Article 46 of the Saudi Commercial Papers Law
المادة 46 من نظام الأوراق التجارية · الفرع الثاني: كيفية الوفاء
Article 46 requires a bill stipulated payable in money not in circulation in the Kingdom to be paid in money in circulation there, and sets the rate used and the holder's option if the debtor is late.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا اشترط وفاء الكمبيالة بنقد غير متداول في المملكة وجب الوفاء بالنقد المتداول فيها حسب سعره يوم الاستحقاق، فإذا تراخى المدين عن الوفاء في اليوم المذكور كان للحامل الخيار بين المطالبة بمبلغ الكمبيالة مقوما بالنقد المتداول في المملكة حسب سعره في يوم الاستحقاق أو في يوم الوفاء.
ويتبع العرف الجاري في المملكة لتقويم النقد الأجنبي، ومع ذلك يجوز للساحب أن يبين في الكمبيالة السعر الذي يحسب على أساسه المبلغ الواجب دفعه.
وإذا عين مبلغ الكمبيالة بنقود تحمل اسمًا مشتركا ولكن تختلف قيمتها في بلد الإصدار عن قيمتها في بلد الوفاء كان المقصود نقود بلد الوفاء.
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 46 explained in plain English
Article 46 deals with a bill of exchange stipulated to be paid in a currency not in circulation in the Kingdom, and sets these rules:
- Payment in the currency in circulation: payment must be made in the money in circulation in the Kingdom at its rate on the due date.
- Debtor's delay: if the debtor delays payment on the due date, the holder may choose between claiming the amount of the bill valued in the money in circulation in the Kingdom at its rate on the due date or at its rate on the day of payment.
- Method of valuation: the custom prevailing in the Kingdom is followed to value foreign currency; however, the drawer may state in the bill the rate on which the amount to be paid is calculated.
- Currencies with a common name: if the amount is specified in money bearing a common name but whose value in the country of issue differs from its value in the country of payment, the money of the country of payment is meant.
The holder's option in case of delay protects the holder from exchange-rate fluctuations from which a late debtor might benefit, since the holder chooses the more favorable of the two rates set by the text.
For bills tied to foreign currencies, it is advisable to consult a lawyer specializing in commercial cases and commercial papers to settle the rate clause in the bill.
Practical example
A company in Riyadh holds a bill of exchange for USD 10,000, and the money in circulation in the Kingdom is the riyal, so payment is made in riyals at the dollar's rate on the due date. The debtor was two weeks late and the rate changed during that time. Under Article 46, the company may claim the amount in riyals at the rate on the due date or at the rate on the day of payment, whichever it chooses.
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 46 of the Saudi Commercial Papers Law
May a bill of exchange written in a foreign currency be paid in riyals?
If it is stipulated payable in money not in circulation in the Kingdom, it must be paid in the money in circulation there at its rate on the due date.
Which rate applies if the debtor is late paying a bill in a foreign currency?
The holder may choose between claiming the amount valued in the money in circulation in the Kingdom at its rate on the due date or on the day of payment.
May the drawer fix the exchange rate in the bill?
Yes, the drawer may state in the bill the rate on which the amount to be paid is calculated; otherwise the custom prevailing in the Kingdom is followed.
More articles on Payment of a Bill and Protest
- Article 4
The article permits stipulating that a bill of exchange be paid at the domicile of a person other than the drawee, whether in the drawee's town or in another.
يجوز اشتراط وفاء الكمبيالة في موطن شخص آخر غير المسحوب عليه سواء كان هذا الموطن في الجهة التي فيها موطن المسحوب عليه أو في جهة أخرى.
- Article 11
Article 11 makes the drawer of a bill of exchange guarantee its acceptance and payment, and allows the drawer to stipulate exemption from guaranteeing acceptance but not payment.
يضمن صاحب الكمبيالة قبولها ووفاءها، ويجوز أن يشترط إعفاءه من ضمان القبول دون ضمان الوفاء.
- 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 20
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.
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 آث
- Article 24
Article 24 sets the form of acceptance of a bill of exchange, written on it with the word "accepted" or similar words and signed by the drawee, requires dating the acceptance in certain cases, and lets the holder record an undated acceptance by protest.
يكتب القبول على ذات الكمبيالة ويؤدى بلفظ (مقبول) أو بأية عبارة أخرى تفيد هذا المعنى ويوقعه المسحوب عليه، ويعتبر قبولا مجرد وضع المسحوب عليه توقيعه على صدر الكمب
- Article 27
Article 27 provides that where the drawer designates a place of payment other than the drawee's domicile without naming who is to pay there, the drawee may name that person at acceptance, failing which the acceptor must pay at the place of payment.
إذا عين الساحب في الكمبيالة مكانا للوفاء غير موطن المحسوب عليه دون أن يعين من يجب الوفاء عنده جاز للمسحوب عليه تعيينه عند القبول، فإذا لم يعينه اعتبر القابل ملز
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.