Arbitration vs. Litigation: What’s Better for Construction Disputes in Bahrain?
In Bahrain’s construction sector, legal disputes are often complex, technical, and high stakes. From delays and variation claims to defects and payment issues, disagreements can arise between project owners, contractors, subcontractors, and consultants. When they do, parties are faced with a crucial decision: Should the matter be resolved through arbitration or litigation?
Each path has its own advantages, legal implications, and strategic considerations. In this blog, we explain the key differences between arbitration and litigation in Bahrain, and provide a general example to illustrate how the choice of dispute resolution method can affect outcomes in construction conflicts.
What Is Litigation?
Litigation is the process of resolving disputes through the public court system. In Bahrain, civil and commercial construction cases are typically handled by specialized commercial courts. The process is formal, governed by national procedural laws, and results in a binding court judgment.
Key features of litigation:
- Public hearings and court rulings
- Governed by Bahraini procedural and evidence law
- Right to appeal to higher courts
- Slower process but legally enforceable in all courts
What Is Arbitration?
Arbitration is a private, contractual method of resolving disputes outside the court system. It is often preferred in construction contracts, especially in large or international projects. Disputes are heard by an arbitrator (or panel) chosen by the parties, and the decision (award) is binding.
Key features of arbitration:
- Private and confidential
- Parties choose the arbitrator(s)
- Flexibility in procedure and language
- Limited appeal rights (in most cases)
- Often faster and more specialized than litigation
Bahrain has a supportive legal framework for arbitration, including the Bahrain Chamber for Dispute Resolution (BCDR-AAA) and adoption of the UNCITRAL Model Law on arbitration.
Why Arbitration Is Often Preferred in Construction Disputes
Construction cases typically involve technical matters such as project specifications, construction defects, delay analysis, and variation pricing. Arbitration allows parties to appoint industry experts as arbitrators, and to use flexible procedures that are better suited for technical evidence.
It also keeps disputes confidential, which is especially important for private developers, public contractors, and multinational firms concerned about reputation or future projects.
When Litigation May Be More Appropriate
While arbitration is often preferred, litigation may be better in some situations, such as:
- When urgent interim relief is needed (e.g., freezing assets)
- When one party refuses to cooperate with arbitration procedures
- In small-scale disputes where arbitration costs outweigh benefits
- When enforcement is expected to be straightforward within Bahrain
Example:
A contractor and a project owner disagreed over unpaid variation claims and project delays in a BD 3 million infrastructure project. The contract included an arbitration clause referring disputes to a regional arbitration center. The contractor initiated arbitration, believing it would be faster and more discreet.
During the process, both parties presented expert reports, schedules, and correspondence. The arbitrator an engineer with legal training issued a detailed award after four months, partially awarding the contractor’s claim and rejecting the delay penalties imposed by the project owner.
A lawyer advised on how to enforce the award through Bahrain’s High Civil Court. The dispute was resolved without a public court case, allowing both parties to move forward with future business.
This example shows how arbitration can offer speed, privacy, and technical clarity, especially in high-value construction disputes.
Comparing Arbitration and Litigation for Construction Disputes in Bahrain
Arbitration:
- Confidential and private
- Parties choose the arbitrator
- More flexible procedures
- Often faster for complex cases
- Better suited for technical construction matters
- Limited right of appeal
- Costs can be higher in low-value disputes
Litigation:
- Governed by Bahraini courts
- Public and transparent
- Right to appeal
- More cost-effective in minor disputes
- Slower and more rigid process
- Less technical specialization
What to Include in Your Contract
To protect your legal rights in case of a dispute, your construction contract should:
- Clearly state the preferred dispute resolution method
- Specify the arbitration institution and seat (e.g., BCDR in Bahrain)
- Define the language, number of arbitrators, and scope of arbitration
- Include rules for expert evidence, timeframes, and interim measures
Well-drafted clauses help avoid confusion and delays when a dispute arises.