Article 19 of the Saudi General Warehouses Law
المادة 19 من نظام الإيداع في المخازن العامة
The article provides that if the goods suffer a defect or damage covered by an insurance policy, the holder of the storage receipt or pledge document has over the insurance amount the rights and privilege he had over the goods.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا وقع للبضاعة عيب أو تلف تغطيه وثيقة التأمين، يكون لحامل إيصال التخزين أو مستند الرهن على مبلغ التأمين ما له من حقوق وامتياز على البضاعة.
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 19 explained in plain English
This article deals with what happens to the rights of the document holders if the goods suffer a defect or damage covered by an insurance policy.
The rule is that the rights move from the goods to the insurance amount:
- The holder of the storage receipt has over the insurance amount the rights he had over the goods.
- The holder of the pledge document has over the insurance amount the rights and privilege he had over the goods.
So the damage does not forfeit the right of the secured creditor or the owner, but the insurance amount takes the place of the damaged goods within the limit of what the policy covers.
Note that the provision is limited to a defect or damage covered by the insurance policy. The article does not deal with damage not covered by insurance.
This provision is connected to the definition of the storage receipt in Article 2, which contains details such as the type of insurance, the name of the company insuring the goods and the beneficiary of the insurance, since these details help the holder of the receipt know which policy covers the goods.
This article comes after Article 18, which regulates the deadlines for the holder of the pledge document to have recourse against the pledging debtor and the endorsers after the goods are sold, and before Article 20, which deals with the loss or damage of the storage receipt or pledge document. A person whose stored goods have been damaged and who needs to assess his right to the insurance amount is best advised to consult a lawyer specializing in commercial matters or compensation claims.
Practical example
A merchant pledged his stored goods to a bank by endorsing the pledge document, then a fire in the warehouse destroyed the goods, and the fire was covered by the insurance policy. Under this article the bank, as holder of the pledge document, has over the insurance amount the rights and privilege it had over the goods.
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 19 of the Saudi General Warehouses Law
What happens to my rights if insured stored goods are damaged?
If the defect or damage is covered by the insurance policy, the holder of the storage receipt or pledge document has over the insurance amount the rights and privilege he had over the goods.
Does a secured creditor lose his right if the goods are damaged?
If the damage is covered by the insurance policy, his right and privilege move to the insurance amount.
More articles on Storage Receipt and Pledge Document
- Article 2
The article defines the Law's key terms: the general warehouse, deposit in warehouses, the storage receipt and the pledge document.
يقصد بالألفاظ والعبارات الآتية ـ أينما وردت في هذا النظام ـ المعاني المبينة أمامها ما لم يقتض السياق خلاف ذلك : المخزن العام : هو المكان الذي يخصصه الخازن لإيدا
- Article 10
The article provides that the depositor receives from the general warehouse the storage receipt with a pledge document containing all its details, and the warehouse keeps a true copy of both.
يتسلم المودع من المخزن العام إيصال التخزين الذي يرافقه مستند رهن يشتمل على جميع البيانات المدونة في إيصال التخزين ، ويحتفظ المخزن العام بصورة مطابقة للأصل من إي
- Article 11
The article allows fungible goods to be replaced with goods of the same nature, type and quality if the storage receipt and pledge document so provide, with the rights passing to the new goods, and the documents to be issued for part of a bulk quantity.
إذا كانت البضاعة المسلم عنها إيصال التخزين ومستند الرهن مثلية جاز أن تستبدل بها بضاعة من طبيعتها ونوعها وصفتها، متى كان منصوصا على ذلك في إيصال التخزين ومستند ا
- Article 12
The article allows the storage receipt and pledge document to be issued in the depositor's name or to his order, allows the endorsement of either or both to others, and requires the endorsement to be recorded with the warehouse keeper immediately.
يجوز أن يصدر إيصال التخزين ومستند الرهن باسم المودع أو لأمره. وإذا كان إيصال التخزين ومستند الرهن لأمر المودع جاز له أن يظهرهما للغير أحدهما أو كليهما. وعلى الم
- Article 20
A person who loses the storage receipt may ask the Board of Grievances for an order to deliver a copy of it, and a person who loses the pledge document may ask for an order to pay the debt that has fallen due, with proof of ownership and a guarantor or sufficient security.
يجوز لحامل إيصال التخزين عند ضياعه أو تلفه أن يطلب من ديوان المظالم إصدار أمر إلى المخزن العام بتسليمه صورة من إيصال التخزين ، على أن يثبت ملكيته لإيصال التخزين
- Article 21
The guarantee provided when a storage receipt or endorsed pledge document is lost expires one year after the Board of Grievances issues the order to deliver a copy of the receipt or to pay the debt that has fallen due.
ينقضي الضمان الذي يقدم في حالة ضياع إيصال التخزين أو مستند الرهن المظهر بانقضاء سنة من تاريخ إصدار ديوان المظالم أمر تسليم صورة إيصال التخزين أو استصدار أمر وفا
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.