Tracing Uncodified Legal Principles
Our Associate, Hisham Almansoor discusses how the Civil Code treats ‘sources of law’ & delves into two uncodified legal principles affecting contracting parties.
Hisham Almansoor ([email protected]) – Associate
The Bahraini legal system, as is the case with its regional and international counterparts, is a multi-layered, continuously developing system comprising several sources of law which impact obligations prescribed under contracts and the enforcement of rights under the same. To the layperson, these consist of statutory/legislative instruments such as decree laws (مرسوم بقانون), laws (قانون), and ministerial resolutions (قرار) which are issued pursuant to legislative decrees and laws. However, the application of legal rules and principles by the courts may go beyond what is explicitly prescribed in legal text. In this article, we first consider how the Civil Code (Decree Law 19/2001) (hereinafter “BCC” or the “Civil Code”) treats ‘sources of law’ before discussing two of these uncodified legal principles as an application of the provision of the Civil Code highlighted below. It is to be noted that uncodified legal principles play a pivotal role in personal status matters of Muslims given that Islamic Sharia rules remain largely uncodified, however in this article, we instead consider those principles which have a bearing on commercial and/or civil matters (ie non-related to personal status laws).
The Civil Code on ‘Sources of Law’
A foundation of the civil legal system in Bahrain, the Civil Code regulates a wide array of topics within its 1054 articles from contracts, tortious/unlawful acts, unjust enrichment, muqawala and construction, commercial agencies, employment contracts, mortgages, insurance, among others.
The jurisprudence of the courts is derived from various sources apart from legislative text. Article 1 of the Civil Code provides as follows:
“(a) The legislative texts shall apply to all matters governed by the provisions hereof in letter and in spirit; (b) In the absence of a provision, the Judge shall determine the matter in accordance with custom, and, in the absence thereof, in accordance with the provisions of the Islamic Sharia, as guided by the best views as regards the conditions and circumstances of the country. In the absence of such provisions, the Judge shall issue his decision in accordance with the principles of natural law and equity.”
The Bahraini legislators therefore specify multiple sources upon which the courts may base rulings and in doing so, they confirm that in the absence of legal provisions, the jurisprudence of the courts may draw upon custom, Islamic Sharia, and the principles of natural law and equity. How might this impact parties seeking to enforce their rights and obligations?
Taking Advantage of One’s Wrong-Doing
The Bahraini legal system, albeit indirectly, prohibits the taking advantage of a party’s own wrong-doing in such a way as to relieve or excuse itself from liability or the performance of a legal obligation. This is embodied in the spirit of various provisions of the Civil Code in the context of contractual and tortious liability, which we consider below, before turning to the ‘uncodified’ aspect of the principle where no legal provision explicitly alludes to this principle.
The sanctity of contracts – and the pacta sunt servanda principle – posit that the contract makes the law of the parties, and the parties are required to perform and observe its terms in accordance with the requirements of good faith and honourable dealing, pursuant to Articles 128 and 129 BCC. A natural sub-component to this principle is that the termination of contracts ought to be approached very cautiously by the courts and the conduct of the parties may be subject to scrutiny. This is enshrined in Article 140(a) BCC, which provides:
“In bilateral contracts, where one of the parties fails to perform his obligation before it falls due, the other party may, upon serving notice on the former, seek performance of the contract or its rescission, and may claim any damages caused by such failure to perform, if necessary, unless the party seeking rescission has also failed to perform his obligation.”
One example of the prohibition of taking advantage of a party’s own wrongdoing, in situations apart from termination of contracts, stems from ultra vires acts and where a party or creditor has relied on a debtor’s guarantee of the performance of an obligation.
For example, if a bank has provided a guarantee for the payment of a sum of money (eg. to pay an employee’s legal entitlements on behalf of a company/employer), and that guarantee does not satisfy formal requirements (eg. bearing the signature of an individual with joint signing authority only), and the employee asserts a labour claim against both the employer and bank as guarantor, the courts may not relieve the bank of its obligations under the guarantee as it would be estopped from contradicting an obligation it assumed to the detriment of another party.
The estoppel principle is one that is uncodified in the legal system, yet a landmark ruling of the Egyptian Court of Cassation in Challenge No. 18309 J.Y. 89, confirms its significance where it was held:
“In adherence to the universal rule derived from Roman law, allegans contraria non est audiendus, which has become known as the rule “whoever seeks to undo what was done by him, his effort will be rejected” or “estoppel”, despite the absence of an explicit legislative text stipulating this rule, a judge may, relying on Article 1(2) of the Civil Code […] apply this rule. The application of this rule requires the presence of two conditions: Firstly, a statement, act or an omission originating from a party that is in contradiction with an earlier behaviour of that same party; Secondly, the said contradiction would cause harm to the other party who dealt with the first party based on the validity of its previous behaviour”.
It is to be noted that judgments of the Egyptian Court of Cassation remain vital in confirming legal principles common across many civil law jurisdictions in the Arab region, especially in view of the fact that the Bahraini Civil Code (enacted in 2001), similar to many of its GCC counterparts, is largely modelled on the Egyptian Civil Code (enacted in 1948), and Bahraini courts frequently allude to judgments of the Egyptian Court of Cassation even where an equivalent principle or provision exists under the BCC.
Turning to the above example, the bank providing the guarantee is effectively estopped from electing not to perform the obligation prescribed under the guarantee as (i) there was an intention from the bank to guarantee the obligation in question, (ii) the creditor relied upon that undertaking by the bank and (iii) failure by the bank to perform the obligation would entail harm or detriment to the creditor.
Concluding remarks
Many other uncodified principles exist impacting the ability of contracting parties to enforce their rights and obligations. The prohibition of taking advantage of one’s wrongdoing and estoppel are both key examples which demonstrate the role of natural law and equitable principles to underpin the jurisprudence of the courts in accordance with Article 1 of the Civil Code.
For more information, please contact us on [email protected].