Article 12 of the Saudi Commercial Pledge Law
المادة 12 من نظام الرهن التجاري · الفصل الرابع: المال المرهون
The article permits pledging more than one movable asset to secure the same debt, and gives the pledgee the right to set the order of enforcement against them unless otherwise agreed.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز رهن أكثر من مال منقول لضمان الدين نفسه، ويحق للمرتهن في هذه الحال تحديد ترتيب التنفيذ على هذه الأموال، ما لم يُتفق على غير ذلك.
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 12 explained in plain English
This article deals with the reverse of multiple pledges: instead of one asset being pledged to more than one creditor, here more than one movable asset is provided as security for a single debt.
The article lays down two rules:
- Permissibility: Several movable assets may be pledged to secure the same debt, such as a debtor pledging equipment and vehicles together to secure a single financing.
- Order of enforcement: In this case the pledgee may decide which of these assets enforcement starts with and which follow.
But the pledgee's right to set the order is not absolute; it exists unless otherwise agreed. If the pledgor wants enforcement to start with a particular asset, or an asset to be excluded from the start, it must state this in the agreement.
The phrase unless otherwise agreed means the matter is left first to the agreement of the parties, and if the pledge contract is silent on the order of enforcement, setting it is for the pledgee. The article does not address the case of several pledgees over the same asset or priority among them; it is limited to several pledged assets for a single debt.
When drafting a pledge contract over several assets, it is advisable to consult a lawyer specialized in commercial and finance matters to settle the enforcement order clause.
Practical example
A contracting company in Riyadh obtained financing from a bank and pledged two cranes and a fleet of cars to secure it. If the company defaults on payment, the bank may decide to start enforcement against the cranes and then the cars, unless the pledge contract provides another order that the parties agreed on.
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 12 of the Saudi Commercial Pledge Law
Can more than one asset be pledged to secure a single loan?
Yes. Article 12 permits pledging more than one movable asset to secure the same debt.
Who decides which pledged asset is enforced against first?
The pledgee may set the order of enforcement against the pledged assets, unless otherwise agreed.
Can the pledgor require a particular order of enforcement?
Yes. The pledgee's right to set the order exists unless otherwise agreed, so another order may be agreed.
More articles on Conditions of the Pledged Asset
- Article 8
The article requires the pledgor to own the pledged asset and have capacity to dispose of it, and the asset to be saleable or valuable, and bars pledging estate and bequest assets before the pledgor owns them.
1- يجب أن يكون الراهن مالكًا للمال المرهون عند إبرام العقد وأهلاً للتصرف فيه، فإن تبين ما يخالف ذلك بعد التعاقد فللدائن المرتهن حسن النية التمسك بحقه في رهن بدي
- Article 10Amended by M/94
The article provides that the whole pledged asset secures the whole debt unless otherwise agreed, and permits pledging an undivided part of a movable asset even if it cannot be divided.
2- يعد كل المال المرهون ضامناً لكامل الدين، ما لم يتفق على غير ذلك. 3- يجوز رهن جزء من مال منقول ولو استحالت قسمته أو فرزه، ويقع الرهن في هذه الحال على الجزء ال
- Article 38Amended (1411 AH)
The article permits pledging all of the pledgor's movable assets, a part or class of them, or an adequately described asset, and states when enforcement may take place and the pledgor's right to dispose of the assets before default.
1- يجوز رهن جميع الأموال المنقولة المملوكة للراهن أو جزء منها أو فئة منها، ويجوز كذلك رهن أي مال منقول موصوف وصفً عاماً وكافياً لتعيينه 2- يكون التنفيذ على الره
- Article 43
The article refers the determination of a pledged asset's value and average valuation to the Regulations' rules and procedures, unless the body competent for certain types of assets has its own special procedures.
تحدد قيمة المال المرهون ومتوسط التقويم في الحالات المنصوص عليها في النظام وفق القواعد والإجراءات التي تبينها اللائحة، ما لم يكن لدى الجهة المختصة بتنظيم أنواع م
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.