Book an appointment with us, or search the directory to find the right lawyer for you directly through the app.
Find out moreWe are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.
Read the full editionHani Al Naddaf - Partner, Head of Litigation - Qatar - Arbitration / Litigation / Construction and Infrastructure / Insurance
Abdulkarim Alsoud - Senior Associate - Litigation
In January 2019 the Qatari Civil Court of First Instance issued an interesting judgment in relation to the enforcement of possessive mortgages in which it confirmed a very important principle related to the recognition of the expeditious enforcement of possessive mortgages. The Court ruled that the possessive mortgage shall be recognised and enforced separately from the original substantive case that deals with the determination of outstanding amounts under the facilities agreement. In other words, the possessive mortgage is enforceable by an expedited procedure even where it is related to a civil case regarding the acceleration of the outstanding facility amount is filed and pending before the Court.
Under the laws of Qatar, a creditor may obtain a security interest over movable property in Qatar by executing a mortgage over movables, which is a form of possessory pledge under Law No. 22 of 2004 on the Civil Code (‘Civil Code’). Under this method of security, the possession of the relevant movable(s) is transferred to the pledgee (usually a creditor) or a neutral third party who holds the movable(s) on behalf of the pledgee (generally a trustee or bailee). The movable asset(s) would secure the financial obligation of the borrower under the financing agreement between the creditor and the borrower.
A Possessive Mortgage on movable assets (in this case, Machinery) was signed between a Qatari Bank and its debtor as additional security in respect of the financing facilities granted by the Qatari Bank to the debtor.
Following a default in payment by the debtor, the Qatari Bank filed a civil case in order to claim the outstanding amount in accordance with the facilities agreements before the Court of First Instance.
Simultaneously, the Qatari Bank submitted a separate petition to the Summary Court Judge to seek an order to enforce the Possessive Mortgage and sell the mortgaged movable assets.
The Summary Court Judge dismissed the petition filed by the Qatari Bank for the recognition and enforcement of the Possessive Mortgage without providing any reasoning for his decision.
The Qatari Bank, represented by Al Tamimi & Company, appealed the decision issued by the Summary Court Judge on the grounds that the dismissal order was against provisions of Article 241 of Law No. 27 of 2006 on the Qatari Commercial Law (the ‘Commercial Code’) which states as follows: ‘If the debtor does not pay the debt secured by the mortgage within a period of its maturity, the mortgagee, after the expiry date of seven days from the date of notification to the debtor about the payment formally or by registered letter with acknowledgment of receipt, shall submit a petition to the head of the court to seek an order to sell the entire mortgaged item or part of it.’
The Qatari Bank also argued that the Summary Court’s refusal to enforce the Possessive Mortgage violates all legal provisions related to mortgage as set forth in the Civil Code and the Commercial Code.
The Court of First Instance accepted the Qatari Bank’s argument above and reversed the decision of the Summary Court Judge and confirmed the following important principles relating to the recognition of the expeditious enforcement of a Possessive Mortgage:
This judgment is an important development as it constitutes an expedited approach adopted by the Qatari Civil Courts toward the enforcement of Possessive Mortgage. The Civil Court has recognised the value of a prompt and efficient enforcement process which is beneficial for banks when considering lending to the Qatari borrowers. This is of particular importance for the banks as they would be able to collect the debts due to them by enforcing the Possessive Mortgage quickly and being able to sell the pledged movable assets in a prompt and efficient manner. The summary enforcement process is expected to take several weeks compared to the normal court process which may take up to one year.
Al Tamimi & Company’s Litigation team in Qatar regularly advises on and conducts all types of litigation in the region, including commercial, banking, criminal, medical, employment, transport, sports, insurance, personal status, construction and intellectual property. For further information, please contact Hani Al Naddaf (h.alnaddaf@tamimi.com) or AbdulKarim Al Soud (a.alsoud@tamimi.com)
To learn more about our services and get the latest legal insights from across the Middle East and North Africa region, click on the link below.