Bahrain’s new statute on conflicts of law

With the recently enacted Law No. 6 of 2015, Bahrain has finally adopted a much-needed legal framework for the resolution of conflicts of law in civil and commercial matters involving a foreign element. The new Law introduces conflict rules relating to, inter alia, status and capacity of natural and juristic persons, ownership of immovable and movable property and contracts in general. It also outlines rules on certain special contractual types. The principle that the parties to an agreement are free to select the applicable law subject only to public order limitations, previously merely alluded to, is now enshrined in Articles 4 and 5 of the newly enacted legislation. Even more interestingly, the new Law regulates the mechanism for proving the applicable law by laying down rules that, while codifying existing practices, also introduce some important innovations. In particular, the mechanism for proving the foreign law provisions requires providing the court with the relevant transcripts, and failure to prove the foreign law would result in application of Bahrain law. This may create a dilemma when the foreign law belongs to legal systems admitting court precedents as a source of law. Article 6 establishes that, as additional evidence, the parties may provide judicial rulings and doctrinal opinions, which should mitigate the above mentioned concern insofar as a court might admit that, absent statutory law, the alternative sources of law (or doctrinal interpretations thereof) may control. Perhaps the most interesting innovation is a procedural rule whereby the court must determine the applicable law before addressing the subject matter of the dispute. This establishes the applicable law’s determination as a preliminary matter, thereby avoiding that the substantive ruling may issue concurrently with the court’s pronouncement on applicable law. It remains to be seen whether the court’s pronouncement may be the object of an interlocutory appeal.”

Commentary by ASAR – Al Ruwayeh & Partners