Article 263 of the Saudi Civil Transactions Law
المادة 263 من نظام المعاملات المدنية · الفرع الأول: طرفا الوفاء
If the payer is subrogated to the creditor, the creditor's right passes to him with its attributes, accessories, guarantees and defenses to the extent of what he paid, and the creditor has priority for the remainder in partial subrogation unless otherwise agreed.
Official text (Arabic)
This article has not been amended since the law was issued.
1- إذا حلَّ الموفي محلَّ الدائن كان للموفي حقُّ الدائن بما لهذا الحق من صفات وما يلحقه من توابع وما يكفله من ضمانات وما يرد عليه من دفوع، ويكون هذا الحلول بالقدر الذي أداه الموفي من ماله.
2- إذا كان الحلول في جزء من الحق فيكون الدائن مقدمًا في استيفاء ما بقي على الموفي، ما لم يتفقا على خلاف ذلك.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 263 explained in plain English
After Article 262 specifies the cases in which one who paid another's debt is subrogated to the creditor, this Article states the effect of this subrogation.
Paragraph 1: what passes to the payer. The payer has the creditor's right with everything connected to it:
- The attributes of this right.
- The accessories attached to it.
- The guarantees that secure it.
- The defenses to which it is subject, so the debtor may assert against the payer the defenses that apply to the right.
But the subrogation is to the extent of what the payer paid from his own funds, so the payer is not subrogated to the creditor beyond what he paid.
Paragraph 2: subrogation in part of the right. If the payer paid only part of the debt, there are then two persons with a right against the debtor: the creditor for the remainder, and the payer for what he paid. Here the creditor has priority in collecting what remains to him over the payer, unless they agree otherwise.
The cases of subrogation in Article 262 are: where the payer is bound by the debt together with the debtor or bound to pay it on his behalf, or is a creditor who paid another creditor with priority over him by virtue of a security in rem, or where a legal provision provides for subrogation, or where the creditor and the payer agree on subrogation at or before payment even if the debtor does not accept.
The practical benefit is that the payer does not have only a personal right of recourse but benefits from the guarantees of the original debt, such as a pledge. He does, however, bear the defenses to which the right is subject. In partial subrogation it is advisable to agree expressly on the order of collection. To assess the rights in a particular case, it is advisable to consult a lawyer specializing in civil cases.
Practical example
A company in Riyadh owes a bank SAR 100,000, secured by a pledge. The surety paid SAR 60,000 of it and so was subrogated to the bank to that extent. SAR 40,000 remains owed to the bank, and the bank has priority over the surety in collecting this remainder, unless they agree otherwise.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 263 of the Saudi Civil Transactions Law
What passes to one who paid the debt and was subrogated to the creditor?
The creditor's right passes to him with its attributes, accessories, guarantees and the defenses to which it is subject, to the extent of what he paid from his own funds.
If I paid only part of the debt, who has priority for the remainder?
The creditor has priority in collecting what remains over the payer, unless they agree otherwise.
Can the debtor object against the payer who was subrogated to the creditor?
Yes, because the right passes to the payer with the defenses to which it is subject.
More articles on Performance of Debt and Set-Off
- Article 21
The article distinguishes fungible things, whose units are alike or close and can stand in for one another on performance, from non-fungible things, whose units differ in a way recognized by custom or whose like is rarely found.
1- الأشياء المثلية هي ما تتماثل آحادها أو تتقارب بحيث يمكن أن يقوم بعضها مقام بعض عند الوفاء بلا فرقٍ يُعتد به عرفًا. 2- الأشياء القيمية هي ما تتفاوت آحادها في
- Article 110
The article provides that a bilateral contract terminates automatically if performance becomes impossible for a reason beyond the debtor's control, and sets the rules for partial and temporary impossibility.
1- في العقود الملزمة للجانبين، إذا أصبح تنفيذ الالتزام مستحيلًا بسببٍ لا يد للمدين فيه، انقضى التزامه والالتزام المقابل له، وانفسخ العقد من تلقاء نفسه. 2- إذا ك
- Article 147
What a non-debtor paid cannot be recovered if, as a result, a good-faith creditor lost the debt instrument or its guarantees or abandoned his claim until its period expired, and the payer may have recourse against the original debtor.
لا محل لاسترداد غير المستحق إذا حصل الوفاء من غير المدين وترتب عليه أن الدائن وهو حسن النية قد تجرد من سند الدين أو مما حصل عليه من الضمانات أو ترك دعواه قِبَل
- Article 162
The article provides that an obligation that does not meet the conditions for compulsory enforcement remains owed on a moral basis (diyanah); if the debtor performs it voluntarily, the performance is valid and is neither a gift nor an undue payment.
إذا لم يستوف الالتزام الشروط النظامية لتنفيذه جبرًا يبقى قائمًا في ذمة المدين ديانةً، فإذا وفاه مختارًا كان وفاؤه صحيحًا ولا يُعدُّ تبرعًا ولا دفعًا لغير المستح
- Article 206
The article permits early performance by the person for whose benefit the term was set unless it harms the other party, treats the term as for the debtor's benefit in case of doubt, and returns the debt to deferred status if what was received early is claimed by another.
1- يجوز تعجيل الوفاء بالدين ممن كان الأجل لمصلحته ما لم يلحق التعجيل ضررًا بالطرف الآخر. 2- عند الشك في كون الأجل لمصلحة المدين أو الدائن فالأصل أن يُعدَّ لمصلح
- Article 207
The article provides that a deferred debt does not fall due on the creditor's death, and falls due on the debtor's death unless it is secured by security in kind, the heirs provide adequate security, or the creditor agrees it remains deferred.
لا يحل الدين المؤجل بموت الدائن، ويحل بموت المدين إلا إذا كان الدين موثَّقًا بضمانٍ عينيٍّ أو قدم الورثة ضمانًا كافيًا عينيًّا أو شخصيًّا أو وافق الدائن على بقا
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.