Article 6 of the Saudi Payments and Payment Services Law
المادة 6 من نظام المدفوعات وخدماتها
Provides that final payment orders, settlement operations, clearing arrangements, default management arrangements and collateral are binding and effective and cannot be amended, cancelled or invalidated.
Official text (Arabic)
This article has not been amended since the law was issued.
تعد أوامر المدفوعات النهائية وعمليات التسوية وترتيبات المقاصة وترتيبات إدارة التعثر والضمان؛ ملزمة،ً ونافذة، وغير قابلة للتعديل أو الإلغاء أو الإبطال.
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 6 explained in plain English
This article establishes the principle of stability and finality in payment operations. It makes five things binding and effective and not open to amendment, cancellation or invalidation:
- Final payment orders: under Article 1, payment orders that are subject to settlement finality under the rules of important payment systems.
- Settlement operations.
- Clearing arrangements: that is, calculating the net obligations between the dealing parties under the rules of payment systems.
- Default management arrangements: the arrangements that limit risks when a member or service provider is unable, or likely to be unable, to meet its obligations, including enforcing against or transferring collateral.
- Collateral: cash or assets convertible into cash provided to secure rights and obligations in important payment systems for the benefit of the members.
The practical idea is that someone dealing through these systems needs certainty that once an operation has become final it will not be undone later, because undoing a single operation could affect a chain of related operations. The time at which an order becomes final is determined by the rules of the payment system concerned, under the definition of "settlement finality" in Article 1.
This is linked to the Central Bank's power in Article 7 to classify any payment system as an "important payment system." Anyone with a dispute about a particular payment operation would do well to consult a lawyer specializing in banking and finance and payment systems.
Practical example
A bank in Riyadh issued a payment order through an important payment system, and the order reached settlement finality under the rules of that system. After that, the bank cannot ask to withdraw, amend or cancel the order, because final payment orders are binding and effective.
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 6 of the Saudi Payments and Payment Services Law
Can a payment order be cancelled after it becomes final?
No. The article provides that final payment orders are binding and effective and not open to amendment, cancellation or invalidation.
When does a payment order become final?
Under the definition of settlement finality in Article 1, refer to the rules of the payment system concerned and the rules of the relevant important payment systems.
Are clearing and collateral arrangements binding?
Yes. The article makes them binding and effective and not open to amendment, cancellation or invalidation, like final payment orders, settlement operations and default management arrangements.
More articles on Systemically Important Payment System and Settlement Finality
- Article 1
Defines the key terms of the Payments and Payment Services Law, such as payment systems and services, payment order, member, customer, consumer, collateral and settlement finality.
يقصد بالكلمات والمصطلحات الآتية -أينما وردت في هذا النظام- المعاني الموضحة أمام كل منها، ما لم يقتضِ السياق غير ذلك: النظام: نظام المدفوعات وخدماتها. البنك المر
- Article 7
Makes the Central Bank the regulator, supervisor and overseer of payment systems and services, and lists thirteen specific powers.
يتولى البنك المركزي التنظيم والإشراف والرقابة على نظم المدفوعات ومشغليها، وخدمات المدفوعات ومقدميها، وفقاً لأحكام النظام وما تحدده اللوائح. وله على وجه خاص الآت
- Article 9
Requires the operator of a payment system classified as "important" to work, from the date it is notified, under special rules it sets for this purpose as the regulations specify.
يلتزم مشغل نظام المدفوعات الذي يصنف بأنه نظام مدفوعات مهم، من تاريخ إشعاره بذلك؛ بالعمل وفق قواعد خاصة بـ (نظام المدفوعات المهم) يضعها لهذا الغرض، بحسب ما تحدده
- Article 10
Sets four elements the rules of an important payment system must include, among them when a payment order becomes final, enforcing against collateral, and managing members' default.
يجب أن تشتمل القواعد الخاصة بــنظام المدفوعات المهم على الآتي: 1- الوقت الذي يصبح فيه أمر المدفوعات الذي أنشأه عضو معين نهائيّاً، والوقت الذي يخضع فيه لنهائية ا
- Article 11
Requires a member of an important payment system to disclose its memberships when bankruptcy or judicial deposit procedures are opened for it, and to notify the operator of what it knows about other members.
يلتزم أي عضو في نظام مدفوعات مهم بالآتي: 1- الإفصاح للبنك ولمشغل نظام المدفوعات عن أي نظم مدفوعات مهمة يكون عضواً فيها، وذلك عند قيد أو افتتاح أي من إجراءات الإ
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.