Article 15 of the Saudi Commercial Pledge Law
المادة 15 من نظام الرهن التجاري · الفصل الخامس: المحافظة على المال المرهون واستثماره
The article bars the pledgee and the custodian from using the pledged asset except with the pledgor's written consent and for consideration equal to the usual rate.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز للمرتهن أو العدل الانتفاع بالمال المرهون إلاَّ بموافقة مكتوبة من الراهن، ويشترط أن يكون مقابل الانتفاع بما يعادل المثل.
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 15 explained in plain English
This article protects the pledgor from others using its pledged asset without its permission. The rule is that the pledgee or the custodian may not use the pledged asset.
There is one exception, in which the article's conditions are all met:
- Written consent of the pledgor: Oral consent is not enough.
- Consideration equal to the usual rate: That is, the user pays consideration equal to what is usually paid to use a similar asset.
The custodian, under the law's definitions, is a person whom the pledgor and the pledgee agree will possess the pledged asset or take charge of preserving, investing, growing or developing it, or collecting its proceeds.
Use in this article differs from investment, which Article 14 regulates. That article permits the pledgee or the custodian to invest, manage and grow the pledged asset and collect its proceeds for the account of the pledgor under an authorization from it recorded in the pledge contract, and permits a possessor other than the pledgor, after agreement with the pledgor, to deduct the expenses mentioned in Article 7 from the proceeds. Investment is carried out for the pledgor's account, whereas use benefits the pledgee or the custodian itself, which is why Article 15 requires the pledgor's written consent and consideration equal to the usual rate.
If a pledgee or custodian has used the asset without meeting these conditions, the pledgor should consult a lawyer specialized in commercial and finance matters to learn its options.
Practical example
Khalid pledged a transport vehicle to a supplier company in Jeddah, and the vehicle came into the company's possession. The company wanted to use the vehicle to deliver its orders. It may not do so unless it obtains written consent from Khalid and pays him consideration equal to the usual rental for a vehicle like this.
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 15 of the Saudi Commercial Pledge Law
Can the pledgee creditor use the pledged asset?
The pledgee or the custodian may not use the pledged asset except with the pledgor's written consent and for consideration equal to the usual rate.
Is oral consent enough to use the pledged asset?
No. The article requires the pledgor's consent to be in writing.
What is the difference between using the pledged asset and investing it?
Use requires written consent and consideration equal to the usual rate under Article 15, while investment is carried out for the pledgor's account under its authorization recorded in the pledge contract under Article 14.
More articles on Preserving and Investing the Pledged Asset
- Article 5Amended by M/94
The article prevents changing the custodian in a commercial pledge except by agreement of the pledgor and the pledgee, and gives the custodian the right to claim compensation for damages from the change.
1- لا يجوز تغيير العدل إلاَّ باتفاق الراهن والمرتهن، ويحق للعدل المطالبة بالتعويض عن أي أضرار ترتبت على هذا التغيير.
- Article 7
The article specifies what the pledged asset secures: the principal secured debt together with the expenses of preserving it, investing it, collecting its proceeds and enforcing against it.
يضمن المال المرهون -إضافة إلى سداد أصل الدين المضمون- المصروفات المتعلقة به، وهي: 1- مصروفات حفظه. 2- مصروفات استثماره. 3- مصروفات تحصيل ريعه. 4- مصروفات التنفي
- Article 22
The article makes the possessor responsible for the safety of the pledged asset, lets the pledgee or pledgor go to the competent court to protect it, and makes the possessor liable for its value if it perishes through its own fault.
1- الحائز مسؤول عن سلامة المال المرهون حتى تاريخ انقضاء الرهن أو التنفيذ على المال المرهون. وللمرتهن أو الراهن -بحسب الأحوال- أن يطلب من المحكمة المختصة إلزام ا
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.