Bahrain Execution Law

Introduction

Bahrain Decree-Law No. 22/2021 On the Promulgation of the Execution Law in Civil and Commercial Matters (“Execution Law”) ranks among the most important recent pieces of legislation passed in Bahrain and marks one of the most significant updates of the civil and commercial procedural framework since the all-encompassing cornerstone legislation of Bahrain Decree-Law No. 12/1971 On the Issuance of the Civil and Commercial Procedures Law (“Procedures Law”).

Bahrain Decree-Law No. 22/2021 abrogates Title 8 of Bahrain Decree-Law No. 12/1971 (“Execution”). Whilst similar or identical provisions to those contained in Title 8 of Bahrain Decree-Law No. 12/1971 are found in Bahrain Decree-Law No. 22/2021, Bahrain Decree-Law No. 22/2021 offers a more organised layout and some notable additions, which are described below.

Analysis

Entry into Force

Bahrain Decree-Law No. 22/2021 became effective on 17 March 2022, six months after publication in the Official Gazette.

In addition to proceedings instituted after that date, Bahrain Decree-Law No. 22/2021 applies to pending execution proceedings “instituted prior to its entry into force”. It does not however affect “existing seizure procedures and the sales procedures” (Article 3 of Bahrain Decree-Law No. 22/2021).

The transitional rules are found in Bahrain Ministerial Resolution No. 19/2022 determining the mechanism for reconciling the status of existing execution files before the implementation of the provisions of the Execution Law in Civil and Commercial Matters promulgated by Legislative Decree No. (22) of 2021.

Decisions implementing the Execution Law

A number of Ministerial Resolutions have been taken in the wake of the adoption of Bahrain Decree-Law No. 22/2021, implementing some of its most fundamental provisions, namely:

• Bahrain Resolution No. 4/2022 in relation to the Regulation of the Private Executor Activity Practices.
• Bahrain Resolution No. 19/2022 determining the mechanism for reconciling the status of existing execution files before the implementation of the provisions of the Execution Law in Civil and Commercial Matters promulgated by Bahrain Decree-Law No. 22/2021.
• Bahrain Resolution No. 20/2022 in relation to the Requirements for the Notification of the Judgment Debtor.
• Bahrain Resolution No. 21/2022 in relation to the Credit Record of the Judgment Debtor.
• Bahrain Resolution No. 22/2022 in relation to the Procedures for Submitting an Application to perform of the Writ of Execution.
• Bahrain Resolution No. 23/2022 in relation to Rules related to how to Seize and sell properties of the Judgment Debtor and Distribute Sale Proceeds.
• Bahrain Resolution No. 24/2022 in relation to Procedures for Requesting the Enforcement of Writs of Execution and Appealing against the Decisions of the Execution Court. 
• Bahrain Resolution No. 25/2022 in relation to Rules related to how to Seize and Sell movables and Distribute Sale Proceeds.
• Bahrain Resolution No. 26/2022 specifying Rules and Procedures for Specific Performance.
• Bahrain Resolution No. 35/2022 Determining the Categories of Licensees to which the legal procedures stipulated in the Central Bank of Bahrain and Financial Institutions Law on the Execution of Writ of Execution shall apply.
• Bahrain Resolution No. 36/2022 determining the Value of the Minimum Executable Amounts of the Judgment Debtor’s Accounts.

Structure of the Execution Law

Bahrain Decree-Law No. 22/2021 contains 60 articles structured around six chapters:

• Chapter 1 – General Provisions (Articles 1-26 of Bahrain Decree-Law No. 22/2021): this chapter introduces some significant new features such as a definition of “Writ of execution”, the introduction of “Private execution persons” to assist the execution process, and provisions relating to disclosure of assets by the debtor.
• Chapter 2 – Execution against natural and legal persons (Articles 27-43 of Bahrain Decree-Law No. 22/2021): this chapter sets out, in detail, the procedure for the attachment and sale of assets belonging to two categories of debtors, namely, individuals and legal entities, other than commercial companies and financial institutions (which are covered by Chapter 3 and Chapter 4 of Bahrain Decree-Law No. 22/2021 respectively).
• Chapter 3 – Execution against Companies (Articles 44-48 of Bahrain Decree-Law No. 22/2021): outlines specific rules relevant to execution against companies licensed under Bahrain Decree-Law No. 21/2001 On the Issuance of the Commercial Companies Law, with regards to the company’s disclosure obligation.
• Chapter 4 – Execution against Financial Institutions (Articles 9 and 50 of Bahrain Decree-Law No. 22/2021): outlines specific rules relevant to execution against financial institutions licensed under Bahrain Law No. 64/2006 On the Issuance of the Central Bank of Bahrain and Financial Institutions Law.
• Chapter 5 – Provisional Attachment (Articles 51-57 of Bahrain Decree-Law No. 22/2021): is an almost identical copy of Articles 304-309 of Bahrain Decree-Law No. 12/1971. It describes the types of assets which can be subjected to a measure of provisional attachment and regulates the carrying out of the measure.
• Chapter 6 – Criminal Liability (Articles 58-60 of Bahrain Decree-Law No. 22/2021): sets out the sanctions applicable to individuals and companies which hamper or fail to cooperate with the execution process.

The most prominent features of Bahrain Decree-Law No. 22/2021 are analysed in the sections below, mirroring the structure of Bahrain Decree-Law No. 22/2021.

Chapter 1 – General Provisions

1. The concept of “Writ of Execution”

Whereas Article 244 of Bahrain Decree-Law No. 12/1971 (now abrogated), referred to the courts of execution as having competence to execute court judgments and decisions, authenticated deeds and conciliation reports ratified by the courts and other documents so characterised by law, Bahrain Decree-Law No. 22/2021 rationalizes the scope of the court’s jurisdiction by unifying these two limbs under the key definition of “writs of execution”, which is used throughout Bahrain Decree-Law No. 22/2021.

Writs of execution are defined in Article 2 of Bahrain Decree-Law No. 22/2021 as:

"Judgments and decisions made by the courts in their various kinds and degrees, arbitral awards after ordering their enforcement, authenticated deeds, conciliation reports, and any other documents so characterised by law”.

2. The role of the “Private Execution Person”

A significant update brought in by Bahrain Decree-Law No. 22/2021 is the introduction of “private execution officers” (“PEOs”) from the private sector to assist the courts in carrying out the execution procedures.

Bahrain Ministerial Resolution No. 4/2022 sets out the procedure and requirements for the granting and renewal of PEOs’ licences, and regulates the PEOs’ tasks, duties, and responsibilities (Article 5 of Bahrain Decree-Law No. 22/2021).

Pursuant to Article 3 of Bahrain Ministerial Resolution No. 4/2022, a licence to act as a PEO (lasting three years, renewable) can only be granted to legal persons authorised to operate in Bahrain, upon obtaining the appropriate practicing record from the Ministry of Industry, Commerce and Tourism, which cannot be cumulated with the activity of legal professionals or notaries. Each PEO must name at least three individuals within the organisation to carry out, on the PEO’s behalf, the practical work involved in the performance of the PEO’s duties.

When exercising their duties, the PEO and its employees are treated as public officials (Article 6 of Bahrain Decree-Law No. 22/2021).

Article 10 of Bahrain Ministerial Resolution No. 4/2022 authorises PEOs to:

- Carry out the necessary procedures for seizing and selling movable assets.

- Carry out the necessary procedures for preparing the sale of real estate property, cars, stocks and bonds.

- Carry out the necessary procedures for specific performance.

PEOs act under the supervision and control of the execution judge (Article 7 of Bahrain Decree-Law No. 22/2021) and are subject to disciplinary sanctions in case of breach of their duties, ranging from warnings to the cancellation of their licence (Article 9 of Bahrain Decree-Law No. 22/2021).

3. The Immediate/Provisional execution of judgments

The starting principle is that judgments cannot be executed “as long as they may be subject to appeal” (Article 10 of Bahrain Decree-Law No. 22/2021).

As an exception, Articles 10-13 of Bahrain Decree-Law No. 22/2021 set out the rules applicable to judgments which can be immediately (or “provisionally”) executed.

Provisional execution by force of law

Provisional execution automatically applies to judgments and orders issued in summary cases (Article 10 of Bahrain Decree-Law No. 22/2021), and to judgments given in commercial matters provided that an appropriate guarantee is given (Article 11 of Bahrain Decree-Law No. 22/2021), which is a solution identical to that which is set out in Article 245 of Bahrain Decree-Law No. 12/1971 (abrogated).

Provisional execution can apply without the need for the creditor to provide a guarantee in the following scenarios:

- if the judgment debtor has “acknowledged the establishment of an obligation”;

- if the judgment is issued in execution of a previous final judgment or is based on an uncontested official instrument or private deed to which the judgment debtor was a party; and/or

- if the judgment concerns the interim or obligatory maintenance of a minor or other listed childcare matters (Article 11 of Bahrain Decree-Law No. 22/2021).

Provisional execution by court order

The Execution Court can make a declaration of provisional execution of the judgment, subject to the presentation of a guarantee, in the following cases:

- if the judgment concerns a possessory action;

- if the judgment evicts a tenant from the premises in accordance with the law;

- if the judgment concerns the payment of wages and salaries of employees or wages of servants, craftsmen or workers;

- if the judgment concerns the performance of urgent repairs (Article 12 of Bahrain Decree-Law No. 22/2021).

Stay of provisional execution

The provisional execution of a judgment can be stayed by a court order, subject to the requesting party proving that the execution would cause disproportionate harm and that there is a likelihood that the judgment will be overturned.

4. Applying for the execution of a writ

Pursuant to Article 19 of Bahrain Decree-Law No. 22/2021, the applicant must notify the writ of execution to the judgment debtor at least seven days prior to filing the execution application.

An application for the execution of a writ can be lodged electronically through the Information and eGovernment Authority website, as detailed in Bahrain Ministerial Resolution No. 24/2022.

Pursuant to Article 2 of Bahrain Ministerial Resolution No. 24/2022, the applicant must provide the following:

- Proof of the notification of the writ of execution to the judgment debtor, or evidence that the notification could not be made.

- A power of attorney (if applicable).

- The writ of execution.

- A certified translation of any submitted document (if applicable).

- A bank certificate enclosing the applicant’s bank account details (IBAN).

Upon acceptance of the application, the Execution Court will issue a decision.

5. Disclosure

A remarkable new feature of Bahrain Decree-Law No. 22/2021 is Article 24 of Bahrain Decree-Law No. 22/2021, which places on the judgment debtor the burden of disclosing the whereabouts of their funds and assets sufficient to cover the amount of the debt set out in the writ of execution. If the debtor’s funds are insufficient to cover that amount, then the debtor must nevertheless disclose the whereabouts of all their assets, including those held by third parties and any property to be returned to the debtor in the future.

Disclosure must take place within one day of the date of the notification of the writ of execution or of the debtor’s knowledge of the execution procedure. The debtor must thereafter disclose any changes regarding the disclosed funds, within seven days of any such changes taking place.

6. Specific performance and periodic penalty

Article 25 of Bahrain Decree-Law No. 22/2021 authorises specific performance of a writ of execution “to the extent necessary”, without the need of a dedicated application from the creditor. The relevant rules and procedures are set out in Bahrain Ministerial Resolution No. 26 of 2022.

If the judgment debtor does not pay within ten days of being notified of the writ of execution, the creditor can apply for an order from the Execution Court imposing a periodic penalty fine on the judgment debtor. The amount of the fine can be increased, if deemed insufficient to persuade the debtor to comply.

The judgment debtor can apply for a stay of execution subject to demonstrating that specific performance is impossible.

When specific performance involves an “obligation to do” (such as an eviction or removal order), the PEO will carry out the execution procedures, including by using force if necessary (subject to receiving an authorisation from the Execution Court). If executing the writ entails assistance from a public body, the Execution Court will make an order requesting that public body to cooperate.

Chapter 2 – Execution against natural persons and legal persons

Chapter 2 of Bahrain Decree-Law No. 22/2021 outlines the enforcement regime against natural and legal persons.

Specific rules relating to the attachment and sale of real estate properties can be found in Bahrain Ministerial Resolution No.23/2022, whilst rules relating to the attachment and sale of chattels can be found in Bahrain Ministerial Resolution No.25/2022.

1. Automatic attachment of assets

Pursuant to Article 29 of Bahrain Decree-Law No. 22/2021the Execution Law, attachment procedures are triggered “automatically” by the filing of the execution application and include the attachment of amounts held in bank accounts as well as of movables and real estate properties.

As far as the attachment of bank accounts is concerned, Bahrain Ministerial Resolution No. 36 of 2022 sets out a minimum unseizable amount of BHD 400 (USD 1000), which needs to remain available to the debtor.

2. Disclosure Orders Against Third Parties

The judgment creditor can, at any time, inform the Execution Court of the whereabouts of the debtor’s assets. The court can then issue disclosure orders to any relatives, or third parties suspected to have received or benefited from the debtor’s assets. Any person so ordered must respond within 10 days of the notification.

3. Enforcement against real estate property
Bahrain Ministerial Resolution No. 23/2022 lays out the procedure for enforcing a writ of execution against the debtor’s real estate property. This involves seizing the property, organising the auction and auctioning the property.

Seizing the property

If the value of the writ of execution is below or equivalent to BHD 10,000 (USD 26,500), the seizure becomes effective 15 days after the order of the Execution Court. If the value exceeds that threshold, the seizure is effective as from the date of the order of the Execution Court.

In practice, a seizure notice is placed on the official properties register of the Survey and Land Registration Bureau, preventing any transactions on the seized property without the prior authorization of the Execution Court.

Preparing the auction

Preparing the auction involves an initial phase of data-gathering by the PEO who will draw up a report containing details of the seized property such as location, type, boundaries, occupation. The valuation of the property is carried out by the PEO with the assistance of two licensed property valuers.

The report and its attachments are submitted to the Execution Court and notified to the debtor.

Ten days at least after such notification, the Execution Court can issue an order authorising the sale of the property by way of public auction.

The PEO further draws up a “list of conditions” attaching documents related to the underlying enforcement application, the property valuation, and details regarding the forthcoming public auction (as detailed in Article 6 of Bahrain Ministerial Resolution No. 23/2022). The PEO then presents the “list” to the Execution Court for approval.

Public notice must be given, 15 days prior to the scheduled date of the auction, by publication in the Official Gazette and in a local newspaper.

Auctioning the property

The bidding procedure is carried out in public. The Execution Court issues an order awarding the sale to the highest bidder, although it has discretion to approve a bid lower than the base price or to order the repetition of the auction.

The buyer must make payment of the sale price into Court within two weeks of the Execution Court’s decision awarding the sale for the sale to become final and title to the property being transferred.

If the winning bidder fails to pay the sale price, the auction will be repeated at the bidder’s expense.

4. Enforcement against chattels

Bahrain Ministerial Resolution No. 25 of 2022 sets out the procedure for enforcing a writ of execution against the debtor’s chattels, which involves seizing the assets, organising the auction, and auctioning the assets.

Different timeframes for seizure apply depending on the type of asset and the amount of the debt. The seizure is immediate (i.e., it is effective as of the date of the Execution Court order granting enforcement) on vehicles for debts exceeding the amount of BHD300 (USD800), and on shares and bonds for debts exceeding BHD 10,000 (USD 26,500). On the other hand, the seizure only takes place 15 days from the order granting enforcement in the following cases:

- Seizure of vehicles for debts lower than BHD300 (USD800). 

- Seizure of shares and bonds for debts lower than BHD10,000 (USD26,500).

- Seizure of revenues, shares/ equities and movable goods.

Seizure seals are placed on the assets, making any transaction carried out in breach of the seizure ineffective. The PEO draws up a report listing the seized assets along with their description, location, approximate value and procedural details regarding the seizure. Garnishment of the debtor’s assets and revenues (including salary) held by third parties is also possible.

The auction is organised and carried out in a similar manner to that described above in relation to the auctioning of real estate property.

5. Complaints against attachment and distribution of sale proceeds

Pursuant to Article 37 of Bahrain Decree-Law No. 22/2021, any interested party can, within seven days of being notified or becoming otherwise aware of an attachment, file a complaint with the Execution Court in any of the following cases:

- If the attached asset does not belong to the judgment debtor, whether in full or in part.

- If the attached asset is already encumbered by competing rights which match or exceed that asset’s value.

- If the attached asset is already encumbered by competing rights which match or exceed that asset’s value.

- If the asset cannot be legally sold.

- If the amount of the credit exceeds the amount that can be garnished from the debtor’s bank account, salary, payments, or expenses.

Any interested party can likewise file a complaint against a decision to award sales proceeds within seven days of being notified or becoming otherwise aware of that decision.

Any such complaint can be filed electronically on the Information and eGovernment Authority website in accordance with Article 3 of Bahrain Ministerial Resolution No. 24/2022.

6. Appeals

A decision from the Execution Court rendered pursuant to the complaint procedure explained above can be appealed to the High Court, where it is processed as a summary case, for expediency. The enforcement of the appealed decision is stayed for the duration of the appeal.

7. Travel bans

The creditor may request the Execution Court to issue a travel ban order against the judgment debtor if there is fear that they might leave the country to avoid execution and their assets appear to be insufficient to pay the debt. The travel ban cannot exceed three months and can be renewed up to three times.

8. The “annotation” of the debtor’s credit score

Under Article 42 of Bahrain Decree-Law No. 22/2021, if the debtor’s assets are insufficient to pay the judgment amount, the Execution Court shall order the recording of the debt in the debtor’s credit score for a duration of seven years. The annotation is removed in case of settlement.

9. The monitoring of the debtor’s transactions

Under Article 43 of Bahrain Decree-Law No. 22/2021, if the debtor’s assets are insufficient to pay the judgment amount, the Execution Court shall issue a circular to relevant government entities, requesting to be notified of any intervening transactions relating to the debtor’s assets.

Chapter 3 – Execution against companies

Chapter 3 of Bahrain Decree-Law No. 22/2021 (Articles 44-48 of Bahrain Decree-Law No. 22/2021) covers enforcement against commercial companies licensed pursuant to the Bahrain Commercial Companies Law.

1. Suspension of enforcement

The Execution Court must suspend enforcement proceedings initiated against companies undergoing restructuring or insolvency procedures.

2. Additional time allowance for settlement purposes

As an exception to Article 25 of Bahrain Decree-Law No. 22/2021 (which, as seen above, gives the judgment debtor ten days from the notification of the writ of execution to pay, failing which a periodic penalty applies), commercial companies enjoy a 21-day “grace period”, from the date of the submission of the execution application, for the purpose of reaching an amicable settlement with the judgment creditor.

If such an agreement is not achieved the judgment debtor must, within one day of the end of the grace period, provide full disclosure of their assets to the Execution Court. If the debtor is insolvent or cannot meet its liabilities, they must – in addition to providing disclosure – make the appropriate restructuring or insolvency filings within 15 days of the end of the grace period. A failure to disclose or to comply with the appropriate restructuring or insolvency filings will result in enforcement measures being taken in accordance with Chapter 2 of Bahrain Decree-Law No. 22/2021.

Chapter 4 - Execution against financial institutions

Enforcement against financial institutions licensed under Bahrain Law No. 64/2006 On the Issuance of the Central Bank of Bahrain and Financial Institutions Law (“Licensees”), is supervised by the Central Bank of Bahrain (“CBB”) itself.

The relevant rules and procedures of execution are set out in CBB Resolution No. 10 of 2022 regarding execution orders against banks, and involve the following:

1. Upon approval of the application for the execution of a writ, the Execution Court immediately transmits an execution request to the CBB.

2. The competent department within the CBB records the execution request in a special register and oversees the execution against the concerned Licensee.

3. The Licensee is granted a period “not exceeding 21 days” from the date of the Execution Court’s approval of the enforcement application, to either comply with the enforcement order or to settle the dispute with its creditor.

4. Execution can be made against the Licensee’s shareholdings, properties, deposits, bonds, and other instruments.

Additionally, the CCB can impose restrictions, penalties, and other administrative measures on the Licensee.

Chapter 5 – Provisional Attachment

Provisional attachments are interim measures taken on the debtor’s assets in cases where the creditor fears that the future enforcement of a writ against the debtor might be hindered.

In accordance with Article 55 of Bahrain Decree-Law No. 22/2021, this measure is usually carried out on the basis of a “wellestablished right that is immediately enforceable”, i.e., a writ of execution. In the absence of an enforceable right, this measure can also be sought by petitioning the courts either as part of ongoing proceedings on the merits, or under a separate dedicated application.

Within 15 days of the attachment, the creditor must commence proceedings before the competent court to establish the grounds and validity of the attachment. A failure to do so will result in the attachment being revoked.

Chapter 6 – Criminal Liability

Under Articles 58-60 of Bahrain Decree-Law No. 22/2021, any person deliberately impeding or obstructing the progress of enforcement procedures (for example, by concealing funds, submitting misleading information or refraining from disclosing relevant information) is punishable by a maximum of two years of imprisonment and a fine ranging from BHD 500 (USD 1,300) to a maximum of BHD 100,000 (USD 265,000).

Legal persons in whose name (or for whose benefit) any such acts have been committed are also punishable by a fine ranging from a minimum of BHD 2,000 (USD 5,000) to a maximum of BHD 100,000 (USD 265,000).

This article chapter was first published by LexisNexis. To read the aricle please click the link: Bahrain Execution Law