Knowledge Series Volume I & II: Execution General Provisions & Enforcement Of Judgements And Execution Procedures

Volume I: The Raees and Co Knowledge Series Volume I provides an overview of the current position of existing execution files and the general provisions introducing Decree Law No. 22/2021 on the Issuance of the Law of Execution in Civil and Commercial Matters ("Execution Law" or "the Law"). Execution Law covering jurisdiction, Execution Deeds, and enforcement of arbitral awards. The latest and most prominent development in the Law is the introduction of Private Execution Persons which aims to streamline execution procedures. Volume I addresses the necessary information required to practice and obtain the license of the Private Execution Person under Resolutions Nos. 3 and 4 of 2022.

The dispute resolution process as it is known to the layperson revolves around the litigation process up to the point of judgement. However, the journey to execute a judgement is arguably more vital than the litigation process itself for an individual or company who has won a civil case. Procedural laws play a crucial role in the quality of a country's legal system. The possibility for defendants to frustrate the enforcement of a judgement or the slowness of certain executory processes is likely to provide ample room for legal reform.

The Law of Execution (Decree Law No. 22/2021) ("Execution Law" or "the Law"), which has repealed Title Eight of the Civil and Commercial Procedures Law (Decree Law No. 12/1971) ("CCPL") previously addressing execution practices, was published in the Official Gazette on 9 September 2021, has entered into force on 17 March 2022.

The Execution Law, should its provisions be properly observed and implemented as supplemented by Ministerial Resolutions, can enhance the process of executing Bahraini judgements.

This article addresses Chapter One (General provisions) of the Execution Law with reference to the relevant Resolutions providing additional information regarding procedures. The main focus of Volume I will be on Private Execution Persons and the procedures for obtaining the necessary license to practice.

Existing Execution Files

Resolution No. 19/2022 with respect to Establishing the Mechanism for the Reconciliation of Existing Execution Files Prior to the Effectiveness of the Provisions of the Execution Law in Civil and Commercial Matters stipulates two separate reconciliation routes for existing files depending on the debtor in question. The said reconciliation routes set out below are, however, subject to any settlement agreement which may be reached between the creditor and debtor in respect of the debt the subject of the Execution Deed.

Where the debtor is an individual or a juristic person – other than commercial companies and financial institutions – execution measures will follow the procedures set out in Chapter Two of the Execution Law except for: (i) procedures for the sale of real estate by public auction already initiated; and (ii) procedures for the sale of moveable property where a person has already been appointed to undertake the sale of such moveables by public auction, where the provisions of Title Eight of CCPL will continue to apply. Debtors are required to comply with the new disclosure requirements set forth in Article 24 of the Execution Law.

Where the debtor is a commercial company (established pursuant to Decree Law No. 21/2001 Issuing the Commercial Companies Law) or a financial institution (licensed pursuant to Decree Law No. 64/2006 Issuing the Central Bank of Bahrain and Financial Institutions Law), execution measures will follow the procedures set out in Chapter Three of the Execution Law except for: (i) procedures for the sale of real estate by public auction already initiated; and (ii) procedures for the sale of moveable property where a person has already been appointed to undertake the sale of such moveables by public auction, where the provisions of Title Eight of the CCPL will continue to apply. Execution measures ((i) and (ii) above) taking against commercial companies or financial institutions shall not cease or pause except where the company: (i) makes full disclosure of its financial position with supporting documents in accordance with the requirements of Article 24 of the Execution Law; (ii) submits a declaration on its ability to pay its debts or that its liabilities exceed its assets; and (iii) proceeds with filing a case or a case is filed by its creditor seeking the commencement of reorganisation and banking procedures in respect of the debtor company under Decree Law 22/2018 Issuing the Reorganisation and Bankruptcy Law (the "RBL").

Jurisdiction of the Court of Execution

The Court of Execution of the Kingdom of Bahrain by virtue of the Law is entitled to enforce all Execution Deeds (see below). It is declared that execution procedures shall be under the supervision and control of the judge of the Court of Execution with the newly introduced Private Execution Persons to assist the judge in the process which will be further addressed in this Volume I.

Execution Deeds

For the Court of Execution to carry out execution procedures, it must do so against an Execution Deed which is defined under Article 2 of the Law as follows:

• Judgements and decisions made by the courts of Bahrain in their various kinds and degrees;
• Arbitral awards after ordering their enforcement by the competent court;
• Notarised deeds (such as mortgage deeds and debt bonds);
• Conciliation reports that are ratified by the courts; and
• Any other documents so characterised by Law.

Enforcement of Arbitral Award

The enforcement of Arbitral awards shall take place by submitting an application to the clerks' office of the High Court after paying the prescribed fees and enclosing the original award (or a copy) and a copy of the arbitration agreement. If the award is written in a language other than Arabic, a translation must be supplemented.

Then the arbitral award shall be enforceable by an order issued by the President of the High Court, after reviewing the judgement and the arbitration agreement and after ascertaining that no impediment prevents its enforcement.

Private Execution Person

One of the most notable new features of the Execution Law is the permissibility of the Ministry of Justice ("MOJ") to appoint a portion of the Execution Procedures to the private sector. This would be in the form of a Private Execution Person (Private Executor), approved by the Supreme Judicial Council, to undertake the work and responsibilities generally assigned to a public execution officer. Article 5 of the Law permits the licensing of the Private Execution Person which is in line with the overarching aim of the introduction of the new Law; streamlining the execution process within the Bahraini legal system. It should be noted that Article 5 applies to execution against both individuals and commercial companies.

Through the government now being able to assign private execution officers to conduct execution assignments, as opposed to solely relying on public execution officers, the 'workforce' of the Execution Court increases significantly. MOJ commented that previously the vast difference between the number of execution files being approximately 86,000 with only five employees implementing execution procedures necessitates this development in the Law. Reliance on Private Executors therefore eases the strain on pubic execution officers which was previously a consequence of the small workforce, and can now enable more expedient execution procedures.

Supervision and controls

The Private Execution Person shall be regarded as Public Sector Employee and shall undertake work under the supervision and controls of the Judge of the Court of Execution. The Private Execution Person whether a physical person or a representative of a juristic person shall before performing their duties take an oath before the Minister of Justice. The oath will be deemed valid for all work assigned.

Regulating Criteria of Private Execution Persons

Resolution No. 4/2022 with respect to the Regulation of Private Execution Officers ("Resolution No. 4/2022") provides the criteria for licensing private execution officers as well as the roles that may be performed by the same. Private Execution Persons (also referred to more briefly as "Private Executor") may be natural persons (individuals) or juristic persons (registered companies).

Licensing Fee

In accordance with Resolution No. 3/2022 Concerning the Determination of the Licensing Fee to engage in Private Execution and Renewal Fee in which Article 1 stipulates a license application fee of BHD500 which must be paid by the Private Executor which includes up to three individual officers under the Private Executor. A fee of BHD100 is payable per additional person exceeding three individuals.

Renewal of the license is applicable to the Private Executor for a fee of BHD500 including three individual officers, and an additional BHD100 per individual exceeding the three.

Terms of Granting a License

By virtue of Article 3 of Resolution No. 4/2022, in order for a license to be granted to practice the activity of the private execution license, the following requirements must be met:

1. The applicant must be a legal person licensed to work in the Kingdom.
2. The applicant must obtain a commercial register for practicing the activity from the MOICT, provided that the commercial register does not combine the activity of the private execution person with the legal profession or the activities of a private notary.
3. The individual representing the legal person must have no previous convictions by a final judgement of a felony or misdemeanor breaching honor or trust, unless the person has been rehabilitated, and has not been previously dismissed from a job, removed from a position, or crossed out from the roll of practicing a profession by a final judgement or by a final disciplinary decision, unless at least three years have passed for either of them.
4. The applicant must pay the prescribed license fee.
5. To submit a valid insurance policy for the duration of the license against liability for professional errors, issued by one of the insurance companies licensed in the Kingdom, provided that the insurance amount is not less than BHD30,000.
6. The applicant must nominate at least three persons as employees to practice as private natural executors, provided that each of them fulfills the following conditions: (i) each person must not have been convicted by a final judgement of a felony or misdemeanor involving moral turpitude or dishonesty unless he has been rehabilitated; (ii) each person has not been previously dismissed from a job, dismissed from a position, or crossed out from the roll of practicing a profession by virtue of a final judicial ruling or a final disciplinary decision, unless at least three years have elapsed since the issuance of either of them; and (iii) each person must pass the exams and training decided by the Institute of Judicial and Legal Studies.

Licensing Application

The application must be submitted to the Minister of Justice, along with the required documentation necessary to verify the fulfillment of the terms stipulated above. The decision of the license must be decided upon within thirty days from the date of the submission. The legal representative shall be notified of the decision within seven days of its issuance. However, failure to notify the applicant within the period specified is considered a rejection of the license application.

License information

The license must include the name of the legal person licensed and the names of the natural private executors working under the legal person licensed to practice the business. The license must also include the licensee's address, the number and date of granting the license and its expiry date, and the works and procedures subject to the license.

Works Licensed

A private execution person may be licensed to perform a number of activities such as initiating the necessary procedures to seize and sell movable property, sale of real estate, cars, shares, and bonds, as well as initiating the necessary procedures for the specific performance of the obligation under the Execution Deed.

Duties and Responsibilities

The private execution person and those employed under them shall:

• Carry out the licensed works and procedures accurately, honestly, and faithfully, and preserve the secrets and dignity of the profession in accordance with the Law.
• Carry out the works and procedures subject to the license through the system approved by the MOJ and may not be carried out through another system.
• Execute the decisions and orders issued to him/her by the Judge of the Execution Court.
• Disclose to the creditor what personal interests he/she may have in the execution procedures or may have from a kinship relationship with the executor against the debtor.
• Maintain records related to his work.
• Handing over all documents, records, and papers to the Execution Department at the MOJ upon request, expiry, or cancellation of the license.
• Not receiving any cash under the Execution Deed from the debtor.
• Deliver any movables related to the implementation of execution in accordance with the procedures.

Private Execution Person Fees

Said fees may be agreed upon between the creditor and Private Execution Person. Recent amendments have been enacted under Resolution No. 30/2024. Pursuant to Article 12 of Resolution No. 4/2022 (as amended) the debtor to the Execution File may be required to settle the fees depending on the stage of execution procedures, which we summarise as follows:

1. If the debt under the Execution Deed has been fully settled through the attachment of bank accounts or the debt has otherwise been fully settled, the debtor may be obliged to pay a maximum of BHD1,000 or 5% of the value of the Execution Deed, whichever is lesser;
2. If the attachment of bank accounts is insufficient to settle the debt under an Execution Deed and a Private Execution Officer is required to attach and procure sale of moveable assets, the debtor may be obliged to pay a maximum of BHD10,000 or 5% of the value of the Execution deed, whichever is lesser;
3. In the event specific performance is required under an Execution Deed (e.g. eviction of property), the debtor shall be obliged to pay BHD100 to the Private Execution Officer; and
4. If several Private Execution Persons are appointed, the debtor shall be required to only settle the greater of the fees, which shall be split equally among them.

The invalidity of the private execution

The Execution Law provides two instances where the practice of private execution is invalid or prohibited which are if the Private Execution Person is a party to the Execution Deed under which the execution is being carried out and/or is a party or affiliate to the Execution Deed.

Maintenance of a Record

The Private Executor must keep a register approved by the Ministry to record all the execution files opened, the names of debtors and creditors, and the actions and procedures taken in respect of each of them.

Disciplinary Action

The Execution Law has set disciplinary action to be imposed on the Private Execution Person in case of violating provisions of this law through warnings, and a financial fine not exceeding BHD10,000, and cancellation of the license.

Inspection and Accountability

If the Judge of the Execution Court finds that the Private Executor has in performing the work violated the Execution Law, the decisions issued for its implementation, or the judicial decisions or orders issued to the Private Executor, disciplinary measures will be taken, and the Execution Department at the Ministry must submit a report in this regard to the Disciplinary Committee formed by a Resolution of the Minister of Justice. The Disciplinary Committee must investigate the violations and prepare a memorandum of its recommendations considering the outcome of the investigation and submits it to the minister to issue a decision to impose any of the disciplinary sanctions stipulated in Article 9 of the Law if the violation is proven.

The Execution Department of the Ministry undertakes the administrative inspection to verify its compliance with the duties stipulated under the provisions of the Law and the decisions issued for its implementation and compliance with the terms of the license.

Disciplinary measures against the natural Private Execution Person extend to the legal person to which he/she is affiliated, and the penalties may differ against the legal and natural person(s).

If a decision was issued to cancel the license of the juristic person, the cancellation extends to the natural private execution persons working the legal entity even if they are not a party to the disciplinary procedures.

The Minister of Justice is granted the authority to close the premises of the Private Execution Person or temporarily suspend its business until the investigation into the violation is completed.

Expiry and Cancellation of License

The license expires at the end of its term unless renewed in accordance with the provisions of Article 17 of Resolution No. 4/2022, or the expiry of the license or any reason.

The license of the Private Execution Person shall be cancelled in any of the following cases:

• The person has obtained the license based on incorrect documents or information.
• The loss of one or more of the conditions for granting the license.
• Issuance of a final criminal judgement against the private executor in a felony, or in a misdemeanor involving moral honor or dishonesty.
• At their own request in writing.

Conclusion

The Raees + Co Knowledge Series Volume I provided a detailed explanation of the rules and regulations pertaining to the Private Execution Person license. This includes licensing fees, supervision of the court, requirements to be met, and the arrangement of fees along with disciplinary action.

Knowledge Series Vol. II: Enforcement of Judgements and Execution Procedures

This article will further tackle the general provisions of Chapter One of the Execution Law with reference to relevant Resolutions issued following the enactment of the Law. It will focus on the enforcement of judgements including judgements from foreign countries, funds that may not be seized, and the procedures for execution.

Judgements Subject to Provisional Execution

A judgement may not be executed within the execution procedures of the Law if challenging it by way of appeal is permissible, unless provisional execution is prescribed in the Law or ordered in the judgement issued in accordance with Article 245 of the Civil and Commercial Procedures Law (Decree Law No. 12/1971) ("CCPL"). However, in the case where such judgements and orders are issued under summary cases then such provisional execution will be deemed compulsory.

Whilst the Execution Law further provides that provisional execution shall be compulsory by force of law if a guarantee was given in regard to judgements issued in commercial matters. The court may issue such judgement without guarantee at the requests of the litigants in the following cases: (i) if the convicted person has acknowledged the inception of obligation; (ii) if the judgement is issued in execution of a final judgement or based on an official document that has not been challenged by forgery or a non-repudiated customary document, where the losing party was a litigant in the previous judgement or a party in the documents; or (iii) if the judgement was issued as a temporary or obligatory alimony, payment for child support or housing or for the delivery of the child to his mother.

Nonetheless, the court may also issue its judgements on the declaration of provisional execution at the request of the litigants if a guarantee was provided, taking into consideration that the judgements issued are for the following cases: (i) possessory claims; (ii) eviction of a tenant from the leased premises; (iii) payment of wages and salaries of staff, employees, servants, workers or labourers; or (iv) performance of urgent repairs.

Stay of Provisional Execution

The court with which an appeal or grievance is filed may order at the request of the interested parties a stay of the provisional execution if he/she fears that gross damage may arise from such execution or if the ground of challenging the judgement makes its cancellation more likely to happen.

Deposit of the Guarantee

Where a judgement or order may only be executed under a guarantee, the obligor has a choice to either deposit sufficient money, securities or the proceeds of the execution to the Court of Execution's treasury, or to deliver what is ordered in the judgement to a custodian.

Funds That May Not Be Seized

As a way of protecting the debtor and creditor, the Execution Law introduces a notable new provision of allocating the funds that may not be seized against the debtor. Such funds consist of the following:

• State-owned public and private funds;
• Funds of foreign embassies and diplomatic bodies with immunities;
• Funds given by the government and social subsidies provided to the debtor;
• The household necessary to the debtor including the spouse, relatives by blood and marriage residing with the debtor, nor the clothes they wear;
• Wages and salaries of the employer except to the extent of a quarter of the fixed gross;
• Tools and other movables used for the debtor's work, unless they are given as a security for a debt;
• The house of the debtor in which he/she resides with his/her family of whom he/she is legally obliged to support, unless it is given as security for a debt; and
• Revenues, payments, or expenses prescribed for the debtor except to the extent of a quarter, provided that he/she does not have a wage nor a salary.

Judgements Issued in a Foreign Country

Enforcement of Judgements

As a way of easing the execution procedures towards the debtors and creditors, the Law introduces provisions that allow the judgements and orders issued in a foreign country to be enforced in the Kingdom of Bahrain on the same conditions as are prescribed in the law of that country. The enforcement of such judgements shall take place under the High Court in the Kingdom after filing an application for the Execution Order and disclosing the payment of the prescribed fees.

In order for the Execution Order to be passed, the court must assure that: (i) they are non-competent to hear the dispute in which the case has been issued on and that the foreign courts that passed such judgements are competent in accordance with the international rules of jurisdiction prescribed in the laws thereof; (ii) the litigants in the case were summoned and properly represented; (iii) the judgement or order is final; (iv) the judgement issued in the foreign country does not conflict with a judgement or order previously passed by the courts of the Kingdom and does not breach its public order nor the morality.

Execution of Official Instruments

In the case where the Execution Order involves official instruments, the application shall be filed with the Execution Judge by the competent court in the Kingdom after the payment of the prescribed fees is disclosed. The Execution Order will then be issued after the judge ensures the conditions of enforcement stipulated in the laws of the country it was drafted in is fulfilled, taking into consideration of it not going against the public order or morality of the Kingdom.

Nevertheless, by complying with the above mentioned, it shall not prejudice the provisions of existing or to be entered treaties between the Kingdom and other countries.

Execution Procedures

Notification for Debtor's Performance

Article 19 of the Law requires the creditor to notify the debtor with a copy of the Execution Deed at least seven days prior to proceeding with execution and the submission of such notification to the Execution Court (the "Execution Notice"). The Execution Notice is a legal requirement on the creditor before an Execution File may be opened. It effectively places the debtor on notice wherein a settlement independent of any Execution File is possible within the seven-day grace period.

Resolution No. 20/2022 With Respect to the Conditions for the Notification of the Debtor to Perform requires the following information in the Execution Notice served by the creditor upon the debtor: (i) details of the creditor (or the person undertaking such notification), the debtor or its attorney; (ii) a copy of the Execution Deed; (iii) demand performance in full of the Execution Deed; and (iv) confirmation of the date of the notification. Such notification may only be sent after the judgement to be executed has become final or after the date set in the Execution Deed for performance has fallen due and may be sent using electronic means or by registered mail with receipt acknowledgment.

Submission of the Debtor's Performance Application

After the debtor is served with an Execution Notice pursuant to the Execution Deed, he/she may pay the debt subject matter in full. Alternatively, the Law now enables debtors to deliver performance on their own initiative. In accordance with Resolution No. 22/2022 With Respect to Procedures for Applying for the Performance of the Execution Deed issued pursuant to Article 20 of the Law, debtors may now file an application to the Court of Execution to pay the debt or deliver performance of the obligation ("Performance Application") irrespective of the creditor's Execution Notice. Payment or performance must be delivered within one week from the submission of the Performance Application, failing which that Execution File shall be closed and the fees paid by the debtor will be irrecoverable. The previous execution system under Title Eight of the CCPL did not envisage this possibility.

Submission of the Execution Application

By virtue of Resolution No. 24/2022 Regarding the Procedures for Requesting the Execution of Deeds and Filing Grievances from Decisions of the Execution Court Judge, the application for executing a judgement shall be submitted electronically through the website of the Information and eGovernment authority (www.iga.gov.bh), taking into consideration all the data and documents legally required for implementation, including the prescribed fees and a copy of the Execution Notice.

In the event of the debtor's death, incapacitation, or the person acting on behalf of him loses his representational capacity prior to the commencement or completion of the execution, no action will be taken towards his/her heirs or agent unless one month has elapsed from them being notified of the request of execution.

Impermissibility to Challenge a Judgement

Challenging a court judgement on the verge of it being executed or contested shall not be accepted before the Execution Court. Moreover, the judge may not alter any description of the judgement, nor may order it to be a summary judgement if there was no provision for such effect.

Impermissibility to Clarify a Judgement

In the case of the court judgement being unclear or vague, the judge of the Execution Court may not declare any explanation or clarification, and shall, prior to the enforcement of the judgement, seek in writing from the court that passed the said judgement an explanation of the judgement therein.

Disclosure of Debtor's Funds

The debtor, within seven days following notification or knowledge of the execution procedures, shall disclose their funds within the limit of the amount covered by the subject matter of the Execution Deed. In the event of the funds not being enough to cover the value of the Execution Deed, then they shall disclose all their funds. This includes any funds which are in the possession of the debtor, or in the possession of any of their affiliates, or which will be returned to them in the future.

Specific Performance

Where a debtor fails to pay his/her debt amount subject to the Execution Deed within ten days from the date of notification, the creditor may request the Judge of the Execution Court to impose a penalty fine on the debtor to force him/her to carry out the execution. In the case the judge considers the amount of the fine imposed to the debtor is not sufficient to execute, then he/she may increase the amount. The debtor may file an appeal on such penalty fine before the High Court immediately after paying the prescribed fees.

Resolution No. 26/2022 with respect to Determining the Rules and Procedures of Specific Performance stipulates that the order for specific performance against the debtor occurs automatically once the creditor's application to execute is accepted by the Execution Court. Private execution officers may assist in procuring specific performance where execution requires eviction of premises by the use of force or the removal of property. Whereas, if the debtor proves that the specific performance is not possible, the execution procedures shall be stayed.

Termination of Execution Procedures

Execution procedures shall be terminated by the fulfillment of the payment of the debt amount subject to the Execution Deed or by a settlement agreement between the debtor and creditor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.