Reviving The Skyline: The New Stalled Projects Law And Its Implications

Legislative Decree No.66 of 2014 regarding the Settlement of Stalled Real Estate Projects came into force on 6 December 2014 (New Law). The New Law has been introduced to re-start real estate development projects in Bahrain where units have been sold off-plan, payments have been made, and the projects have either stopped (through a default situation) or have stalled causing a detrimental effect on the economy of Bahrain.

What is a stalled project? Pursuant to the provisions of Decision No. 1 of 2015, a real estate development project will be considered as ''stalled'' for the purposes of the New Law where one or more of the following criteria apply:

If the developer's lack of seriousness to complete the project is proven; If the developer has not, without valid reason, commenced the development work despite obtaining the necessary permits and approvals from the relevant government authorities; and/or If the developer fails to execute the project as a result of gross negligence. For the remainder of this article, references to "Stalled Project" will mean a project which has met the criteria set out above.

The Committee Under the provisions of the New Law, an entity shall be appointed by the Cabinet of Ministers (Entity). The Entity will have the responsibility of investigating Stalled Projects referred to it and will determine all debts, obligations and rights in relation to each Stalled Project by reviewing all statements, information, contracts, agreements and any other documents relating to the Stalled Project.

After undertaking a review of a Stalled Project, the Entity will submit its findings to a committee (Committee) which shall consist of three judges from the Supreme Civil Court of Appeals, with the senior of the three being the chair (Chairman) and two experts nominated by the Cabinet.

Ministerial Order No. 14 of 2015 has confirmed that the Committee will comprise of the following members:

Consultant Sameh Mohammed Fehmy Amer (Chairman) Judge Dr. Mona Jassim Mohammed Al Kowary (Member) Judge Mohammed Mirza Mohammed Aman (Member) Dr. Abdulla Yousif Taleb (Member) Aref Haidar Ali Rahimi (Member)

The Committee's main roles and responsibilities are governed under the provisions of Decision No. 12 of 2015, which also confirms that its role will be to decide upon the settlement of each Stalled Project referred to it by the Entity on an urgent basis.

The Committee will have the power to take all necessary measures to remove the causes of...