Legal Update: Bahrain Law of Civil and Commercial Execution

On the 16th of September 2021, Legislative decree No. 22 of 2021, promulgating the Law of Civil and Commercial Execution (the “New Execution Law”), was issued.

The New Execution Law is considered as a development to the judicial system, keeping pace with the requirements of sustainable improvement, aiming to increase the effectiveness of justice procedures.

The following are the most important focus points and updates under the New Execution Law:

• The New Execution Law establishes disclosures as a part of the enforcement proceedings, where the person or entity subject to execution will be obliged to disclose the assets owned, within seven days from the beginning of the execution process. Should the amount currently owned by the discloser not be sufficient to cover the claimed debt, they shall also be required to disclose any assets they expect to gain in future.
• The New Execution Law developed a system placing a limit on the credit of the person/entity subject to execution for seven years if their money is insufficient to pay his or its debt in order to protect the future creditors. Said limit may only be raised through a settlement or through the commencement of the period stated hereinabove.
• Companies will be given 21 days from the date of the execution file to make a settlement with their creditors. If the settlement failed, the company will be obliged to disclose its capital. Furthermore, if the company’s debts are higher than its capital, then the company must start the procedures of bankruptcy within 15 days after the end of the settlement period.
• To help expedite the process of enforcement, the New Execution Law allows the private sector to assist in the enforcements process through a decision that will be made by the Minister of Justice, clarifying the system where the private sector can help the Execution Courts, the description of their role, and the conditions that should be met to be a licensed private executor.

In conclusion, this decree is set to establish smoother and more effective pathways through shortening the procedures and increasing the speed of enforcement.