ve domicile or residence in Bahrain, apart from in rem actions regarding immovable properties situated overseas. It’s because it’s extra acceptable (li-mula’amati) for the courts the place the immovable is situated to listen to the case. Equally, Article 15(2) of the CCCA stipulates that Bahraini courts have jurisdiction over actions involving property situated in Bahrain, obligations originated, carried out or ought to have been carried out in Bahrain, or bankruptcies opened in Bahrain. This implies a contrario that, beneath the precept of comfort (mabda’ al-mula’amah), the [said] provision excludes [from the jurisdiction of the Bahraini courts] circumstances the place the property is situated outdoors Bahrain, or the place the obligations originated in and carried out overseas, or was originated and will have been carried out overseas, or issues a chapter opened overseas until the case includes a cross-border chapter as ruled by Legislation No. 22 of 2018 on Restructuring and Chapter.

Relating to the precept of social gathering autonomy (mabda’ ‘iradat al-khusum), Article 17 of CCCA permits Bahraini courts to adjudicate circumstances, even when they don’t fall inside their jurisdiction, if the events explicitly or implicitly settle for their authority. Whereas the legislation acknowledges the events’ freedom (iradat) to submit (qubul) the jurisdiction of Bahraini courts to listen to circumstances that in any other case don’t fall beneath their jurisdiction, the legislator didn’t make clear the derogative impact of choice-of-court agreements when the events comply with exclude the jurisdiction of Bahraini in favor of a overseas courtroom, regardless of the Bahraini courts having jurisdiction over the case. As well as, the legislator stays silent on the principles for worldwide jurisdiction in circumstances introduced in opposition to Bahraini nationals. Nonetheless, this can’t be interpreted as a refusal by the legislator [of the said rules] nor as an insistence on the jurisdiction of Bahraini courtroom. In truth, the legislature has beforehand embraced the precept in accordance with which Bahraini courts would decline jurisdiction over circumstances that in any other case fall beneath their jurisdiction when events comply with arbitration, whether or not in Bahrain or overseas.

Primarily based on the foregoing, nothing in precept prevents the events from agreeing on the jurisdiction of a [foreign court]. Nonetheless, if, one of many events nonetheless brings the case earlier than Bahraini courts regardless of such an settlement, the problem extends past merely honoring the settlement to a broader problem dependent solely on how Bahraini courts assess their very own jurisdiction. On this case, the events’ settlement [relied upon] earlier than the Bahraini courts turns into only one issue that the courtroom shall contemplate when deciding whether or not or to not decline jurisdiction. The courtroom, on this context, should study whether or not there are grounds to say no jurisdiction in favor of a extra acceptable overseas [court] within the curiosity of justice, and the courtroom shall resolve accordingly when the stated grounds are verified. This precept is called “The Doctrine of Discussion board Non Conveniens” (al-mahkamat al-mula’amat).[1] Subsequently, if all of the circumstances obligatory for contemplating the taking of jurisdiction by a overseas courtroom and the rendering justice is extra acceptable (al-‘akthar mula’amah) are met, Bahraini courts ought to decline jurisdiction. In any other case, the final rules shall apply, i.e. that the taking of jurisdiction shall be upheld, and the courts will proceed with listening to the case.

Accordingly, the Bahraini courts’ acceptance to say no jurisdiction in favor of a overseas courtroom, primarily based on the events’ settlement and in step with the precept of social gathering autonomy, presupposes that [doing so] would result in the conclusion of the precept of comfort (mabda’ al-mula’amah). [This would be the case when] (1) the dispute shall have a world character; (2) there’s a extra acceptable discussion board to take care of the dispute [in the sense that] (a) the validity of the selection of courtroom settlement conferring jurisdiction is acknowledged beneath the overseas legislation of the chosen discussion board; (b) proof will be collected simply; (c) a real connection exists with the state of the chosen discussion board; and (d) the judgments rendered by the courts of the chosen discussion board will be enforced therein with ease.[2]

Moreover, for the reason that jurisdiction of Bahraini courts is predicated on the consideration that the adjudicatory jurisdiction (al-qadha’) is likely one of the manifestations of the State’s sovereignty over its territory and that the train of this jurisdiction extends to the farthest attain of this sovereignty, it’s incumbent [upon the courts] to make sure that declining jurisdiction by Bahraini courts doesn’t infringe upon nationwide sovereignty or public coverage in Bahrain. The Evaluation of whether or not all of the abovementioned circumstances are happy falls throughout the discretion of the courts of deserves (mahkamat al-mawdhu’), topic to the management of the Supreme Courtroom.

Given the above, and primarily based on the details of the case […..], the appellant—an English firm—entered into an settlement of distribution and sale in Bahrain for pharmaceutical merchandise [……], supplying the appellee—a Bahraini firm—with stated merchandise. Seven invoices have been issued for the entire quantity claimed; but the appellee refused to make cost. [Considering that] Bahrain is essentially the most acceptable discussion board for the administration of justice on this case – given the details that appellee’s domicile and its place of work, in addition to the place of efficiency of the duty are situated in Bahrain – the events’ settlement to submit disputes arising from the contract in query to the jurisdiction of the English courts and to use English legislation doesn’t alter this conclusion. It’s [therefore] not permissible to argue right here in favor of prioritizing social gathering autonomy to justify declining jurisdiction, as social gathering autonomy alone isn’t enough to ascertain jurisdiction with out the success of the opposite circumstances required by the precept of discussion board non conveniens (mabda’ mahkamat al-mula’amah).

Contemplating that the courtroom of the appealed choice [unjustifiably] declined to listen to the case on the grounds that it lacked jurisdiction, it violated the legislation and erred in its software. Subsequently, its choice shall be overturned.

IV. Feedback

Though the result of the case (i.e. the non-enforcement of a derogative choice-of-court settlement) could be by some means predictable given the follow of Bahraini courts as famous within the earlier touch upon the identical case, the reasoning and justifications supplied by the Supreme Courtroom are – in lots of respects – shocking, and even … puzzling.

A complete overview of the courtroom’s ruling and its broader theoretical and sensible context requires detailed (and prolonged) analyses, which might not be appropriate for a weblog observe format. For that reason, solely a short remark can be supplied right here with out delving an excessive amount of into particulars.

1. Worldwide Jurisdiction and its Basis in Bahrain

In line with the Supreme Courtroom, the worldwide jurisdiction of Bahraini courts is grounded in two basic rules: comfort (al-mula’amah) and social gathering autonomy (‘iradat al-khusum).

Comfort (al-mula’amah), as indicated within the choice, is known when it comes to “proximity”, i.e. the connection between the dispute and Bahrain. This connection is crucial for correct administration of justice, and effectivity of imposing judgments. Concerns of “comfort” are mirrored within the Bahraini guidelines of worldwide jurisdiction as set out within the CCCA. Subsequently, when the jurisdiction of Bahraini courts is justified primarily based on these guidelines, the dispute will be heard in Bahrain; in any other case, the courts ought to dismiss the case for lack of jurisdiction.

Nonetheless, Bahraini courts, though initially incompetent, can nonetheless assume jurisdiction primarily based on social gathering autonomy (‘iradat al-khusum). Right here, the events’ settlement – whether or not specific or tacit – to undergo the authority of Bahraini courts establishes their jurisdiction.

At this stage of the choice, it’s shocking that the Courtroom didn’t embody the Bahraini nationality of the events as an extra floor for the jurisdiction of Bahraini Courtroom. Whereas the Supreme Courtroom rightly identified that the Bahraini regulation of worldwide jurisdiction doesn’t regulate dispute introduced in opposition to Bahraini nationwide, and that, in contrast to many codifications within the MENA area, nationality of the defendant isn’t explicitly used as a common floor for worldwide jurisdiction, this doesn’t suggest that nationality has no function to play in Bahrain. In truth, as defined within the earlier put up on the identical case, Bahraini courts have often assumed jurisdiction on the premise of the Bahraini nationality of the events and have constantly affirmed that “individuals holding Bahraini nationality are topic to the jurisdiction of Bahraini courts as a manifestation of the state’s sovereignty over its residents”. Furthermore, Article 16(6) of the CCCA permits for jurisdiction to be taken primarily based on the nationality of the plaintiff in private standing issues, significantly when Bahraini legislation is relevant to the dispute.

Moreover, one may query the inclusion of varied elements, such because the reference to Bahrain, administration of justice and effectivity, beneath the broad and considerably obscure label of “comfort”. In a (extra summary) sense, any rule of worldwide jurisdiction will be justified by issues of “comfort”. In any occasion, it price mentioning right here that trendy literature affords a large number of justifications for various guidelines of worldwide jurisdiction, considering numerous pursuits at stake, theories of jurisdictions, paradigms, and approaches (for an in depth account, see Ralf Michaels, “Jurisdiction, Foundations” in J. Basedow et al. (eds.) Elgar Encyclopaedia of Non-public worldwide Legislation – Vol. 1 (Edward Elgar, 2017) 1042).

2. The Sudden Reference to Discussion board Non Conveniens

As soon as the Courtroom recognized the foundational bases of the Bahraini courts’ jurisdiction, it engaged in a considerably complicated dialogue concerning the circumstances beneath which it would decline jurisdiction.

You will need to recall that the authorized query earlier than the courtroom pertains to the impact of a choice-of-court settlement in favor of a overseas courtroom. In different phrases, the problem at hand is whether or not such settlement can exert its derogative impact, permitting Bahraini courts to chorus from exercising jurisdiction.

Historically, Bahraini courts have addressed comparable points by asserting that the principles of worldwide jurisdiction in Bahrain are obligatory and can’t be derogated from by settlement (as famous within the earlier touch upon the identical case right here). Nonetheless, on this occasion, the Courtroom veered off in its evaluation. Certainly, the Courtroom (unexpectedly) shifted from the easy problem of admissibility of the derogative impact of choice-of-court agreements to the broader query of whether or not to say no jurisdiction, in the end resulting in a dialogue of……discussion board non conveniens!

The Courtroom’s strategy leaves an unsettling impression. It’s because the bottom of enchantment was not framed when it comes to discussion board non conveniens. Certainly, the appellant didn’t argue that the choice-of-court settlement shouldn’t be enforced as a result of the chosen courtroom was inappropriate or as a result of Bahraini courts have been discussion board conveniens. As a substitute, the appellant merely referred to the obligatory nature of the jurisdictional guidelines in Bahrain, which can’t be derogated from by settlement, regardless of any consideration concerning which courtroom is clearly extra acceptable to listen to the case.

This impression is additional strengthened by the style with which the Courtroom addressed the problem it raised itself. Certainly, after setting out the check for declining jurisdiction on the premise of discussion board non conveniens (however, in actual fact, primarily concern extra the circumstances for the validity of a choice-of-court settlement), the Courtroom failed to look at and apply the exact same checks it established. As a substitute, the Courtroom concluded that Bahraini courts have been discussion board conveniens just because they’d jurisdiction on the grounds that the defendant was a Bahraini firm registered in Bahrain, had its domicile (principal place of work) there, and that Bahrain was the place of efficiency of the sale and distribution obligations.

Nonetheless, upon a better examination on the reality of the case, one can hardly agree with the Courtroom’s strategy. Quite the opposite, all of the reported details point out that the necessities set forth by the Courtroom have been met: (1) the worldwide nature of the dispute is past any doubt; (2) English courts are clearly acceptable to listen to the case as (a) the choice-of-court settlement in favor to English courtroom is undoubtedly legitimate beneath English legislation; (b) it’s unlikely that the case would elevate any issues concerning the gathering of proof (since one of many events is an English firm, one can count on that components of the proof concerning the transaction, cost, invoices and so forth. can be in English, and to be present in England); (c) there is no such thing as a doubt in regards to the real reference to England, as one of many plaintiff is an English firm established in England, and components of the transactions are linked with England. Additionally, it’s unclear how a choice-of-court settlement on this case would violate the sovereignty of Bahrain, as there’s nothing within the case to recommend any public coverage issues.

The one potential problem may pertain to the enforceability of the longer term judgment in England (level (d) above) as there’s a chance that the appellee might haven’t any belongings to fulfill the longer term judgment in England. This may clarify why the appellant determined to herald Bahrain in violation of the choice-of-court. Nonetheless, such concern will be mitigated by contemplating the chance of imposing the English judgment in Bahrain, as it could meet the Bahraini enforcement necessities (articles 16-18 of Legislation on Execution in Civil and Business Issues [Legislative Decree No22/2021]).

V. Concluding Remarks

This isn’t the one case during which challenges to choice-of-court agreements in favor of a overseas courtroom are framed when it comes to discussion board non conveniens in Bahrain (see e.g., the Bahrain Chamber of Dispute Decision, Case No. 09/2022 of 17 October 2022). Nonetheless, to my information, that is the primary Supreme Courtroom choice the place specific reference is made to “the doctrine of discussion board non conveniens” (with the phrases cited in English).

Within the case beneath dialogue, there’s a concern that the Courtroom appears to have conflated two associated but distinct issues: the ability of the courtroom to say no jurisdiction on the bottom of discussion board non conveniens, and the courtroom’s authority to say no jurisdiction on the premise of the events’ settlement to confer jurisdiction to a selected courtroom (cf., R. Fentiman, “Discussion board non conveniens” in Basedaw et al., op. cit. 799). On this regard, it’s true that in widespread legislation jurisdictions the doctrine of discussion board non conveniens is usually acknowledged as a legitimate protection in opposition to the enforcement of choice-of-court agreements (see J.J. Fawcett, “Normal Report” in J.J. Fawcett (ed.), Declining Jurisdiction in Non-public Worldwide Legislation (Oxford College Press, 1995) 54). Nonetheless, it additionally typically admitted that the respect of the events’ selection shouldn’t be simply disregarded, and courts ought to solely intervene in distinctive circumstances the place there’s a clear and compelling causes to take action (see, Fentiman, op. cit., 799). Such compelling causes, nonetheless, are clearly absent within the current case.

Furthermore, the way in which with which the Supreme Courtroom framed the problems of overseas non conveniens inevitably raises a number of intricate questions: would the doctrine apply with respect to the settlement’s prorogative impact conferring jurisdiction to Bahraini courts? Wouldn’t it function within the absence of any choice-of-court settlement? Can it’s raised within the context of parallel continuing (lis pendens)? Wouldn’t it function in household legislation disputes, and so forth.?

In my view, the solutions to such query are very more likely to be within the unfavorable. That is primarily as a result of Bahraini courts, together with the Supreme Courtroom, have historically and constantly regarded their jurisdiction as a matter of public coverage, given the emphasis they normally place on judicial jurisdiction as a manifestation of the sovereignty of the State which, when established, can’t be put aside or diminished. Such conception of worldwide jurisdiction leaves little room to discretionary evaluation by the courtroom to guage components of discussion board non conveniens, in the end main them to say no jurisdiction even when their jurisdiction is justified.

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[1] English phrases within the unique textual content. The Arabic equal will be higher translated as “discussion board conveniens” somewhat than “discussion board non conveniens”.

[2] Numbers and letters added.