Bahraini Court Rejects Landlord’s Claim for Utility Charge Differentials, Finding an Implied Waiver Through Long-Standing Course of Dealing

3 min 45 sec

Written by

Mohamed Al Sari

Associate

m.alsari@tamimi.com View LinkedIn Profile

Bahrain’s High Civil Court recently issued a judgment in a civil action dismissing a landlord’s claim against a corporate tenant for unpaid electricity and water charge differentials. The decision offers a useful illustration of how courts assess a defence of implied waiver or estoppel arising from a long commercial relationship, even where the written lease terms point the other way.

Case background

The claimant owned a building containing a number of apartments, among which the defendant had rented an apartment under successive leases of varying durations from 2017 until March 2026. Each lease provided, in its second clause, that electricity and water charges would be split, the landlord would absorb a portion of the bill (a fixed amount set in each lease), and the tenant would pay the remainder.

The claimant alleged that, since the start of the tenancy, the defendant had failed to pay its share of these differentials, and that the claimant itself had paid the full utility bills throughout in order to avoid disconnection, because the utility accounts were held in its own name. The claimant asserted it had repeatedly asked the defendant to settle the outstanding amounts without success.

The defendant disputed the validity of service of the claim and argued that the debt was denied outright. It further argued it owed nothing because the claimant had never previously billed it for these charges. It submitted account statements and an email from the claimant’s side in 2024 acknowledging that the claimant would absorb the utility charge differential.

The Court’s reasoning

The Court began from the general principle under Article 128 of the Civil Code that a contract is the law of the parties, and neither party may unilaterally rescind or amend it, except as the agreement or the law permits. The Real Estate Leasing Law (Law No. 27 of 2014), requires rent and its basis to be fixed in the lease and requires a tenant to pay water, electricity, telephone, and other service charges unless otherwise agreed under Article 26 of that law.

The Court noted that the parties did not dispute the existence of the tenancy itself or the monthly rent paid. The dispute was confined to the utility charge differentials that the claimant said were due under the terms of each lease.

Having referred the case to an evidentiary hearing specifically to test the defendant’s waiver defence in light of the parties’ course of dealing, the Court found the defendant’s two witnesses credible. It noted the consistency and mutual corroboration of the witnesses’s accounts and their alignment with the documentary record, including the first witness’s evidence that the claimant never pursued the differentials during the tenancy and that the defendant was told in 2024, as a valued client, that it would not be charged for them.

The second defence witness’s testimony aligned with this account. The Court found this evidence reinforced by the March 2024 email correspondence submitted by the defendant, which the Court did not read in isolation but assessed against the surrounding circumstances and the witness testimony regarding the parties’ ongoing pattern of dealing.

The Court further noted that, while it was not persuaded by all of the claimant’s rebuttal witnesses’ testimony, it drew from their evidence the sufficient acknowledgment that the March 2024 email concerning the defendant’s release from the utility charge differentials had indeed been sent.

On this basis, the Court held that the claim was unsupported in fact and law and dismissed it accordingly. It added that this finding on the merits (that a waiver had been established) made it unnecessary to rule on the defendant’s separate limitation defences, since those had become moot.

Having lost the case, the claimant was ordered to bear the costs of the proceedings and to pay legal fees, pursuant to Article 192 of the Civil and Commercial Procedure Law.

Practical implications

This judgment is a reminder that a written lease allocation of utility costs, however clearly drafted, can be displaced in practice. The Court was prepared to find an implied waiver of a contractual entitlement based on a consistent course of dealing over several years, the landlord’s failure to invoice or press for payment, and contemporaneous email correspondence and mutually corroborating witness testimony, even though the underlying lease documents used the same standard clause allocating the differential to the tenant.

For landlords and institutional tenants alike, the case underscores the importance of either enforcing contractual billing terms consistently or documenting any departure from them clearly. Years of informal forbearance can later be construed by a Court as a binding waiver rather than a mere courtesy.