BAHRAIN Law and Practice Contributed by: Noor Radhi, Mohamed Ali Shaban and Mohamed Altraif, Hassan Radhi & Associates
6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law The primary source of international insolvency law in Bahrain is Chapter Five of the Bankruptcy Law (Law No 22 of 2018), which provides a comprehensive framework for dealing with cross-border insolvency cases, promoting co-operation between courts and competent authorities in Bahrain and foreign states, and protecting the interests of creditors and other stakeholders. The Bankruptcy Law incorporates many provisions that might be consistent with the UNCITRAL Model Law on Cross-Border Insolvency, although Bahrain has not formally adopted it. The Bankruptcy Law also takes into account Bahrain’s international obligations arising from treaties or agreements with other states. 6.2 Jurisdiction The Bankruptcy Law provides criteria for determining jurisdiction in cross-border insolvency cases. Bahraini courts have jurisdiction to recognise foreign proceed - ings and provide assistance to foreign representatives in connection with foreign proceedings. The Bankruptcy Law distinguishes between foreign main proceedings and foreign non-main proceedings. A foreign main proceeding is one that takes place in the state where the debtor has the centre of its main interests, while a foreign non-main proceeding is one that takes place in a state where the debtor has an establishment. 6.3 Applicable Law The Bankruptcy Law provides guidance on the appli - cable law in cross-border insolvency matters. In gen - eral, Bahraini law applies to proceedings under the Bankruptcy Law. However, the Bankruptcy Law allows for co-operation and co-ordination with foreign courts and representatives and the recognition of foreign pro - ceedings. When recognising a foreign proceeding, Bahraini courts may grant relief consistent with the Bankruptcy Law, including staying proceedings, suspending the right to transfer or dispose of the debtor’s assets, and
providing for the examination of witnesses and the taking of evidence. 6.4 Recognition and Enforceability The Bankruptcy Law provides a mechanism for the recognition of foreign insolvency proceedings in Bah - rain. A foreign representative may apply directly to the court for recognition of the foreign proceeding in which they have been appointed. The court will recognise the foreign proceeding if it meets the requirements set out in Article 174 of the Bankruptcy Law, including that the foreign proceeding is a proceeding within the meaning of the Bankruptcy Law, the foreign representative is properly appointed, and the application meets the procedural require - ments. Upon recognition of a foreign main proceeding, cer - tain automatic effects come into play, such as a stay on the commencement or continuation of individual actions against the debtor and a suspension of the right to transfer or dispose of the debtor’s assets. The Bankruptcy Law does not specifically address the enforceability of foreign judgments against the debtor, but it provides for co-operation and assistance to for - eign representatives and courts. 6.5 Co-Ordination in Cross-Border Cases The Bankruptcy Law promotes co-operation and co- ordination between courts and officeholders in cross- border insolvency cases. Bahraini courts are required to co-operate to the maximum extent possible with foreign courts and representatives, either directly or through a bankruptcy administrator. The Bankruptcy Law provides for various forms of co- operation, including the appointment of a person to act at the direction of the court; communication of information; co-ordination of the administration and supervision of the debtor’s assets; approval of agree - ments concerning the co-ordination of proceedings; and co-ordination of concurrent proceedings. 6.6 Foreign Creditors The Bankruptcy Law provides that foreign creditors have the same rights as domestic creditors regard -
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