Apartment Ownership and Delay Compensation in Bahrain: An Arbitration Case Analysis
How a tribunal addressed competing contractual rights, registration obligations and compensation for delayed apartment transfers.
AHMED MAHMOUD SAYED HASSAN ELSOFANY — 27/10/2026
The Content Structure
01. The Story Before the Dispute
A business exit agreement entitled the claimant to seven apartments. Later assignments and the cancellation of two of them led to a dispute over registration and delay compensation.
02. The Dispute
The tribunal examined personal contractual liability, its jurisdiction over the registration claims, the claimant's standing and the extent of compensation.
03. The Award
The tribunal ordered registration of two apartments and awarded BHD 20,850 plus 5% annual interest, while rejecting the claims concerning the other five apartments and unproven cancellation payments.
04. Reasons for the Award (Legal Analysis)
The reasoning turned on the contract wording, earlier proceedings, the reversal of assignments and the evidence supporting each financial claim.
05. Questions and Answers
Eight practical questions explain the tribunal's conclusions and the importance of documenting transfers and retaining proof of payment.
01. The Story Before the Dispute
In March 2018, the claimant ended a business partnership with the first respondent under a partnership termination and exit agreement. In return for leaving the partnership, the claimant was to receive seven residential apartments in a building previously held through their joint venture. Two preliminary sale and ownership agreements were concluded between the claimant, the first respondent and the company responsible for developing the building.
The agreements required the apartments to be delivered ready for occupation. They provided for delay compensation of BHD 250 per apartment per month, calculated from actual project completion, except where the delay resulted from force majeure or delays in electricity and water connections.
The parties later entered into a release and settlement covering all seven apartments. The claimant assigned the apartments to third parties under separate agreements, with a BHD 15,000 price adjustment forming part of the arrangement. Five apartments were registered in the new purchasers' names. Registration of the remaining two was not completed.
The claimant and the purchaser of those two apartments subsequently agreed to cancel the relevant assignments because the respondents had not completed the transfers and handover as agreed. The purchaser later applied to intervene in support of the claimant, confirming the cancellation and the reasons for it.
When registration in the claimant's name was not completed, the claimant commenced arbitration under the sale agreements against the first respondent, the development company and the Survey and Land Registration Bureau. The claims sought registration of the two apartments, delay compensation for all seven units and further financial relief.
02. The Dispute
Could the tribunal determine the registration claims and hear the claim against the Survey and Land Registration Bureau in these proceedings?
Did cancellation of the two assignments restore the claimant's right to seek registration?
Which apartments and losses could support a compensation claim by this claimant?
The Claimant's Position
The claimant sought an order requiring the first and second respondents to register the two apartments in his name, BHD 31,000 in agreed delay compensation for those units and BHD 40,000 for the other five apartments. He also claimed BHD 10,000 said to have been incurred in cancelling the third-party arrangements, interest at 12%, arbitration costs and legal fees.
He argued that cancellation of the two assignments had restored his rights and that the respondents had failed to perform their contractual obligations on time.
The First Respondent's Position
The first respondent denied personal contractual liability, maintaining that he had acted only for the development company. He also challenged arbitration of property-registration matters on public-policy grounds and the inclusion of the registration authority as a respondent.
He argued that the claimant lacked standing because he had previously assigned the apartments, and disputed the fault and loss alleged as grounds for compensation.
The Development Company's Position
The company requested an accounting examination and witness evidence concerning the financial position and alleged handover to third parties. It maintained that the claimant had failed to pay the price adjustment and disputed the claims.
After the purchaser's intervention, however, the company acknowledged the claimant's entitlement to registration of the two apartments, treating the intervention as confirmation that the earlier assignments had been cancelled by agreement.
Course of the Investigation
The tribunal appointed an accounting expert to inspect the two apartments, review property documents and email correspondence, trace the sale, assignment and cancellation agreements, reconcile the parties' accounts and identify responsibility for delayed handover. The expert submitted a final report following hearings and extensions of time.
03. The Award
The tribunal unanimously held the first respondent personally liable, jointly with the development company, to transfer the two apartments to the claimant. It also directed the Survey and Land Registration Bureau to issue and deliver the corresponding title documents in implementation of the award.
The first and second respondents were ordered jointly to pay BHD 20,850 for delayed transfer and delivery of the keys, after deduction of earlier assignment charges. The award included interest at 5% annually from 10 June 2021 until payment, together with a share of arbitration costs, expert fees and legal fees.
The tribunal rejected the BHD 40,000 claim relating to the other five apartments, which had already been assigned to new owners before the proceedings. It also rejected the BHD 10,000 cancellation-payment claim because actual payment had not been proved, and awarded 5% interest rather than the requested 12%.
The result distinguished the two apartments for which the claimant's rights had been restored from the five whose rights had passed to other purchasers. The claimant therefore succeeded on registration and a limited compensation claim, rather than on every amount requested.
04. Reasons for the Award (Legal Analysis)
First: Personal Liability of the First Respondent
The tribunal examined the preliminary sale agreements and the later assignment and cancellation documents. It found that the first respondent and the company had contracted together as the first party, rather than the individual appearing solely as a company representative. The way his name appeared in the documents supported that conclusion.
The tribunal also relied on an earlier final judgment rejecting the same personal-capacity objection in a related dispute under the same arbitration clause. The source analysis describes the tribunal as treating that earlier determination as having res judicata effect.
Second: The Registration Claims and the Registration Authority
According to the source analysis, the tribunal found that the procedural requirements for recording the real-property claims had been satisfied: official copies of the claim had been submitted to the registration authority and annotated with the requested relief.
The authority had been notified and presented its substantive defence without objecting to its inclusion. The tribunal also considered earlier related proceedings and the respondents' own reliance on the arbitration clause before the ordinary courts in relation to apartment-registration claims. On those facts, it rejected the jurisdictional objection. This was the tribunal's conclusion in these proceedings, rather than a general statement that every property-registration dispute is arbitrable.
Third: The Claimant's Standing After Cancellation of the Assignments
The source analysis records reliance on Articles 287 and 289 of the Civil Code concerning assignment of rights. The tribunal found that the two relevant assignments had subsequently been cancelled because transfer and handover had not been completed. That restored the claimant's contractual entitlement to pursue registration.
The development company's acknowledgment and the purchaser's intervention supported that finding. The analysis distinguishes the restored contractual rights from completion of the formal registration process, which remained the subject of the requested relief.
Fourth: Registration and Calculation of Delay Compensation
The expert evidence supported the finding that the price of the two apartments had been paid in full and that a third party had paid registration charges for one unit on the claimant's behalf. The tribunal accordingly upheld the obligation to transfer the apartments and hand over their keys.
For the agreed BHD 250 monthly compensation per unit, the tribunal used different starting points. For the first apartment, it assessed the relevant period from the building's readiness for handover; for the second, from full payment of its price. It departed from the expert's proposed starting date for the first unit and made its own assessment of the evidence.
The resulting gross compensation was BHD 25,750. Deducting BHD 4,900 in earlier assignment charges documented in the company's records produced a net award of BHD 20,850.
Fifth: Why the Other Five Apartments Were Excluded
The claimant had assigned the rights relating to the other five apartments before commencing the proceedings. The tribunal treated the associated delay-compensation rights as passing with those assignments to the new owners. The claimant therefore no longer had standing to recover the BHD 40,000 claimed for those units.
Sixth: Why the Cancellation-Payment Claim Failed
The claimant sought BHD 10,000, representing BHD 5,000 for each cancelled assignment. Although the cancellation agreements referred to these amounts, the tribunal found no evidence that the claimant had actually paid them to the purchaser. It rejected the claim for want of proof of the alleged expenditure.
Seventh: Interest at 5% Rather Than 12%
The tribunal treated the relationship as commercial because it arose from the termination of a business partnership. The source analysis records its reliance on Article 81 of the Commercial Law concerning interest on overdue commercial debts and its assessment of interest at 5% annually, rather than the claimant's requested 12%.
The 5% rate is reported as the outcome of this case. It should not be read as a universal rate applicable to every property or arbitration dispute.
05. Questions and Answers
Why did the first respondent's company-representative defence fail?
The tribunal read the contracts as binding him personally alongside the company, rather than solely as its representative. It also relied on an earlier final determination of the same objection in related proceedings.
Why did the tribunal hear the property-registration claims in this case?
It relied on compliance with the registration-related procedural requirements, the authority's participation and the parties' conduct in related proceedings concerning the arbitration clause. Whether another claim can be arbitrated requires examination of its own facts and legal requirements.
How did the claimant regain the right to seek registration of the two apartments?
The two assignments were later cancelled by agreement following the failure to complete registration and handover. The tribunal found that this restored the claimant's contractual rights; formal registration still had to be completed.
Why was delay compensation awarded for only two of the seven apartments?
The assignments of the other five apartments remained effective and those units were registered to new owners. The tribunal treated the related compensation rights as having passed to those owners, leaving the claimant without standing to pursue them.
Why was interest awarded at 5% instead of 12%?
The tribunal treated the underlying relationship as commercial, referred to Article 81 of the Commercial Law and assessed interest at 5% in this case. The requested rate was not automatically accepted.
Why was the BHD 10,000 cancellation claim rejected?
The claimant did not produce evidence that he had actually paid the alleged cancellation amounts. A contractual reference to an amount was insufficient to establish that the claimed expenditure had occurred.
Was the tribunal bound to adopt every conclusion in the expert report?
No. It used the expert's investigation but reached its own conclusion on the relevant starting date for one apartment's delay compensation and recalculated the amount awarded.
What practical lesson does the case offer?
Document every assignment, cancellation and amendment clearly, link later agreements to the original contractual framework and arbitration clause, follow through on registration, and retain proof of payments. A clear chain of documents helps establish who holds each right and who may claim compensation.