Federal Law No. (4) of 2020 Regarding Securing the Rights in Movables (justice and juiciary law)

Article (1)  
Definitions  
In application of the provisions of this Law, the following words and expressions shall have 
the meanings ascribed thereto unless the context requires otherwise:  
State  : United Arab Emirates  
Ministry  : Ministry of Finance  
Minister  : Minister of Finance  
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 the type of property or statu s of 
Pledgor or Pledgee or nature of secured liability. It shall include the right 
of Pledgee in a mortgage contract, right of lessor resulting from a finance 
leasing, right of ownership of a seller to the movable sold under 
contracts of sale and transfer of the movable for the security and the 
right of transferee in the security by transfer.  
Pledge  : Material or moral movable, whether current or future, on which the 
security right is established.  
Pledge 
Returns  : Any in -kind or cash allowance res ulting 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 securi ty right.   
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  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 third 
party.  
Pledged 
Person  : A debtor of secured liability if he is not a Pledgor  
Security 
Contract  : A contract between the Pledgor and the Pledgee to establish the security 
right.  
Register  : An electronic register designated for registering the rights on the 
movables.  
Registration  : Recording the rights provided on the movables in the Register. Such 
recording shall include any amendment or cancellation thereto.  
Accounts 
Receivable  : The right to fulfil amounts of money for the Pledgor owed by a third 
party. Such right shall not i nclude the payments established in the 
endorsable bonds, the right in the payments deposited in the credit 
accounts with banks or the right in the payments under the securities.  
The Court  : Court of Appeal or the court which the Pledge falls within it s jurisdiction, 
as the case may be.  
 Security 
Right for 
Purchase 
Financing  : A security right on a material movable, intellectual property right or the 
right of licensee under an intellectual property licensing that is 
established to secure the liabili ty of settling the part unpaid from a price 
of a movable or any other credit granted for enabling the Pledgor from 
obtaining rights in a movable.  
Enforcement 
against Third 
Party  : Completion of procedures required for enabling the Pledgee from 
insisting on the security right against a third party, whether by 
registering a registration in the Register according to provisions of this 
Law or by enabling the Pledgee to possess the Pledg e or acquiring the 
Pledgee to control the Pledge.  
  
 
  
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Article (2)  
Scope of Application of the Law  
1. Provisions of this Law shall apply to any security right established under its provisions 
within the framework of commercial or civil transactions.  
2. For purposes of this Law, the right of transferee in selling the accounts receivable shall be 
deemed a security right and shall be subject to provisions of this Law, save the provisions 
of Chapter Seven therefrom.  
  
Chapter Two  
Pledge

Article (3)  
Funds that may be Pledges  
Any material or moral or a part thereof may be under Pledge or an indivisible right therein, 
whether current or future, including the following:  
A. Accounts receivable unless they are a part of a transaction of transfer of a project.  
2. Credit accounts with banks, including the current and deposit accounts.  
C. Bonds and documents transferable through delivery or endorsement, which prove the 
entitl ement of an amount or ownership of goods, including the commercial papers, bank 
deposit certificates, bills of lading and goods deposit certificates.  
D. Equipment and work tools.  
E. Material and moral elements of the business.  
F. Goods intended for sale or renting, raw material and under manufacturing or 
transformation.  
G. Crop yields, animals and their products; this includes fish and bee.  
H. Property by Allocation.  
I. Any other movables that the laws applied in State stipulate their validity to be under 
Pledge according to provisions of this Law.  
  
  
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Article (4)  
Funds Excluded from Provisions of the Law  
Provisions of this Law shall not apply to the following funds:  
A. Movables which the applicable legalisation 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 cons ular missions and 
government international organisations.

Article (5)  
Possession Free Mortgage  
1. Notwithstanding the provision of any other legalisation, the movables may be 
mortgaged without need to deliver their possession to the Pledgee or third par ty. 
2. Registration of the security right established under a mortgage right in the Register shall result in all rights enjoyed by the Pledgee as he possess the mortgaged fund.  
  
Chapter Three  
Register

Article (6)  
Register Establishment  
1. A Register shall be established for registering the rights in accordance with provisions of this Law by a resolution issued from the Cabinet. The resolution shall determine the 
authority which will manage the Register  upon a proposal from the Minister.  
2. The Executive Regulation of this Law shall organise the work of the Register and the 
procedures followed on the recording therein, as well as the fees prescribed for its use.

Article (7)  
Right of Accessing the Regis ter 
The public may access the information provided in the Register as determined by the  
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 Executive Regulation of this Law. It is permissible to request a paper -based or electronic 
report including the information provided in the Register. Such report shall,  if authenticated 
by the authority managing the Register, have an authority overall in proving the date and 
time of registration and any information registered in the Register. The Executive Regulation of this Law shall organise the requirements of obtaining the report.  
  
Chapter Four  
Establishment and Enforcement of the Security Right among Parties

Article (8)  
Security Right Establishment  
1. For the establishment of the security right and its enforcement among its parties under 
the provisions hereof, the following conditions shall be fulfilled:  
A. Entering the security contract.  
B. The Pledgor shall have the capacity to act in respect of t he Pledge or authorised to 
establish the security right in respect thereof.  
C. The security contract shall include a description for the Pledge which may be described generally or specifically, allowing its identification. This shall include its 
descript ion as the full funds of Pledgor, certain or general category or certain or 
general classification of funds of Pledgor.  
D. The security contract shall include a description for the liability secured in the 
security right. The Executive Regulation of this  Law shall determine the degree and 
kind of description, mentioning the maximum secured liability.  
E. The Pledgee shall pay the amount agreed upon in the security contract or shall be 
committed to pay such amount.  
2. The security right shall secure one or more liability of any kind, whether current or 
future, recognised or recognisable, completed or conditional, fixed or variable.  
3. The security right shall be automatically extended to the returns and proceeds of Pledge 
and its replacement, unless the parties otherwise agree.  
   
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Article (9)  
Keeping the Pledge  
The Pledge holder shall take the care of usual person in keeping it, in line with its nature, 
unless there is an agreement on taking special care.  
  
Chapter Five  
Enforcement of the Security Right Against Third Party

Article (10)  
Enforcement Methods of the Security Right Against Third Party  
1. The security right shall be enforced against third parties using any of the following methods:  
A. Registering a registration in the Register according to provisions of this Law.  
B. Delivering the possession of the Pledge to the Pledgee.  
C. Controlling the Pledge by the Pledgee.  
2. The replacement of the method of enforcing the security right from  registration to 
possession or vice versa shall not affect the continued enforcement of security right 
thereon against third party.  
3. The Registration may be registered before establishing the security right or concluding the security contract in connec tion with registration, provided the written consent of 
Pledgor shall be obtained.  
4. Unless otherwise agreed, the Pledgee shall pay the charges and costs of registration of the security right in the Register.

Article (11)  
Enforcement of Security Right on Returns  
1. The security right shall remain enforced against third party on the Pledge returns, 
proceeds, amount and its replacement without need to take any procedure.  
2. The enforcement of security right sh all expire against third -party on the returns if the 
right of Pledgee thereon is not registered within (15) fifteen working days from the date  
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 they are received by the Pledgor, unless the Pledge returns are cash and recognisable or 
described in the registr ation.

Article (12)  
Registering the Registration  
The registration shall be made through the Register in accordance with the procedures determined by the Executive Regulation of this Law.

Article (13)  
Provisions for Accounts Receivable  
No condition in an ag reement restricting the right of Pledgor in establishing a security right 
on accounts receivable shall affect the validity of establishing the security right on the accounts receivable or its enforcement. However, the party requires the recording therefor shall have the right to recourse to the Pledgor claiming his rights.

Article (14)  
Security Right Transfer  
The Pledgee may transfer the security right without obtaining the approval of Pledgor. The 
transfer may be registered as an amendment to the registrat ion. The failure of registration of 
the amendment shall not affect the enforcement of security right against third party.

Article (15)  
Registration of Attachment on Pledge  
1. If an order or judgement is issued to impose the precautionary or executive at tachment 
on Pledge, the one for whom the order or judgement is issued shall enforce the rights decided by the order or judgement on the Pledge by registering the registration 
according to provisions of this Law or possessing the movable.  
2. The order or judgement issued according to Clause (1) of this Article shall be enforced 
against third party from the date and time of its registration in the Register, as  
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 determined under the priority according to provisions of this Law.

Article (16)  
Regis tration Cancellation  
1. The Pledgee shall be committed to cancel the registration in the following cases:  
A. If the Pledgee agrees with the Pledgor to strike off the registration from the Register.  
B. If the security right is forfeited as a result o f the fulfilment of the full secured liability 
under the security contract or for any reason before the expiration of the period set 
in the Register.  
C. If the establishment of the security right is not completed under Clause (3) of article (10) hereof.  
D. If the court issues an order to strike off the registration from the Register under the 
provisions hereof.  
2. The Pledgee shall cancel the registration within (5) five working days from the date of 
realisation of any of the cases stipulated in Claus e (1) of this Article.  
3. If the Pledgee does not cancel the registration within the period determined in Clause (2) of this Article, he shall be responsible for compensating the Pledgor for any actual 
damage caused thereto.  
4. The effect of cancellation of registration shall not be extended to the right of other 
Pledgees who have rights applicable under the same security contract, unless they agree 
in written.

Article (17)  
Effects of Enforcement against Third Party 
1. The enf orcement of security right against third party shall result in priority of the Pledgee 
to be ahead of other creditors in fulfilling his rights in the Pledge. Such priority shall be 
determined based upon the date and time of enforcement of security right ag ainst third 
party.  
2. The enforcement of security right against third party shall result in priority of right of the 
Pledgee and his right in being ahead of the unsecured debts and privileged debts,  
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 including the debts entitled to the Pledgor employees and works and any other d ebts 
entitled to the public treasury, such as unpaid taxes.  
3. The priority of security right shall be extended to all secured liabilities including, the 
liabilities resulted after the security right becomes enforced against third party.  
4. The priorit y of security right shall include all movables constituting the Pledge and 
described in the registration registered in the Register, whether owned by the Pledgor or established before or after the date of registration.  
5. The awareness of the Pledgee that there is a security right competing his right shall not 
affect the security right prescribed under provisions of this Law.  
6. It is permissible to stipulate in the Executive Regulation on additional priority rules 
related to a kind or more of the Pledg e types.  
  
Chapter Six  
Right of Tracking and Priority

Article (18)  
Right of Tracking  
1. The enforcement of security right against third party shall result that the Pledgee will 
have the right in tracking the Pledge with any person to whom it is transferred to execute 
thereon and fulfil his rights.  
2. Save the provision of Clause (1) of this Article, the Pledge shall be transferred free from 
any security right to its purchaser or tenant or to any other person acquiring a right 
thereon if agreed by the Pledgee.  
3. If it is a material property, the Pledge shall be referred to its purchaser free fr om any 
security right if it is disposed of within the course of ordinary business of seller, provided the purchaser shall not be aware at the time of concluding the sale agreement that the 
sale breaches the rights of the Pledgee under the security contract . 
  
 
  
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Article (19)  
Priority of Security Right for Purchase Financing  
1. The security right for financing the purchase of equipment, inventory, intellectual 
property rights and the rights under a licensing agreement related to the intellectual 
property right s shall be ahead of any other competing security right not related to a 
purchase financing established by the Pledgor if a registration is registered in the Register on the security right for purchase financing within (7) seven working days from 
the possession of Pledgor to the equipment or inventory or concluding an agreement of 
sale or licensing the intellectual property rights of Pledgor.  
2. The security right for purchase financing on the returns or inventory of accounts 
receivable shall have lower pr iority than the security rights established on the accounts 
receivable registered in the Register at earlier date, unless the Pledgee, the holder of 
security right for purchase financing, notifies the other Pledgee.

Article (20)  
Priority of Security Right over Property by Allocation  
1. Save the provision of Civil Transactions Law, the security right established on the Pledge 
shall remain after it becomes a property by allocation. In this case, the security right shall 
be enforced against third party, including the Pledgees holding current rights on the property before the date of allocation or established thereafter.  
2. Notwithstanding the provision of Clause (1) of this Article, the security right established on th e Pledge that becomes a property by allocation shall not be enforced against the 
Pledgee of the property if the Pledge is allocated for the property before authenticating the transaction of mortgaging the property and the date of authentication of such transaction is preceding the date of registration of the security right in the Register.

Article (21)  
Priority of Right in Set -off 
The right of banks and financial institutions licensed to keep the deposits according to other  
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 laws in conducting set -off among the liabilities owed to them by the Pledgor and the right of 
Pledgor to receive the cash amounts deposited in his account with the bank shall have 
priority over any other security right established on the accounts they keep.

Article (22)  
Priority over Crop Yields  
If the Pledgor possesses a property lawfully in order to use it in farming the crop yields, the 
security right he establishes on the crop farmed in such property, which has been enforced 
against third party in accordance with provisions of this Law , shall be ahead of any mortgage 
or any other right on such property.

Article (23)  
Security Right on Interchangeable Items  
1. A security right may be established on the interchangeable items before merging into 
their counterparts so as the security right remains enforced thereon after merging.  
2. If the security rights enforced against third party multiplied on the same product  or mass, 
such rights shall be equal in priority on the product or mass. Each Pledgee shall fulfil his 
right from the product or mass per the Pledge belonging to him to the mass or product at 
the time of merging.

Article (24)  
Waiver of Priority  
1. The P ledgee may waive the priority prescribed thereto according to provisions of this 
Law in written, provided the waiver shall be made within his secured rights and shall not 
affect the rights of other Pledgees.  
2. The waiver of priority may be registered as  an amendment to registration. The failure to 
registration of amendment shall not affect the enforcement of security right against third 
party or the priority thereof.  
   
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 Chapter Seven  
Rights of Pledgee and Acting in Good Faith

Article (25)  
Rights of Pledge e Acquiring the Pledge  
1. The Pledgee acquiring the Pledge shall have the following rights:  
A. Recovering the reasonable expenses incurred in keeping the Pledge.  
B. Using the Pledge reasonably, in addition to the resulting returns for fulfilling the 
secured liability.  
2. The Pledgee not acquiring the Pledge shall inspect it when it is acquired by the Pledgor 
or any other person on behalf of him.  
3. Each person shall be committed to practice his rights and execute his liabilities under this 
Law, in line with good faith.

Article (26)  
Offer to Possess Pledge  
1. The Pledgee and Pledgor may agree on having the Pledge possessed by the Pledgee 
wholly or partially to fulf il his rights.  
2. The Pledgee shall notify other holders of rights on the Pledge registered in the Register.  
3. Any person having rights of the P ledge shall have the right to object to the Pledgee to the 
offer of possessing the Pledge to fulfil the secured liability according to provisions of this Article, within (10) ten working days from the date of being notified of the possession offer.  
4. It is required to obtain the approval of any person having rights secured by the Pledge to 
object the offer of possessing the Pledge to fulfil the secured liability according to provisions of this Article, within (10) ten working days from the date of being notified of 
the possession offer.  
1. The Pledgee may request the Court to adjudicate any objection within (10) 
ten working days from the date of submitting the objection. The decision in this regard 
shall be final and unchallengeable through any of the c hallenge means.   
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 6. If no objection is submitted to the Pledgee against the possession request or if the 
Pledgee gets the approval stipulated in Clause (4) of this Article, he may possess the 
Pledge in full or in part to fulfil the secured liability.  
7. If the Pledgee does not practice his right in recourse to the Court according to provisions 
of Clause (5) of this Article or if the Court decides accepting the objection, the execution 
shall be made on the Pledge according to procedures stipulated in this  Law.

Article (27)  
Right of Pledgee to Execute on Pledge Unilaterally  
1. If the Pledgor or Pledged person breaches the liabilities provided in the security contract, 
the Pledgee shall notify the Pledgor and Pledged person in written of his intent to 
acquire the Pledge, execute thereon, separate it from any other property attached 
thereto, if required, and dispose of it within the period specified in the notice. This shall 
be made according to the following requirements:  
A. Notifying other holders of rights on the Pledge registered in the Register.  
B. Notifying the Pledge acq uirer if it is acquired by a third party.  
C. Notifying the property owner where the Pledge exists, the Pledgee of such property, 
owner of the movable to which the Pledge is attached and acquirer of such movable.  
2. The notice should be submitted under Clause (1) at least (7) seven working days prior 
the sale, disposal by other method, leasing or licensing, and it shall include the information stipulated in the Executive Regulation.  
3. Without submitting a request to the Court, the Pledgee may specify the method, means, time, place and other aspects of sale or disposal by other method or leasing or licensing 
by use including, whether he will sell, dispose by other method, lease or license the 
Pledge unilaterally, over groups or fully and whether through public or exclusive 
auction.  
4. The Pledge s hall be referred to its purchaser or to any other transferee acquiring a right 
thereon free from the security right belonging to the executing Pledgee and any other 
rights on the Pledge, save the rights having priority over the right of executing Pledgee.  
5. Upon disposal of the Pledge according to provisions of this Article, the executing Pledgee  
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 shall:  
A. Use the proceeds of execution to fulfil the secured liability after deducting the 
reasonable expenses for execution.  
B. Pay back any surplus from the returns and proceeds of execution to any person 
having a right on the Pledge with lower priority who has notified the Pledgee 
conducting the execution of his claim prior the distribution of the proceeds, in 
addition to the limits of such claim, then, t o return the balance to the Pledgor.

Article (28)  
Execution on Pledge if it is an Account Receivable, Written Bond or Account 
Payable  
If the Pledgor or Pledged person breaches the liabilities provided in the security contract, the 
Pledgee may execute on th e Pledge by fulfilling his right thereon directly without recourse to 
any judicial proceeding in any of the following cases:  
 1. If the Pledge is an account payable with banks, it  shall be fulfilled with expenses through 
set-off if the Pledgee if the bank keeping such account. The Pledge shall be claimed if the 
account is with another bank.  
2. If the Pledge is written bonds or documents transferable through delivery or endorsemen t, the execution shall be made by disposal thereof through its delivery or 
endorsement if its value is equal to the security right or by fulfilling the amounts or 
owning the goods represented by such bonds and selling them and fulfilling his rights 
from th e sale price.  
3. If the Pledge is accounts receivable, the Pledgee shall have the right to fulfil any of the payments from the debtor by accounts receivable even before the breach if agreed by the Pledgor. In case of selling the accounts receivable, the Pledgee shall have the right to 
fulfil the accounts receivable at any time.  
4. The security right shall be executed in the cases stipulated in this Article when the 
Pledgee notifies the Pledgor and the Pledged person or the bank keeping the account 
payab le or holder of bonds or documents, as the case may be, in order to transfer the  
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 amounts from the account to the bank account of the Pledgee or to enable him to 
acquire the bonds or documents, as the case may be.  
In all cases, the Pledgee and Pledgor may agree in written on the prior waiver of the Pledgor to the right of being notified of the procedures of execution on the Pledge that is made according to provisions of this Article.  
  
Chapter Eight  
Execution through Judiciary

Article (29)  
Request of Acquiring the Pledge  
1. Without prejudice to the rights of the Pledgee in undertaking the usual judicial 
proceedings, the Pledgee may request the Judge of Urgent Matters to issue a decision to 
acquire the Pledge and execute thereon according to provisions of this Law.  
2. The re quest of Pledgee may include the necessity of placing the Pledge under control of 
a third person at the cost of Pledgor in order to execute thereon and sell it immediately 
according to provisions of this Law.  
3. The request should be accompanied by the f ollowing:  
A. A copy of security contract and an extract for registering the security right in the 
Register.  
B. Name and address of execution applicant.  
C. Names and addresses of the Pledgor and Pledged person.  
D. Name of Pledge acquirer if it is acquired by a third party.  
E. Name of owner of the movable to which the Pledge is attached and acquirer of such movable, if he is another person, owner of property where the Pledge exists and 
acquirer of such property, if  he is another person, and the address of each of them, as 
the case may be.  
4. Each interested party may object the request of acquiring for the execution with the Judge of Urgent Matters within (5) five working days from the date of being informed of the request.  
   
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Article (30)  
Fulfilment of Secured Liability  
The Pledgor or the Pledged person may fulfil the secured liability of the execution, in 
addition to the fees and expenses to the treasury of the Court where he submits the request 
within (5) five work ing days from the date of being informed of the execution request.

Article (31)  
Order of Permission of Acquiring  
1. The Judge of Urgent Matters shall adjudicate the request and any objection thereto within (5) five working days from the termination of t he period stipulated in article (30) 
of this Law. He may adjudicate and the parties do not attend.  
2. The decision of the Judge of Urgent Matters issued according to Clause (1) of this Article shall be challenged before the Court of Appeal within (5) five working days from the 
date of issuance of decision. The Court of Appeal shall adjudicate the challenge within 
(10) ten working days from the date it is submitted. Its decision in this regard shall be 
final and unchallengeable through any challenge means.  
3. Unless the Court of Appeal deems otherwise, the submission of appeal shall not result in suspending the execu tion of decision of Judge of Urgent Matters. The Court of Appeal 
may oblige the appellant to provide a bank security with certain amount.  
4. Subject to provision of article (35) of this Law, the issuance of decision of acquiring and 
execution on Pledge s hall not result in maturity of any other debts secured by the Pledge 
unless the Court otherwise decides.  
5. Upon a request from the Pledgee, the Judge of Urgent Matters may agree on using the 
task force for executing the decision of acquiring, and the re gistrar and policemen shall 
attend.  
6. In case of a decision on acquiring for executing on the Pledge, the registrar shall prepare a minute including a detailed description for the status of Pledge, the property where it 
exists and the movable to which it is attached, as the case may be. A copy of this minute 
shall be deposited in the file.  
   
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Article (32)  
Reform of Pledge to Prepare it for Sale or Use 
1. The Pledgee, once he is enabled from acquiring the Pledge, shall submit a petition to the 
Judge of Urgent Matters requesting to permit him to make necessary reforms on the 
Pledge and prepare it for sale at his cost; the resulting expenses shall be added to  the 
secured debt.  
2. The petition mentioned in Clause (1) of this Article may include a request for issuing a 
decision to permit the Pledgee to use the Pledge and receive its profits, benefits and 
other amounts resulting from its use, and any expenses p aid by the Pledgee shall be 
deducted from what is received.

Article (33)  
Procedures of Sale  
1. The Court may authorise the Pledgee, following the issuance of the decision allowing 
him to acquire the Pledge and execute thereon, to sell it, provided that he acts with 
sufficient care for the sale thereof at a higher price that is not lower than the market price 
without following any of the sale procedures set forth in the Civil Procedure Law 
mentioned.  
2. The Court, if finds necessary for keeping the Pled ge, may determine in the authorisation 
the requirements or method of sale. It may set a minimum for the sale price.  
3. The Court may decide to allow the Pledgor to sell the Pledge if it was proved that he is 
able to sell it at a higher price, within the period specified by the Court and under the 
supervision of the Pledgee or the Court.  
4. Notwithstanding the provisions of Clause (1) of this Article, if the Pledge was exposed to 
destruction, damage or depreciation or if the acquisition thereof entails g reat expenses 
and the Pledgor or Pledged person do not wish to provide a substitute thereof, the Pledgee may ask the Court for permission to sell it immediately and the security shall be transferred to the proceeds of sale.  
   
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Article (34)  
Transfer of Rights at Sale  
The sale of Pledge according to procedures stipulated in this Law shall result in clearing it 
from the rights thereon and such rights shall transfer to the proceeds of sale.

Article (35)  
Clearance of Pledge from Liabilities  
1. Any person, while the procedures of execution are proceeded, may offer the Pledgee -under a notice - to fulfil his rights on the Pledge in full, including the expenses of 
execution thereon, in order to clear them from their liabilities.  
2. The Pledgee informed of the notice stipulated in Clause (1) of this Article may accept the 
offer in written within (5) five working days from the date of being notified of the notice 
and confirmation of acceptance.  
3. The offering person shall fulfil all liabilities resulting from the Pledge to the Pledgee prior 
the offer in accordance with the agreement, within no more than five working days from 
the termination of period mentioned in Clause (2) of this Article. The one fulfilling the 
rights shall substitute the Pledgee with the same priority.  
4. The person clearing the Pledge according to provisions of this Article may keep it 
acquired by the Pledgor or proceed the execution on Pledge according to provisions of 
this Law.

Article (36)  
Deposit of Proceeds of Execution  
The Pledgee who has executed on the Pledge according to provisions of article (33) of this 
Law shall deposit the proceeds of execution in the treasury of Court which the sale is made 
in its jurisdiction within tw o working days, according to the form of report of procedures of 
sale determined in the Executive Regulation of this Law.  
  
  
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Article (37)  
Distribution of Proceeds of Execution  
1. The Court which the sale is made in its jurisdiction shall prepare a list for  distributing the 
proceeds of execution as per the priorities determined in this Law and inform the 
execution applicant and other holders of rights on the Pledge. It may issue an order for 
any of them to prove his right on the Pledge. The proceeds of sale shall be distributed 
within (5) five working days from the date of distribution decision of the Court.  
2. The proceeds of execution on the Pledge shall be distributed according to the following 
order:  
A. Expenses of keeping and reforming the Pledge and  preparing it for sale, and any fees 
paid for licensing, keeping and using it according to provisions of the Law.  
B. Fees and expenses of execution on Pledge, including the judicial fees.  
C. Rights of Ple dgees as per their priorities determined in this Law.  
D. The remaining of returns of Pledge and proceeds of execution shall be distributed as 
per the priorities determined in the laws applicable in State.  
3. If the returns of Pledge and proceeds of exe cution are not sufficient to fulfil the liabilities 
resulting thereon, the Pledged person shall remain responsible towards the Pledgee for any depreciation in value of the debt. In this case, the depreciation shall be deemed 
ordinary debt.  
4. The surplus  of returns and proceeds of execution shall be paid pack to the Pledgor.

Article (38)  
Suspension of Execution 
1. The Pledgor may request the Judge of Urgent Matters, during the procedures of 
execution, to order the suspension of execution on the Pledge within no more than (5) 
five working days for justified reasons.  
2. The Judge of Urgent Matters may grant the Pled gor and the Pledgee an opportunity to 
negotiate for reaching a settlement within the period he determines or within the period 
agreed upon by the Pledgor and Pledgee.  
3. The Judge of Urgent Matters may agree on the request of suspension of execution if h e  
Federal Law No. 4 of 2020 on Securing the Rights in Movables  21 
 deems that the outcome of execution is not possible to be corrected. In case of deciding 
the suspension of execution, the suspension applicant shall be assigned to provide a 
monetary insurance or bank security to be determined by the Judge to secure the failure 
and damage that may be caused to the Pledgee.  
4. The decision of Judge of Urgent Matters issued in the request of suspension of execution 
shall be final and unchallengeable through any challenge means.

Article (39)  
Pledgor Bankruptcy  
The security  right enforced against third parties according to provisions of this Law at the 
time of proceeding the procedures of bankruptcy of Pledgor shall remain enforced against 
third parties, and shall keep the priority prescribed thereto prior the procedures of 
bankruptcy.

Article (40)  
Compensation of Pledgor and Pledged Person  
The Pledgee shall be responsible for compensating the Pledgor and Pledged person and 
holder of a right on the Pledge for any failure, damage or lost profit resulting from his 
violation to procedures of execution stipulated in this Law.  
  
Chapter Nine  
General Provisions

Article (41)  
Notice and Informing according to Provisions of this Law  
Persons to be informed according to provisions of this Law shall be notified and informed at the address provided in the Register. The notice and informing via the email address shall be 
valid if the one to whom the informing is sent agrees in written on d eeming such email 
address approved for informing purposes.  
   
Federal Law No. 4 of 2020 on Securing the Rights in Movables  22

Article (42)  
Law Applicable to Security Rights on Intangible Funds  
Law of Domicile of Pledgor, as determined in the Executive Regulation of the Law, shall 
apply to the establishment of security rig ht and its enforcement against third parties, the 
priority and execution of security right on the Pledge if it is an intangible movable.

Article (43)  
Priority of Application of Provisions of this Law  
Provisions of other laws including, Civil Transactions L aw, Commercial Transactions Law, 
Finance Leasing Law and Civil Procedure Law shall apply where there is no special provision 
is made in this Law and without contradiction with its provisions.  
  
Chapter Ten  
Punishments

Article (44)  
Punishments on Committing  Acts  
The Pledgor, Pledgee, Pledged person or Pledge acquirer shall be punished of imprisonment 
and a fine of no more than (60,000) sixty thousand dirhams or by both punishments in case 
of committing any of the following acts:  
1. Deliberate registration of a security right other than reality or in violation to provisions of 
this Law.  
2. Deliberate damage of Pledge, disposal thereof in violation to the security contract, depreciation of its value or the rights of Pledgees, or committing any act resultin g in 
preventing them from fulfilling their rights from its returns or the proceeds of execution 
thereon.  
3. Deliberate hampering of procedures of execution on Pledge including, the procedures of 
acquiring, selling it or distributing its returns or proceeds of execution thereon according to provisions of this Law.  
  
Federal Law No. 4 of 2020 on Securing the Rights in Movables  23

Article (45)  
Responsibility for Legal Persons  
Any of members of board of directors, board of administrators, joint partners and employees 
appointed at the legal person committing any of the acts stipulated in article (44) of this 
Law, shall be punished by imprisonment and a fine of no more than (60,000) sixty thousand 
dirhams or by both punishments, unle ss it is proven that he does not know or participate in 
taking the decision including a violation to provisions of this Law and he proved his 
objection thereto.

Article (46)  
Severe Punishment  
The application of the punishments stipulated herein shall not p rejudice any more severe 
punishment stipulated by any other law.  
  
Chapter Eleven  
Final Provisions

Article (47)  
Issuing the Executive Regulation  
1. The Executive Regulation of this Law shall be issued by a resolution from the Cabinet upon a proposal from the Minister, within six months as of the date of its publication.  
2. The Cabinet shall issue the resolutions required for applying the provisions of this Law 
including, the amendment of any periods stipulated therein, upon a proposal from the Minister.

Article (48)  
Past Transactions and Regularisation  
1. Any Pledgee may register the security rights resulting from any transaction made prior 
the issuance and effectiveness of the Executive Regulation of this Law without need to 
the approval of Pledgor.   
Federal Law No. 4 of 2020 on Securing the Rights in Movables  24 
 2. The rights mentioned in Clause (1) of this Article s hall be registered within six months 
from the date of effectiveness of the Executive Regulation of this Law.  
3. The priority of rights registered within the period determined in Clause (2) of this Article 
shall be determined from the date they become enf orced against third parties according 
to the laws established thereunder, otherwise, they shall become enforced against third 
parties from the date they are registered.

Article (49)  
Repeal of Legalisation  
1. The Federal Law No. (20) of 2016 on Mortgagin g of Movables as Security for Debt shall 
be repealed, as well as any provision violates or contradicts with the provisions hereof.  
2. The regulations, decisions and circulars related to the above -mentioned Federal Law 
(20) of 2016 shall remain applicable, without prejudice to the provisions hereof, until 
the alternative regulations, decisions and circulars that are going to replace them are 
issued.

Article (50)  
Law Publication and Entering into Force  
This Law shall be published in the Official Gazette and enter into force on the day following the date of its publication.  
 
 
Khalifah Bin Zayed Al Nahyn  
UAE President  
 
Issued by us at the Presidential Palace in Abu Dhabi:  
Date: 5 Shawaal 1441 AH  
Corresponding to: 28 May 2020 AD