Vol 14 (2017) - Issue 6

Article preview

Applicable Bankruptcy Law to Foreigners in the Gulf Cooperation Council (GCC) Countries within the Framework of Regional Agreements and the Law of Cross-Border Insolvency

Introduction
The word 'bankruptcy' in the Arabic language is derived from the word 'fils', and is a name for indigence and insolvency, which means the transition from richness to hardship.
Bankruptcy is defined by the Gulf Cooperation Council (GCC) systems as the cessation of the payment of outstanding commercial debts on time. It is a system of execution of the debtor trader's funds who has ceased the payment of debts owed, through procedures established by law under the control and supervision of the judiciary.
The most prominent features of bankruptcy systems within the GCC:
1. They distinguish between insolvency and bankruptcy; insolvency is a way of executing the non-merchant debtor's fund through a judgment from the civil court. On the other hand, bankruptcy is a way of executing the trader debtor’s fund through a judgment from the commercial court. Moreover, they distinguish between them with regard to the impact each has, as according to Islamic ruling, the insolvent should not be approached by the creditor, and it is not permissible to claim the debt from him, or imprison him, or force him to pay, but rather the creditor should wait until the insolvent can pay by himself. While the Islamic ruling dictates the bankruptcy rules be applied to the bankrupt, which usually entails liquidating his assets and possibly imprisoning him if he has perpetrated any of fraudulent bankruptcy offences, as well as him losing some political and professional rights.
2. Bankruptcy provisions are applied to commercial companies, not banks.
3. Bankruptcy provisions were regulated among the commercial law group for all GCC countries except Bahrain, which has a separate law for bankruptcy.