BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates
4.3 Cyber and Technology-Related Coverage Issues Cyber-related coverage litigation remains relatively limited in Bahrain, and there is not yet a substantial body of reported decisions defining the treatment of cyber events under conventional policies. Neverthe- less, standard property, crime, professional liability and business interruption policies increasingly contain express cyber exclusions or limitations, while special- ised cyber policies are available to insure specifically defined technology and data risks. Potential disputes include whether a cyber incident caused physical damage, whether business inter- ruption cover requires physical loss, whether social- engineering fraud falls within crime or cyber cover, whether data restoration costs constitute insured loss, and whether a cloud or technology-service provider outage triggers contingent business interruption cov- er. Systemic incidents may also raise difficult aggrega- tion questions where one vulnerability affects multiple systems, locations or insured entities. Policy drafting is responding through more detailed definitions of cyber events, systems, data, security failures and insured loss. Insurers are also introducing sublimits, waiting periods, vendor-related conditions, ransomware provisions and exclusions addressing state-backed or war-related cyber operations. 4.4 Aggregation and Limits of Liability Aggregation and limit disputes are not the largest cat- egory of insurance cases by number, but they can become central in substantial property, construction, professional liability, marine and systemic-loss claims. The principal questions are whether multiple losses constitute one occurrence or several occurrences, whether they arise from a single originating cause, and whether separate limits, deductibles or sublimits apply. Before proceedings are commenced, the insurer will usually appoint a loss adjuster or an expert with expe- rience in the relevant class of insurance. The resulting report may form the basis for rejecting the claim, limit- ing the amount admitted or applying a particular policy limit. The insured may respond by appointing its own expert and challenging the methodology, assump-
conditions concerning invalidity or forfeiture unless they have been prominently highlighted. Where a poli- cy provision has not been presented in the prescribed manner, the insurer may seek to characterise the matter as an absence of initial coverage. The insured may respond that the argument is, in substance, an attempt to apply an exclusion or forfeiture provision that does not comply with Article 696. Coverage disputes therefore increasingly require care- ful analysis of the structure of the policy: the insuring clause, definitions, conditions, exclusions, endorse- ments and the legal consequence of each provision. Insurers are responding by refining policy architecture and separating fundamental coverage requirements from exclusions, while insureds increasingly scruti- nise whether a purported limitation is substantively an exclusion or forfeiture condition. 4.2 Policy Wordings and Interpretation Developments Bahraini courts apply the general Civil Code principles of contractual interpretation. Where the wording is clear, the court should not depart from it in an attempt to identify a different intention. Where interpretation is required, the court seeks the parties’ common intention, considering the nature of the transaction, commercial practice and the standards of loyalty and confidence applicable to the relationship. In cases of doubt, Article 126 provides that the term is interpreted in favour of the party who would be preju- diced by its application and, in particular, in favour of the debtor where the term creates or increases an obligation. Insurance policies may also constitute con- tracts of adhesion, in which case Article 59 requires ambiguity to be interpreted in favour of the adhering party – ordinarily the insured. Exclusions are generally construed within the policy as a whole and must be sufficiently clear to identify the risk removed from cover. Endorsements normally prevail over inconsistent standard conditions where that hierarchy is clear, but ambiguity may arise where the endorsement does not expressly identify the pro- visions it replaces or modifies.
15 I NSURANCE L I T IGATI O N 2026
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