Management Report. Auditor s Report

Transcription

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2 Management Report Auditor s Report About Centre s Operations and Activities in 2012

3 Our Leaders

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5 Contents Chapter One Vision, Mission, Values and Strategy 7 Chairman s Massage 8 Secretary General s Massage 9 Chapter Two Management Report 10 Chapter Three Auditors Report 22

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7 7 Vision: The Centre seeks to become a leading regional and international forum for the settlement of commercial disputes. Mission To enhance the role of arbitration as an alternative for settlement of commercial disputes. Values Complete neutrality, integrity in the supervision of arbitration proceedings and ensuring that absolute justice is served in all awards. Strategy To be the Centre of choice for the GCC citizens for settlement of their commercial disputes and for the resolutions of issues between them and others through its competitive advantage of a fixed and mandatory period of time and final nature of its awards and their enforcement in the GCC states. To be the sole Centre for GCC citizens in the hearing of disputes arising from the implementation of the GCC Economic Agreement and resolutions issued for its implementation. To enhance the reputation and pioneering position amongst regional and international dispute resolution centres and forums through active communication with a high level of professionalism in international conferences and meetings. To adopt modern management methods in the operation of the Arbitration Board s Secretariat through building up a sophisticated technological system for management of dispute files. To show appreciation of the arbitrators and experts on the Rolls of the Centre by nominating or appointing them as members of arbitration boards. To prepare and qualify a new generation of arbitrators, especially from the GCC citizens, through offering high quality training programmes.

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11 11 First: Board of Directors a) Board Meetings: The Constitution states that the Board of Directors shall convene a meeting at least once every six months or whenever the need arises. During 2012 the Board of Directors held three meetings during which it adopted a number of resolutions the most important of which are as follows: 1) Meeting (52) Governorate of Jeddah, Saudi Arabia, 14th February, 2012: --The Chairmanship was transferred from Mr. Saeed Ali Khamas, UAE representative to Advocate Yassin Khalid Khayat, Saudi Arabia s representative according o the provisions of Article (5) of the Constitution which provides as follows:.. Chairmanship of the Board of Directors shall be on a rotation basis according to the practice followed by the Gulf Co-operation Council. --Nomination of Mr. Khalid Ali Rashid AlAmeen, Kingdom of Bahrain s representative as Deputy Board Chairman. --Approval of the Annual report on the Centre s activities and operations during Approval of the financial report issued by the External Auditor for the 2011 accounts and approving his re-appointment for the financial year ) Meeting (53) City of Muscat, Sultanate of Oman, 25th September, 2012: --Preliminary approval of designating the Centre as Dar Al Karar and requesting the Secretary General to commission a professional entity for evaluation of this idea. --Need to follow up the letter addressed to HRH Prince Khalifa bin Salman Al Khalifa, Prime Minister of the Kingdom of Bahrain concerning the allotment of a plot of land as a gift for building permanent headquarters. 3) Meeting (54), Emirate of Dubai, United Arab Emirates, 6 th December, 2012: --Unanimous approval to the election of HH Prince Dr. Bandar bin Salman bin Mohamed Al Saud, Advisor to the Custodian of the Two Holy Mosques and President of the Saudi Arbitration Team to take up the post of Honorary Chairman and instructing the Secretary General to co-ordinate with His Royal Highness the Prince to submit such selection for approval and co-ordinating with the concerned authorities with respect to all the questions for celebrating this event. --Reviewing the opinion of the consulting firm and approving the designation of Dar Al Karar. --Approving the Operating Budget (Revenues and Expenditure) for the Financial Year 2013.

12 b) Award of Honorary Membership HH Prince Dr. Bandar bin Salman bin Mohamed Al Saud, Advisor to the Custodian of Chairman of the Supreme Council of the Judiciary, Saudi Arabia. Sultanate of Oman. Advocate Shaikha Haya bint Rashid Al Khalifa, Chairperson of the Bahrain Chamber for Advocate Dr. Hasan bin Isa Al Mulla, First Chairman of the Board of the GCC Commercial Mr. Ebrahim Mohamed Ali Zainal, Centre s Board member and Kingdom of Bahrain s State of Kuwait. Advocate Ali bin Khamis Al Alawi, Centre s Board member and Sultanate of Oman s Advocate Yousuf Zainalabedin Mohamed Zainal, First Secretary General of the GCC former Deputy Prime Minister of the Arab Republic of Egypt. Adviser Dr. Magdy Ibrahim Kassim, President of the Court of Appeal, Cairo, Executive Director of the Abu Dhabi International Arbitration Centre, Senior Advisor at the GCC Commercial Arbitration Centre c) Joint Forum (27) between the General Secretariat and Members of the Gulf Chambers of Commerce: The Forum was held at the GCC General Secretariat, in Riyadh, on Saturday 15th September, thanks to the Chairmen and members of the GCC Chambers of Commerce for their moral and number of disputes were registered in comparison with the previous years, enabling the Centre to become self reliant in He also thanked the GCC Chambers of Commerce and Industry, 5the Centre in the GCC member states. 12

13 13 Second: Centre s General Secretariat a) General Secretariat s Activities: The General Secretariat s activities were highly vigorous and professional in the administration of arbitration process, dissemination of legal and arbitration culture or attendance of international conferences and such activities that highlighted the achievements made, especially the following: 1) Established Principle of Not Challenging the Centre s Awards The principle which has been established by courts in the Kingdom of Bahrain (Court of Cassation on 12 March 2012) is that no challenge may be filed with any other competent judicial authority against the awards issued by the Arbitration panel handed down in accordance with the Centre s Constitution and Procedures Regulation. The lawmaker defines the role of the competent judicial authority, according to the law of the country where the execution is sought, to merely the issuance of an order for execution of the Centre s awards by placing the Execution Format on it. If any of the litigating parties applies for dismissal of such order on the basis of invalidation of the award for one of the reasons set forth in Article 36 of the Arbitration Regulation, its duty shall be limited to ascertaining the validity of such reason. If it is found to be valid, it shall only refuse to place the Execution Format on it and rule for non-execution. This principle gives the Centre s awards a legal effect and weight, of a binding and absolute nature. It should be noted that this principle which was established by the Bahrain Court of Cassation advocated by Counsellor-at-Law Magdey Ebrahim kassim about one year and a half before the Court of Cassation passed its ruling. At that time, this opinion was not familiar to the Gulf arbitration and legal circles, and it seemed odd or strange, inconceivable and farfetched. This, however did not change what is known about the legal expert who had this view, considering his long legal and arbitration expertise, both theoretical and practical, which was so rich and which accumulated over years until it became well established. Some of his experience came when he was President of the Court of Appeal. He also holds a doctorate degree from Sorbonne University in Paris, and his doctoral thesis was about annulment of arbitral awards. He was also a lecturer on arbitration at the Institute of Training and Judicial Studies (ITJS) in Abu Dhabi for ten consecutive years. After the Bahrain Court of Cassation upheld his opinion, the Centre commissioned him to prepare the academic and Fiqh (jurisprudence) documentation for this opinion to publish it in a special issue limited to this topic. This principle will undoubtedly make many companies and corporations incorporate the Centre s arbitration clause or the clause of arbitration by the Centre in their agreements. 2) Execution of the Centre s Awards: The Riyadh Administrative Court of Appeal (Grievance Court) established that the Centre s rulings are by their nature final judgements that are binding upon the parties to arbitration proceedings before it so long as awards are passed according to the arbitration procedures set forth in its Constitution. It also confirmed that the Centre s awards should not be challenged in any manner before any judicial authority belonging to any of the GCC member states. The Bahrain law courts do not have any jurisdiction to hear appeals of the awards of this Centre according to its Constitution.

14 14 3) Publication of Correction for the Arbitration Procedures Regulation: On 19th July, 2012 we wrote to the Legislation and Legal Opinion Commission in the Kingdom of Bahrain for correction of a mistake and publication of the Arbitration Procedures Regulation approved on 5th October, 1999 not as published previously (approved on 16th November 1994) upon the promulgation of Legislative Decree No.(6) of 2000, as publication in the Official Gazette a formal presumption of knowledge by the general public. The Legislation and Legal Opinion Commission acceded to our request by publishing an errata and re-publishing the corrected Arbitration Procedures Regulation approved in 1999 in Issue No.(3065) of the Official Gazette dated 16th August, ) Demand for Enforcement of the Centre s Awards on the Basis of its Legal Status: This plea relies upon two crucial points: - The Centre s Constitution published by the GCC Supreme Council is considered as one of the regional agreements that requires approval by a law which is above the ordinary national laws. - The Centre does not belong to the national legal system of any of the six GCC states and is not considered to belong to the Kingdom of Bahrain which is only the Centre s host country. An award must be enforced according to Article (15) of the Centre s Constitution not according to the Agreement with respect to Enforcement of Judgements, Legal Representation and Judicial Summonses in the GCC States. 5) International effect of the Centre s awards- Confirmation of Substantiation by Counsellor- at- Law Dr. Magdy Ebrahim Kassim, a Special Issue In a unique academic and Fiqh substantiation of a documented academic authority, documented by legal provisions, international agreements and comparative situations of different arbitral centres, panels and authorities worldwide, Dr. Magdy delved into the essence of things to read the hidden meaning and extract the authentic from the alien, deduce the presumption, infer evidence and conclude the result of a situation of the current and historical framework of the academic reality substantiating the Centre s awards. The Centre published in its journal a special issue for this substantiation, in which the following is outlined: The Centre s rules (Constitution and Procedures Regulation) are drawn from a sovereign source that rises above laws in force in the six GCC states, because they were issued by virtue of a resolution adopted by the GCC Supreme Council during its 14th session held in Riyadh on 22 December This gives a regional and international nature to the Centre and to its Procedures Regulation. It is permissible for a Party to the Arbitration process at the Centre to be a state or a corporate person, in accordance with the provision of Article 27/2 of the Economic Agreement between the GCC states signed on 31 December 2001, which repealed the agreement signed in November This agreement allows public authorities and organizations in the GCC states to seek arbitration through the GCC Arbitration Centre. Unlike other centres, the GCC Arbitration Centre deals with natural and corporate persons. In case of conflict between the jurisdiction of courts and that of arbitration, the arbitration panel s awards shall prevail, and not the awards passed by courts. This principle has been established in the French Law only recently.

15 15 The Centre s regulations or any of its procedures are not subject to control, whether by way of challenge or by instituting cases in the first place seeking to nullify them through any judicial authority in any of the GCC states or other states. The reason is that the arbitral award issued by the Centre has nothing to do with any national legal system of any of the GCC states or any other state. Enforcement of the award issued by the Centre in the GCC States can only be made by reference to its own provisions as an independent authority (including the Constitution and Procedures Regulation) because they were issued by the regional assembly represented in the resolution of the GCC Supreme Council, giving the Centre and its regulation an international capacity and nature. This provision states as follows: The award issued by the Centre, in accordance with its Constitution and Procedures Regulation is, at the end of the day, a final arbitral award that may not be challenge by any ordinary or extraordinary method. No proceedings may be filed in the first place to invalidate it in any country in the world. It is an award that has an absolute and permanent legal nature that may not be changed in any place. This gives the award an international effect, and in this way it has an absolute and paermanent legal certainty of an indefinite nature. 6) Use of the Name (Dar Al Karar) and Publication of a Marketing Leaflet: The Centre started gradually the marketing of its services under the name Dar Al Karar by the publication of a marketing leaflet showing clearly the legal status of the Centre as one of the entities created under the authority of the GCC Supreme Council and is considered as an arbitration entity that is not subject to the national legal system of any member state. Its rules have a supranational nature that is above the national laws of the six GCC states. The leaflet outlines the powers of the Centre and names of the companies and business firms that embrace the Centre s arbitration clause. The emphasis is on the final and binding nature of the Centre s rulings. The publication also contains quotations about the Centre written by prominent international figures. 7) Participation in the Elections of the General Secretariat of the Arab Federation of International Arbitration: On 24th April, 2012 the Centre received an invitation to participate in the elections of the General Secretariat of the Arab Federation of International Arbitration which were held on 26th May, 2012 at the offices of the Contractors Syndicate in Amman, Jordan, following the Centre s registration of its membership in the Federation on 23rd February, 2012 and becoming a corporate member ever since. A total of 29 candidates were nominated to take part in the elections. The Centre played a crucial role on the election day (26th May, 2012) by holding a meeting with the candidates from the GCC states and agreed to put forward 4 candidates to take part in the elections. So the Centre introduced a model example of agreement which others cannot easily match. The Centre co-ordinated with the AFIA Secretary General to maintain the office of the Deputy Secretary General which was won by Dr. Fahad Mohamed Zaid Al Rifai, of Saudi Arabia, with a majority vote.

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17 17 b) Arbitration Board s Secretariat: 1) Enhanced Professionalism towards Arbitration Centres and Boards: The Centre has been able to further enhance its professionalism in the administration of commercial disputes towards prominent arbitration figures. We recall Dr. Hamza Haddad, former Secretary General of the Arab Federation for International Arbitration who drew the attention of the Secretariat in charge of following up all the procedural aspects of the case heard by the Centre. The Centre was also praised by the advocate Dr. Mohamed Abdul Raouf, Director of the Cairo Regional Centre for International Commercial Arbitration who commended the Centre for the significant efforts made by the officials in charge of administering disputes. Favourable comments were also received from Dr. Okasha Abdul Aal, Dean of the Faculty of Law in Alexandria University, Professor Yehia Al Gamal, former Egyptian Deputy Premier and Counsellor-in-Law Dr. Magdi Ebrahim Kassim, Executive Director of the Abu Dhabi Centre for Commercial Conciliation & Arbitration and President of the Cairo Court of Appeal. Those prominent figures see the Centre as a success story based upon the pioneering efforts of its leadership, not only its administration, with its sense of initiative, discipline and oversight. 2) Issue of a Final Arbitration Award with Record Period of Time (40 days): At the hearing held on 1st March, 2012 the Arbitration Board reviewed dispute No.52/2011 and delivered an award that is considered the fastest ruling to be passed before the Centre s arbitration boards. The award was handed down within 40 days only from the date of reference of the dispute file to the Arbitration board.

18 18 3) Administration of Registered Arbitration Disputes: Table No.(1) Hearings held during 2012 Dispute No. Number of Hearings Total Number of Hearings 35 Table No.(2) Awards Delivered during 2012 in Chronological Order Dispute No. Type of Award Award Date 48 Final 25 th January Verdict for settlement of the dispute 08 th February, Final 01 st March, Final 01 st March, Final 19 th March Final 30 th April, Preliminary Award 21 st June, Final 01 st September, Final 06 th October, Final 28 th November, 2012 c) Arbitrators and Experts Roll: the Centre is keen on maintaining a list of the names of prominent figures such as arbitrators, lawyers, judges, legal practitioners, leaders of associations and bar societies who are reputed for their vast experience and extensive knowledge in the legal field or in the area of arbitration especially those who have engaged in free institutional arbitration and fulfil the conditions laid down in the Regulation of Registration in the Arbitrators and Experts Roll. Registrations and Renewals of Arbitrators and Experts during 2012: Registration of new arbitrators 107 Registration of new experts 10 Renewal of arbitrator's membership 3 Renewal of expert's membership 3

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20 20 d) Training Programmes and Events: For the promotion of arbitration culture and qualifying a new generation of arbitrators, the Centre introduced a programme for qualification and training of arbitrators consisting of five stages in the Kingdom of Bahrain and Saudi Arabia in co-operation with the Riyadh Chamber of Commerce and Industry and in the UAE in co-operation with the Judicial Training and Studies Institute. 1) Arbitration Events (Arbitrators Qualification and Training Programme) during 2012: Event Bahrain Saudi Arabia UAE Kuwait Basic Rules of Arbitration th May 2012 Arbitrator's Foundation and Expertise th January th February, th January th June 2012 Arbitration Case Procedures st February th March th February th June 2012 Drafting Arbitration Awards st May th April, th March th June 2012 Enforcement of Arbitration Awards th May, th April th May th June 2012

21 21 2) Other Events in 2012: Within the framework of joint co-operation for promotion of legal and arbitration awareness, the Centre held a number of legal forums in the UAE and Saudi Arabia in co-operation with the Saudi Chambers of Commerce represented by the National Committee for Lawyers and Advocates Committee at the Jeddah Chamber of Commerce and Industry and in the Sultanate of Oman in co-operation with the Oman Chamber of Commerce and Industry, Dhofar Branch. Event Venue Date Forum on the Art of Contract Drafting (Drafting, Implementation Mechanisms and Dispute Resolution) Forum on Bankruptcy and Restructuring and their Impact on Arbitration Dubai, UAE 1-4 th April 2012 Dubai, UAE th April 2012 I9th Forum of Advocates and Arbitrators in the GCC States hosted by the Saudi Chambers Council represented by the National Committee of Advocates in co-operation with the Advocates Committee at the Jeddah Chamber of Commerce. 17 th Salalah Annual Forum about Development of the Arbitration System in the GCC States Sultanate of Oman as an Example held in co-operation with the Oman Chamber of Commerce and Industry, Dhofar Governorate Jeddah, Saudi Arabia Salalah Sultanate of Oman th February, th August 2012

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23 23 GCC Commercial Arbitration Centre Contact and Management as at 31 st December 2012 Member States United Arab Emirates Kingdom of Bahrain Kingdom of Saudi Arabia Sultanate Oman State of Qatar State of Kuwait Board of Director Mr. Yaseen Khalid Khayyat - Chairman Mr. Khalad Ali Rashed AlAmeen - Vice Chairman Mr. A. Rahman A. Jaleel Al-Abdulghani - Member Mr. Khaled A. Almudahka - Member Mr. Saeed Ali Mohd Khammas - Member Mr. Red ha Juma Al Saleh - Member Secretary General Mr. Ahmed Najem Abdulla Al Najem Head Office Building No. 8, Road 60, Block 360 Zinj Manama P.O. Box: Adliya Kingdom of Bahrain Banks Auditors National Bank of Bahrain Kuwait Finance House BDO 17 th Floor Diplomat Trade Office Tower P.O. Box: 787 Manama Kingdom of Bahrain

24 24 Auditors Report to the Chairman and Members of the Board of Directors of GCC Commercial Arbitration Centre Report about the Financial Statements We have audited the accompanying financial statements of GCC Commercial Arbitration Centre ( Centre ), which comprise the Financial Position Statement as at 31 st December 2012, Comprehensive Income Statement, Statement of Changes in Accumulated Surplus and Cash Flow for the Year then ended, and Notes to the Financial Statements and a summary of the significant accounting policies and other notes. Responsibility of the Directors for the Financial Statements The Centre s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting standards. This responsibility includes maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatements, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Auditing Standards. Those standards required that we comply with the relevant ethical requirements and plan and perform that audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements, the procedures selected depending on our judgment, including the assessment of the risks of material misstatements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Centre s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate to the circumstances, but not for purpose of expressing an opinion on the effectiveness of the Centre s internal control. An audit also includes evaluating the appropriateness of accounting principles used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all materials respects, the financial position of the Centre as at 31 st December 2012 and of its financial performance, its cash flow for the year then ended in accordance with the International Standards for Financial Reporting standards. Manama, Kingdom of Bahrain 06 th February 2013

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26 26 GCC Commercial Arbitration Centre Comprehensive Income Statement for the year ended as at 31 st December 2012 (Amounts in BD) Notes Revenues Arbitration revenues , ,358 Course and Conference revenues , ,775 Member s registration fees 12 40,900 40,650 Other Revenues 13 19,674 36, , ,815 Expenses Staff Costs (163,368) (139,169) Course and Conference expenses 14 (100,712) (66,824) General and Overheads (78,858) (40,745) Depreciation 5 (13,884) (9,714) (356,822) (256,452) Total comprehensive income for the year transferred to the accumulated surplus 278, ,363

27 27 GCC Commercial Arbitration Centre Statement of Changes in Accumulated Surplus for the year ended as at 31 st December 2012 (Amounts in BD) Accumulated General Surplus Reserve Total As at 31 st December , ,581 Net comprehensive income for , ,363 Transferred to general reserve (111,836) 111,836 - As at 31 st December , , ,944 Net comprehensive income , ,183 Transferred to general reserve (27,818) 27,818 - As at 31 st December , , ,127

28 28 GCC Commercial Arbitration Centre Cash Flow Statement for the year ended 31 st December 2012 (Amounts in BD) Notes Operating Activities Total comprehensive income for the year 278, ,363 Adjustments: Depreciation 5 13,884 9,714 (Gains)/ Losses from sale of furniture and equipment 13 - (8,433) Bank interests 13 (17,773) (24,630) Change in operating assets and liabilities: Receivables and others (7,208) 18,385 Other payables (175,818) 182,212 Staff End of Service Benefits Cash flows from operating activities 91, ,850 Investment Activities Purchase of furniture and equipment 5 (5,443) (45,692) Movement in fixed deposits 613,024 (372,116) Earnings from sale of furniture and equipment - 8,433 Bank interests received 13 17,773 24,630 Net cash flow used in investment activities 625,354 (384,745) Net deficit in cash and cash equivalents 717,285 (88,895) Cash and cash equivalents as at the beginning of the year 8 160, ,198 Cash and cash equivalents as at the end of the year 8 877, ,303

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