Article 590 of the Saudi Civil Transactions Law
المادة 590 من نظام المعاملات المدنية · الفرع الثاني: آثار عقد الكفالة
If any liquidation proceedings are opened for the debtor and the creditor does not submit his claim in them, his right to claim against the surety lapses to the extent of what he would have collected had he submitted it.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا افتتح أيٌّ من إجراءات التصفية للمدين وفق النصوص النظامية ولم يتقدم الدائن بمطالبته بالدين وفق ذلك الإجراء سقط حقه في الرجوع على الكفيل بقدر ما كان يستوفيه لو أنه تقدم بمطالبة المدين به.
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 590 explained in plain English
This article deals with the surety's position when the debtor enters liquidation proceedings under the legal provisions.
Conditions of the rule:
- that any liquidation proceedings are opened for the debtor under the legal provisions.
- that the creditor does not submit his claim for the debt in those proceedings.
The effect: the creditor's right to claim against the surety lapses, though not necessarily in full, but to the extent of what he would have collected had he submitted a claim against the debtor for it.
If the creditor would have received part of his debt from the liquidation had he submitted his claim, and then neglected to do so, he cannot make the surety bear this part which he lost through his neglect.
The article itself does not specify the types of liquidation proceedings or the deadlines for submitting claims, but refers to what the legal provisions governing them provide.
This rule is consistent with Article 589, which protects a non-joint surety from the creditor's inaction in claiming against the debtor, and with Article 591, which provides that the creditor may not claim against the surety alone except after claiming against the debtor, unless the surety is jointly liable.
Anyone facing this situation, whether creditor or surety, is advised to consult a lawyer who specializes in commercial or civil cases.
Practical example
Khalid stood surety for the debt of a small company owed to a supplier, and liquidation proceedings were then opened for the company, and the supplier did not submit his claim in them. If the supplier would have collected 40% of his debt in the liquidation, his right to claim against Khalid lapses to the extent of that percentage.
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 590 of the Saudi Civil Transactions Law
What happens to the suretyship if the debtor enters liquidation?
If the creditor does not submit his claim in the liquidation proceedings, his right to claim against the surety lapses to the extent of what he would have collected had he submitted it.
Does the creditor's right against the surety lapse entirely?
It lapses to the extent of what the creditor would have collected had he submitted a claim against the debtor in the liquidation proceeding.
What is meant by liquidation proceedings in this article?
The text refers to any liquidation proceedings opened for the debtor under the legal provisions, without detailing them.
More articles on Suretyship
- Article 222
The Article provides that solidarity among debtors is not presumed and arises only by agreement or legal provision.
لا يكون التضامن بين المدينين إلا باتفاق أو بنص نظامي.
- Article 578
The article defines suretyship as a contract in which the surety undertakes to the creditor to perform an obligation owed by the debtor if the debtor himself does not perform it.
الكفالة عقدٌ يلتزم بمقتضاه الكفيل للدائن بأن يفي بالتزام على المدين إذا لم يَفِ به المدين نفسه.
- Article 579
Suretyship is concluded between the surety and the creditor, the creditor's silence counts as acceptance, and it does not depend on the debtor's acceptance, so it is valid without his knowledge and despite his objection.
1- تنعقد الكفالة بين الكفيل والدائن، ويعد سكوت الدائن إذا وجه إليه الإيجاب قبولًا للكفالة. 2- لا يتوقف انعقاد الكفالة على قبول المدين، وتجوز دون علمه، وتجوز أيض
- Article 580
The article requires the surety to have full capacity, limits a suretyship by a person on his deathbed to one third of the estate unless the heirs approve, and a suretyship to or for an heir takes effect only with their approval.
1- يجب في عقد الكفالة أن يكون الكفيل كامل الأهلية. 2- الكفالة من المريض مرض الموت لا تنفذ في حق الورثة فيما زاد على (ثلث) التركة إلا بإجازتهم، وإذا كانت الكفالة
- Article 581
The article provides that suretyship is valid only if the obligation guaranteed is valid.
لا تكون الكفالة صحيحة إلا إذا كان الالتزام المكفول به صحيحًا.
- Article 582
The article allows suretyship to be immediate, conditional, for a limited period, or deferred to a term.
يصح أن تكون الكفالة منجزةً أو معلقةً على شرط أو مؤقتةً أو مضافةً إلى أجل.
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.