Article 20 of the Saudi Commercial Papers Law
المادة 20 من نظام الأوراق التجارية · الفصل الثاني: تداول الكمبيالة بالتظهير
Article 20 provides that an endorsement after the due date has the effects of an earlier endorsement, that one after protest for non-payment or after the protest deadline has the effects of an assignment of a right, and that backdating an endorsement is forgery.
Official text (Arabic)
This article has not been amended since the law was issued.
التظهير اللاحق لميعاد الاستحقاق يرتب آثار التظهير السابق له، أما التظهير اللاحق لاحتجاج عدم الدفع أو الحاصل بعد انقضاء الميعاد المحدد لعمل هذا الاحتجاج فيرتب آثار حوالة الحق. ويعتبر التظهير الخالي من التاريخ أنه قد حصل قبل انقضاء الميعاد المحدد لعمل الاحتجاج إلا إذا أثبت غير ذلك. ولا يجوز تقديم تاريخ التظهير وإن وقع اعتبرت تزويرا.
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 20 explained in plain English
This article deals with the effect of the timing of an endorsement, and sets out these rules:
- An endorsement after the due date: it has the same effects as an endorsement made before the due date.
- An endorsement after protest for non-payment, or after the deadline for making that protest has passed: it has only the effects of an assignment of a right, not the effects of an endorsement.
- An undated endorsement: it is presumed to have been made before the deadline for making the protest passed, unless otherwise proved.
- Backdating an endorsement: this is not permitted, and if it occurs it is treated as forgery.
"Protest for non-payment" is a procedure that records the obligor's refusal to pay. This article does not specify the deadline or procedures for protest, and does not set out the rules of assignment of a right.
The practical benefit is that someone who receives a bill of exchange after a protest has been made, or after its deadline has passed, does not get the effects of an endorsement but those of an assignment of a right. This article follows Article 19 on the pledge endorsement. Care must also be taken not to write on an endorsement a date earlier than its true date.
Anyone dealing with an overdue bill of exchange or one that has been protested would do well to consult a lawyer specializing in commercial cases and commercial papers.
Practical example
A bill of exchange fell due and was not paid, and its holder made a protest for non-payment, then afterward endorsed it to a merchant in Riyadh. Under Article 20, this endorsement does not have the effects of an endorsement but those of an assignment of a right. If the holder wrote an earlier date on the endorsement to give the impression it was made before the protest, that would be treated as forgery.
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 20 of the Saudi Commercial Papers Law
Can a bill of exchange be endorsed after its due date?
Yes, and an endorsement after the due date has the same effects as an endorsement before it.
What is the effect of an endorsement after protest for non-payment?
It has the effects of an assignment of a right, as does an endorsement made after the deadline for making the protest has passed.
What is the rule on backdating an endorsement?
It is not permitted, and if it occurs it is treated as forgery.
More articles on Endorsing Commercial Papers
- Article 12
Article 12 allows a bill of exchange to be transferred by endorsement even if not expressly drawn to order, bars endorsement where the drawer writes "not to order", and permits endorsement to the drawee, the drawer or any other obligor.
يجوز تداول الكمبيالة بالتظهير ولو لم يذكر فيها صراحة إنها مسحوبة (لا أمر). ولا يجوز تداول الكمبيالة التي يضع فيها ساحبها عبارة (ليست لأمر) أو أية عبارة مماثلة إ
- Article 13
Article 13 requires an endorsement to be free of any condition, treats a condition attached to it as if not written, makes a partial endorsement void, and treats an endorsement to bearer as a blank endorsement.
يجب أن يكون التظهير خاليا من كل شرط، وكل شرط علق عليه التظهير يعتبر كأن لم يكن. والتظهير الجزئي باطل. ويعتبر التظهير للحامل تظهيرا على بياض.
- Article 14
Article 14 sets out how an endorsement is written on a bill of exchange or an attached paper and signed by the endorser, permits a blank endorsement, and states the holder's options in that case.
يكتب التظهير على الكمبيالة ذاتها أو على ورقة أخرى متصلة بها ويوقعه المظهر. ويجوز ألا يكتب في التظهير اسم المظهر إليه ، كما يجوز أن يقتصر التظهير على توقيع المظه
- Article 15
Article 15 makes the endorser guarantee acceptance and payment of the bill of exchange unless otherwise stipulated, and lets the endorser prohibit re-endorsement, in which case the endorser does not guarantee to those who receive the bill by a later endorsement.
يضمن المظهر قبول الكمبيالة ووفائها ما لم يشترط غير ذلك. ويجوز له حظر تظهيرها من جديد، وفي هذه الحالة لا يكون ملزما بالضمان لمن تؤول إليهم الكمبيالة بتظهير لاحق.
- Article 16
Article 16 treats the possessor of a bill of exchange as its lawful holder if they prove their right by an unbroken series of endorsements, and protects a holder from having to give up a lost bill unless they obtained it in bad faith or by gross fault.
يعتبر حائز الكمبيالة حاملها الشرعي متى أثبت أنه صاحب الحق فيها بتظهيرات غير منقطعة ولو كان آخرها تظهيرا على بياض. والتظهيرات المشطوبة تعتبر في هذا الشأن كأن لم
- Article 17
Article 17 provides that endorsement transfers all rights arising from the bill of exchange, and bars a defendant from raising against the holder defenses based on their personal relationship with the drawer or earlier holders unless the holder intended to harm the debtor.
ينقل التظهير جميع الحقوق الناشئة عن الكمبيالة. وليس لمن أقيمت عليه دعوى بكمبيالة أن يحتج على حاملها بالدفوع المبينة على علاقته الشخصية بساحبها أو بحامليها الساب
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.