05 Jun 2023

Court of Cassation Overturns Million-Dinar Ruling by BCDR in Significant Judgment

The Bahrain Court of Cassation has rendered a significant judgment, invalidating a ruling issued by the Bahrain Chamber for Dispute Resolution (BCDR) that obligated an international commercial company to pay a staggering sum of one million Bahraini dinars to a financial institution.

In response to this momentous decision, Saad Al Doseri, founder of Al Doseri Law and legal representative for the appellant, expressed his satisfaction with the Court of Cassation’s correct application of law and fairness in annulling the ruling against the client. Al Doseri emphasised that seeking the invalidation of a BCDR ruling is of a special nature, requiring specific grounds and direct submission to the Court of Cassation.

The case commenced when the appellant was surprised upon learning of the BCDR ruling, of which it had no prior knowledge. Accordingly, the client engaged the services of Al Doseri Law to ascertain the validity of this information.

Following an extensive investigation, it came to light that the client’s former director had granted a power of attorney to a legal representative, by using outdated authority documents. This enabled them to act as the client’s legal representative before the BCDR without the client’s knowledge. In light of this, Al Doseri developed a work plan.

Aligning with Al Doseri’s plan, the initial step involved filing a lawsuit with the High Administrative Court to invalidate the power of attorney issued by the former director, on the basis of his lack of authority. The High Administrative Court issued a ruling invalidating the power of attorney issued in the client’s name, thereby laying the foundation for the appeal against the BCDR ruling which had mandated the payment of one million dinars. The High Administrative Court referred to Articles 640 and 641 of the Civil Code, which establish that an agency is a contract wherein the principal appoints another person to act on his behalf in a legal matter. For the agency to be valid, the principal must be qualified to perform the delegated act. It was established that the former director, who had submitted his resignation, lacked the capacity to act in the name of the client.

Subsequently, a cassation was filed to nullify the ruling issued by the BCDR. The invalidation of the power of attorney constituted a decisive legal ground, in addition to the lack of due notification of the BCDR proceeding.

Al Doseri challenged the BCDR ruling in accordance with Article (13/a) of Decree-Law No. (30) of 2009, amended by Decree-Law No. (64) of 2014. This provision allows parties to appeal before the Court of Cassation by requesting the invalidation of a ruling when the appellant was not properly notified of the appointment of a dispute resolution tribunal or the procedures for dispute, or when the appellant was unable to present a defence.

In his appeal, Al Doseri asserted that the representation of the client in the BCDR proceeding and the attendance on its behalf were void and carried no legal weight. He emphasised that the fundamental reason for the annulment was the lack of confrontation, a cornerstone of the judicial system. The principle of confrontation has been long established in legal systems. “The client fell victim to fraud and moral forgery perpetrated by the former director through the issuance of an official power of attorney following his resignation”, Al Doseri stated.

Al Doseri further argued that the statutory period for appeal remains open despite the expiration of its statutory 45-day period, in accordance with the grounds mentioned above. Additionally, Al Doseri stated that “Dismissing this appeal would legitimise an invalid power of attorney and validate the legal consequences of illicit actions”.

The esteemed Court of Cassation has accepted the appeal in form and, consequently, has nullified the BCDR ruling, upholding the correct application of the law.

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