Contributed By Charles Russell Speechlys
Identifying the asset position of another party is not always easy in any jurisdiction. Depending on the circumstances, two key approaches are available to a party seeking such information in Bahrain: either through publicly available sources or by way of enforcement/court order.
Publicly Available Information
Websites such as www.sijilat.bh offer a companies and agencies register with publicly available commercial information such as company names, registered addresses, dates of corporate registration and trading status. Information such as company accounts, articles of association and charges over company assets and properties are not available without specific request.
However, the company registration available on the Sijilat site does provide the total paid-up capital figure, the shareholders and their respective shareholdings and the ultimate beneficial owner (UBO).
The addition of the UBO details is pursuant to the recently issued Resolution No 83 of 2020 concerning the Standards, Requirements and Rules to Determine Ultimate Beneficiaries, which requires UBOs of registered entities to submit their information (such as their passport and TIN) on the Sijilat portal. It should be noted that this is a work in progress and that this information has not yet been completed for each company listing.
A party that brings proceedings in Bahrain may apply to the Bahraini courts for an order for an individual or company to disclose certain documents as defined in a specific request. The party making the request must demonstrate to the court that it has a legitimate interest in the documents for the purpose of its case.
In addition, various enforcement and/or injunctive relief procedures are also available against individuals or companies and their assets. These reliefs are most commonly sought either through the Court of Urgent Matters (at the beginning of or during litigious proceedings) or from the Execution Court when enforcing a final judgment.
Information regarding a party’s assets is not publicly available from the Ministries (ie, the Survey & Land Registration Bureau for property). As such, a party wishing to obtain information relating to assets registered to another party will need a Court Order in their favour.
Upon the execution of a judgment in Bahrain, the Execution Court will exercise its jurisdiction and request confirmation of the debtor's assets from each of the relevant government entities, including the Central Bank of Bahrain (which will, in turn, contact the financial institutions). This would usually include any sums held in accounts, vehicles and property.
A party can obtain a number of different domestic judgments through the courts of Bahrain. Civil cases in Bahrain will fall under the jurisdiction of the Bahraini civil courts, which comprise the following:
The Small Claims Court has jurisdiction over cases of less than BHD5,000 in value.
The High Civil Court deals with all civil disputes in Bahrain of more than BHD5,000 in value, and acts as an appeal court to the Small Claims Court.
In 2009, the Bahraini government established the Bahrain Chamber for Dispute Resolution (BCDR), which creates both a specialised commercial court (the BCDR Court) and an alternative dispute resolution centre providing a forum for international arbitration and mediation (the BCDR-AAA). Litigation proceedings are brought pursuant to Section One of Legislative Decree No (30) of 2009 as amended by Legislative Decree No (64) of 2014, whilst arbitration and mediation are undertaken pursuant to Section Two thereof.
The BCDR Court (Section One) has jurisdiction over high-value commercial claims (in excess of BHD500,000) of an international nature, or involving a Central Bank of Bahrain Licensee. These cases cannot be brought in any other civil court in Bahrain.
It is important to note that the BCDR Court is a civil court of Bahrain and its judgments are considered final judgments, with the only recourse being directly to the Court of Cassation. A point of interest is that foreign lawyers may also represent parties before the BCDR Court if they have a joint power of attorney with a Bahraini lawyer authorised to practise before the Bahrain Court of Cassation.
The Court of Cassation is the highest court in Bahrain and deals with applications for annulment of judgments and matters of state. The Court of Cassation does not re-examine the facts of a case and only reviews technical legal arguments. Court of cassation rulings are final and enforceable; they cannot be appealed further.
The Bahraini courts allow for default judgments in circumstances where a defendant has been summoned but fails to appear before the court without a valid reason. This is determined by the judge on a case-by-case basis, as Bahraini law does not provide an exhaustive list of what these reasons may be.
Summary judgment is also available in domestic proceedings, based on the judge’s discretion.
Bahraini courts also offer a number of interim relief measures upon application to the relevant courts, such as:
Interim measures can be applied before, during or after the judgment has been issued (pending execution) by the claimant submitting an application to obtain interim relief before the competent court. Where there is a substantial risk that a claimant’s rights may be impinged, the claimant may submit an application to the Court of Urgent Matters to expedite measures.
A domestic judgment may be enforced by an order for the attachment of assets as well as an order for assets to be sold.
An applicant wishing to make an attachment order prior to proceedings must prove to the court that there are valid reasons for doing so, such as:
A party seeking to enforce a domestic judgment would make an application to the Court of Execution (if there are Court of Cassation proceedings ongoing, these do not automatically stay the enforcement proceedings).
The party is required to bring the following to the Court of Execution:
Applications are then made to the Execution Court, requesting it to seek confirmation of the assets held by the debtor from the relevant Ministries in Bahrain. The Execution Court will exercise its jurisdiction and request confirmation of the debtor's assets from each of the relevant government entities, including the Central Bank of Bahrain (which will, in turn, contact the financial institutions). The Execution Court will then freeze assets (including cash) up to the value of the judgment debt. If there are no liquid assets, the court will seize property and sell it at auction to settle the judgment.
Almost all assets can be attached in Bahrain, including movable and immovable property, but there are of course some specific assets that cannot be enforced against, such as:
The enforcement of final judgments in Bahrain is carried out predominantly by the Execution Court. As with any jurisdiction, the length of time it takes for a judgment to be settled is almost entirely reliant on the availability of the debtor’s assets.
The Bahrain Execution Court is efficient and dependable, with systems in place for timely recovery if assets are available.
The swiftest recovery option is, of course, liquid assets held by the banks in Bahrain. The Execution Court requests the debtor’s asset position from the Central Bank of Bahrain and, if there are monies held, issues an order for an amount up to the value of the judgment to be frozen and transferred to the court account. In these circumstances, enforcement can take as little as eight weeks.
However, if there are no liquid assets available and property is required to be seized and auctioned, or judicial receivers need to be appointed to manage the property (for example, in the case of a business/rental property), the time period for enforcement can be extended considerably. There is of course no fixed amount of time for recovery in these circumstances, and they are dealt with on a case-by-case basis.
Execution Court fees are governed by Legislative Decree No (3) of 1972 (as amended) (the Judicial Fees Law). In accordance with this legislation, the Execution Court charges a fee per enforcement order – this means that each application for a freeze or a seizure of assets is charged separately in accordance with the value of the claim.
The Execution Court in Bahrain is key to post-judgment procedures for determining a defendant’s assets. The Execution Court is responsible, pursuant to a claimant’s application, for obtaining the requisite information from the relevant Ministries and government authorities. The Execution Court judge issues requests for information held by the authorities and, once this is received, will make the necessary orders to seize the same.
In addition, and as discussed in 1.1 Options to Identify Another Party's Asset Position, a court may make a disclosure order against a defendant compelling them to disclose their assets, including any property owned and monies held in bank accounts.
Appeals and challenges to judgments in Bahrain differ depending on the stage of proceedings and the court that issued the judgment.
Once a judgment is handed down, a party may appeal from the Small Claims Court to the High Civil Court, or from the High Civil Court to the Higher Court of Appeal if they believe there has been an error of fact and/or law. Appeals from the Higher Court of Appeal to the Court of Cassation may be made on points of law only. BCDR Court judgments are non-appealable; the only recourse available is annulment to the Court of Cassation.
Appeals/challenges to the Court of Cassation can only be made on limited grounds of challenge, predominantly those in relation to errors in fact and law.
A party has to file its appeal/challenge at the relevant court within 45 days of receiving notice of the judgment (subject to some exceptions). Notice is issued if the judgment is presented to all parties at a hearing, and the right to appeal is lost if the timeframe for filing the appeal expires.
As per articles 259 to 260 of the Bahrain Civil and Commercial Procedures Act 1971 (the CCPA), the role of the Execution Court is to enforce the judgments received without entertaining objections by a party to the judgment itself. If there appears to be any element of a judgment that is practically unenforceable, an Execution Court judge must not offer any opinion as to resolution and instead must seek clarification of the relevant section in writing from the trial judge. Moreover, the Execution Court judge has the ability to advise the interested parties to approach the relevant court if it appears to them, in the course of enforcement, that there are certain matters that require resolution.
Challenge of Attachment Orders
The party against whom the attachment order is imposed may appeal to the court within eight days of receiving notification of the attachment order.
As the attachment is approved by the court, even if the attachment had been wrongly granted, a creditor is not liable for any damages caused by the attachment to the debtor.
As with any jurisdiction, there are of course judgments that have limited enforceability, by virtue of their subject matter. As discussed in 2.2 Enforcement of Domestic Judgments, judgments ordering the attachment to assets such as the family dwelling of a party, a party’s business documents and property or property owned by the state are unenforceable.
Furthermore, the Bahraini courts will not order an attachment to property if it is not satisfied it is necessary to do so (if, for example, there is no reasonable risk that the defendant is likely to flee the jurisdiction or dissipate that asset).
There is no publicly available central register of all judgments. Whilst the court hearings are public and judgments are not technically confidential, practically speaking, a party needs to have (and be able to demonstrate) a legitimate interest in order to obtain copies of proceedings to which it was not a party.
The Bahraini government website contains an online "courts and cases service" with the ability to query and search details of civil legal proceedings. However, this resource is not publicly available; an electronic key is needed from Bahraini-qualified counsel in order to access this.
Enforcing foreign judgments in Bahrain is not an overly onerous or complex process, provided you have access to the original documents and can have these legalised or apostilled (depending on the country the judgment is issued in, of course).
Bahrain is a signatory to a number of reciprocal recognition treaties, including:
Generally speaking, Bahraini courts will enforce a foreign judgment without requiring prior recognition proceedings if the judgment originates from a country that is also a signatory to one of the same treaties. For example, the Riyadh and GCC Conventions apply to all GCC countries, do a judgment in the UAE is likely to be automatically recognised in Bahrain (subject to the below).
Where reciprocal recognition is not established via treaty between Bahrain and the foreign country, the recognition of foreign judgments is governed by the CCPA, and foreign judgments may still be recognised following an application for such to the High Civil Court (this is essentially a fresh claim in which the court may choose to re-examine the issues if the defendant submits a defence).
Under Article 252(3) of the CCPA, no enforcement order of a foreign country judgment may be passed except after ascertaining the following:
As discussed in 3.1 Legal Issues Concerning Enforcement of Foreign Judgments, the treatment of foreign judgments will depend on the country from which the judgment originates and whether a treaty exists between Bahrain and that country.
A party seeking recognition of a foreign judgment in Bahrain must be aware that, while the Civil and Commercial Law of Bahrain is not governed primarily by Islamic Law, the courts will consider certain principles of Islamic law as forming part of Bahrain’s public order and ethics, and therefore may use Article 252(3)(4) of the CCPA to justify rehearing the case.
Under the Riyadh Convention, judgments against governments or government employees that relate to their administrative duties are not recognised.
Recognition of a foreign judgment is also rejected under the Riyadh convention if:
Provided that a certificate of final judgment/enforceability can be obtained from the country in which the judgment was obtained, default and summary judgments can be recognised and enforced in Bahrain.
A foreign judgment in Bahrain is enforced by bringing the judgment before the Bahraini High Civil court for recognition and paying the prescribed court fees (see 3.5 Costs and Time Taken to Enforce Foreign Judgments).
A foreign judgment will only be enforced if it meets the criteria set out in 3.1 Legal Issues Concerning Enforcement of Foreign Judgments. In accordance with the CCPA, it is essential that the Bahraini judge is satisfied that the litigants have been duly summoned and properly represented.
If the award is recognised, a party must seek enforcement from the Bahraini Court of Execution. Domestic authorities must execute the foreign judgments as issued (ie, not in part), provided that they do not oppose Shari’a law and public order.
Recognition of Judgments from Treaty Countries
The GCC Convention (Article 1) states that 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.”
Enforcement under the Riyadh Convention (Article 32) requires the competent judicial body to establish that the judgment complies with the provisions of the Riyadh Convention and confirm this in its judgment. The competent body will then order appropriate measures to be taken to give the judgment the same enforceable status as it would have had if it had been made by the requested party.
Recognition of Judgments from Non-treaty Countries
In the absence of a treaty such as the GCC or Riyadh Conventions being in place, or in the absence of a principal of reciprocity between Bahrain and the jurisdiction in which the foreign judgment originates, a fresh claim must be filed before the competent court requesting that it acknowledges and recognises such judgment – the foreign judgment may be used as evidence in support of this application.
The enforcement of all judgments in Bahrain is carried out predominantly by the Execution Court; this includes foreign judgments being enforced as per any applicable treaty or agreement, foreign judgments recognised by the Bahrain courts and foreign judgments confirmed following application to the courts as a fresh case. All judgments capable of being enforced in accordance with the Bahrain law requirements are treated the same for the purpose of enforcement.
That being said, the position regarding the enforcement of foreign judgments is the same as for domestic judgments (see 2.3 Costs and Time Taken to Enforce Domestic Judgments). The length of time it takes for a judgment to be enforced is almost entirely dependent on the availability of the debtor’s assets, and the costs are subject to the Judicial Fees Law on an application basis.
Appeals of foreign judgments are subject to the limitations set out in 2.5 Challenging Enforcement of Domestic Judgments.
To appeal a foreign judgment that has been enforced by a Bahraini Court of Execution, a party must submit an application to the Bahrain High Civil Court.
There is an established history of enforcement of arbitral awards in Bahrain, and the principle of arbitration itself is a well-recognised and respected form of dispute settlement. Bahrain is a leading centre for arbitration proceedings, and the following enforcement of awards.
A Favourable Approach towards Arbitration
Arbitration is a popular means of dispute resolution in Bahrain and, as discussed in 2.1 Types of Domestic Judgments, the jurisdiction established its own arbitration institution in 2009, the BCDR-AAA, which ranks among the most competitive in the region. The Arbitration Rules of the BCDR (the BCDR Rules) have been developed in partnership with the American Arbitration Association, with the most recent amendment to these rules taking place in 2017.
Another important institution headquartered in Bahrain is the Gulf Cooperation Council Commercial Arbitration Centre (GCCCAC), a regional arbitration authority established in 1993.
Other arbitral institutions commonly used for international commercial arbitration in Bahrain are the London Court of International Arbitration (LCIA), the International Chamber of Commerce (ICC), the United Nations Commission on International Trade Law (UNCITRAL), the Dubai International Financial Centre-LCIA (the DIFC-LCIA), the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Global Market Arbitration Centre (ADGMAC).
Legal Framework for the Enforcement of Arbitral Awards
The New York Convention
Bahrain has been a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) since 6 April 1988.
In accordance with the terms of Bahrain’s accession to the New York Convention, Bahrain will recognise and enforce:
Adoption of the UNCITRAL Model Law
Legislative Decree No 9 of 2015 (the Bahrain Arbitration Law) adopts the provisions of the UNCITRAL Model Law (the Model Law) in its entirety. The Bahrain Arbitration Law adds further substantive provisions, including:
In accordance with the provisions of the Model Law, the Bahrain Arbitration Law will recognise any arbitral award as final and binding subject to a few limited grounds for refusing enforcement or recognition, as set out under 4.3 Categories of Arbitral Awards Not Enforced.
The BCDR Law
Legislative Decree No 30 of 2009 with respect to the BCDR (the BCDR Law) sets out specific rules applying to the enforcement of arbitral awards rendered by the BCDR under the BCDR Arbitration Rules (see 4.2 Variations in Approach to Enforcement of Arbitral Awards).
There are two routes to enforce arbitral awards in Bahrain. The first route applies to the enforcement of arbitral awards rendered under the BCDR Rules, while the second route is relevant to the enforcement of other domestic and international arbitral awards.
Enforcement of Arbitral Awards Rendered under the BCDR Rules
Pursuant to Article 23 of the BCDR Law, enforcing an arbitral award rendered under the BCDR Arbitration Rules requires an order of a judge of the High Court of Appeal.
When making an application for an enforcement order to the High Court of Appeal, the applicant must provide:
The High Court of Appeal allows for rounds of submissions by the parties and, upon the application of the party seeking enforcement, can hand down freezing orders over the debtor’s assets concurrently with its enforcement order.
Subject to the judge of the High Court of Appeal being satisfied that the arbitral award does not contravene Bahrain’s public order, the judge will issue a “reasoned” enforcement order in favour of the applicant or, in the unlikely event that the award is in breach of public policy, an order denying enforcement.
The enforcement order can be challenged within 30 days of its notification, on any of the limited grounds for setting aside an arbitral award as set out under Article 24 of the BCDR Law (see 4.6 Challenging Enforcement of Arbitral Awards).
The judge that has issued the enforcement order shall not be “included in the composition of the court selected to adjudicate the petition” challenging the enforcement order.
Enforcement of Arbitral Awards Not Rendered under the BCDR Arbitration Rules
In accordance with Article 252 of the CCPA (as amended by Legislative Decree No 21 of 2019), enforcing an arbitral award – whether domestic or international – that is not made under the BCDR Arbitration Rules requires making an application to the High Civil Court.
When making an application for an enforcement order to the High Civil Court, the applicant must provide:
The High Civil Court allows for rounds of submissions by the parties. Subject to having ascertained that “there is nothing preventing [the Arbitral Award] implementation”, the President of the High Civil Court will then issue an enforcement order in favour of the applicant, or an order denying enforcement.
See 4.6 Challenging Enforcement of Arbitral Awards regarding the grounds preventing enforcement.
An award that has not yet become final and binding on the parties (ie, is still subject to proceedings) or that has been set aside or suspended by a court of the country in which, or under the law of which, it was made, may be declared unenforceable in Bahrain, upon the application of a party.
When an award is subject to ongoing set-aside proceedings in the country in which, or under the law of which, it was made, the Bahraini courts may suspend enforcement proceedings and may also, upon the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.
It is also rather more difficult to enforce any interim award in Bahrain on the basis that this would not be the "final" award in any proceedings.
Although a state or state entity may raise a defence of sovereign immunity at the enforcement stage, the Bahraini courts take their judicial independence and the rule of law seriously and, as such, a state or state entity would need to show genuine and sufficient evidence in order to successfully defend enforcement on such grounds.
As briefly outlined in 4.2 Variations in Approach to Enforcement of Arbitral Awards, an application for an enforcement order must be made in writing to either the Bahraini High Court of Appeal (for arbitral awards rendered under the BCDR Arbitration Rules) or the Bahraini High Civil Court (for other arbitral awards).
Once obtained, the enforcement order is then taken to the Bahrain Court of Execution, where the enforcing party can apply for the following measures:
Orders made by the Court of Execution can be referred to the High Civil Court, whose decision is deemed final.
Court fees for applications for the recognition and enforcement of arbitration awards and for challenges and appeals are subject to the rules based on which judicial fees are levied, as per the Judicial Fees Law, on a case-by-case basis.
Main Grounds for Challenging Enforcement of Arbitral Awards
The enforcement of arbitral awards can be challenged during the initial application for the enforcement of arbitral awards filed with either the High Court of Appeal or the High Civil Court (depending on whether the arbitral award in question has been rendered under the BCDR Arbitration Rules or not – see 4.2 Variations in Approach to Enforcement of Arbitral Awards), on the following limited grounds:
Consequences on Enforcement of an Application to Set Aside an Arbitral Award
Filing an application to set aside an arbitral award before the Court of Cassation (for arbitral awards rendered under the BCDR Arbitration Rules) or the High Civil Court (for other arbitral awards) will not automatically stay the enforcement of the arbitral award.
The party resisting enforcement may request an interim order for a stay on enforcement of the arbitral award, pending the determination of the application to set aside. However, such orders are rarely obtained.