Article 47 of the Saudi Commercial Court Law
المادة 47 من النظام التجاري نظام المحكمة التجارية · الفصل السادس: في السفاتج ، سندات الحوالة المعبر عنها بالبوليسة والكمبيالة المتداولة بين التجار
The article regulates the holder's right to the cover for payment when the drawer goes bankrupt after acceptance, and when the drawee goes bankrupt after accepting, depending on the nature of the cover.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا أفلس الساحب بعد قبول المحال عليه ولو قبل حلول أجل الدفع فلحامل السفتجة دون غيره من غرماء الساحب الحق في استلام مقابل الوفاء الذي عند المسحوب عليه وإذا أفلس المسحوب عليه بعد قبوله فان كان مقابل الوفاء دينا في ذمته فحامل السفتجة أسوة بالغرماء وإن كان مقابل الوفاء أعيانا أو بضائع أو أوراق ذوات قيمة أو مبالغ بأعيانها مودعة فله استلام ذلك ممتازا عن غيره .
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 47 explained in plain English
This article deals with the fate of the cover for payment if bankruptcy occurs after the bill is accepted, and distinguishes between two cases:
Case one: the drawer's bankruptcy after the drawee accepts, even before the payment date arrives. Here the holder of the bill, to the exclusion of the drawer's other creditors, has the right to receive the cover for payment held by the drawee. The drawer's other creditors do not compete with the holder for this cover.
Case two: the drawee's bankruptcy after accepting, and the ruling depends on the nature of the cover:
- If the cover is a debt owed by the drawee: the holder of the bill ranks equally with the creditors, that is, on the same footing as the other creditors.
- If the cover is specific items, goods, valuable papers or sums deposited in kind: the holder may receive them in priority over others.
The difference is logical: specific items and deposits can be distinguished from the bankrupt's property, while an open debt owed becomes part of the bankrupt's total debts.
This article connects to Article 46 on the cover for payment, and to Article 48, which binds the acceptor to pay even if the drawer goes bankrupt. Because bankruptcy matters are complex, consult a lawyer specializing in commercial cases.
Practical example
A company in Riyadh accepted a bill of exchange drawn on it by a supplier, and the supplier then went bankrupt before the payment date. Under this article, the holder of the bill alone, to the exclusion of the supplier's creditors, has the right to receive the cover for payment held by the company.
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 47 of the Saudi Commercial Court Law
What are the holder's rights if the drawer of a bill goes bankrupt after acceptance?
The holder, to the exclusion of the drawer's other creditors, has the right to receive the cover for payment held by the drawee, even if the bankruptcy was before the payment date arrived.
What if the drawee goes bankrupt after acceptance?
If the cover is a debt owed by the drawee, the holder ranks equally with the creditors; if it is specific items, goods, papers or sums deposited in kind, the holder may receive them in priority over others.
More articles on The Draft and Bill of Exchange and Acceptance
- Article 42
The article sets the details required in a bill of exchange (safta): date, amount, drawee's name, date and place of payment, reason for the value and its receipt, and drawer's signature, and the rule for multiple copies.
سندات الحوالة أي السفاتج التي تسحب من محل على آخر يجب أن تؤرخ ويوضح فيها المبالغ المحولة واسم الشخص المحال عليه وتاريخ ومكان الدفع ويبين فيها أنها قيمة بضاعة أو
- Article 43
The article allows a bill of exchange to be drawn on one person with a condition that it be paid at the place of another person, and also allows it to be drawn at the order of a person on his account.
يجوز أن تسحب السفاتج على شخص ويشترط فيها الدفع في محل شخص آخر كما يجوز سحبها بأمر شخص على ذمته
- Article 44
The article provides that bills of exchange drawn contrary to the preceding conditions are considered only ordinary instruments.
السفاتج المحررة على خلاف الشروط الآنفة الذكر لا تعتبر إلا كسندات عادية .
- Article 45
The article requires that, when the payment date falls due, the drawee owe the transferor or the person who ordered the drawing an amount not less than the value of the bill.
عند حلول أجل دفع قيمة السفاتج يجب أن يكون في ذمة المحال عليه للمحيل أو للآمر بالسحب مبلغ لا يقل عن قيمة السفتجة .
- Article 46
The article makes acceptance sufficient proof that the acceptor owes the funds covering payment, and requires the drawer to prove the existence of the cover if it is denied, failing which the drawer guarantees the bill's value to the holder.
الشرح على السفتجة بالقبول دليل كاف على أن القابل مدين للساحب أو الآمر بالسحب بما يقابل الوفاء وعلى الساحب وحده أن يثبت في حالة الإنكار أو الامتناع عن الدفع بعد
- Article 48
The article provides that whoever accepts a bill of exchange is bound to pay its value and may not withdraw after acceptance, even if the drawer went bankrupt without the acceptor's knowledge before acceptance.
من قبل السفتجة صار ملزوما بوفاء قيمتها ولو أفلس الساحب بغير علمه قبل قبوله فلا يجوز له الرجوع بعد القبول .
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.