LNB News 08/01/2015

Noor Al Tareif, Associate at Zu’bi & Partners Attorneys & Legal Consultants examines the impact of the new Lease Law which comes into force on 7 February 2015.

Background

On 7 February 2015, a new lease law, Bahrain Law No. 27/2014, will come into effect. This law is the culmination of many improvements the government has been seeking to implement regarding rental properties. Previously, lease laws were difficult to source, as there was no single consolidated lease law. For over 70 years, the numerous property lease laws in Bahrain only applied to certain municipalities or certain types of purposes of premises. As a result of the laws being scattered, inconsistency issues often arose, along with confusion over which laws to apply. The centralisation of this entirely new law on leases, applicable to all types of properties in all of Bahrain, achieves the aim of providing clarity and consistency to an extremely important sector of the region’s legal system.

The previous law

Older laws, including some dating back to the 1940s, will continue to govern leases in Bahrain until the new lease law comes into effect. These laws are spread out over decades and promulgated in terms of separate municipal areas of the Kingdom as well as separate premise purposes. Previous laws also divided the country into only two municipalities-Manama and Muharraq. For example, the Manama Act governs renewal of lease of land and buildings used for commercial purposes in Manama. Due to massive booms in property development and in particular the gradual urbanisation of residential areas, provisions regarding only these areas are no longer sufficient.

In addition to various rent laws, the Civil Code contains provisions regarding leases. These include the definition of a lease, the leasehold rights on lapse of the lease term, the form a rent can take, the definition of a statutory lease and the right to terminate a lease if serious and unforeseen circumstances arise of such
nature as to render the performance of obligations by a party too burdensome. The Civil Code provisions on leases will continue to apply where the new law is silent.

The Rents Act, Bahrain Law No. 42/1946, as amended, is currently the primary law related to leases and governs residential properties, although the Rents Act Proclamation made certain provisions of the Rents Act applicable to commercial properties. Again, this law separated the country into only two municipalities-Manama and Muharraq. The rights of a landlord to terminate the lease and obtain possession at the end of the term were difficult to enforce. One of the most prominent problems with the Rents Act was that it favoured the tenant. For example, the tenant alone had the right to renew the lease if it expired, thereby severely restricting the rights of the landlord.

Significant changes

The most significant change is that the lease laws themselves are being codified into one single piece of legislation. Doing so enhances clarity and consistency while still maintaining sections of the core framework. The new rules revoke five previous rent laws, including the Manama Act and the Rents Act, which may be seen by some as a drastic change. However, this measure will ensure uniformity amongst all types of rental premises in all areas of the Kingdom of Bahrain, which can only be seen as a positive development for the property sector.

The new law also establishes a Rent Disputes Committee. Previously, local courts were inundated with cases relating to disputes between landlords and tenants. With the establishment of the Committee, all disputes related to any provision of the new law will be resolved outside of court in a timely manner. Resolutions of the Committee may, however, be appealed before the High Civil Court. Despite this, the establishment of the Rent Disputes Committee means that there will still be an overall reduction in the burden on national courts.

One entirely new provision that has the potential to impact every leased property is the requirement for the landlord to wait two years from the lease commencement date or the last rent increase date before having the right to increase the rent. The maximum increase is now set at 5% for residential properties and 7% for commercial and other properties, unless otherwise agreed in writing. A landlord must notify the tenant of their intention to increase the rent at least three months before the lapse of the second year.

One crucial issue which needed resolving was the imbalance of rights afforded to landlords and tenants in line with the Rents Act. The landlord’s rights at the end of the lease were disputed due to lack of clarity in previous laws. The new law guarantees the specific rights of the landlord, correcting the perceived inequality of the Rents Act in this respect. As stated above, the tenant was previously favoured in lease renewal circumstances. This is now rectified by the requirement of mutual agreement for renewing a lease in the new law, which balances this and many other rights to apply to both landlord and tenant, resulting in a fairer and more equitable piece of legislation.

In any case, the new lease law is a welcome and long-awaited development in the regulation of the property sector of Bahrain.

Bahrain’s oldest established and leading family law firm Zu’bi & Partners Attorneys & Legal Consultants has promoted five talented senior lawyers as part of the firm’s strategic growth programme.
Eman Omar has been promoted to Partner at the Firm’s headquarter offices at GBCorp Tower, Bahrain Financial Harbour District. Eman’s principal practice areas include Corporate & Commercial; Labour; Insolvency & Bankruptcy; Mergers & Acquisitions; and Litigation.

Both Dr Mohamed Salama and Naveen Thakur were promoted to Partners. Dr Salama specializes in Litigation; Corporate & Commercial; Banking; Labour; Bankruptcy. Naveen’s experience covers Investment Funds; Islamic Finance; Corporate and Commercial; Private Equity; Mergers & Acquisitions; Banking and Finance.

Hamza Saleem, recently admitted as Solicitor, England & Wales, and Omar Manassaki were promoted to Senior Associate. Hamza’s main practice areas cover Banking and Finance, Capital Markets as well as Mergers & Acquisitions; whilst Omar specializes in Corporate and Commercial; Mergers & Acquisitions; Landlord and Tenant; and Intellectual Property matters.

Commenting on the promotions, Senior Partner Qays H. Zu’bi, said: “As a Firm, we recognise that the success of our business is totally dependent upon attracting and retaining the very best people. Through these promotions, the Firm acknowledges not only talent but also the hard work and commitment that its diverse team of lawyers has demonstrated over a period of time.”

“Eman, Dr Salama, Naveen, Hamza and Omar are highly respected in their fields by clients and colleagues alike and bring a great deal of expertise and dedication to their work. The Firm looks forward to their continued contribution to providing our clients with the best possible service.”

Note to Editors:

Zu’bi & Partners is the merged firm of two long-established Bahraini law practices: Hatim S. Zu’bi & Partners, the oldest established local law firm in Bahrain, and Qays H. Zu’bi Attorneys & Legal Consultants. The firm’s client base consists mainly of Fortune 500 companies and banks, government and quasi-government bodies – local and international, as well as high net worth individuals.

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, such as litigation, arbitration, alternative dispute resolution, as well as property, labour, trade and family law. The firm is regularly consulted by major international law firms and calls upon these firms to assist its clients in their respective jurisdictions.

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

LNB News 27/11/2014

Rasha Belbaisi of Zu’bi & Partners examines the impact of the new Investor Protection Law in Bahrain which comes into force on 1 January 2015.

Background

The Bahrain Development Property Association has been working hard to improve the Kingdom’s property and real estate industry by rehabilitating Bahraini cadres, bringing together developers and professionals and cooperating with international real estate development institutions. So far, they have succeeded in recruiting 18 international real estate companies to take advantage of their expertise to improve the quality of real estate laws and regulations in the country. More recently the Kingdom’s Cabinet has approved a new law aimed at resolving failed multi-million Dinar investment projects and protecting investors. Bahrain Law No. 28/2014 complements a new law governing new investment projects which has already been passed by the National Assembly and ratified by King Hamad. That law, amongst other things, requires anyone embarking on a new project to submit complete plans including start and completion dates, designs and artists’ impressions, as well as a valuation estimate for the scheme which has been calculated by an engineering firm and ratified by the Engineering Practices Regulatory Committee. The Municipalities and Urban Planning Affairs Ministry will also set up a real estate disputes commission. It will consist of two judges and senior government officials. Developers who break the law could be jailed.

Rationale

Despite recent high-quality developments and real estate projects, Bahrain’s real estate market has faced numerous challenges including the sale of ‘off plan properties’ to investors without government approval being obtained, improper planning causing completion delays, fund mismanagement and unforeseen force majeure events. Countless legal claims have been brought as a result of losses incurred, which persuaded the government to provide investors with further guarantees to restore confidence in the real estate development market.

Most significant changes

Under the law, main and sub-developers will be prohibited from promoting any off-plan sale of property units either inside or outside Bahrain before completing registration procedures in the relevant Register and obtaining a license from the relevant authorities. The Law also includes substantive guarantees to investors, by allocating a separate project account to be created in the name of each property development project. This account will be exclusively allocated for management, construction and execution payments and will be established following a written agreement between developers, depositors and account trustees. The agreement must clearly define the account operating guidelines and the rights and obligations of the parties. 5% of the account will be held by the appointed trustee so as to ensure any compensation claims which may arise from any suspension of the project are settled.

Impact

By setting a solid framework to regulate real estate projects, the Law will provide further protection to investors by stopping real estate developers from undertaking or promoting any projects without obtaining the mandatory licenses from the relevant authorities and depositing the projects’ allocated funds in the project’s account. As a result, the ‘off plan’ selling situation which has put many real estate projects at risk, will be prohibited, as developers will only be permitted to sell completed units. The current issue of project suspension will also be efficiently regulated under the Law, as a project developer will be obliged to complete the project or reimburse investors with the relevant amounts if the project has been partially suspended. In the case of the project being fully suspended, the developer will be required to complete the project at their own expense under the supervision of a different developer or sell the project and distribute the proceeds of sale among the investors. The lengthy timeframes for the resolution of disputes arising from property development has also been considered through the formation of the Property Development Disputes Committee which will have the jurisdiction to rule on an urgent basis regarding all cases and disputes arising from property development works and projects subject to the provisions of the Law, within six months. The Committee’s verdict is subject to the parties’ appeal before the Court of Appeal within 15 days of a verdict being issued. The developments and guarantees stipulated in the Law will not only re-establish Bahrain on the map as a regional hub for real estate industry but is also expected to attract further foreign investment, which will inevitably have a positive effect on the country’s economy.

Legalweek.com

14 November 2014

For international firms the Middle East has proved a tough jurisdiction to crack. Neil Hodge asks local firms and lawyers what they can teach the global players

While parts of the Middle East may practically float on oil, the region is still classed as an emerging market. With that comes investment risk as the local economies ‘see saw’ in response to wider global financial shocks and political turmoil.

The past couple of years have seen a raft of firms move into the region, with Addleshaw Goddard, CMS Cameron McKenna, Morgan Lewis & Bockius and White & Case all taking the plunge by sending in teams into the UAE, while Baker & McKenzie has merged with UAE-based firm Habib Al Mulla.ulla. In January Clifford Chance (CC) became the first international law firm to launch a joint Saudi and foreign-owned office in Saudi Arabia.

But lawyers based in the region admit that the market for legal services can be volatile. A few firms have pulled out, testament to the fact that international firepower does not necessarily translate in an area where close, long-term relationships are often the key to success: Olswang has shelved its Dubai plans, while Holland & Knight has shut up shop in Abu Dhabi – its only office in the Middle East.

Michael Kerr, Middle East managing partner at Dentons, says demand can fall more quickly in the region than in other markets, but being committed to the long-term success of the region is the key to winning clients. “The Gulf economies are strengthening again, and projects that have been in the pipeline for several years are now at the implementation stage,” Kerr explains. “There is more confidence in the market and international law firms that have had a long-term presence here can see more business opportunities.”

CC’s managing partner for the Middle East, Robin Abraham, says the region is constantly maturing, but firms have to be flexible in how they deal with changes in the marketplace. “A few years ago restructurings were a big part of our practice, as were contentious issues,” he says. “However, construction is the big fee earner now, and corporate and project finance work is becoming stronger. The areas of practice that are the most in demand – or most profitable – often switch.

“International firms that set up here need to be able to follow changes in the market quickly and make sure that they can support what clients want. Any firm that comes in thinking that it can focus on just a couple of sectors is going to find that demand for such work can be uneven after the initial rush.”

A better year

Local law firms feel that 2014 has been a good year, and that 2015 will prove even better. Governments are opening their coffers and embarking on huge infrastructure spending sprees, while rules to improve corporate governance and transparency, and to free up financial services – such as Saudi Arabia’s plans to permit overseas financial institutions to buy and sell shares in companies listed on the Tadawul, the largest stock market in the Middle East – are whetting foreign investor appetite.

Husam Hourani, managing partner at Al Tamimi & Company – the region’s largest unaffiliated local law firm – says the past 12 months have been very successful. The firm has launched a new healthcare sector group, a regulatory practice and a sports law practice, and has opened three new offices in Erbil, Iraq; Muscat, Oman; and Manama, Bahrain – the latter completing its reach across the entire six-nation Gulf Cooperation Council. The firm is also looking at further new office locations for 2015.

Hourani is confident that Al Tamimi will capture a lot of work connected to a relatively new growth area of business in the region: initial public offerings (IPOs). “I expect the growth in company listings to continue,” he says. “We’ve had three key listings this year and we see several more on the horizon. Having worked on all of the IPOs listed with the Dubai Financial Market so far this year, I believe we are perfectly positioned to support this trend.”

Because of the increase in work, some firms are going on a recruitment drive as the market for legal services and government advisory work has become more buoyant. “We are looking to recruit more local lawyers with industry sector experience but it is a challenge,” explains Rosanna Chopra, partner and business development manager at Galadari in the UAE. “The economy tends to work in cycles here, so you need to find the people who can best serve your needs for the long-term.

“Relationships are also very important in this region so you need to have people in your firm who can retain clients and find new ones when there is a downturn, as well as being able to deal with an influx of work when it comes. Essentially, you need a good mix of lawyers who can be minders, finders and grinders.”

Booming markets

Sam Habbas, senior partner at ASAR, which has offices in Bahrain and Kuwait, believes the legal services market in the Middle East is generally on an upward trend. And while he points out that the market appears to be expanding faster in Dubai than anywhere else in the region, he adds: “In Kuwait we are seeing increased activity with regards to infrastructure projects, such as transport and utilities projects – including electricity generation and water desalination – and we are also experiencing increasing interest in capital markets, taxation and mergers and acquisitions.”

Habbas is optimistic that Kuwait should continue to develop as an economic force and a foreign investment magnet thanks to the passage of several pieces of key legislation, including the amended Companies Law and a new Public Private Partnership Law approved in June. Large-scale infrastructure projects will also prove a valuable source of work for law firms, especially since a KWD35bn (£76bn) development plan approved by the Kuwait government in 2010 is expected to be extended next year. There is also likely to be a rise in capital markets work, compliance in particular, now that the Kuwait Capital Markets Authority, the recently established financial regulator, is fully operational.

Public-private partnerships are also becoming more common in Bahrain, where financial services regulation is gathering pace. For example, there are plans to pass legislation to formalise corporate structuring and handover procedures for major government projects. Bahrain has also recently issued enhanced corporate governance provisions for publicly traded and regulated entities to further enhance investor and consumer confidence.

There is no shortage of work for local firms, it seems. “Litigation, arbitration and alternative dispute resolution matters continue to keep the firm busy,” says Qays H. Zu’bi, senior partner at Bahrain-based firm Zu’bi & Partners. “Other legal services have also picked up in certain sectors such as telecommunications, hospitality and retail.

“We have noticed an increase in real estate and construction projects, especially after the law concerning property development has come into effect, which is expected to encourage local and foreign investment in local real estate projects. We have also been busy with numerous employment matters since the labour laws recently changed.”

Law firms in Qatar are also set to enjoy the further spoils of planned large-scale infrastructure and transport projects. “There is a strong commitment from the authorities to develop the country’s infrastructure and housing and this is bringing in a lot of construction work and foreign contractors,” explains Abdul Rasheed, legal consultant at Qatar-based firm Gebran Majdalany. “But that is only part of the story. Qatar is intent on developing its financial services sector – as well as regulation of it – so that the country has a strong capital market to attract further foreign investment.”

Local v international

While the uptick in economic fortunes is certainly blessing independent outfits, lawyers at these firms are uncertain how the improvements in investor confidence and government spending will materially impact on international law firms – or their share of the market in the region – in the long term.

The degree to which international outfits can operate across the Middle East varies from country to country. Generally, local firms are guaranteed the lion’s share of direct government contracts, with foreign firms acting for contractors rather than the government. Local firms also benefit from being solely able to litigate cases in court. However, companies tend to prefer arbitration and dispute resolution outside of court in most parts of the Middle East, which throws international players a juicy bone.

While western law firms are making deeper footprints in the region, Habbas is confident that their presence will not adversely affect local outfits. “As an established local firm, we do not see the entry of international firms in the jurisdictions in which we operate as a threat,” he says. “In many cases, foreign firms do not practise local law and would actually work with local firms rather than compete against them.”

Hourani adds: “We’ve seen a number of firms enter the market and we welcome this competition. We work with many of the international firms as their local counsel. Our model, however, is to remain independent.”

Some believe that only those international firms that have had a sustained long-term presence in the region will ultimately reap rewards, and that new entrants are likely to face a real struggle. “The international firms are driven by the actions of their clients, so, if there is more foreign corporate activity here, the likes of the magic circle will follow,” Chopra points out. “But when corporate activity drops back, so too does the presence of international firms.

“Locally based firms, however, are driven by the economy of the region, so they are more able to adapt to client needs as the business climate changes. They are here to stay, but international firms – which tend to have large overheads because they are ‘senior partner heavy’ – will only stay if they can afford to.”

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 won the prestigious National Law Firm of the Year 2014 Award for Bahrainpresented by the International Financial Law Review (IFLR), the leading market guide for financial and corporate law firms worldwide at its awards ceremony held on 15th October 2014 at the Burj Al Arab in Dubai, the most well attended IFLR awards ever.

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 2015”, also recently won the “Dispute Resolution Law Firm of the Year 2014: Bahrain” and the “2014 M&A Law Firm of the Year” awards from Acquisition International Magazine.  It also received a “2014 Top 250 Leading Firm” award from Intercontinental Finance Magazine (ICFM) and a number of other accolades from other prominent finance and legal publications.

Hatim Q. Zu’bi, Partner, commented:  “We are delighted with our success at the IFLR Middle East Awards, which are highly competitive and an important benchmark of performance. This award reflects the excellent legal services which the firm provides to its clients, thanks to the dedication and expertise of our team of highly qualified lawyers.  We look forward to building on our success in 2015 and to expanding the range of services we provide in the region”.

Note to Editors:

Zu’bi & Partners is the merged firm of two long-established Bahraini law practices: Hatim S. Zu’bi & Partners, the oldest established local law firm in Bahrain, and Qays H. Zu’bi Attorneys & Legal Consultants.  The firm’s client base consists mainly of Fortune 500 companies and banks, government and quasi-government bodies – local and international, as well as high net worth individuals.

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, such as litigation, arbitration, alternative dispute resolution, as well as property, labour, trade and family law.

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

Following the introduction of the Labour Law for the Private Sector Law No. 36 of 2012 (“New Law”) in 2 September 2012, and having been in force for over a year now, its effectiveness is due for review.

In practice, the New Law has enabled the speedy resolution of Labour cases as it specifies the timeframe in which the cases are to be examined and resolved and the pace at which they are to progress. However, it took away one tier of litigation, namely appeal.

Alongside the expeditious resolution of cases, the New Law has minimised the number of cases brought before the Labour Courts, due to its clear and specific formulas for calculating compensation entitlements in cases of unfair dismissals or unjustified terminations, thus enabling the employer and the employee to identify their rights, obligations and entitlements without the need for a lengthy and complicated judicial recourse.

The question, however, remains of whether annual leave is to be calculated on the basis of working days or calendar days. Some companies have opted to apply calendar days on the basis that other provisions in the law clearly state ‘working days’ (i.e. annual leave vs Hajj leave), whereas others have decided on working days. We are still awaiting the issuance of a resolution amending the law or a court order deciding on this matter and advice given today is more in line with 30 calendar days.

The New Law has undoubtedly improved the Labour Courts system and pushed it towards the realm of efficiency and workability; however, as with any new law, its provisions remain in need of a solid unified interpretation and application.

Qays H. Zu’bi, Senior Partner at Zu’bi & Partners

Published in The Oath – Country Focus / Middle East Round-up, December 2013

GCC Patent Law Advantages
The unified GCC Patent Law was first introduced in 1987, with implementing regulations published in 1996. Patent applications are filed through the GCC Patent Office (GCCCPO), which was established in Riyadh in 1998. Once granted, patents are protected in all six member states. However, the unified patent law is limited to the filing and prosecution of patents; enforcement responsibility lies within each country, says Ghanim.

“There is no doubt that the GCC Patent Law will improve patent protection administration as the process of patent registration on state level is still underdeveloped and challenging,” says Mrad.

If the law is firmly imposed on patent violations through deterrence actions and severe penalties, it can be utilized to protect patent rights, prohibit pirating operations and to encourage more innovation and investion,” says Zineldin.

“Patent protection extends to all GCC member states via one centralized filing in Riyadh. This definitely saves time, effort and money,” says Owais.

“The GCC patent system provides a convenient way to secure patent rights in each member state”, says Sasha Parker, an IP consultant at Alsafar & Partners in Dubai. “It is a valuable tool for applicants as it facilitates the protection of patent in multiple jurisdictions.”

Rasha Belbaisi, a legal consultant at Zu’bi & Partners in Manama, Bahrain, sees the advantages from a business perspective. “We believe that the unified patent law among the GCC countries has encouraged local and foreign investors and inventors to invest in the region, through the unification of laws, procedures and granted privileges.”

“Whilst the patent systems in some states such as the UAE and Saudi Arabia are fairly well established, it is fair to say that others are very much in their infancy”, says Sangar. “The Omani Patent Office, for example, has only very recently started formal examination of all pending applications, and the Qatari Patent Office has only recently started accepting local applications. Since both Oman and Qatar are already part of the GCC, it may be more desirable to seek protection via a GCC application in these countries rather than a national patent.”

“In fact, since until this date, patents in both Qatar and Kuwait are not examined or granted. The only way to obtain real patent protection in these two countries is by filing through the GCCPO”, says Ghanim. “It is true that both countries’ offices accept patent applications, but these applications are merely assigned a filing date and filing number with no further action taken.”

Disadvantages of the Patent Law
While lawyers appreciate the advantages brought by the GCC Patent Law, some also see the other side of the coin.

Similar to the general IP problems the region faces, Ghanim says that “the major complaint has been the sluggishness of the prosecution. The rate of decision on patent applications is considered rather slow compared to neighbouring or foreign patent offices”.

“We expect that the numbers of applications will be huge and that it may take a longer time to accept an application because of the data that need to be examined”, says Karim El Gebaily, legal counsel and manager at Talal Abu-Ghazaleh Legal in Dubai.

Besides the long wait to register patents, the application for protection is open to attack by central filing, says James Bowden, an associate at Afridi & Angell in Dubai. “In the event that an opposition to a patent application is successful, it means that the applicant loses protection in all six GCC member states at the same time.”

“Reality tells us that the GCC patent law has no real impact on the economy other than functioning as a window for issuing patent certificates to international invention holders,” says Garoub. “This modest situation is due to the fact that national courts in GCC countries do not issue satisfactory compensation awards in patent infringement cases.”

“In the GCC countries, patent disputes are heard by traditional civil courts in the Arabic language. The traditional civil courts often lack the specialist patent experience of the dedicated courts and judges”, says Saadi. “The result of this is that the GCC is not often a preferred jurisdiction for patent enforcement. The GCC also has very limited availability for injunctions, which would be a primary recourse in other jurisdictions.”

In the meantime, the experience of examiners is also an issue. “The substantive examination is outsourced to a foreign patent office. Currently, patent applications filed with the GCCPO are examined by the Chinese State Intellectual Property Office”, says Ghanim. This outsourcing increases the time and costs associated with a patent application.

“It is quite essential to consider providing specialist training to the GCC government departments that deal with all types of intellectual properties, and to increase technological awareness in the region,” Belbaisi says.

“A further issue is the lack of publicly accessible patent-related information or resources in the region,” says Tarek Jairwdeh, head of the intellectual property section at Meyer-Reumann & Partners in Dubai. “Very little information is made publicly available by either the GCC or the national patent offices, which makes it virtually impossible to obtain an overview of the patent landscape in a particular area of interest.”

Belbaisi agrees that the lack of published and reported IP cases keeps the enforcement capabilities of those decisions in their infancy. “However, Saudi Arabia tends to experience more patent litigations than others in the region, possibly because it is the seat of the GCC Patent Office”, Belbaisi says.

On top of the disadvantages of the patent law, the nature of the GCC also brings obstacles for patent registration. “The GCC patent system operates outside the Patent Cooperation Treaty (PCT), hence the filings are accepted in accordance with a 12-month priority period provided under the GCC Patent Law”, says Sunna. “The concern is that in this case it might be more favourable to file direct patent applications with each country separately rather than using the GCC patent system.”

“This is important because it means that applicants must carefully consider which GCC markets are important for them. They will need to determine whether it is more advantageous to first file for a UAE national patent and claim priority under the PCT or to file for a GCC patent and not have the opportunity to claim earlier priority under the PCT,” says Bowden.

“With a more favourable priority period being available through the PCT, and with a question mark over the enforcement of GCC patents, it is expected that right owners will look increasingly towards filing patent applications in separate GCC states directly, rather than using the GCC patent system,” Jairwdeh says.

GCC Trademark Law Not Yet in Force
Unlike the patent law, the GCC Trademark Law is not yet in force. The trademark law was initially submitted by the GCC General Secretariat and approved by the GCC Trade Cooperation Committee in 1987. By the end of 2005, the GCC Trade Cooperation Committee approved amendments to certain articles of the unified law and recommended the submission of the amendments to the GCC Supreme Council for endorsement. The law was then ratified by the Supreme Council in 2006.

The purpose of the GCC Trademark Law is to replace the local trademark laws of each of the GCC member states, thereby creating unified implementing regulations for trademark protection in all states, according to data compiled by the International Trademark Association. However, the GCC Trademark Law is not expected to offer a unified filing system. Trademark applications will continue to be filed separately in each GCC member state. Qatar, the UAE and Saudi Arabia have published their approval in national gazettes.

“The delay in enacting a unified GCC trademark law is because the GCC Commercial Cooperation Committee has reportedly not yet sanctioned its implementing regulations”, says Sangar. “Also, given the number of member states involved, administrative
hurdles and delays are generally a common occurrence.”

“A unified trademark law necessarily requires consensus between the GCC member states. As each member state has varying legal systems and approaches to the protection of intellectual property, reaching such consensus takes some time to achieve”, says Abdus Samad, an associate at Afridi & Angell in Dubai.

“Bahrain and Oman signed free trade agreements with the US in 2006 and 2009, respectively”, says Obeidat. “Under the agreements, any change to the IP laws will need to be coherent and consistent with the agreement. As such, this may have triggered a delay in the two countries’ adoption of the law.”

Although the GCC Supreme Council convenes to discuss GCC wide issues, the law-making function remains firmly at state level, says Rizvi. “There will need to be increased appetite for member states to move towards greater legislative harmonization before […]

Trademark Applications Surge
A study released in late 2012 by Thomson CompuMark, the Middle East saw a 600% increase in trademark applications between 1990 and 2011.

Over the last 22 years, there have been 133,963 trademarks registered in the UAE and 118,380 in Saudi Arabia. Classes covering pharmaceuticals, electrical and scientific apparatus, advertising and business, cosmetics, and staple foods received the most trademark registrations.

Published in Asia IP – Cover Story: Coming Together, November 2013
Please click here if you would like to download a PDF version of the original article as seen in the November 2013 edition of Asia IP – Cover Story: Coming Together.

The year 2013 has marked the beginning of a new bilateral bond between the Kingdom of Bahrain and Canada. On June 4, 2013, His Excellency Shaikh Khalid bin Ahmed Al Khalifa, Minister of Foreign Affairs of the Kingdom of Bahrain signed a Tax Information Exchange Agreement (“TIEA”) with the Canadian Foreign Minister John Baird at the Canadian Foreign Affairs and International Trade Ministry, Ottawa.

The TIEA has been negotiated and signed between Bahrain and Canada to promote international economic cooperation and to establish a formal regime for the exchange of information relating to civil and criminal tax matters. The TIEA is subject to ratification, acceptance or approval by the both Canada and Bahrain, in accordance with their respective laws. The TIEA will be enforced on the date when both Canada and Bahrain notify each other regarding the completion of their notifications and internal procedures for entry into force. Upon entry, the Agreement shall have effect over tax matters involving intentional conduct which is liable to prosecution under the criminal laws of the applicant party and for all other matters covered under Article 1 of the Agreement.

The TIEA further emphasises Canada’s international efforts to promote transparency and effective exchange of tax information. It provides for the mutual exchange of tax information that is possessed by, or accessible to the taxation authorities of either jurisdiction, in order to enable better administration, enforce taxation laws and to prevent international fiscal evasion. It also allows for the exchange of information related to the management and execution of national tax laws between the two countries, and simultaneously sets out clear guidelines and procedures for the exchange of tax information.

The Agreement follows the internationally agreed standard on exchange of tax information set forth by the Organization for Economic Cooperation and Development (OECD) Global Forum Working Group on Effective Exchange of Information. The idea of tax information exchange agreements, which was first released in April 2002, was born out of OECD’s initiative to address harmful tax practices. The lack of effective information exchange constitutes one of the key criteria in determining harmful tax practices.

The objective of the Agreement between the two countries states that competent authorities of the contracting parties are required to provide assistance through exchange of information that is essential for the administration and enforcement of the domestic laws of the contracting parties concerning the various taxes covered by this Agreement. Such information shall include matters that are potentially relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters.

As per Article 3 of the Agreement, the existing taxes to which this Agreement shall apply in particular are income tax payable under Amiri Decree No. 22/1979 (“The Oil Tax”), in Bahrain, and all taxes imposed or administered by the Government of Canada. The exchange of information would take place following a request regarding the same and the party providing the information shall strive to deliver all the relevant information with respect to the matter concerned. While doing so, the party should also take into consideration, the extent to which this is allowable under its own domestic laws and provide the information accordingly.

In accordance with Article 5 of the Agreement, the information that can be provided to the other contracting party would include information held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominees and trustees; information regarding the ownership of companies, partnerships, trusts, foundations etc.; ownership information on all such persons in an ownership chain; in case of trusts, information on settlors, trustees and beneficiaries; and in case of foundations, information on founders, members of the foundation council and beneficiaries. The provider of information should do so only after a proper enquiry regarding the request made and for this purpose the concerned parties can also conduct tax examinations abroad. The providing party also has the option to decline the other’s request if its disclosure is against its public policy or if it contains trade secrets and other confidential information.

Looking at it from an international perspective, TIEA will help maintain higher standards for the collection of taxpayers and for the accounting of information, promote transparency and good governance; increase financial sector stability; combat criminal activity; enhance the jurisdiction’s reputation as a legitimate offshore financial centre; and assist in the integration of the offshore financial centre jurisdiction into the international financial system and global community. At the same time, the TIEA will protect the country’s revenue base by providing access to necessary offshore information and improving the integrity of the tax system, protect compliant businesses and individuals from unfair tax competition from those who evade their tax obligations, and provide an important deterrent to taxpayers considering entering into offshore arrangements to avoid or evade tax.

In this era of globalisation, the willingness of other governments to share information is an important element in the enforcement of domestic tax laws and in the evasion of taxes, thereby undermining the fairness and integrity of country’s tax system. It also encourages cross border transactions and prevents money laundering.

Please click here if you would like to download a PDF version of the original article as seen in the July 2013 edition of Bloomberg BNA’s Tax Planning International Review.

This entire article can be downloaded by clicking here.

The topic of most interest in Bahrain at present is the introduction of the New Bahrain Labour Law; The Labour Law for the Private Sector Law No.36 of 2012 (New Labour Law) which became effective from 2 September 2012 and repeals and replaces the old Labour Law for the Private Sector (No. 23 of 1976) (as amended). Implementing regulations are also expected to follow which will become effective within six months of the date of its issue.

The New Labour Law has certainly introduced some positives such as further recognition of women’s rights, the recognition of domestic staff rights, non-discriminatory practices and an expeditious resolution of labour disputes which, under the old law took up to four to five years to resolve through the courts. It has also, amongst others, introduced set compensation calculations for unjustified and unfair terminations (depending on the type of employment contract).

Compensation
The calculation of the compensation an employee is entitled to in the event of his or her unfair dismissal or unjustified termination by the employer was calculated previously on the basis of custom and market practice. One of the advantages of the new labour law is that it provides a clear mechanism for the calculation of such compensation which is the reason we have witnessed many more out of court settlements taking place. The courts will be free to deal with legitimate claims.

Unjustified & Unfair Termination: The compensation entitlements in the event of unjustified termination are as follows:

Indefinite contract of employment

If the employer terminates a contract of employment for an indefinite duration within the first three months from its effective date the employee will not be entitled to any compensation. However, in the event that it is established that the termination during the first three months was an unfair dismissal in accordance with the definition of unfair (Articles (104) and (105) of the New Labour Law) then the employee shall be entitled to compensation equivalent to one month’s wages.

If the employer terminates a contract of employment for an indefinite duration without cause or for an unlawful cause after the first three months following the commencement of the employment, the employee will be entitled to the equivalent of two day’s wages for each month of service. The minimum compensation shall be one month’s wage up to a maximum of 12 months wages. Furthermore, if the termination is also considered to be a legally unfair dismissal, the employee would additionally be entitled to a further one half of the compensation determined for the unjustified termination aforementioned.

It is imperative to note that when calculating the amount of compensation due fractions of a month are deemed a complete month.

Definite Contract of Employment

If the employer terminates a contract of employment of a definite duration without cause or for an unlawful cause, the compensation amount will be the equivalent of the wages for the remaining period of the fixed term. However the New Labour Law allows the parties to the contract to mutually agree a lesser amount, provided that the agreed amount for compensation is not less than three month’s wages or the remaining period of the contract whichever is less.

In the event that the contract of employment was entered into for the completion of specific work and the contract was terminated without cause or for an unlawful cause prior to its completion, the employee would be entitled to the wage for the remaining period required for the completion of the agreed work (unless the parties agree a lesser compensation amount, provided it is not less than three months’ wage or the remaining period thereof) whichever is less.

Lawful Terminations: The New Labour Law has also clearly provided for justified terminations where the old law was silent.

Poor Performance: The New Labour Law now grants the employer the right to terminate an employee in the event of their poor performance. The right to justifiably terminate the employee is subject to the employer giving the employee a minimum notice period of 60 days of such inefficiency and poor performance to allow the employee a reasonable time to achieve the required level of performance prior to termination, the failure of which would justify the termination of the employee and not entitle the employee to any compensation.

Redundancies: Under the old law the term redundancy was not recognised neither was the amount of compensation as a result thereto. The courts would determine levels of compensation on the basis of the circumstances surrounding the termination as well as the market and the company’s customary practice.

The New Labour Law however allows an employer to terminate an employee in the event of the total or partial closure of their establishment, its scaling down or replacement of the production system therefore affecting the size of the workforce. However, the Ministry of Labour will require a notice and the reasons of such a termination 30 days prior to serving notice of termination on the employee. The amount of compensation is fixed in the law.

Retirement age: A further major development under the New Labour Law is the provision providing for a retirement age, being 60 years of age (for both male and female employees).

Female employees: The old law prohibited women from working during certain hours and in certain occupations (unless otherwise prescribed in an Order by the relevant Ministers); the New Labour Law does not impose such restrictions unless otherwise prohibited pursuant to a resolution of the Minister of Labour. A non-discrimination clause has also been inserted in the new law which provides that “female employees shall be subject to all the provisions governing the employment of employees without discrimination between them where their employment conditions are similar”.

Other enhanced rights for women include an increased period of maternity leave of 60 days and nursing hours. Female employees have also been given the right to take up to 6 months without pay up to three times throughout her period of service with the employer for the purposes of caring for her child who is not more than six years of age.

Wage and basic wage: The old law did not distinguish between the components of the employee’s gross wage and their basic wage. Under the old law end of service indemnity was payable on the gross salary which included all the employee’s monthly allowances in addition to their basic pay. The New Labour Law however provides that an employee’s entitlements in relation to the calculation of his leaving indemnity payment are to be calculated only on the basis of the employee’s most recent basic wage in addition to social allowance, if any.

Leave Entitlements

Annual Leave: The New Labour Law provides that an employee who has completed at least one year of service is entitled to annual leave on full pay for a period of not less than 30 days accruing at the rate of two and a half days for each month (as opposed to 21 days increasing to 28 days after 5 years of service under the old law). However, the provision fails to specify whether the 30 days are calculated on the basis of calendar days or working days and we are still awaiting the issuance of a resolution amending the law or a court order making judgement on the interpretation of this Article.

Contingency Leave: A new provision was established under the New Labour Law which gives the employee a right under to take leave on a last minute basis in the case of an emergency calling for their urgent need to remain off duty. Such contingency leave may be taken for a period not exceeding six days during the year with a maximum of two days in each case and the same is set off against the employee’s annual leave days.

Educational Leave: As opposed to the default position where the employer has the right to schedule the employee’s annual leave days in accordance with the business’s requirements and conditions, an employee is given the right under the new law to schedule his leave in the event that he has to sit for an examination at any educational level (provided that notice of the same is given to the employer at least thirty days before the employee proposes to take such leave).

Sick leave: Under the New Labour Law employees’ now receive enhanced sick leave entitlements which have increased to 15 days sick leave on full pay, 20 days on half pay (previously 15 days) and 20 days on no pay (previously 15 days). Entitlements to sick leave on full or half pay may be accumulated for up to 240 days during the employee’s service; this was previously only 182 days under the old law.

Leaving indemnity: Employees who are not subject to the Bahrain Social Insurance Laws (expatriate employees and Bahraini employees whose salaries are in excess of BD 4,000) previously received less in leaving indemnity under the old law in the event that they resign prior to completing five full years of service in comparison to what they would receive should the employer terminate their employment (unless the termination was for cause under Article 113 of the old law). The calculation of leaving indemnity under the New Labour Law however would be the same irrespective of who terminated or why the employment relationship was terminated.

Labour Disputes & Litigation: Labour disputes under the old law were initially filed with the Ministry of Labour. Failure to reach settlement would lead to the dispute being transferred to the Labour Court for determination after a long court process which may take several years prior to a final determination. The New Labour Law attempts to minimize the number of cases that go through the courts. All claims must now be filed with the Labour Case Administration Office where the Labour Case Administration Judge will hear the case and prepare a report in the hope of attempting an amicable settlement. In the event that the parties do not reach an amicable settlement, the Labour Case Administration Judge refers the matter to the High Civil Court who will hear the labour dispute on an urgent basis within two months from the date of filing the case. However, subject to a resolution of the Labour Case Administration Office Chief, such period can be extended for an additional period of two months at the request of the Case Administration Judge. The New Labour Law requires the High Civil Court Judge to hear the case on an urgent basis and to render its judgement within 30 days from the date of the first hearing.

The High Court Judge’s decision is final, and the parties may only appeal to the Court of Cassation on matters of law. The New Labour Law is more in line with international standards as it aligns Bahrain’s domestic law with several of the Arab and international labour treaties and conventions to which it is a signatory. In this effort to introduce more efficient and cost effective employment regulations, it is expected that fewer disputes will be processed through the courts which will also, in turn, reduce the number of frivolous cases that are filed without merits by disgruntled employees.

12, June 2013: Think Pink Bahrain acknowledges the support that the local Bahraini Law Firm; Zu’bi & Partners Attorneys & Legal Consultants, has given the Charity over the past year. The Charity is pleased to announce that Zu’bi & Partners has been awarded permanent corporate sponsors status herewith, in recognition of the work the Law Firm undertook on behalf of Think Pink Bahrain, including representing the Charity during meetings with Bahrain ministries and government agencies.

Speaking on behalf of the Charity, Ms Julie Sprakel, Founder of Think Pink Bahrain noted, “The Charity extends its thanks to all members at Zu’bi & Partners Attorneys & Legal Consultants, specifically Mr. Qays H. Zu’bi and Ms Latifa Salahuddin. Their professionalism, high standard of work and support over the past year has been unwavering. The team thanks them both for supporting Think Pink Bahrain during this time, and welcoming them as permanent corporate sponsor, is Think Pink Bahrain’s small gesture of thanks. The Law Firm is now the official representative of Think Pink Bahrain: Bahrain Breast Cancer Society”.

Zu’bi & Partners Attorneys & Legal Consultants

Zu’bi & Partners (the “Firm’) is a recent merger of two long-established Bahrain law firms: Hatim S. 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 recognised 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 17 549 605 / email: qzubi@zubipartners.com / www.zubipartners.com
Please click here if you would like to check the original article published in the Think Pink Bahrain website.