Article 38 of the Saudi Commercial Maritime Law
المادة 38 من النظام البحري التجاري · الفصل الأول: بناء السفينة وملكيتها
The article permits the joint owners to entrust management of the joint ownership to one or more managers from among the owners or others, with management powers except sale, mortgage, creating real rights and chartering without majority permission.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يجوز بقرار من المالكين على الشيوع أن يُعهد بإدارة الشيوع إلى مدير أو أكثر، ويجوز أن يكون المدير من المالكين أو من غيرهم.
2- لمدير الشيوع القيام بجميع التصرفات والأعمال التي تقتضيها إدارة الشيوع، عدا بيع السفينة أو رهنها أو ترتيب أي حق عيني آخر عليها، أو تأجيرها، فلا يجوز له ذلك إلاَّ بإذن من المالكين يصدر بالأغلبية اللازمة.
3- كل اتفاق على تقييد سلطة المدير بغير ما ورد في الفقرة (2) من هذه المادة لا يحتج به على الغير.
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 38 explained in plain English
This article regulates the manager of the joint ownership for a ship held in joint ownership.
1. Appointment: the owners may, by their decision, entrust management of the joint ownership to one or more managers, and the manager may be one of the owners or an outsider.
2. Powers: the manager may carry out all acts and work that management of the joint ownership requires, except:
- Selling the ship.
- Mortgaging it.
- Creating any other real right in it.
- Chartering it.
These he may do only with permission from the owners issued by the required majority.
3. Protection of third parties: any agreement restricting the manager's authority beyond what is stated in paragraph 2 cannot be relied on against third parties.
In practical terms, a third party dealing with the joint ownership's manager on management matters can rely on the powers set by the law, even if the owners agreed among themselves to restrict them further. For sale, mortgage, chartering and creating real rights, the person dealing needs to verify that the majority's permission exists. The majority, under Article 37, is the owners of more than half the shares unless agreed otherwise.
A person dealing with a joint-ownership manager or taking on this management can consult a lawyer specializing in commercial cases.
Practical example
The owners of a cargo ship appoint an outsider as manager of the joint ownership. He may contract for maintenance and day-to-day operation, but cannot charter the ship to another company without the majority's permission.
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 38 of the Saudi Commercial Maritime Law
Can the joint-ownership manager sell the ship?
No, except with permission from the owners issued by the required majority; the same applies to mortgage, chartering and creating any real right.
Must the joint-ownership manager be one of the partners?
No. He may be one of the owners or an outsider.
Can an agreement among partners restricting the manager's authority be relied on against third parties?
Any agreement restricting the manager's authority beyond what paragraph 2 provides cannot be relied on against third parties.
More articles on Ship Construction and Co-Ownership
- Article 31
The article requires a ship construction contract, and any amendment to it, to be proved in writing, and the contract is valid only if signed by its parties.
يثبت عقد بناء السفينة وأي تعديل يطرأ عليه بالكتابة، ولا يكون صحيحاً إلا بتوقيع أطرافه عليه.
- Article 32
The article provides that ownership of the ship remains with the builder and passes to the party ordering it only on accepting delivery after trials, unless agreed otherwise.
تبقى ملكية السفينة لمتعهد البناء، ولا تنتقل ملكيتها إلى طالب البناء إلا بقبول تسلمها بعد تجربتها، ما لم يتفق على غير ذلك.
- Article 33
The article makes the ship builder guarantee that the ship is free of hidden defects, even if the party ordering it accepted delivery after trials.
يضمن متعهد بناء السفينة خلوها من العيوب الخفية، وإن قبل طالب البناء تسلم السفينة بعد تجربتها.
- Article 34
The article provides that a suit for guarantee of hidden defects is not heard after one year from the date of learning of the defect.
لا تسمع دعوى ضمان العيوب الخفية بعد مضي سنة من تاريخ العلم بالعيب.
- Article 35
The article extends the hidden-defect guarantee and the one-year period from learning of the defect, set in Articles 33 and 34, to ship repair contracts.
تسري أحكام المادتين (الثالثة والثلاثين) و(الرابعة والثلاثين) على عقود إجراء إصلاحات السفينة.
- Article 36
The article requires acts creating, transferring or ending ownership of a ship or other real rights in it to be proved by an official document, otherwise void, and they are effective against third parties only once entered in the ship's register.
1- تُثبت التصرفات التي يكون موضوعها إنشاء حق الملكية أو نقله أو انقضاءه، أو غير ذلك من الحقوق العينية على السفينة؛ بمحرر رسمي، وإلاَّ كانت باطلة. وإذا وقعت هذه
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.