Legislation Details
- Full Title: Federal Law Regarding Securing the Rights in Movables
- Law Type: Federal Law
- Law Number: [4] of 2020
- Issued Date: 28 May 2020
- Effective Date: 29 May 2020
- Official Gazette: No. 679
- Sector: Justice and Judiciary
- Status: Active
- Number of Articles: 105
- Chapters/Parts: 11
- Amendments: 0
Summary
This Federal Law regulates the establishment and enforcement of security rights over movable assets in the UAE. Its purpose is to provide a comprehensive legal framework for securing debts and other liabilities through the creation of security interests in various types of movable property. The law is significant for businesses and individuals in the UAE as it introduces a centralized electronic register for recording security rights, clarifies the priority of security interests, and specifies the rights and obligations of pledgors and pledgees. This is expected to facilitate access to credit and promote the use of movable assets as collateral, thereby supporting economic growth and development in the country. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 1-2)
What is the scope and purpose of this law?
The law applies to any security right established under its provisions within the framework of commercial or civil transactions in the UAE. It covers a wide range of movable assets that can be pledged, including accounts receivable, bank accounts, negotiable instruments, equipment, inventory, crops, and intellectual property rights. The law aims to provide a comprehensive legal framework for the creation, registration, priority, and enforcement of security interests in movable property. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 2)
What are the key definitions under this law?
The law provides the following key definitions:
- Security Right: An in-kind right on a movable that is established under a security contract for securing the fulfilment of a liability, even if not explicitly described as a security right, regardless of the type of property or status of pledgor or pledgee or nature of secured liability.
- Pledge: Material or moral movable, whether current or future, on which the security right is established.
- Pledge Returns: Any in-kind or cash allowance resulting from the disposal of the pledge or replacing it with another one, or any compensation obtained by the pledgor due to the reduction in the pledge value, its damage or any other similar compensation.
- Pledgee: Beneficiary creditor from the security right.
- Pledgor: A person having a right or authority in disposing of the pledge and establishing the security right to pledge his liabilities or liabilities of a third party.
- Register: An electronic register designated for registering the rights on the movables.
- Accounts Receivable: The right to fulfil amounts of money for the pledgor owed by a third party.
(Federal Law Regarding Securing the Rights in Movables, 2020, Art. 1)
What are the main obligations and requirements?
The law imposes the following key obligations: 1. The security contract must include a description of the pledge and the secured liability. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 8) 2. The pledgee must take reasonable care of the pledge in line with its nature, unless otherwise agreed. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 9) 3. The pledgee must pay the charges and costs of registering the security right in the register, unless otherwise agreed. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 10) 4. The pledgee must register its security right in the register within 15 working days to maintain enforcement against third parties on the pledge returns. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 11)
What licensing, registration, or approval requirements exist?
The law requires the establishment of a centralized electronic register for registering security rights over movable assets. A Cabinet resolution will determine the authority responsible for managing the register and the procedures for recording, accessing, and obtaining reports from the register. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 6-7)
What rights and protections does this law provide?
The law provides the following key rights and protections: 1. Movables can be mortgaged without the need to deliver possession to the pledgee or a third party. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 5) 2. The security right automatically extends to the returns and proceeds of the pledge, unless the parties agree otherwise. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 8) 3. The security right can be enforced against third parties through registration in the register, delivery of possession to the pledgee, or the pledgee's control of the pledge. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 10) 4. The law grants the pledgee certain rights, such as the right to execute on the pledge unilaterally and the right to acquire the pledge. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 25-27)
Which authorities or bodies are responsible for enforcement?
The law does not specify any particular authorities or bodies responsible for the enforcement of its provisions. However, it does state that a Cabinet resolution will determine the authority responsible for managing the register established under the law. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 6)
What are the penalties for non-compliance?
The law provides the following penalties for non-compliance: 1. Imprisonment and/or a fine for committing acts that violate the provisions of the law. The specific penalties are not mentioned. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 44) 2. Legal persons may be held responsible for violations committed by their representatives, managers, or agents. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 45) 3. Severe punishment for any person who intentionally commits an act that violates the provisions of the law. The specific penalties are not mentioned. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 46)
What fees, charges, or financial provisions are specified?
The law states that the pledgee must pay the charges and costs of registering the security right in the register, unless otherwise agreed between the parties. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 10) The law also mentions that the Executive Regulation will determine the fees prescribed for the use of the register. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 6)
What exemptions or exceptions apply?
The law does not apply to the following: a. Movables which the applicable legislation requires the registration of the security rights provided thereon in special registries. b. Expenses, wages, salaries, and workers' compensation. c. Public funds, endowment funds, and funds of diplomatic and consular missions and government international organizations. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 4)
How are disputes resolved under this law?
The law does not specify any dispute resolution mechanisms. It only mentions that the "Court" (defined as the Court of Appeal or the court within whose jurisdiction the pledge falls) is responsible for certain procedures related to the enforcement of the security right, such as the request for acquiring the pledge and the order of permission for acquiring the pledge. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 29-31)
What are the key deadlines and time limits?
The law specifies the following key deadlines and time limits: 1. The security right must be registered in the register within 15 working days to maintain enforcement against third parties on the pledge returns. (Federal Law Regarding Securing the Rights in Movables, 2020, Art. 11) 2. The law does not mention any other specific deadlines or time limits.
How does this law interact with other UAE legislation?
The law mentions the following related federal laws and decrees: - Federal Law No. (1) of 1972 concerning the Competences of the Ministries and the Powers of the Ministers - Federal Law No. (5) of 1975 concerning the Commercial Register - Federal Law No. (26) of 1981 on Maritime Trade Law - Federal Law No. (5) of 1985 Promulgating the Civil Transactions Law - Federal Law No. (3) of 1987 Promulgating the Penal Code - Federal Law No. (10) of 1992 Promulgating the Law of Evidence in Civil and Commercial Transactions - Federal Law No. (11) of 1992 Promulgating the Civil Procedure Code - Federal Law No. (35) of 1992 Promulgating Penal Procedures Code - Federal Law No. (37) of 1992 On Trademarks - Federal Law No. (18) of 1993 on Promulgating the Commercial Transactions Law - Federal Law No. (17) of 2002 Regulating and Protecting Industrial Property Rights for Patents, Industrial Drawings and Designs - Federal Law No. (1) of 2006 concerning the Transactions and Electronic Commerce - Federal Law No. (6) of 2010 concerning Credit Information - Federal Law No. (2) of 2015 on Commercial Companies - Federal Law by Decree No. (9) of 2016 on Bankruptcy - Federal Law No. (20) of 2016 on Mortgaging of Movables as Security for Debts - Federal Law No (8) of 2018 concerning Finance Leasing - Federal Law by Decree No. (14) of 2018 concerning the Central Bank and the Regulation of Financial Institutions and Activities - Federal Law by Decree No. (19) of 2019 on Insolvency - Federal Law by Decree No. (26) of 2019 on Public Finance (Federal Law Regarding Securing the Rights in Movables, 2020, Preamble)
When did this law come into effect?
This Federal Law No. (4) of 2020 Regarding Securing the Rights in Movables came into effect on 29 May 2020, the day after its issuance on 28 May 2020. It was published in the Official Gazette No. 679. (Federal Law Regarding Securing the Rights in Movables, 2020, Preamble)
Source Documents
This article analyses Federal Law Regarding Securing the Rights in Movables for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.