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24 January 2023

Inheritance Under Bahraini Law

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Raees + Co

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We are one of Bahrain’s most eminent law firms with significant regional depth and exemplary global perspective. We offer premium legal services to a diverse range of companies and individuals across numerous industries in Bahrain and beyond. Whether you are part of a corporation, an organisation or an individual, partnering with us means that you can be assured of the most direct and effective solution to all your legal needs and requirements. We look forward to hearing from you.
Our Senior Associate, Neha Sachde explains the Inheritance Law in Bahrain for both Muslims & Non-Muslims.
Bahrain Family and Matrimonial
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Estate inheritance for Non-Muslim expatriates under Bahraini Law is a topic few are aware of yet one which many seek answers to. In this article, we analyse the Law of Inheritance in Bahrain for both Muslims and Non-Muslims. We also look into the inevitable complexities and difficulties of estate inheritance post-mortem, whilst detailing proactive approaches which can be taken by individuals in order to streamline the process of inheritance.

Regulations Under Bahraini Law Governing the Administration of the deceased's estate

The administration of estates for Muslims under Bahraini Law is determined in accordance with the principles of Islamic Sharia and not by way of any legislation. Reference to the principles of Islamic Sharia, in the context of inheritance, is provided in Article 5(d) of the Bahraini Constitution and Article 909 of the Bahrain Civil Code which provide the following respectively:

"Inheritance is a guaranteed right governed by Islamic Sharia".

"The determination of the heirs, their inherited shares and devolution of the property of the estate onto heirs are governed by the provisions of Islamic Sharia".

Administration of Estate for Non-Muslims foreigners in Bahrain is regulated by two statutory instruments, namely: (i) Legislative Decree No. 11/1971 concerning Inheritance and Administration of Estates of Non-Muslim Foreigners; and (ii) Legislative Decree No. 12/1971 concerning the Issuance of the Civil and Commercial Procedures Law.

Procedure for Administration of Estates for Muslim Foreigners

Inheritance cases involving Muslims enjoy a high degree of flexibility in terms of procedure. The procedure is determined on a case-to-case basis upon the judge's discretion of what it considers necessary based on the concerned party's request:

  • A case may be filed by an heir seeking only the ascertaining of estate monies and distributing estate monies among the heirs.
  • A case may be filed by an heir seeking the ascertaining of estate monies & distributing such monies while also asserting claims against other heirs for wrongful conduct relating to estate monies.
  • A case may be filed by a creditor - ahead of other heirs doing so - seeking the ascertaining of estate monies and demanding that monies due to them are paid from estate monies before distribution to the heirs.

Procedure for Administration of Estates for Non-Muslim Foreigners

The administration of estates of Non-Muslim foreigners involves the appointment of an executor/administrator who administers the estate under court supervision. This Law envisions an administration process that runs through 6 main stages, namely:

  1. Appointment of executor/administrator - (Article 5)
  2. Statutory advertisement for creditors/debtors - (Article 9)
  3. Filing an inventory of all assets and debts with the Court - (Article 10)
  4. Gathering estate assets and payment of estate debts - (Articles 13 and 14)
  5. Execute any existing will - (Article 15)
  6. Distribute remaining estate monies among heirs - (Articles 1 and 16)

Law 12/1971 establishes the High Court as the competent court to consider the administration of estates of non-Muslim foreigners in Bahrain and determines the law to be applied by the High Court in ascertaining the identities of the heirs, their inheritance shares, and the distribution of the estate monies as the law of the deceased home country at the time of death.

Practice of Bahraini Courts in administering Estates - Muslims & Non-Muslims

Notwithstanding the existence of Law 11/1971, the practice of the High Court - when considering inheritance cases of Muslims and Non-Muslims - is one and the same. When considering the estates of non-Muslim foreigners, the High Court does not apply the provisions of Law 11/1971 and instead applies the same procedures it applies when considering cases involving the estates of Muslims. The inheritance case runs through three stages:

Stage 1 : Filing of petition by an heir seeking the opening of the deceased estate. The petition must include: (i) Deceased's death certificate; (ii) Succession Order (identifying survivors and inheritance shares); (iii) Any valid will left by the deceased; (iv) Other relevant documents.

Stage 2 : The High Court -

  1. Publishes a notice of the opening of the deceased's estate in the Official Gazette inviting any heirs or creditors with claims against the deceased to file a claim with the High Court within 45 days and any debtors to confirm any debt they owe to the deceased, and
  2. Requests the concerned authorities including the Central Bank of Bahrain, the Survey and Land Registration Bureau, the General Directorate of Traffic, Bahrain Bourse and the Commercial Register to confirm what assets and monies are owned by the deceased, following which all dealings with the deceased estate will be frozen.

Stage 3 : The High Court -

  1. If no claims are asserted following notice in the Official Gazette, the High Court would ascertain estate monies and confirm the share of each heir according to the submitted Succession Order and pay the same after executing any will left by the deceased.
  2. Where claims are asserted by an heir or a creditor of the deceased, the High Court may consider such claims or appoint a judicial administrator to administer the estate including payment of any debts due from the deceased (after obtaining the High Court's approval) and report to the High Court confirming the shares of any heir after executing any will left by the deceased.

Setting up Family Trusts to mitigate Court procedure

Various difficulties can be encountered by dependents of deceased individuals after their deaths, due to monies and assets of the deceased being frozen upon their death. These actions ultimately prevent the dependents from accessing bank accounts (including joint accounts) and from dealing in any manner with estate monies including moveable and immoveable property forming part of the estate.

Any person considering avoiding court procedures for their heirs of estate may consider setting up a family trust. Family trusts are established during a person's lifetime to hold assets or run a business for the benefit of family members (including future generations). A wide variety of assets can be assigned to a family trust, including cash, financial investments, real estate, artefacts, precious metals, business interests, life insurance policies and debts.

Family trusts can be set up to protect the ownership of assets - after the settlor's death - against lawsuits and claims on estates and to ensure the orderly distribution of funds to intended beneficiaries. Trustees generally take ownership of a trust's assets, manage those assets, and arrange for beneficiaries to receive their benefits according to the settlor's wishes.

Trusts are established through a notarized trust deed, in English or Arabic, and registered with in the Trusts Register at the Central Bank of Bahrain. Trust deeds must identify the initial trust property to be transferred to the trust; the purpose of the trust; the beneficiaries (or class of beneficiaries); the trust's name; its registered office; and details of the trustee.

In Bahrain, trustees must be licensed and are regulated by the Central Bank of Bahrain (CBB) as either Category A (with full powers and duties) or Category B (with limited powers and duties).

Concluding Remarks

Although the theoretical procedure for executing the estate of Muslims has more flexibility when compared to the estates of non-Muslims, in practice the Bahraini courts implement the same procedure relative to the inheritance of estates for both Muslims and Non-Muslims and follow the 3-stage process. As such, since non-Muslim inheritance is not governed by Sharia principles, the rightful beneficiaries of an estate are not pre-determined, and thus the submission of a succession order from the country of origin is necessary. The retrieval of such an order is a hurdle to overcome in the rightful execution of the estate inheritance under Bahraini law for non-Muslim expatriates, as it can be a time-consuming bureaucratic procedure in the already difficult circumstance of a family members passing. This process can be circumvented and streamlined by setting up a family trust, which can ensure that the rightful heirs to an estate will have their rights protected by the testator.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
24 January 2023

Inheritance Under Bahraini Law

Bahrain Family and Matrimonial

Contributor

We are one of Bahrain’s most eminent law firms with significant regional depth and exemplary global perspective. We offer premium legal services to a diverse range of companies and individuals across numerous industries in Bahrain and beyond. Whether you are part of a corporation, an organisation or an individual, partnering with us means that you can be assured of the most direct and effective solution to all your legal needs and requirements. We look forward to hearing from you.
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