Article 40 of the Saudi Commercial Maritime Law
المادة 40 من النظام البحري التجاري · الفصل الأول: بناء السفينة وملكيتها
The article makes a joint owner who is a manager liable with all his property for debts arising from the joint ownership, jointly with the other managers, and makes non-manager owners liable likewise unless they agree otherwise and the agreement is published.
Official text (Arabic)
This article has not been amended since the law was issued.
1- إذا كان المدير من المالكين في الشيوع، كان مسؤولاً في جميع أمواله عن الديون الناشئة عن الشيوع، وإذا تعدد المديرون كانوا مسؤولين في جميع أموالهم بالتضامن فيما بينهم، وكل اتفاق على خلاف ذلك لا يحتج به على الغير.
2- يُسأل المالكون غير المديرين في جميع أموالهم، وبالتضامن فيما بينهم، عن الديون الناشئة عن الشيوع، ما لم يتفق على غير ذلك، ولا يحتج بهذا الاتفاق الذي تم فيما بينهم على الغير، إلاَّ من تاريخ شهره في صحيفة تسجيل السفينة.
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 40 explained in plain English
This article regulates the liability of a ship's joint owners for its debts toward creditors.
1. A manager who is an owner:
- If the manager is one of the owners, he is liable with all his property for debts arising from the joint ownership.
- If there are several managers, they are liable with all their property jointly and severally among themselves.
- Any agreement to the contrary cannot be relied on against third parties.
2. Owners who are not managers:
- They are liable with all their property and jointly and severally among themselves for the joint ownership's debts, unless otherwise agreed.
- But this agreement can be relied on against third parties only from the date it is published in the ship's registration sheet.
In practical terms, liability for the ship's shared debts is not limited to the value of the share, but by default extends to all of the partner's property. The difference between an owner-manager and a non-manager is that the former cannot escape this liability toward third parties by agreement, while the latter can limit his liability by agreement, provided it is published in the ship's registration sheet so it can be relied on against third parties from the date of publication.
This article differs from Article 39, which regulates the distribution of expenses and profits among the owners themselves. A person who holds a share in a ship would do well to consult a lawyer specializing in commercial cases to assess their liability.
Practical example
Three partners in a ship who are not managers agree that each will be liable only to the extent of his share. This agreement can be relied on against creditors only from the date it is published in the ship's registration sheet; for debts predating publication they are liable with all their property, jointly and severally.
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 40 of the Saudi Commercial Maritime Law
Is a partner in a ship liable for its debts with his own property?
By default, owners are liable with all their property and jointly and severally for the joint ownership's debts, unless non-manager owners agree otherwise and the agreement is published.
Can an owner who is a joint-ownership manager limit his liability?
Any agreement contrary to his liability with all his property and joint liability with the other managers cannot be relied on against third parties.
When can the partners' agreement limiting their liability be relied on?
From the date it is published in the ship's registration sheet.
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.