PRESS RELEASE 24.10.2017

Zu’bi & Partners, Attorneys & Legal Consultants (Z&P), Bahrain’s oldest established and leading law firm, and one of the region’s top tier law firms, has for the fourth consecutive year won the prestigious Law Firm of the Year 2017 award for the Kingdom of Bahrain. The award was presented to the firm at a grand ceremony organized at the Burj Al Arab in Dubai, UAE on 18 October 2017 by the International Financial Law Review (IFLR), the market-leading financial law publication for lawyers in financial institutions, corporates and private practice.

Z&P is consistently recognized and listed among the top tier law firms in the Kingdom of Bahrain by leading legal journals, directories and periodicals, and has received a number of significant accolades from other prominent finance and legal publications. In the recently released IFLR 1000 2018 rankings, the Firm is ranked as Top Tier Firm in Bahrain.

Senior Partner Qays H. Zu’bi, who attended the high-profile event with some members of his team, commented: “We take pride for being awarded such a distinguished award by IFLR for the fourth consecutive year. The award reflects the Firm’s perseverance and continued performance at the highest levels. This award goes a long way in acknowledging the complexity of the matters handled by the Firm, the excellent legal services which the Firm provides to its clients, as well as the everlasting dedication and expertise of our team of highly qualified lawyers. We look forward to building on our success next year and to expanding the range of services we provide in the region”.

Note to Editors:

Zu’bi & Partners, Attorneys & Legal Consultants is one of the longest established family law firm in the Middle East and the oldest law firm in Bahrain. It is regularly ranked as a top-tier legal services provider in Bahrain, Dubai and Jordan. The Firm provides legal services across all leading sectors including banking and finance, corporate, commercial, construction, real estate, to name just a few. It acts for both corporate clients and high net worth individuals in many diverse areas, including litigation and arbitration, property, labor, trade and family law. The breadth of expertise and success of the Firm has been widely recognized by independent legal commentators and publications and is reflected in its client base of leaders in their fields, including both private and public institutions, government and quasi-government bodies, as well as high net worth individuals.

Contact Mr Qays H. Zu’bi, Senior Partner on (Tel) +973 17 549 605 / email: qzubi@zubipartners.com / website: www.zubipartners.com

PRESS RELEASE 20.10.2016

Zu’bi & Partners Attorneys & Legal Consultants (Z&P), Bahrain’s oldest established and leading law firm, and one of the region’s top tier firms, has for the third time won the prestigious Law Firm of the Year 2016 Award for Bahrain presented by the International Financial Law Review (IFLR), the leading market guide for financial and corporate law firms worldwide at its awards ceremony held on 19 October 2016 at the Burj Al Arab in Dubai.

Z&P is consistently recognized and listed among the top law firms in the region by leading legal journals, directories and periodicals, such as Chambers Global, IFRL1000 and the Legal 500. The firm, listed by IFLR1000 as “Financial & Corporate Recommended Firm 2016 & 2017”, has also received a number of significant accolades from other prominent finance and legal publications.

Senior Partner Qays H. Zu’bi, who attended the high profile event last night, commented:  “We are absolutely delighted with our renewed success at the IFLR Middle East Awards, as we know these are highly competitive and an important benchmark of performance. This award goes a long way in acknowledging the excellent legal services which the firm provides to its clients, as well as the everlasting dedication and expertise of our team of highly qualified lawyers.  We look forward to building on our success next year and to expanding the range of services we provide in the region”.

Note to Editors:

Zu’bi & Partners is the oldest established local law firm in Bahrain and a top-tier legal services provider in Bahrain and the GCC.  The firm provides legal services across all leading sectors including banking and finance, corporate, commercial, construction, real estate, to name just a few.  It acts for both corporate clients and high net worth individuals in many diverse areas, including litigation and arbitration, property, labour, trade and family law.

The breadth of expertise and success of the Firm has been widely recognized by independent legal commentators and publications and is reflected in its client base of leaders in their fields, including both private and public institutions, government and quasi-government bodies, as well as high net worth individuals.

Contact Mr Qays H. Zu’bi, Senior Partner on (tel) +973 17 549 605 / email: qzubi@zubipartners.com / website: www.zubipartners.com

Interactive Map – Insurance Regulation in Bahrain
Contributors:
Rana Al Alawi
Holman Fenwick Willan Middle East LLP
http://www.hfw.com/insurance-GCC-map/

BAHRAIN

FACTS

Population 1.362 millionAL Rank (GDP) 17thGlobal Rank (GDP) 97th
GDP 2014 $33,87 billion
Economic Growth 2012 3.6%Economic Growth 2013 5.3%Economic Growth 2014 4.5%
Inflation (official) 2012 2.2%Inflation (official) 2013 1.5%Inflation (official) 2014 1.5%
Currency/Exchange Rate WWW.BLOOMBERG.COM/MARKETS/CURRENCIES

MANAGING CLAIMS

RESERVATION OF RIGHTS / WITHOUT PREJUDICE RULE The doctrines of reservation of rights or without prejudice correspondence do not exist under Bahraini law in the form or usage that they are used in England.  Under the Bahraini Civil Code, insurers are required to pay the insured amount within 30 days from the date on which the insured submits the necessary information and documents.  The parties can enter into non-disclosure or confidentiality agreements whereby information passed between them cannot be shown to third parties, although there must be a clear agreement to this effect and on the meaning of without prejudice correspondence, including a clear statement that the communication is not an admission of liability.

PRIVILEGE Under Bahraini law, there is no general doctrine of privilege (i.e. whether legal advice privilege or litigation privilege), although the impact of this is minimised by the absence of any obligation of disclosure (discussed below).  However, the laws governing lawyers’ conduct in Bahrain prohibit lawyers from disclosing confidential information provided by their clients without the client’s consent or other limited circumstances.

DISCLOSURE There is no formal doctrine of disclosure under Bahraini law, nor any general obligation on parties to litigation to disclose documents as that which applies under English law.  However, pursuant to the laws governing evidence, the court may order disclosure of documents on its own volition or following a request by a party if the documents are identified and productive to the matter.

INTEREST Bahraini Courts generally award interest at a rate of between 4% to 7% from the date of filing the action until final payment.

COSTS The general principle is that the losing party will be ordered to pay the court fees paid by the other party.  However, the losing party also be ordered to pay nominal legal fees of the other party in some circumstances.

MONETARY CORRECTION In the absence of an express contractual provision, monetary correction is not provided for under Bahraini law.

PUNITIVE DAMAGES Bahraini law does not expressly provide for punitive damages.

EXPECTED LENGTH OF CASE Generally, proceedings in the Court of First Instance will take 6-9 months, although more complex matters can take considerably longer than this as this may entail appointment of experts. In the instance of an appeal, the appealing party has 15, 30, or 60 days in order to submit an official appeal based on the nature of the case. Cases of a non-priority, non-specialized nature that occur in high frequency, such as motor claims, will stay pending for a few years due to their sheer volume and unimportance. Cases of a more specialized nature, such as banking and insurance claims, are dealt with sooner; however, most of these claims do not reach court-level as the agreements governing the parties of such claims contain arbitration clauses, whereby the parties submit to being mediated by a foreign arbitration chamber.  Most insurance companies try to settle any disputes with the client prior to escalation.

Once an appeal is lodged, there is no set time frame in which the Courts may adjudicate the case. This is dependent upon the number of pending cases awaiting final judgement. The Bahrain Chamber for Economic, Financial and Investment Dispute Resolution (“BCDR”) may also have jurisdiction over a matter or claim in the following two instances— if both parties have agreed to submit to such jurisdiction; or if the matter must be referred to the BCDR by law. In relation to the latter, a matter shall be referred to the BCDR if the claim value exceeds Bahraini Dinar Five Hundred Thousand and if the dispute involves a financial institution in Bahrain according to the Central Bank of Bahrain law, or an international commercial dispute. Awards under the BCDR may be challenged directly to the Court of Cassation, which may extend the case duration up to two years.

REINSURANCE LAW

FRONTING REQUIREMENTS At present, outright fronting is not permitted but is still commonly practiced.  We understand that local insurers are heavily reliant on foreign reinsurers, and that in practice, according to the CBB rulebook that governs such fronting arrangements, the insurer must “monitor its exposure, to an individual reinsurer and provide details of its reinsurance programme to the CBB. It must notify the CBB if its total aggregate exposure, on a premium basis, to one reinsurer (or group of related reinsurers, exceeds 25% of individual or aggregate risks and why it considers that this exposure does not pose a credit risk for which a provision should be made the risk.

The parties are free to choose the law applicable to the insurance / reinsurance contract and Bahraini Courts  will generally uphold a foreign governing law clause provided it does not offend public order, morality or core public policies in Bahrain.  The parties can also choose arbitration as the method of dispute resolution, however, under the Bahraini Civil Code, an arbitration clause must be “prominently highlighted” in block letters or larger font and signed by the parties.

LIMITATION Under the Bahraini Civil Code, claims arising out of a general insurance contract must be brought within 3 years from the occurrence of the incident from which the claim arose with the following exceptions:

  • In the case of non-disclosure or misrepresentation, the time limit is from the date the insurer becomes aware of the non-disclosure or misrepresentation.
  • In the case of an insured accident, from the date the concerned persons become aware of the occurrence.
  • In relation to liability insurance, from the date of filing of the action by the third party against the insured or the date on which the third party receives compensation from the insured.

In relation to contracts of marine insurance, claims must be brought within 2 years, although the date form which the limitation period runs depends on the nature of the claim.  Reinsurance contracts are likely to fall within these limitation periods if the reinsurance contract is governed by Bahraini law.

CONDITIONS, CONDITIONS PRECEDENT AND WARRANTIES Bahraini law does not expressly define “conditions”, “conditions precedent” and “warranties” as such.  However, there are certain formalities and other provisions regarding the interpretation of such clauses in an insurance contract of which the re/insurer should be aware.

To be valid and enforceable under Bahraini law, any “conditions relating to invalidity, forfeiture or arbitration” (which would therefore include conditions precedent to liability, warranties or exclusion clauses) must be “prominently highlighted” in block letters or larger font.  Under the Bahraini Civil Code:

  • Any clause in an insurance contract that seeks to entitle the insurer to avoid the contract of insurance / avoid the claim in relation to a breach which is not causative of the loss is potentially invalid. This definition covers warranties, exclusion clauses and conditions precedent.
  • In relation to notification clauses “stipulating the forfeiture of the insured’s right” (drafted as conditions precedent) in the event of a delay in notifying a claim or providing documents, such provisions will not be valid if there was an “acceptable excuse” for the delay.

NON-DISCLOSURE / MISREPRESENTATION The Bahraini Civil Code imposes an obligation on the insured to disclose “all circumstances of which he is aware and which are useful for the insurer to know to enable the latter to assess the risks assumed” and in particular, those matters which the insurer made the subject of specific written questions. For instance, in terms of medical insurance, the insurer may require a detailed medical history and from the requesting party in order to be evaluated adequately.   This duty applies at the time the insurance is procured.  Further, during the period of the policy, the insured is obliged to notify the insurer of any circumstances which result in increasing the risks insured.

An insurance policy is voidable by the insurer if “the insured remains silent in respect of a certain matter or submits an improper statement that is likely to change the issue of the risk or its significance is undermined in the insurer’s opinion“.  In terms of the insurer’s rights:

  • If the non-disclosure is discovered before the insured risk materialises, the insurer may avoid the policy after 10 days’ written notice (by registered post) unless the insured agrees to an increase of the premium reflecting the increased risk. If the policy is avoided, the insurer must refund the premium or that part of the premium in respect of which the insurer did not take a risk.
  • If the non-disclosure is discovered after the insured risk materialises, the insured amount is reduced in the same proportion as the premiums actually paid compared to the premiums which should have been paid had the risks been accurately disclosed by the insured. If such a non-disclosure is intentional, it warrants the cancellation of the contract.
  • Misrepresentation warrants the cancellation of the policy ab initio. Typically, an insurer chooses to reject a specific claim rather than terminate the full contract if the misrepresentation is not material.

FOLLOW THE FORTUNES / SETTLEMENTS Bahraini law does not regulate or define the concepts of “follow the fortunes” or “follow the settlement” clauses.  Therefore, it is necessary to rely on the reinsurance contract wording itself to determine the obligations of the parties and the consequences of any breach thereof. It is common for treaty reinsurance contracts to explicitly contain the aforementioned clauses. Exceptionally, the clauses are read into implicitly.   It is therefore very important for the parties to include very clear “follow the fortunes” or “follow the settlement” wording which explains the intention of the parties and the consequences of a settlement of a claim by the cedant.

CLAIMS CO-OPERATION / CLAIMS CONTROL There are no provisions under Bahraini law regarding claims cooperation or control. Therefore, the scope of the claims cooperation / control and the consequences of a breach of such a provision will need to be clearly provided for in the wording of the reinsurance contract, and may also be based on the scope of work of the insured company.

ROLE OF THE REINSURANCE BROKER (PRODUCING AND PLACING) There is no legal requirement under Bahraini law to conduct insurance / reinsurance business through an insurance broker.  Where an insurance broker is involved, insurance brokers in Bahrain must be authorised by the financial services regulator, the Central Bank of Bahrain.  Under Bahraini law, a broker is an independent intermediary who:

  • acts as agent for another person in relation to the buying of insurance for that other person;
  • makes arrangements with a view to another person, whether as principal or agent, buying insurance; or
  • advises on insurance.

Bahraini law does not distinguish between placing brokers and producing brokers.  Reinsurance brokers based in Bahrain shall be registered in accordance with the CBB Rulebook 3 and the CBB law, and must be duly licensed. Foreign reinsurance brokers are not directly regulated under Bahraini law, provided they do not carry on business activities in Bahrain (i.e. their business activities are conducted outside Bahrain).  Therefore generally, a foreign reinsurance broker’s functions and duties will be determined by the contractual arrangements between it and the reinsured, a producing broker and/or the reinsurer (as the case may be).

Lexis Nexis – February 2016

1. What are the key immigration requirements for those wanting to work long term in the jurisdiction?

Anyone wishing to live and legally work in Bahrain, except for Gulf Cooperation Council nationals, will need to apply for a work visa and residency permit with the Labour Market Regulatory Authority (LMRA).

The key requirements are as follows:

  • Visa Application Form submitted online to the LMRA
  • Employee’s passport copy
  • Employee’s Smartcard copy if available
  • Employee’s GCC residency copy if available
  • Employment contract copy.
  • Employee’s Pre-medical report from an authorised clinic
  • Fees: Vary as per period of validity of work visa (see below).

The form is completed online once the company has been registered with the LMRA and has established an LMRA account. This can be done by an appointed agent or the company/employer themselves.

The employee’s passport must be valid for at least 6 months and preferably valid for 2 years depending on the period of the work visa. If the employee is in Bahrain on a visit visa, a copy of the entry and extension page is required. If they have a cancelled visa, a copy of the visa cancellation and the page which shows the permitted period stay in Bahrain is also required.

The appointed agent or employer must provide the latest electricity bill, which should not be older than three months. The address on the bill should match the CR address.

A clear copy of the employee’s Smartcard copy if they have one.

A clear copy of the employment contract on government official paper or the employer’s letter head signed by both the employer and the employee and stamped with the company stamp. The contract must include the following information:

Name of the employer, the employer’s registered address and  commercial registration number, full name of the employee as per passport, passport number, nationality, date of birth, Smartcard number (if available), job title as per the LMRA designation list, monthly salary in BHD, duration of the contract, start date of employment and notice period. The employment contract should state that the offer is subject to the successful application of the work permit.

If the visa application is made while the employee is outside Bahrain at the time of the application, he/she must submit a clear copy of the employee’s pre-medical report from their home country or country of residence, issued by a center/clinic accredited by Bahrain’s Ministry of Health (available on the LMRA website), showing that he/she is fit to work. If there is no accredited center available to the employee, he/she may complete their pre-medical at a hospital/medical center of their choice in their home country/country of residence, pursuant to the Medical Checkup Requirement Form and required format.

Fees – employers can provide work visas to their expatriate employees for different periods of validity. The fees are:

  • 2 Year work visa BD 200.000 2 years, 12 or 6 months
  • 1 Year work visa BD 100.000 2 years, 12 or 6 months
  • 6 months temporary work visa BD 200.000 One time for 6 months only
  • Work visa renewal for 6 months BD 200.000
  • Work visa renewal for 1 year BD 100.000
  • Work visa renewal for 2 years BD 200.000

If the employee is on a visit visa, an additional fee of BD 60.000 will be charged towards the transfer fee.

The employer or the authorised agent shall submit the work visa application online to the LMRA. Work visas are issued by the LMRA in coordination with other government bodies such as the General Directorate of Nationality, Passports and Residence Affairs, the Ministry of Foreign Affairs, the Ministry of Health, and the Central Informatics Organisation.

2. What are the main permission categories for such workers – and what rights do these bring (including max/min periods of stay)?

The LMRA provides work visas, with the above specified durations and renewable periods, to expatriates giving them the legal right to work and reside in Bahrain. Depending on the specialization of the  expatriate, they may or may not require additional approval prior to being granted a work visa. Each work visa grants the right to the expatriate to work for one employer only per period of work  visa.

3. Is the position different for staff who have previously worked for you internationally – are there any minimum skill, academic qualification or wage requirements?

No, the position is not different for employees who have previously worked for you outside of Bahrain. The work visa application process remains the  same.

There may be specific requirements for skilled professionals and as such, the application process will take longer as additional approvals must be granted prior to the visa being issued. Academic qualifications, experience, and professional body memberships are all required to be submitted and will be verified prior to the approval being granted.

The law is silent on minimum wage requirements, however, the Minister of Labour expects that any graduate, whether local or foreign, receive BD 400.000 per month. In practice, when a worker undertakes employment, his wage shall be set according to the industry standards. Furthermore, the Social Insurance Organisation (SIO) will only accept certain salaries based on their own criteria consisting of the expatriates role, qualifications, experience, and the Company’s activity and number of employees to name a few.

Corporate Immigration 2016

4. What are the key immigration requirements for those wishing to invest in the country?

A foreign national wishing to invest and reside in Bahrain via the operation of their own company here must obtain a Self Sponsorship Residence Permit. The application must be submitted to the Nationality, Passports and Residence Affairs Department of the Ministry of Industry and Commerce with the following documents:

Service request form.

A clear copy of passport.

A clear copy of ID.

Certificate of good conduct & behaviour.

A certified copy of the company’s memorandum of association and his share must not be not less than Bahraini Dinars One Hundred Thousand (BD 100,000).

A valid certificate of health insurance issued from the Kingdom of Bahrain.

A bank certificate confirming a fixed deposit not less than BD 15,000 in one of the Kingdom’s financial institutions, to be committed every 6 months. The certificate needs to be submitted at the time of renewal.

The applicant must have a source of income sufficient enough to support himself and his dependents not less than Bahraini Dinars Five Hundred (BD 500) per month.

A copy of the applicant’s card or his legal representative.

A ‘No Objection Certificate’ issued by the General Directorate of Immigration for BD 20.000

This will apply to all foreign investors except nationals of the Gulf Cooperation Council (Kuwait, Oman, Qatar, Kingdom of Saudi Arabia, United Arab Emirates). It is worthy of noting that the Bilateral Free Trade Agreement accords US citizens GCC recognition for certain investment   purposes.

5. What are the key immigration requirements for those wishing to buy property in the country?

Foreign companies and non-commercial individuals wishing to buy property in Bahrain will be subject to Article 1 of Bahrain Decree No. 43/2003 regarding the ownership of property and land by   non-Bahrainis in Bahrain (as amended by Bahrain Ministerial Order No. 67/Year 2006), which allows foreign ownership of property in free zone areas, high rise residential areas and other areas designated by the law such as:

The Greater Manama Area, such as Ahmad Al-Fateh District, Hoora Area, Bu Ghazal Area, Northern District of Manama including Diplomatic Area (areas of high rise residential and commercial structure with elevation of 10 storeys or  above).

Seef District (with elevation of 10, 5 and 3  storeys).

New tourism developments such as Durrat Al Bahrain, Amwaj Islands and Al-Areen Desert   Resort.

Areas which fall within the sphere of the Bahrain Financial Harbour (BFH), the Bandar Al Seef Area and Reef Island.

It must be noted that Gulf Cooperation Council nationals will not be subject to this, as they are extended the same rights of ownership as Bahraini nationals.

6. Is there any preference/exemption given to individuals from other countries – if so what countries or individuals with family links to the country?

No person is exempt from obtaining a valid visa to allow entry into Bahrain, except for Gulf Cooperation Council nationals. Work visa applications for some nationalities do seem to be processed faster than others (e.g. US nationals are generally processed very fast compared to other Arab   nationalities).

7. Is there an appeal procedure in these cases?

While Article 24 of Bahrain’s Law on Foreigners (Immigration and Residence) of 1965 sets out an appeal procedure and provides that decisions made under the Act may be appealed to the Board of Appeal, in reality, no PRO makes use of this. In practice, various reasons for rejections of visa applications are treated differently on a case by case basis, and as such, the possibility to overturn the decision will depend on this reason. However, if the rejection reason is ‘Change the Person’ issued by the Ministry of Interior, it is known to be a definite rejection for this person’s application, and an appeal will not be entertained.

Corporate Immigration 2016

8. Are there any circumstances (e.g. criminal convictions) which would bar an individual from working in the country?

Medical fitness and freedom of contagious diseases are crucial in assessing a visa application and so failing a medical examination for the same will bar an individual from obtaining a work visa. The  employer is to process the deportation of the foreign employee immediately if the employee has failed the medical examination. In the event that the foreign worker is convicted for a felony or crime that violates honour or honesty, their work visa will be cancelled and the worker will be deported and barred from re- entering Bahrain.

9. Are there any circumstances in which work permits/rights to remain would be removed?

Work permits may be cancelled prior to their expiry in any of the following circumstances:

  • The permit was obtained on the basis of false documents or information.
  • The employee ceases to comply with one or more of the conditions for granting the permit.
  • A final criminal judgment is passed against the employee for a felony or a crime that violates honour or honesty.
  • A final criminal judgment relating to terrorism is passed against the foreign worker or the foreign worker is arrested under an order from the Public Prosecution for terrorism-related acts or crimes.
  • Violation by the workers of the terms under which his work permit was issued
  • The liquidation of the employer’s business, declaration of his bankruptcy, cancellation of his commercial registration or the termination of his license to practice commercial activity.
  • Death of the employer who had obtained the work permit, unless one of his heirs applied for renewal of the permit within six months.
  • A written request from the employer to cancel the permit on expiry of the contract or at the request of employee.
  • Failure of the employer to pay the fees and other payments due to the authority in connection with the permit for a period exceeding three months after such payments’ due date without a plausible excuse.
  • A worker being infected with a contagious disease, which demands his expulsion from the country as specified in a decision issued by the Minister for Health.

10. How are spouses and family members of those with work permits or residence as a result of investment or property ownership treated?

The differences between the visa application for spouses and family members of those with Investor visas or residence as a result of company investment versus those who are under work visas gained via employment with a Bahrain company lie in cost as well as application processes. They are processed by different government bodies. The LMRA processes visa applications filed by dependents accompanying employees, and the GDNPR processes the dependent visas under the visas issued for property investment and foreign investment.

There is also a slight difference in the visa fee of BD 90 for the LMRA and BD 110 for the GDNPR.

The application process for both is as follows:

Spouses and dependent children under 18-years-old are entitled to be granted residency permits based on the residency permit and work visa granted to the expatriate employee or investor. This is referred to as a Dependent Visa or Family Visa.

The requirements for this are as follows:

  • Completed application form;
  • Employee and family’s passports;
  • Marriage certificate copy;
  • Birth certificate copy of children;
  • Smartcard copy of the dependents;
  • Visa fee as stated above.

The application form for the LMRA is online and the application to the GDPNR is submitted by hand.

A clear copy of above mentioned passports, personal details page, valid for at least six months (preferably for 2 years or 1 year depending on the period of validity of the dependent visa). If the dependent is in Bahrain on a visit visa, then a copy of the entry page into Bahrain and the last extension page (if it is extended) are required. If the visa is cancelled, then a copy of the visa cancellation and the extension page (the page which shows the permitted period of stay in Bahrain) are   required.

Marriage certificate: In the application of the wife’s visa, a copy of the marriage certificate must be  provided in English or Arabic. In the case of Arab nationalities, it must be Apostilled or attested by the Ministry of Foreign Affairs and the Bahrain Embassy from the country of origin and by the Ministry of Foreign Affairs in Bahrain. The Bahrain attestation should be on the front side of the document. In   the case of Indian nationals, the same procedure is applicable., if the husband’s name is not endorsed in the passport of his wife. If the certificate is in any other language than English or Arabic, it must be translated and must follow the above mentioned attestation/apostille  procedure.

Birth certificate: In the application of the children’s visa, a clear copy of the Birth certificate in English or Arabic is required. In the case of Arab nationalities, it must be Apostilled or attested by the Ministry of Foreign Affairs and the Bahrain Embassy from the country of origin, and by the Ministry of Foreign Affairs in Bahrain. The Bahrain attestation should be on the front side of the document or else the document can be Apostilled. If the Birth certificate is in any other language than Arabic or English, it must be translated and follow the above mentioned attestation/apostille   procedure.

In the application of the children’s visa, a no objection letter from the dependent’s father is required.

Smartcard/CPR copy if available.

11. Who qualifies as family members in such circumstances?

Family members, pursuant to the Labour Market Regulatory Authority Law, are direct dependents, spouses and children under 18 years’ old of the expatriate. Children over 18 years’ old and other   family members (i.e. parents, siblings), will have to apply for a visa independently and directly through the General Department for Nationality, Passport and Residence Affairs and separate from the foreign worker’s visa.

12. How does the process work for those visiting on business short-term – and are there restrictions on business visitors without residency?

An individual visiting Bahrain for a short-term business trip must obtain a Business Visit Visa from the General Directorate of Nationality, Passports and Residence for such a trip. The relevant application must be completed and lodged with the Directorate, together with the following documentation: a copy of the visitor’s passport; a copy of the CR of the company; a letter prepared by the inviting company explaining the reason for the visit; a copy of the applicant’s Smartcard/CPR (identity card) or legal representative lodging the application on behalf of the visitor; and Fees of BD 25.000

Furthermore, business visitors without residency are restricted to the activities they conduct whilst in Bahrain on such a visa. They are not permitted to conduct other work related activities. They must also ensure they exit Bahrain prior to the expiry of their visa, or any renewal   thereof.

13. Are transit visas required for those passing through the country?

A passenger need not obtain a transit visa if he is to remain in the airport. If the passenger intends to exit the airport and pass through Bahrain to Saudi Arabia across the causeway, then a transit visa can be arranged specifically for this purpose.

14. What are the procedures for gaining right to remain/work permits?

The procedures for obtaining a work visa are those set out in question

15. How long do the procedures for main working categories take?

Processing applications by the LMRA will take approximately ten working days. However, visa processing times can vary depending on the nationality of the expatriate employee, e.g. Arab nationals usually take longer.

16. In practical terms how flexible are the authorities – in what sort of cases might exemptions be granted?

The authorities are not very flexible, and the Labour Market Regulatory Authority Law does not specify any exemptions that might be granted.

17. How does the quota system impact the recruitment or transfer of international staff?

Bahrain Ministerial Order No. 7/1996 states that companies with 10 or more employees and with a percentage of Bahraini employees being less than 50% must increase the numbers of the their Bahraini workforce by 5% every year for a period of five years. Companies with less than 10 employees must employ at least one Bahraini employee. However, despite this Ministerial Order having not been cancelled, it is not applied in practice. The Bahrainisation requirements are determined by the LMRA depending upon the activities to be undertaken by the companies and are dealt with on a case by case basis. Thus, the impact of this is dependent on the Bahrainisation quota imposed by  LMRA.

18. What proof does an employer need to show to prove they have given a fair opportunity to local employees?

There are no specific laws designating the standard of proof to be shown with regards to giving a fair opportunity to local employees, however, employers are expected to give preference to Bahraini nationals or an equal opportunity over equally qualified foreign  nationals.

19. Are there any restrictions on those with work permits?

A foreign employee for whom a work visa is issued shall adhere to the requirements of the work permit issued thereunder and shall not work with an unauthorized employer (an employer who is not the foreign employee’s sponsor as specified in the work permit). The foreign employee may also not conduct any work different to that which is stated in his work visa. On this basis, an employee may not work for any party other than the employer registered as his sponsor and in the designated place of employment as stated in the work permit. Employment by another would be seen to be a contravention of the law.

20. How easily can short term visas be converted?

Short term visas can easily be converted. If the employee is in Bahrain on a visit visa, the employer shall submit the work visa application to the LMRA before the expiry of the visit visa and it is advisable that such application is submitted at least 7 days before the expiry of the visit visa. If the employee has a multiple entry visit visa, it must be cancelled prior to submitting the work visa application (if the visa application is submitted while the employee is outside  Bahrain).

A worker/employer must apply for the work visa during the time in which the visit visa is valid, and must not engage in any work whatsoever prior to being granted the work  visa.

21. What is the procedure when an immigrant worker wishes to switch employers?

An expatriate employee may transfer their employment to another employer, without the need to cancel their existing work visa, without the need to travel out of the Kingdom of Bahrain, and with or without the consent of their current employer. Such transfer is available only while the expatriate employee’s permit/visa is still valid for at least three months (in some cases, six months), and in instances where the current employer does not consent to the transfer, the employee will have to have spend at least one year in their current employment.

Firstly the employee must, before the expiration or cancellation of their work permit, give written notice to their current employer by registered post evidencing the confirmation of such postal delivery and receipt of such notice by the employer. The employee would be required to give proper notice of termination of employment in accordance with the agreed contractual terms or the minimum legal requirement of 30 days’ notice. The notice period would not be expected to exceed three months. Thereafter, the other employer must lodge an application with the LMRA for a new work visa for the employee (known as mobility). After receiving all the documents, the LMRA will usually make   a decision on the work visa within three working days of receiving all relevant approvals, and validation of the decision will be made upon payment of the fees. Upon successful transfer, the expatriate employee’s work visa will be replaced with an updated visa reflecting the new employer’s details, who then   becomes the employee’s sponsor. It is only until such a transfer is complete and registered with the LMRA and the relevant authorities that an expatriate employee may commence work for the new employer.

22. How does exit and re-entry impact work permits?

An expatriate employee holding a Bahraini work visa may exit and re-enter Bahrain as many times and for as long a period as they so wish within the validity of their work  visa.

23. What evidence should those with work permits provide when re-entering the country?

A valid passport with a valid residence permit/work visa stamped in the foreigner’s passport are required when re-entering the country.

24. Under what circumstances (if any) can long term workers qualify for indefinite leave to remain or citizenship?

Article 6(1) of the Bahraini Nationality Law of 1963 provides that a foreigner who legally and  continuously resides in Bahrain for no less than 25 years, or an Arab national who legally and continuously resides in Bahrain for no less than 15 years, may apply for the Bahraini nationality provided that the individual is of good morals; has adequate knowledge of the Arabic language; and owns a fixed property in Bahrain, registered under his name in the Land Registry in Bahrain.

Furthermore, His Royal Highness the King has the discretion to grant the Bahraini nationality to any individual seen fit, and any Arab national may request to be granted the Bahraini nationality in instances where that individual has given the country his meritorious service. These applications are submitted in person and are entirely at the discretion of the  authorities.

25. What are the penalties for employers for failing to observe immigration/work permit rules?

Without prejudice to any severe penalties stipulated under the Penal Code, infringement of work permit/immigration rules by an employer will subject the employer to imprisonment of not less than three months and not exceeding one year and/or a fine of not less than BD 1,000/- and not exceeding BD  2,000/-. Habitual offenders will face imprisonment of not less than six months and not exceeding two  years, with a fine of not less than BD 2000/- and not exceeding BD 4000/-. In the event of conviction, the court may order cessation of business of the convicted employer or closure of premises for a period not exceeding one year. If the offence is repeated, then the court may order cancellation of the employer’s commercial registration.

26What are the penalties for individuals for failing to observer immigration/work permit rules?

The infringement of work permit rules by an individual will subject that individual to a fine not exceeding BD100/- and possible deportation in the event of conviction. A prohibition on re-entry may also be imposed on a permanent basis or temporarily for a period of not less than three years. As is the case with infringing employers, the infringement of immigration rules, i.e. providing false or   misleading information, will subject any individual to imprisonment of up to three months and a fine not exceeding BD 500.000

Contributing Authors

Ms. Rana Al Alawi

Associate

Zu’bi & Partners Attorneys & Legal Consultants

Contact: Qays H. Zu’bi, Senior Partner T: + 973 17 549 605

E: qzubi@zubipartners.com

W: www.zubipartners.com

Zu’bi & Partners Attorneys & Legal Consultants

Zu’bi & Partners (the “Firm’) is the merged firm between two long-established Bahrain law firms:  Hatim Zu’bi & Partners, the oldest established local law firm in Bahrain, and Qays H. Zu’bi Attorneys & Legal Consultants.

The Firm provides legal services across all leading sectors, including banking and finance, corporate, commercial, construction, energy, IT, communications, real estate, insurance, IP, to name just a few. The Firm also acts for both corporate and high net worth individuals in many diverse areas, including litigation, arbitration, property, labour, trade and family law.

The breadth of expertise and success of the Firm has been widely recognized by independent legal commentators and publications and is reflected in its client base of leaders in their fields, including both private and public institutions, government and quasi-government bodies, as well as high net worth individuals.

Lawyer Monthly – Issue 67-15

Each month, Lawyer Monthly’s ‘My Legal Life’ feature looks at the professional life of some of the world’s leading lawyers and legal professionals. We look at their work, the challenges they face and what motivates them. This month we speak to Qays H. Zu’bi from Zu’bi & Partners Attorneys & Legal Consultants. Zu’bi & Partners is the oldest established local law firm in Bahrain and a top-tier legal services provider in Bahrain and the GCC. The firm provides legal services across all leading sectors including banking and finance, corporate, commercial, construction, real estate, to name just a few. It acts for both corporate clients and high net worth individuals in many diverse areas, including litigation and arbitration, property, labour, trade and family law.

You have been practising law in Bahrain since 1981; how has the legal landscape evolved there in that time?

Since its independence in 1971, Bahrain made great strides in developing the practice of law. Moving away from Britain caused the country to become self-reliant. The  first Bahraini Courts were established in the year 1922 whereupon practicing lawyers took on cases that were adjudicated by Bahraini and other Arab national judges. Prior to the 70’s, some of the laws that existed at time were based on Common Law prompting a change to Civil law after the country announced its independence, as the majority of lawyers and judges came from a Civil Law background influenced by Egyptian jurisprudence.

With the emergence of the oil embargo in the early 70’s followed by the oil boom, initiatives— attributable to the progressive vision of Bahrain’s leaders—were instituted to prepare the country for an influx of investments from neighbouring countries. As a result, banking, company  and commercial laws were enacted amongst others, enabling the setup of foreign banks, financial institutions and offshore companies, which in turn transformed Bahrain into the financial and offshore corporate hub of the GCC. Consequently, legal and court systems rapidly had to progress to keep pace with the growth of the economy. This resulted in some laws being abolished or overhauled. During that time, we saw the enactment of the Civil Law, the Criminal Law, the Law of Civil Procedures, and Labour Law amongst others.

Bahrain became a signatory to many international agreements and conventions to remain competitive and compliant in today’s world. The Free Trade Agreement with the United States serves as an example, as well as the WHO Framework Convention on Tobacco Control, and the United Nations Convention on Contracts for the International Sale of  Goods.

Bahrain had to embark on developing its laws to keep pace with other parts of the world through utilising best-recognized international practices. This is apparent from recent laws enacted such as the Telecommunications Law, Banking Law, and Electronic Law.

Your practice focuses on a range of areas (Corporate; Commercial Banking; Property; Infrastructure;  Telecommunications; Franchising; Privatisation; Intellectual Property; Litigation & Arbitration; Labour; Government); what are the most common types of case you work on?

Being one of the oldest established law firms in Bahrain, we have been involved in virtually all of the banking transactions and infrastructure work that has taken place in the country since 1971. In this regard, we acted in different capacities like representing the government on one hand, or financiers on the other— including, at times, developers, construction companies, property owners, and tenants. The firm has undertaken major litigation and local and international arbitration cases as well, with the exclusion of matters related to taxation since it is non-existent in Bahrain. The types of cases changed depending on the nature of the dispute and market conditions. In favourable economic times, the firm sees an increase in contractual and financial cases. In tough economic times, we see an upsurge in construction claims, corporate and commercial claims, employment cases as well as crime cases involving the police and the public prosecutor. We were also involved in  a number of corporate liquidations, IPOs, and mergers and acquisitions.

As well as being Senior Partner of the firm, you are also Honorary Consul for Canada in Bahrain and President of AmCham Bahrain. What challenges do you face within these high profile positions and how do you overcome them?

A healthy lifestyle and experience helps people overcome many challenges. While these positions demand a lot of time, attention and focus, a person is as good as his team. I am blessed in both positions, the Canadian Consulate and AmCham, to have a good and hardworking support team which makes any challenges negligible. Additionally, I find that open communication is the key to success in all walks of life. Furthermore, it is of paramount importance to be extremely meticulous and devoted when undertaking a job or an assignment. I make it a point to be available and accessible at all reasonable times to anyone seeking help or guidance. Staying involved and informed is a significant element of doing the job right.

To continue gaining the respectability of a major super power in the  world,  Canada, and to carry on representing it in Bahrain as Honorary Consul for more than 14 years is a worthwhile challenge. Likewise, gaining the respectability and support of members of the American Chamber of Commerce in Bahrain to serve as President for a second term is again a worthwhile  challenge.

What motivates you?

My immediate family is my best motivator followed by my employees, clients and friends. The want to reach great heights throughout my life is a great incentive as well. A further important driving force is the need to inspire the young and to give back to the community and the needy.

On the work front, success and achievement are great motivators supported by values and ethics. These include instances where a case is won or a project is accomplished.

What would you change, legislatively, if you had the power?

Reform requires a continuous effort towards improving our laws, enhancing the administration of our law courts and enacting tougher rules to regulate lawyers and experts. As indicated earlier the country has sufficient capacity—through intellect and resources— to revamp many of the laws in order to bring them up-to-date with current international best practices and legal trends.

Likewise, resources have to be allocated towards streamlining the administration of the law courts through a series of crucial changes. The changes include providing judges with support to fast track cases, which are annually on the increase, and providing them with on- the-job education, better pay, and with further tools, knowledge and skills to enable them to deal with highly complex matters of banking and finance (which are foreign or uncommon to our country but are on the rise). This will guarantee a more efficient, fair, and speedier system.

Similarly, I would suggest amending the current law governing the legal professional practice by establishing a firm structure to regulate lawyers. Under this structure, lawyers would have greater powers to manage their affairs including, but not limited to, decisions on the welfare of lawyers, the issuing and withdrawal of licenses, and on the legislation itself. These decisions are to be applied across the board to ensure compliance and uniformity.

Additionally, I would suggest a full review of the laws that have been enacted in the 60’s and 70’s against recent laws to ensure that there is no discrepancy in order to issue and execute consistent judgements.

Finally, I would scrutinize and amend the Commercial Companies law to incorporate the best and most relevant commercial practices.

Is there anything else you would like to add?

The legal  profession  is  a  sacred  profession. In a valueless world today, it  is  imperative that lawyers be more adherent to the rules, regulations, values and ethics of the profession. A lawyer with a high standard of knowledge and competence, combined with integrity and a sense of morals, will be able to  provide his clients with first-class services. To apply the above, lawyers must be assigned the necessary tools by licencing bodies and law courts to aid them in achieving their goals when defending cases so as to facilitate a fair and equitable result for their clients. LM

Legal Week – 18 November 2015

The Middle East market has been rattled by the drop in oil prices. Anna Ward examines the consequences for independent law firms in the region

Over the past 16 months, the plunging oil price has hit government budgets in the Middle East hard. But while Saudi Arabia – the world’s second largest oil producer – continues pumping out oil to protect its market share in the face of swelling US crude output, what is the impact of reduced spending in the region for the legal market and how are local law firms faring compared to their international counterparts?

With the price of key oil benchmark Brent crude still hovering at around six-year lows of just under $50 per barrel, local law firms are seeing a reduction in work as projects are put on hold or suspended, with many saying they felt the deepest effects of the drop in oil prices during the summer.

Certainly, international outfits have shown signs of struggling this year with Latham & Watkins and Herbert Smith Freehills (HSF) opting to close offices in the region and retrench their strategy around Dubai with its more diversified economy, though HSF is to re-launch in Saudi Arabia as well.

Hopes of an uptick in legal work after the Islamic holy holiday of Ramadan ended in July were in vain. “It started to have a noticeable effect in August this year,” says Husam Hourani, managing partner of Al Tamimi, which has offices across the Middle East. “Prior to that, many projects were still pushing forward and it seemed like government initiatives were still going ahead. We were hoping for the situation to improve after Ramadan but it became clear many projects had been put on hold or suspended.”

“In the Middle East we rely heavily on projects initiated by government owned entities, in particular in Saudi Arabia, Qatar and the UAE”

In the private sector, three corporate IPOs were suspended in August, says Hourani, declining to name them. It is understood that many other projects have also been either delayed or suspended. For example, earlier this year, state-owned Qatar Petroleum and oil major Shell ditched plans to build a $6.5bn (£4.2bn) petrochemical plant in the emirate.

“In the Middle East we rely heavily on projects initiated by government owned entities, in particular in Saudi Arabia, Qatar and the UAE. The fact that the price of oil has remained low and is expected to remain at the same level means there are fewer projects,” explains Hourani.

Earlier this year, the International Energy Agency, the world’s leading energy forecaster, said that slowing global economic growth together with robust output from the Organisation of the Petroleum Exporting Countries (OPEC) producers, which include Iran, Iraq, Kuwait, Saudi Arabia, Qatar and the UAE, will mean the oil market glut will persist through 2016.

In some cases, the government has extended the deadlines to bid for certain projects as they take a fresh look at their budgets for the work, says Qays Zu’bi senior partner of independent law firm Zu’bi & Partners headquartered in Bahrain. “Projects are not being shelved in Bahrain but their values are being re-calculated including further revisions on the bids to conform to economic realities,” he comments.

The tiny island kingdom of Bahrain, which has smaller oil and financial reserves than its neighbours, has begun cutting state subsidies on essential items to raise money.

“The drop in oil price has contributed significantly to competition for new legal instructions where the market has become even more challenging”

Sharing The Burden

The outcome of all this is more competition amongst law firms for instructions and a shift in the nature of the work.

“The drop in oil price has contributed significantly to competition for new legal instructions where the market has become even more challenging,” says projects partner Mike Wakefield, projects partner at Galadari Law in Dubai. “It is much more competitive compared with two years ago.”

Meanwhile, clients are piling on the pressure to push down legal costs and in some cases; local firms are struggling to collect fees owed to them.

“With regards to local law firms, there is definitely pressure on fees and in some instances payments are delayed. We now have to make sure we get paid, unlike before,” says Zu’bi, adding: “It is our belief that should the economy slow down further, law firms working in the region be they local or international will have to take a fresh look at their business models and size.”

Ahmed Barakat, managing partner of Asar Legal, headquartered in Kuwait, says clients are becoming “more and more sensitive”, adding: “They are more conscious about money and how to spend it. This also applies to the government which is trying to share the burden with the private sector and push the economy forward.”

Hourani comments that there should also be more privatisation work, particularly in Saudi Arabia. “The Saudi government wants to rely less on oil and come up with new resources to support it. I expect there to be more privatisation work in Saudi. Law firms are trying to bid for work like this and the magic circle firms will, I’m sure, look to get part of the work.”

In addition, Dubai passed a new law in September to encourage new projects to be developed under the public private partnership (PPP) model, saying that they must be economically, technologically and socially feasible, according to the report. The new law was scheduled to come into effect on 17 November.

“We now have to make sure we get paid, unlike before”

Broadening Horizons

However, it is not all doom and gloom. Local law firms are also finding ways to open up opportunities out of the downturn. “Some of my clients who are cash rich are keeping a close eye on markets and looking for projects abroad,” says Zu’bi. “We see an upsurge in litigation and arbitration covering various industries such as construction.”

Other independent law firms are also opting to diversify away from oil and gas.

“We are taking on a broader variety of projects and not simply looking at oil and gas. A number of the ones we are bidding for are in the renewable energy sector,” says Wakefield.

Moreover, the consolidation in the oil industry has also thrown up legal work, he comments.

“An increasing number of smaller oil companies are looking to merge and in some cases, as a result, we have seen an increase in redundancies and employment litigation work.”

And, in the midst of all the upheaval, Dubai has emerged as a relatively safe haven. Most recently, Shearman & Sterling launched an office in Dubai in September spearheaded by the firm’s Middle East managing partner Marwan Elaraby.

“We are taking on a broader variety of projects and not simply looking at oil and gas. A number of the ones we are bidding for are in the renewable energy sector”

Meanwhile, in June HSF announced it was closing its Abu Dhabi office and shifting its five-lawyer team to Dubai. Latham also revealed earlier this year that it will close its Doha and Abu Dhabi bases before the end of 2015 and asked its 11 lawyers there to relocate to Dubai, though three of its existing Dubai partners are set to join Hogan Lovells.

So do local outfits in the region have plans to move their strategy towards Dubai?

Zu’bi says that he already has plans to shift two partners and one associate from the firm’s Bahrain headquarters to its second office in Dubai. Overall, the firm has 25 lawyers, including six partners.

Meanwhile, Wakefield is picking up more work in the real estate space in the city, citing infrastructure plans for global showcase Expo 2020, which proved a bountiful economic magnet for current host Milan this year.

“Not all projects in Dubai are dependent on oil prices. Some are independently sponsored or relate to real estate and we are seeing some increase in activity in real estate development.”

Independent law firms are clearly taking steps to shoulder the burden of oil price crashes at a time of political uncertainty in the region.

However, the issues that have beset the legal market in the Middle East look set to hang around for a while longer, concludes Hourani.

“We expect that the oil price drop will continue to affect the legal market in the Middle East for a long period of time. I don’t expect any changes before April 2016.”

GBR – Global Business Reports

Selected quotes from the interview with Qays H. Zu’bi, Senior Partner, Zu’bi & Partners

Zu’bi & Partners is the oldest local law firm in Bahrain. Could you give a brief history of the firm and some of the services it provides, particularly in regard to aluminium and related industries?

Zu’bi & Partners is a family law firm established in 1921 and has operated in Bahrain since 1971. Hatim Sharif Zu’bi, who today is chairman, was a banker and minister for King Hussein of Jordan. As a result, when Hatim S. Zu’bi set up the firm in Bahrain, banks were attracted to Zu’bi & Partners, some of which were major international banks that today have been with the firm for 40 years. The firm also had a relationship with ALBA, one of the country’s most important companies by many benchmarks, since 1979. In addition to the firm’s litigation work, Zu’bi & Partners is often invited by international law firms to serve as local counsel on major projects. For instance, when the EPCM firm Bechtel is granted a contract, the firm assists in the setup of the structure and licenses. In nearly all largescale projects in Bahrain, Zu’bi & Partners has had a role, from advising financiers, advising contractors, advising banks, or advising developers to environmental regulation and structuring. Additionally, the firm has the resources that would enable it to defend any case or advise on any matter relevant to the aluminium industry.

The complexity of a legal system can impact the successful operation of an industry, especially a significant exporting industry like aluminium. What is the legal environment like for firms in Bahrain?

The Bahrain legal system is flexible. As an example, if a major aluminium company wants to sign an agreement, they can stipulate arbitration elsewhere and can subject it to English law as the governing law. Likewise, the government allows law suits to be brought against it, meaning that if the government enters into a contract, it considers itself like any other party. There are many cases where the government has been sued on contractual civil cases. In regards to the courts in Bahrain, compared to many countries in the region, the legal system is more robust. The execution of judgements takes more time than it should, but the firm believes the Ministry of Justice and Islamic Affairs are working on improving the speed of execution of judgements.

As a firm that is involved in the transportation and logistics sector, how would you asses the ease of export infrastructure in Bahrain for aluminium?

One of impediments at the moment for the aluminium industry is the King Fahd Causeway that links Bahrain to Saudi Arabia. Trucking delays are a major issue for the aluminium industry because of alternative cost. The delays have improved, but not to the extent that they are no longer an issue. However, Bahrain’s ports are superior to many other ports in the region. For example, in other ports, freight can sometimes take six months to clear. Despite the problems with the causeway, it is still faster to ship and clear goods in Bahrain rather than directly to neighboring ports.

Zu’bi & Partners has survived as a family law firm for several generations. Where would Global Business Reports expect to find Zu’bi & Partners in three to five years?

Zu’bi & Partners is in the process of engaging an international consultancy firm that specializes in developing law firms. The plan is to streamline the firm Zu’bi & Partners, to keep it ahead of other firms and bring in new partners to meet the expectations of a new generation of lawyers. Therefore to progress the matter, the firm plans to utilize technology to perform its work more efficiently and at a reasonable price. Zu’bi & Partners is also expanding its Dubai operations from the beginning of October 2015 onwards. We believe there  will also be a great deal of work in the oil and gas industry as the sector is restructuring.  For example, the firm has been invited by major international law firms to be local counsel on an upcoming LNG project in Bahrain.  Regarding the aluminium sector, the firm will continue to involve itself in ALBA’s line 6 expansion and is available to help the growing downstream sector and related service providers.

Notes to Editor:

Zu’bi & Partners is the oldest established local law firm in Bahrain and a top-tier legal services provider in Bahrain and the GCC.  The firm provides legal services across all leading sectors including banking and finance, corporate, commercial, construction, real estate, to name just a few.  It acts for both corporate clients and high net worth individuals in many diverse areas, including litigation and arbitration, property, labour, trade and family law.

The breadth of expertise and success of the Firm has been widely recognized by independent legal commentators and publications and is reflected in its client base of leaders in their fields, including both private and public institutions, government and quasi-government bodies, as well as high net worth individuals.

Contact: Qays H. Zu’bi, Senior Partner

Tel + 973 17 538 600 / email: qzubi@zubipartners.com / website:  www.zubipartners.com

LNB News 28/09/2015

Noor Al Tareif, Associate at Zu’bi & Partners Attorneys & Legal Consultants examines the impact of the Kingdom’s new arbitration law.

Analysis

On 9 August 2015, Bahrain Law No. 9/2015 promulgating the Arbitration Law (the “New Arbitration Law”) came into effect. Article 1 of the New Arbitration Law provides provisions of the UNCITRAL 1985 Model Law with its 2006 amendments on international commercial arbitration (the “UNCITRAL Law”) will apply to any arbitration whatever the legal relationship of the parties to the dispute, if the arbitration takes place in Bahrain or abroad and the parties to it agreed to be subject to the UNCITRAL Law. The provisions of the UNCITRAL Law will apply to all arbitration beginning after the New Arbitration Law’s entry into force regardless of whether the arbitration agreement was concluded before such entry into force. As a result of the promulgation of the New Arbitration Law, Chapter 7 on arbitration and Article 253 from the Civil and Commercial Procedures Act promulgated by Decree No. 12 of 1971 will be repealed. The International Commercial Arbitration Law promulgated by Decree No. 9 of 1994 will also be repealed. The introduction of the New Arbitration Law is a step forward in unifying international arbitration rules and ensuring Bahrain is an attractive jurisdiction in which to settle commercial disputes.

The New Arbitration Law provides that Bahrain will use option 1 in Article 7 of the UNCITRAL Law for the definition of an arbitration agreement and its form. In order to ensure successful reliance on arbitration as a method of dispute resolution, parties must ensure the arbitration agreement is in line with and meets the criteria of the provisions of Article 7 of the UNCITRAL Law, which provides as follows:

  1. “Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
  2. The arbitration agreement will be in writing.
  3. An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.
  4. The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference; “electronic communication” means any communication the parties make by means of data messages; “data message” means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
  5. Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
  6. The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided the reference is such as to make clause part of the contract.

GCC laws and practice of international arbitration, specifically with regard to the recognition and enforcement of foreign arbitral awards, were insufficient and required updating to fully conform to modern international arbitration practice, due to hindrances and lack of understanding of typical arbitration proceedings. This well-established GCC-wide issue is, however, rectified by the New Arbitration Law.

According to the UNCITRAL Law, an arbitral award, irrespective of the country in which it was made, will be recognised as binding and, upon application in writing to the competent court, will be enforced. Article 3 of the New Arbitration Law provides the Bahraini High Court is entrusted with considering and determining all arbitration related applications, including applications to enforce or set aside arbitral awards. Previously, little trust was placed in arbitration as a means of rectifying conflict. This new development ensures trust can and should be placed in Bahrain’s system of alternative dispute resolution.

In line with UNCITRAL Law Article 11, no person will be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties. Amongst the most impactful provisions of the New Arbitration Law is Article 6, which provides “non-Bahraini lawyers may represent the parties to a dispute in the case of international commercial arbitration in Bahrain.” Thus, the New Arbitration Law permits foreign parties to use their own representation in international commercial disputes, a new development which has obvious positive ramifications on encouraging commercial investment into Bahrain and is a sign of the beneficial steps taken by the nation’s government to encourage such investment, bringing increased confidence to Bahrain’s judicial system of arbitration.

Article 7 of the New Arbitration Law provides no arbitrator appointed on the basis of the provisions of the UNCITRAL Law will be questioned on an act or omission in the carrying out of his duties, unless they were carried out in bad faith or were the result of a serious error. This provision also applies to the employees of the arbitrator or those authorised by him to direct some of the work associated with the tasks entrusted to him. Thus, arbitrators cannot be held liable save for cases of bad faith or grave error, which is a positive advancement sure to lead to an increase in the number of available arbitrators in Bahrain, boosting overall faith in the arbitral process.

Bahrain’s signature of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1988 was a positive step in itself towards encouraging means of alternative dispute resolution, as the traditional route of local courts can be an expensive and time-consuming process. However, other GCC countries have been reluctant to amend or produce local legislation reflecting the desire to committedly promote arbitration. The New Arbitration Law takes a huge leap forward to ensure Bahrain’s arbitration laws are in line with international best practices, bringing predictability in arbitral procedures and certainty in enforcement of awards in the region. Going forward, the enactment of the New Arbitration Law will hopefully result in an increase in the number of parties opting for Bahrain as the appropriate jurisdiction for their international commercial arbitrations.

Has the country signed up to any international treaties?

New York Convention, 6th April 1988.

How does the way arbitration works in the Kingdom of Bahrain differ from other international jurisdictions?

Bahrain was the first country to offer what is being called a “Free Arbitration Zone” and the first to introduce the concept of statutory arbitration for commercial and financial disputes. Legislative Decree No. (30) for the year 2009 With Respect To the Bahrain Chamber for Economic, Financial and Investment Dispute Resolution (the “Decree”) gives parties who are interested in international arbitration the option of holding the arbitration in Bahrain without concern that the courts of Bahrain might interfere with, or set aside, the resulting award, as long as the parties seek to enforce the award only in another country.

What are the main Arbitration bodies in this jurisdiction- what laws/ type of laws do they operate under?

  • BCDR-AAA under Resolution No. (65) Issuing the Regulation of Dispute Resolution Procedures for Statutory ADR Tribunal.
  • Gulf Cooperation Council Commercial Arbitration Centre (GCAC) under the Charter & Arbitral Rules of Procedure.
  • The provisions of the UNCITRAL Model Law on international commercial arbitration attached to Law No. 9 of 2015 promulgating the Arbitration Law (the “New Arbitration Law”) (UNCITRAL 1985 with 2006 amendments) apply to any arbitration whatever the legal relationship of the parties to the dispute, if the arbitration takes place in Bahrain or abroad and the parties to it agreed to be subject to the New Arbitration Law.

Do people in this jurisdiction generally use local arbitration bodies or bodies in other locations? If so, which routine is most common – and does this vary with different types of transaction?

Litigants in Bahrain tend to use the local arbitration bodies available, such as the BCDR and the GCAC; however, parties have the option to choose a neutral site, reasonably convenient to both parties, with a friendly arbitration law, in which the courts have acquired a reputation for respecting arbitration awards.

How does recognition of foreign awards work in this jurisdiction?

According to the UNCITRAL Model Law, an arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced.

Foreign awards are recognized and honored in Bahrain as long as these awards are not inconsistent with Shari’a laws and public order.

Is there a difference in the way foreign arbitration decisions and foreign court decisions are recognized?

In accordance with article (252) of the Bahrain Civil and Commercial Procedures Act 1971, Court judgments and orders passed in any foreign country may be ordered to be enforced on the same conditions as are laid down in the law of that country for enforcing court judgments and orders issued in Bahrain.

Application for issue of an enforcement order shall be filed with the High Court in accordance with the terms and conditions for filing court action after payment of the prescribed fees.

Are there specific situations where awards are not enforceable?

Article (V.1) of the New York Convention provides a limited list of reasons for which a court may refuse to enforce an award, including technical or procedural deficiencies in the arbitration agreement or process.

UNCITRAL Model Law Article 36 provides Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

(i) a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

(b) if the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the State; or

(ii) the recognition or enforcement of the award would be contrary to the public policy of the State.

(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.

Are there any differences in free arbitration zones or secondary jurisdictions?

Yes, the BCDR has two types of jurisdiction. The first is called “Jurisdiction under the Law” which authorizes referrals to the BCDR of two types of disputes that would otherwise have been heard by the Bahraini courts. The first type comprises disputes brought by or against financial institutions licensed under the terms of the Law of the Central Bank of Bahrain when the amount in controversy exceeds 500,000 Bahraini Dinars (approximately US$1.33 million). The second type of dispute to be sent to the BCDR as part of its Jurisdiction under the Law consists of all “international commercial disputes” in which the same amount or more is in dispute. The Decree specifies that:

A dispute is international if the headquarters of one of the parties to the dispute, the place where a substantial part of the obligations arising from the relationship is performed, or the place with which the subject matter of the dispute is most closely related, is located outside the Kingdom (of Bahrain).

A dispute is commercial if its subject matter concerns relationships of a commercial nature, whether contractual or not, including any transactions or agreements for the supply, exchange, or distribution of goods or services; commercial management or agency; leasing; factory construction; consultancy services; engineering projects; licensing; investment and financing; banking transactions; insurance; franchising; joint ventures; other forms of industrial or commercial cooperation; and transporting goods or passengers by air, sea, or land.

The second is called “Jurisdiction by Party Agreement”, under which the “Free Arbitration Zone” falls, thus allowing the parties to have the additional option of conducting their arbitration within the Free Arbitration Zone, cutting off all recourse to the courts of Bahrain to challenge any subsequent arbitration award, unless that award is to be enforced in Bahrain. Jurisdiction by Party Agreement, by contrast, depends on contract. The Decree permits parties to agree to arbitrate a dispute before the BCDR, with no requirement as to the amount in controversy, and no requirement that the dispute be international or commercial. It is only necessary that “the parties agree in writing to settle it through the chamber.”

Are there any types of dispute that cannot use arbitration as a vehicle?

If the parties do not confirm their will to resort to arbitration as a dispute resolution proceeding, they shall not be entitled to use arbitration as a vehicle.

Are there any mandatory procedures that have to be followed?  

Parties must comply with the regulations and rules of procedures issued in the arbitration bodies before which they choose to litigate. If the parties do not wish to litigate before the arbitration bodies mentioned above, they must abide by the general rules and regulations stated in the Bahrain Civil and Commercial Procedures Act No. (12) of 1971.

Are there specific features required in an arbitration agreement?

The New Arbitration Law provides that Bahrain will use option 1 in Article 7 of the UNCITRAL Model Law for the definition of an arbitration agreement and its form. Article 7 of the UNCITRAL Model Law provides as follows:

(1) “Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing.

(3) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.

(4) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference; “electronic communication” means any communication that the parties make by means of data messages; “data message” means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.

(5) Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

(6) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract.

Are arbitration decisions domestically binding?

Yes. In accordance with Article 35 of the UNCITRAL Model Law, an arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced.

Who can act as an arbitrator?

Anyone can act as an arbitrator as long as he/she has the required expertise. In accordance with UNCITRAL Model Law Article 11, no person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties. In accordance with Article 6 of the New Arbitration Law, non-Bahraini lawyers may represent the parties to a dispute in the case of international commercial arbitration in Bahrain.

In what circumstances can an existing arbitrator lose their status?

In accordance with Article 12 of the UNCITRAL Model Law:

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him.

(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

According to the BCDR-AAA Arbitration Rules – Challenge of Arbitrators – Article (8) allows the parties to challenge an arbitrator whenever circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence. Such challenge is to be noticed by the administrator within 15 days after being notified of the appointment of the arbitrator or within 15 days after the circumstances giving rise to the challenge become known to that party. If the other party/parties agree to the acceptance of the challenge upon notification, the arbitrator shall withdraw, however, this is not the case if the other party/ parties do not agree to the challenge or the challenged arbitrator does not withdraw. Here, the administrator in its sole discretion shall make the decision on the challenge. The challenged arbitrator may also withdraw from office in the absence of such agreement.

Do the arbitrators have any potential liabilities?

In accordance with Article 35 under “Exclusion of Liability” of the Arbitration Rules issued by the BCDR-AAA it is stated that the members of the tribunal and the administrator shall not be liable to any party for any act or omission in connection with any arbitration conducted under the rules, except that they may be liable for the consequences of conscious and deliberate wrongdoing.

How does the cost of arbitration vary with other jurisdictions?

In accordance with Article 32 under “Compensation of Arbitrators” of the Arbitration Rules issued by the BCDR-AAA, arbitrators shall be compensated based upon their amount of service, taking into account their stated rate of compensation and the size and complexity of the case. The administrator shall arrange an appropriate daily or hourly rate, based on such considerations with the parties and with each of the arbitrators as soon as practicable after the commencement of the arbitration. If the parties fail to agree on the terms of compensation, the administrators shall establish an appropriate rate and communicate it in writing to the parties.

In accordance with Article 23, Chapter 5 “Attribution Costs” of the G.C.C Commercial Arbitration Centre’s “The Charter & Arbitral Rules of Procedures” it is stated: the Centre’s Secretary General shall prepare a list containing a provisional estimate of arbitration costs and shall instruct each of the parties to the dispute to equally deposit a certain sum as an advance on account for such costs. He may instruct the parties to make supplementary deposits during the course of the arbitration proceedings.

How does the cost of arbitration vary with the cost of litigation in this jurisdiction?

Unlike the costs of litigation which are significantly cheaper than the costs of arbitration, arbitration costs vary from one arbitration body to another and from one arbitrator to another, depending on the expenses of the details chosen by the parties, such as the time given for the case to be resolved, the necessity of experts and translators, the seat of arbitration etc. Ultimately, arbitration is a much more expensive procedure in this jurisdiction.

In accordance with the BCDR-AAA rules:

FEE SCHEDULE
Amount of claimInitial filing feeCase service fee
Above $0 to $10,000$775$200
Above $10,000 to $75,000$975$300
Above $75,000 to $150,000$1,850$750
Above $150,000 to $300,000$2,800$1,250
Above $300,000 to $500,000$4,350$1,750
Above $500,000 to $1,000,000$6,200$2,500
Above $1,000,000 to $5,000,000$8,200$3,250
Above $5,000,000 to $10,000,000$10,200$4,000
Above $10,000,000Base fee of $12,800 plus 01% of the amount of claim above $10 million.$6,000
Non-monetary claims$3,350Filing fees capped at $65,000$1,250

Are any important specific time limits to be aware of in the arbitration procedure?

Time limits for arbitration procedures in Bahrain are regulated according to the procedural rules of the arbitration bodies mentioned above unless agreed otherwise by the parties.

How is the arbitration process started?

In accordance with Commencing the Arbitration, Notice of Arbitration and Statement of Claim, Article 2 of the Arbitration Rules issued by the BCDR-AAA -section 1, the party initiating arbitration shall give written notice of arbitration to the administrator and at the same time to the party against whom a claim is being made. Arbitral proceedings shall be deemed to commence on the date on which the administrator receives the notice of arbitration. The notice of arbitration shall contain a statement of claim including the following:

(a) A demand that the dispute be referred to arbitration;

(b) The names, addresses and telephone numbers of the parties,

(c) A reference to the arbitration clause or agreement that is invoked;

(d) A reference to any contract out of or in relation to which the dispute arises;

(e) A description of the claim and an indication of the facts supporting it;

(f) The relief or remedy sought and the amount claimed; and

(g) May include proposals as to the means of designating and the number of arbitrators, the place of arbitration and the language(s) of the arbitration

Upon receipt of the notice of arbitration, the administrator shall communicate with all parties with respect to the arbitration and shall acknowledge the commencement of the arbitration.

Do parties have to be physically present?

In accordance with General Conditions – Representation – Article (12) of the Arbitration Rules issued by the BCDR-AAA the answer is no, representatives may be present on the parties’ behalf. Their contact details (names, addresses and telephone numbers) must however be communicated in writing to the other parties and to the administrator. Once the tribunal has been established, the parties of their representatives may communicate in writing directly with the tribunal.

Are formal hearings normal?

The Charter & Arbitral Rules of Procedure of the GCC Commercial Arbitration Centre states, in Article (21) “Hearings”, the following:

“The tribunal shall hold, at the request of either party, at any stage of the proceedings, hearings for verbal pleadings or for hearing testimony from witnesses or experts. If neither party makes such a request, the Tribunal shall have the option either to hold such hearings or to go ahead with the proceedings on the basis of the papers and documents, provided that at least one hearing has already been held.”

Failure to appear has some consequences. According to Article (27), if either party fails to appear at the hearings after receiving notification to appear from the tribunal, and does not provide, during a period of time being fixed by the tribunal, an acceptable excuse for his absence, such absence shall not bar proceeding with the arbitration.

How do the evidential rules work in such cases?

See above. Furthermore, Article (20) of the BCDR-AAA Arbitral Rules states that evidence of witnesses may also be presented in the form of written statements signed by them. Next, the tribunal determines the admissibility, relevance, materiality and weight of the evidence offered by any party. The tribunal shall take into account Applicable principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and client.

In what circumstances can an arbitration case be referred to national courts?

There are three cases in which an arbitration case may be referred to national courts:

(a) Where arbitral procedures fail to close a case with a final judgement that is accepted by both parties.

(b) If a substantial issue arises in the arbitral procedure, for example mismanagement or an unlawful act on behalf of the Tribunal. Thus, said case would then be transferred to the national court for a final judgement.

(c) Finally, if the arbitral procedure has taken more time than what was agreed on prior to the beginning, the national court would therefore take full responsibility for the case and its concluding judgements. On the other hand, the arbitral procedure may take longer than originally planned, this is when a formal request for an extension is given, if agreed upon by both parties. If the parties do not agree on the time extension, the initial time agreed upon will therefore apply.

Are interim measures possible?

Yes, Article (21) under Interim Measures of Protection of the BCDR-AAA Arbitral Rules states the following:

At the request of any party, the tribunal may take whatever interim measures it deems necessary, including injunctive relief and measures for the protection or conservation of property.

The Charter & Arbitral Rules of Procedure Article (28) “Interim Measures” further adds the exemplar measure of the preservation of the contentious goods, such as ordering the deposit of the goods with third parties or sale of the perishable items thereof in compliance with the procedural rules in the country where the interim measure is adopted.

Article 17A of the UNCITRAL Model Law provides that the party requesting an interim measure shall satisfy the arbitral tribunal that:

(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and

(b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination.

What majority is needed for a decision?

In accordance with Article 29 of the UNCITRAL Model Law, in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members.

What types of awards are available?

All types of awards whether substantive, supportive, procedural, institutional, or ancillary are binding in Bahrain, irrespective of the country in which they are obtained, upon an application for enforcement is submitted in writing.

What are the methods for challenging awards?

In accordance with Article 34 of the UNCITRAL Model Law, an arbitral award may be set aside by the High Civil Court only if:

(a) the party making the application furnishes proof that:

(i) a party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the State; or

(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of the UNCITRAL Model Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with the UNCITRAL Model Law; or

(b) the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of the State; or

(ii) the award is in conflict with the public policy of the State.

An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33 (on correction and interpretation of award), from the date on which that request had been disposed of by the arbitral tribunal.

The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

Can interest be applied for delays – if so how?

Article (268) of the Bahrain Civil and Commercial Procedures Act No. 12 of 1971 provides that interest may apply for delays. Upon the service of notification, the Court demands the convicted litigant to appear in Court and shall demand payment of the debt in one lump sum. If the said debt is satisfied together with the costs, fees, and interests, the debtor may be released. A brief summary of the aforesaid procedures shall then be recorded in the enforcement statement.

How are costs awarded?

If the arbitration is conducted under the GCAC rules, provision is made for the cost of arbitration to be regulated. The GCAC charges a nominal fee for every reference to arbitration, and charges fees for the services provided to the parties not exceeding two per cent of the amount in dispute. Remuneration for arbitrators is also determined as a percentage of the amount in dispute.

What is the domestic procedure for enforcing a foreign court judgment?

According to Article (252) of the Bahrain Civil and Commercial Procedures Act No. 12 of 1971, the domestic procedure for enforcing a foreign court judgment in Bahrain requires filing an application with the High Court for “issue of an enforcement order” in accordance with the terms and conditions for filing court action after payment of the prescribed fees.

No enforcement order may be passed except after ascertaining the following:

  1. That the Bahrain law courts are not competent to hear the case in respect of which the court judgment or order was passed and that the foreign courts which passed it are competent in accordance with the international rules of jurisdiction set down in the laws thereof.
  2. That the litigants to the case in respect of which the judgment was issued were duly summoned and properly represented.
  3. That the court judgment or order has become final in accordance with the law of the cou7rt that passed it.
  4. That the court judgment is in no way consistent with any judgment or order previously passed by the Bahrain courts and does not provide for anything which constitutes a breach of public order or ethics.

How does Islamic law affect the enforcement of foreign court judgments?

In accordance with Articles (254-255) of The Bahrain Civil and Commercial Procedures Act No. 12 of 1971, the High Court may not issue an enforcement order except after ensuring that the conditions required for the validity of the application are in accordance with the law of the country where it was created. Subsequently, the application shall not contain anything that constitutes a contravention of public order or ethics in Bahrain, and compliance with the rules set forth shall not prejudice the provisions of existing treaties.

Will it be relevant to consider if the foreign court had personal jurisdiction over the parties?

Yes. In accordance with Article (252) of the Bahrain Civil and Commercial Procedures Act No. 12 of 1971, no enforcement order may be passed except after ascertaining the that the Bahrain law courts are not competent to hear the case in respect of which the court judgment or order was passed and that the foreign courts which passed it are competent in accordance with the international rules of jurisdiction set down in the laws thereof.

Will the local party have to have been served with any specific notifications before the case for a foreign court judgment to be enforceable?

Yes. In accordance with Article (252) of the Bahrain Civil and Commercial Procedures Act No. 12 of 1971, it is essential for the judge, who is required to enforce the foreign judgment, to ascertain that the litigants have been duly summoned and properly represented.

Are judgments from some jurisdictions, e.g. other GCC states given greater deference – if so which ones and how?

Article (1) of the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications states the following:

1. Each of the GCC countries shall execute the final judgments issued by the courts of any member state in civil, commercial and administrative cases and the personal affairs cases in accordance with the procedures as provided under this agreement, provided that the court that issued the judgment has the jurisdiction in accordance with the international jurisdiction as applicable in the member state where the judgment is required to be executed or has the jurisdiction in accordance with the provisions of this agreement.

2. The preceding paragraph shall apply to any resolution whatsoever shall be issued in accordance with judicial or venue procedures by courts or any competent party in one of the member states.

Will domestic authorities ever only recognize part or limit awards?

Domestic authorities must execute the foreign judgments as issued, provided that they do not oppose the Shari’a Law and public order.

Will damages in a foreign judgment need to be paid in local currency/using local interest rates?

Judgment amounts are determined in the currency of the country in which the judgment has been issued or its equivalent in Bahraini dinars.

Text by:

Rasha Belbaisi, Legal Consultant/Certified Arbitrator, Zu’bi & Partners Attorneys & Legal Consultants

Assisted by Noor Al Tareif, Associate, Zu’bi & Partners Attorneys & Legal Consultants

Note to Editor:

About Zu’bi & Partners

Zu’bi & Partners is the oldest established local law firm in Bahrain and a top tier legal services provider. The firm provides legal services across all leading sectors, including banking and finance, corporate, commercial, construction, and real estate, to name just a few. It acts for both corporate clients and high net worth individuals in many diverse areas, including litigation and arbitration, property, labour, trade, and family law.

Contact: Qays H. Zu’bi, Senior Partner

Tel + 973 17 538 600 / email: qzubi@zubipartners.com / website:  www.zubipartners.com

Gulf Insider: July 2015

The Problem…

During recent years, Bahrain has witnessed a revolution of high quality developments and substantive projects that reflected positively on the national economy, through the creation of multiple job opportunities and attracting foreign investment.

Nevertheless, Bahrain’s real estate market has been constantly facing a number of challenges, mainly those arising from the sale of “off plan properties” to investors without governmental approval. Many of those projects were never fully completed, either due to improper planning and mismanagement of funds, material breaches of contractual provisions, unforeseen events of force majeure, or violations of the laws through undertaking real estate development activities prior to obtaining the required licenses and approvals from concerned authorities, leaving the investors without remedies for the incurred losses resulting from such delays.

… and the Solution

Based on the large number of legal claims arising from those issues, the New Law was passed as a tool to offer further protection to investors and to restore confidence in the Bahrain real estate development market.

Under this New Law, real estate developers are prevented from undertaking, marketing or promoting any project, prior to obtaining the required licenses from the concerned authorities (in particular, from the Ministry of Municipalities and Urban Planning) following the submission of all necessary and supporting documents relating to the projects. Furthermore, completed plans, including the design, artist impressions, the start and completion dates and value estimates are required to be presented and approved by the Engineering Practices Regulatory Committee. Therefore, as a result to these regulations, “off plan” properties will be prohibited, since developers will only be permitted to sell completed units, unless otherwise approved, and a detailed field assessment has been conducted.

The New Law also imposes penalties, including imprisonment and fines, on developers who commit any of the violations stated in the New Law; such as selling unlicensed, incomplete or unregistered projects, violating the provisions of a granted license, or having knowingly submitted false information to the competent authorities for the purposes of registering a project or obtaining a license.

Always on the Safe Side

As a substantive guarantee to investors’ rights, developers shall be compelled to deposit their projects’ funds into a “Guarantee Account”, prior to commencing work on a project, of which 5% will be held by the appointed Account’s Secretary to ensure the settlement of any compensation claims that may arise from the suspension of the project. The New Law also grants both the buyer and the seller the right to terminate a sale and purchase agreement and claim compensation for any loss and damage arising from such termination.

Furthermore, under the New Law, if a project is partially suspended, the developer will be obliged to complete the project or reimburse the investors for the amounts. If a project has been fully suspended, the developer will be required to complete the project at its own expense, under the supervision of a different developer or sell the project and distribute the revenues among the investors.

One of the most prominent outcomes of the New Law is the introduction of the “Real Estate Projects Dispute Committee” whose main role is to resolve the disputes relating to real estate projects within six (6) months. The Committee’s verdict can be challenged before the Court of Appeal within fifteen (15) days of the verdict’s issuance date.

We hope that the New Law will pave the way towards a prosperous future for Bahrain’s real estate market which will ultimately benefit the national economy as a whole.

Text by:

Rasha Belbaisi, Legal Consultant/Certified Arbitrator, Zu’bi & Partners Attorneys & Legal Consultants