BAHRAIN Trends and Developments Contributed by: Mohamed Ali Shaban and Sayed Mohsin Alalawi, Hassan Radhi & Associates
ensure that credit systems reflect all pertinent liabili - ties of a borrower. From a practical standpoint, this integration was ena - bled by the electronic systems put in place during the reform. The execution courts can automatically update the credit bureau once a judge issues an order. The debtor is usually notified that their name will be flagged in the credit bureau, giving them an additional reason to resolve debt. It is important to note that the credit report annotation is not arbitrary – it is typi - cally applied in cases where the debtor has insufficient assets to pay, effectively marking them as a higher credit risk. The annotation remains for seven years or until the debt is resolved, whichever comes first – after which it can be removed, allowing the debtor to rehabilitate their credit. Overall, the court’s collaboration with the Benefit Company has been a win-win for financial transpar - ency. This collaboration helps protect future creditors (banks, leasing companies, etc) from unknowingly extending credit to bad debtors, and it adds an extra layer of consequences for those who might ignore court judgments. For the public, the message is clear: if you are owed money and have to go to court, Bah - rain’s system now ensures that the judgment will fol - low the debtor into their credit history, making it harder for them to escape the debt. Mazad and modernised auctions of seized assets A standout feature of Bahrain’s revamped enforce - ment regime is the partnership with Mazad to conduct public auctions of seized assets. Mazad (which means “auction” in Arabic) is a Bahrain auction platform that has become central to the disposal of assets recov - ered through court execution. Under the old system, selling a debtor’s property – such as real estate or vehicles – to satisfy a judgment was often a drawn- out affair. Auctions were typically organised and held at the courthouse, with a judge overseeing the bid - ding. These judicial auctions could face delays, limited publicity and procedural formalities that slowed the return of funds to creditors. There were cases of mul - tiple auction sessions if bids were too low and did not reach the value of the asset, as well as a general sense that the process was inefficient and inconvenient for buyers and court staff alike.
Today, Bahrain has effectively outsourced the auction process to Mazad, bringing in professional auction - eers and online technology to replace the old judge- led sales. The collaboration with Mazad actually began as an innovative pilot even before the new law and was later codified as an integral part of the 2022 execution law reform. Now, when a court orders that a debtor’s assets be sold to satisfy a judgment, the case’s appointed PEO will co-ordinate with Mazad to handle the auction logistics. This applies to a range of assets – real estate, cars, equipment and other mov - able property can all be auctioned through Mazad’s platform, as directed by the execution court. How Mazad’s auctions work Mazad Bahrain is the overseer of public and electronic auctions in the Kingdom. It operates a modern digi - tal auction platform accessible via web and mobile app, enabling broader participation and more efficient sales. Key characteristics of the Mazad-led auction process in judgment enforcement include the follow - ing. i) Professional auction management Mazad handles advertising the auction, arranging viewings and conducting the sale in a transparent manner. Because Mazad specialises in auctions, it can tap into a larger pool of potential buyers (including its network of registered bidders) and market the assets more effectively than the court could. This often results in better turnout and better prices being realised for the assets, which ultimately benefits both creditors and debtors (higher sale prices mean that the debt is paid with less leftover liability for the debtor). ii) Digital and online bidding Unlike the old courthouse auctions where bidders had to be physically present at a specific time and place, Mazad enables online bidding through its app and website, in addition to live auctions or direct sales when appropriate. This greatly increases convenience and reach – bidders from anywhere can participate, and auctions can conclude faster without logistical delays. For example, a repossessed car can be listed in an online auction that runs for a set number of days, allowing many bidders to compete, whereas previ -
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