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06 November 2017

Real Estate and Construction Disputes – The Fast Track

On 3rd August 2017, the Real Estate Sector Regulation Law (Decree No. 27 of 2017) (the “RESR Law”) was published in Bahrain’s Official Gazette (No. 3325).

Chapter 1 of the RESR Law comes into force one month after publication in the Official Gazette, and Chapters 2 to 6 come into force 6 months after publication.

The RESR Law consists of 109 articles, and repeals the Property Development Law (Decree No. 28 of 2014) (the “PD Law”) and the Law Regulating the Profession of Estate Agents (Decree No. 21 of 1976).

The RESR Law provides a more sophisticated legal framework for the real estate and construction sectors in Bahrain, and addresses a number of ambiguities that stemmed from the previous legislative landscape.

One of the main changes that will be of interest to local and international developers and practitioners alike is the provision, at Article 8 of the RESR Law, that the Bahrain Chamber for Dispute Resolution (“BCDR”) is the competent court for property disputes, where the value of the dispute exceeds BHD 500,000 and the dispute relates to either:

  • an off-plan sale, usufruct, the right of Musataha, the right of long term lease, or the right of lease-to-own or lease contracts;
  • an Owners Association; or
  • the activities or projects of property development or the property rights, as determined by a resolution of the Board of Directors of the Real Estate Regulatory Agency.

Previously, such disputes would have fallen within the jurisdiction of the Property Development Disputes Committee (the “PDDC”), that was created pursuant to the PD Law, and composed of two judges from the High Civil Court and one (non-judicial) ‘officer who has experience in property affairs’.

Judgments of the PDDC may be appealed in the High Civil Court, with further avenues of appeal available in the Court of Appeal and the Court of Cassation.  The dispute resolution process under the PDDC was therefore multi-tiered, and could potentially take a number of years to produce a final judgment capable of enforcement. 

In contrast, disputes within the BCDR are presided over by tribunals composed of two judges of the highest Bahraini courts and a member selected from the BCDR's roster of neutrals, and judgments of the BCDR are considered to be final judgments of the Bahraini courts.

There are only certain, limited, grounds for a party to appeal a BCDR judgment, and such a challenge can only be brought before Bahrain’s highest court, the Court of Cassation.  The grounds include that the judgment was obtained by fraud, or is against public policy.

Of particular note for foreign developers is that disputes before the BCDR may be decided based on the laws of another jurisdiction, should the parties agree or the contract prescribe it, and may be heard in a language other than Arabic, and that foreign lawyers may represent parties in the BCDR in conjunction with Bahraini-qualified lawyer licensed before the Court of Cassation.

This article was first published by Lexis Nexis in the MENA Business Law Review in the 3rd quarter of 2017.


This article was written by Thomas Catto. For more information please contact Thomas on +973 17 133209 or at thomas.catto@crsblaw.com.

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