Article 9 of the Saudi Law on Security Rights in Movable Assets
المادة 9 من نظام ضمان الحقوق بالأموال المنقولة · الفصل الرابع: نفاذ حق الضمان في مواجهة الغير
The article provides that replacing the method of effectiveness of a security right from registration to possession, or the reverse, does not interrupt its continued effectiveness against third parties, subject to the cases where possession is the only means.
Official text (Arabic)
This article has not been amended since the law was issued.
مع مراعاة حكم الفقرة (2) من المادة (الثامنة) من النظام، لا يؤثر استبدال طريقة نفاذ حق الضمان على الضمانة من الإشهار إلى الحيازة أو العكس، في استمرار نفاذ حق الضمان في مواجهة الغير.
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 9 explained in plain English
Article 8 sets out two ways of making a security right effective against third parties: registration in the Registry, or transfer of possession of the collateral to the secured party. This article deals with the case of moving from one method to the other.
The rule: if the method of effectiveness is replaced from registration to possession or from possession to registration, that does not affect the continued effectiveness of the security right against third parties. That is, effectiveness remains continuous and is not treated as a new right that starts from the date of the new method.
The limit: the article begins with the phrase "subject to the provision of paragraph (2) of Article 8", the paragraph that refers to the Implementing Regulations the cases where possession is the only means of effectiveness. In those cases registration is not enough, so moving from possession to registration does not preserve effectiveness.
Practical importance: a creditor may start by holding the collateral and then return it to the grantor to use in his business, or the reverse. This article reassures him that his right remains effective as long as it moved from one method to the other without interruption, which may affect the ranking of priority among creditors.
It is followed by Article 10 on continued effectiveness over the proceeds of the collateral. To arrange the move between the two methods in a way that protects your right, it is advisable to consult a lawyer specialized in commercial and finance matters.
Practical example
A bank in Riyadh received a consignment of goods from a merchant as security for a loan, so its right was effective by possession. The merchant then needed the goods to sell them, so the bank registered its right in the Registry before returning them. Under this article the bank's right remains effective without interruption despite the move from possession to registration.
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 9 of the Saudi Law on Security Rights in Movable Assets
Does the effectiveness of a pledge lapse if the creditor returns the collateral to the debtor and registers his right?
No. Replacing the method of effectiveness from possession to registration or the reverse does not affect the continued effectiveness of the security right against third parties, subject to Article 8(2).
When does moving from possession to registration not help?
In the cases set by the Implementing Regulations in which possession is the only means of making a security right effective against third parties.
Articles this article refers to
More articles on Effectiveness of a Security Right Against Third Parties
- Article 8
The article requires registration, or transfer of possession of the collateral to the secured party, for a security right to be effective against third parties, and refers to the Implementing Regulations the cases where possession is the only means.
1- يشترط لنفاذ حق الضمان في مواجهة الغير الإشهار، أو انتقال حيازة الضمانة إلى المضمون له انتقالاً مباشرًا أو غير مباشر سواء كان انتقالاً حقيقيًّا أو حكميًّا. 2-
- Article 10
The article extends a security right's effectiveness automatically to the proceeds of the collateral for fifteen days from the grantor's receipt of them unless excluded, after which it lapses except for identifiable cash proceeds or proceeds described in the registration.
1- يستمر حق الضمان النافذ في مواجهة الغير تلقائيًّا على عوائد الضمانة لمدة (خمسة عشر) يومًا من قبض الضامن لها، ما لم يتفق عند إنشاء حق الضمان على استثنائها. 2-
- Article 11
The article provides that where the collateral is a right against a third party, the security right becomes effective against that third party from the date he is notified of its creation over the right.
إذا كانت الضمانة حقًّا لدى الغير، فيكون نفاذ حق الضمان في مواجهة ذلك الغير من تاريخ إبلاغه بإنشاء حق الضمان على الحق.
- Article 12
The article provides that a condition restricting the grantor's right to provide his receivables or assign his rights as security does not affect the validity or effectiveness of the security right, and the party who required it may still claim against the grantor.
لا يؤثر أي شرط في اتفاق يقيد حق الضامن في تقديم ديونه أو حوالة حقوقه ضمانة على صحة عقد إنشاء حق الضمان أو نفاذه، ولا يمنع ذلك الطرف الذي اشترط القيد لمصلحته من
- Article 13
The article provides that a registered security right stays effective if the collateral becomes real estate by designation, and is effective against creditors secured by that real estate, unless the collateral was designated before the real estate was mortgaged and the right was not registered.
1- أ- يستمر نفاذ حق الضمان في مواجهة الغير حتى وإن أصبحت الضمانة عقارًا بالتخصيص؛ إذا كان حق الضمان مشهرًا في السجل. ب- يسري نفاذ حق الضمان المشهر في الضمانة ال
- Article 14
The article provides that a security right stays effective against third parties if the collateral is attached to another movable asset in a way that allows it to be separated.
يستمر نفاذ حق الضمان في مواجهة الغير في حال إلحاق الضمانة بمال منقول آخر بشكل قابل للفصل.
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.