Bahrain is currently undergoing some legal reform in the field of secured transactions. The current law governing security interests is fragmented, and contained partly in the Civil Code and partly in the Law of Commerce. A Draft Law has been prepared, which will repeal the relevant sections within these Codes. The second draft of this law was published on the 23rd of March 2020. This law has been drafted by the Central Bank of Bahrain, and it is based on the UNCITRAL Model Law. The notable improvements this law is set to introduce is the ability to create security interests based on movable assets. It is unclear whether intangibles such as intellectual property rights will fall into the scope of the Draft Law, given that they are currently governed by other legal frameworks. The Draft Law envisages the creation of a unified online register. Registration is one of the ways to perfect a security interest, as well as possession or control of the asset in question. The Draft Law takes on a substantive, not formalistic approach, meaning that any transaction which substantively is equivalent to creation of a security interest would be treated as such. This includes assignment, retention of title, financial lease, and sales with option of repurchase or rights of redemption.
The Draft Law (In English):
Last Checked October 2020
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