The Kingdom of Bahrain first considered a proposal aimed at imposing levies on companies dredging sand from its coastline a number of years ago, with the Shura Council approving a draft law in this respect during early 2013.

Whilst the levies will, of course, provide the government with a further source of income, this is not the only intention behind the imposition of these charges: these levies will also work to limit the number of companies dredging from Bahrain’s coasts and, in doing so, will preserve and protect its natural resources.

Initially the legislation governing dredging, and the fact that levies would be applied for doing so, was published in the Official Gazette during August 2014. The legislation governing the regulation of dredging and sale of sea sand operations (Law No. 37 of 2014) subsequently came into force on 7th September 2014 (the “Legislation”).

The Legislation did not, however, provide any information in respect of the fees that would be applicable and it was not until February 2016 that these were published (Regulation No. 29 of 2016) (the “Regulation”). The Regulation defined the fees applicable to dredging as 500 fils per cubic metre.

With the significant interval between the issuance of the Legislation and the Regulation, some businesses are now facing complications regarding the levies that should have been paid during this 18 month period.

Companies subject to the Legislation have been paying fees in the intervening period however these amounts are not necessarily equivalent to the charges provided for in the Regulation.

The main question now is whether charges under the Regulation can and will be backdated and, if so, will the relevant authorities be issuing credit notes for any overpayments made and further invoices to recoup monies where underpayments have been made?

There have also been some discussions as to whether charges are likely to be backdated to when companies were initially granted their dredging permits. Having said this, it is worth noting that the notion of retrospective implementation of these charges is not provided for in the Legislation.

Regardless of the monetary aspect, it is certainly comforting that laws limiting the ungoverned use of natural resources are now not only being rolled out across Bahrain but are also being put into effect with companies carrying out these activities being formally regulated.

This article was first published by Lexis Nexis in the MENA Business Law Review in the 1st quarter of 2017.