Opening an enforcement file under the new Enforcement Law: from instrument to attachment

A creditor holds a final judgment, a cheque or an attested contract and asks what happens once an enforcement file is opened. The answer has changed. The Enforcement Law was issued by Royal Decree No. (M/237) dated 3/11/1447H with Council of Ministers Resolution No. (746) dated 26/10/1447H. Its Article 65 provides that “this Law shall supersede the Enforcement Law issued by Royal Decree No. (M/53) dated 13/8/1433H and its amendments, and shall repeal any conflicting provisions”, and that “the Law shall come into force after the lapse of (one hundred and eighty) days from the date of its publication in the Official Gazette”.

The Law was published on 14/11/1447H. Anyone reading an article or using a form built on the 1433H law today is working from text that no longer stands. This article follows the file from the instrument to the attachment, and sets out what actually suspends enforcement and what does not.

Is what you hold an enforcement instrument?

Article 7 states the rule: “compulsory enforcement may not be carried out except under an enforcement instrument, to recover a determined right that is due for performance.” It confines enforcement instruments to:

• “Final judgments, orders and decisions, and judgments covered by expedited enforcement, issued by the courts of the Kingdom.”
• “Arbitral awards in accordance with the relevant statutory provisions.”
• “Settlement agreements and conciliation instruments attested in accordance with the Notarization Law, or issued by bodies statutorily authorised to do so.”
• “Bills of exchange and promissory notes where registered on the national electronic platforms.”
• “Cheques.”
• “Contracts and acknowledgements attested in accordance with the Notarization Law.”
• Foreign judgments, arbitral awards and attested instruments, subject to the conditions in Article 9.
• “Contracts and instruments treated as enforcement instruments under a law or a Council of Ministers resolution.”

The first practical error sits here. A signed ordinary document is not an enforcement instrument merely because it is signed. And a bill of exchange or promissory note is one only “where registered on the national electronic platforms”. A holder of an unregistered promissory note issued after the Law came into force has a claim to file, not a file to enforce; a note issued before then that meets every statutory condition except registration remains an enforcement instrument for one year after the Law came into force, under item (5) of Royal Decree M/237.

There is also a new time limit to calculate. Article 11 provides that “an enforcement application shall not be accepted under an enforcement instrument where more than (ten) years have passed since its due date”.

The scope of the court’s review is defined. Article 4 has the court “verify that the enforcement instrument satisfies its statutory conditions, without examining the underlying right that is the subject of the instrument”. The enforcement court does not retry the debt.

Registration and the enforcement order

The competent department registers the application once it has verified that it is complete. If registration is refused, Article 13 requires the applicant to supply what is missing “within (ten) working days from the date of being notified, and if he does not, the application shall be deemed rejected”; he may complain about the refusal “within (ten) working days from the date his application was deemed rejected”.

Article 14 then follows: “if the instrument satisfies its statutory conditions, the court shall order the party against whom enforcement is sought to perform it, and that party shall be notified of the enforcement order immediately upon its issuance; if notification proves impossible, the enforcement order shall be announced by the appropriate means, and the effects of notification shall run from the date of the announcement.”

Evading service is therefore no longer a way of stalling. An announcement produces the effects of notification from its own date.

Five working days, then compulsion begins

This is the operative heart of the Law. Article 18: “if (five) working days have passed from the date the party against whom enforcement is sought was notified of the enforcement order, or from the date of the announcement, and he has not performed his obligation, compulsory enforcement proceedings against assets shall begin immediately, unless he provides a bank guarantee sufficient to satisfy the right, in which case he is granted an additional (ten) working days.”

Under paragraph 2 of the same article, those proceedings are:

• “Notifying the entities licensed to register credit information of the fact of non-performance.”
• “Attaching the assets of the party against whom enforcement is sought and whatever accrues to him in the future, and enforcing against them, including his entitlements with public entities.”

Paragraph 3 adds a financial lever: the court may “impose a fine not exceeding (five thousand) riyals per day on the party against whom enforcement is sought for each day that passes without completion of enforcement”, subject to a ceiling fixed by the regulation. The court may cancel it if he performs, and it is collected only “after the distribution of the enforcement proceeds is complete”.

A travel ban is now limited in duration and tied to an application. Article 19 makes it available “on an application submitted by the party seeking enforcement, for a period not exceeding (three) years”, extendable on a fresh application “provided that the periods of the ban on travel outside the Kingdom do not exceed (six) years”, and it lapses when the enforcement application ends. The court lifts it in stated cases, including a need for treatment abroad evidenced by an approved medical report, a debt that is minor as determined by the regulation, a profession that requires travel, and disclosure of assets sufficient to satisfy the debt.

Disclosure of assets

Article 15 provides that “the party against whom enforcement is sought shall disclose his assets from the date he is notified of the enforcement order or from the date of the announcement”. Where there are indications of concealment or dissipation, the circle of disclosure widens to his agents, those with whom he has an employment contract, those dealing with him financially, his debtors and those suspected of favouring him, and the person ordered to disclose must respond “within a period not exceeding (ten) working days”. An entity supervising or registering assets must supply the court with its data on the court’s order “within a period not exceeding (three) working days”.

Attachment: what can and cannot be taken

The security rule is in Article 23: “all assets of the party against whom enforcement is sought stand as security for his debts from the date he was notified of the demand to pay the right, or from the date he was notified of the enforcement order or from the date of the announcement.”

Article 24 builds a weapon for the creditor on that rule. The party seeking enforcement may bring “a claim to void a disposition made by the party against whom enforcement is sought” where he disposed of an asset after that notice and before an attachment order, in the case of gifts and donations, payment of a debt before it fell due, and “contracts and financial obligations unusual for a person in his position, as assessed by the court”. A disposition is “void if he disposed of the assets subject to enforcement after the order attaching them was issued”.

The amount attached is limited. Article 25 prohibits attachment “beyond the amount of the debt claimed, unless the attached asset is indivisible”. And a debtor who proves he holds assets exceeding the right may “designate an asset to be enforced against in priority”.

Article 26 lists what cannot be attached or enforced against, including public assets; the dwelling occupied by the debtor or his dependants and their means of transport where these do not exceed what is sufficient for them, and what he needs to practise his profession himself — all of which may be attached if mortgaged to the creditor or if the asset itself belongs to the party seeking enforcement — and government subsidies. For wages and salaries the proportions are fixed by the text: one half for maintenance debts and one third for other debts. For retirement pensions: one half for maintenance debts and one quarter for other debts.

Direct enforcement and imprisonment

Where the subject of enforcement is an act or a forbearance — vacating a property or delivering a specific thing — Article 36 applies the same five working days, after which the court orders the immediate use of the competent force unless performance requires the debtor to act personally. If that proves impossible, a fine “not exceeding (ten thousand) riyals per day” is imposed.

Imprisonment is a later stage rather than a first one. Article 37 makes it available after “(thirty) working days have passed since any of the compulsory enforcement measures set out in Article 36 was taken”, on the application of the party seeking enforcement, “for no more than (one hundred and eighty) days, extendable for a further period”. The text bars imprisonment where the person is under eighteen, where an approved medical report establishes an illness incompatible with imprisonment, where the person is a pregnant woman or has a child under two, or where the person is an ascendant or descendant of the party seeking enforcement. And “the right under the enforcement instrument is not extinguished by the expiry of the period of imprisonment”.

What actually suspends enforcement?

This is the most misunderstood point, and Article 47 is explicit: “the existence of an enforcement dispute, or a dispute over the underlying right that is the subject of the enforcement instrument, or a complaint against any enforcement measure, shall not prevent enforcement proceedings from continuing in accordance with the Law and the Regulation, unless the authority hearing the dispute or the complaint decides otherwise.”

Filing a dispute therefore suspends nothing by itself. Suspension requires a decision from the competent authority. Once given, “the suspension of enforcement proceedings results in the suspension of all related proceedings and periods”.

Two distinct routes are open to anyone with an interest:

• An enforcement dispute under Article 45, concerning “the validity of the enforcement instrument, the conditions for its enforcement, or the court’s jurisdiction to enforce it”, heard under the rules governing urgent claims.
• A complaint under Article 46 against orders and decisions on enforcement measures specified by the regulation, made “to the president of the court or whoever the Council designates, within (ten) working days from the day following the date the decision or order was made available”, with power to suspend the order pending determination. The decision on the complaint is final.

Article 44 states the general position: “except as specified in the Law, all orders and decisions of the court shall be final.”

When does the file close?

Article 43 lists the grounds on which an enforcement application ends, including satisfaction of the right, establishing that the debtor has no assets, impossibility of enforcement, termination by the party seeking enforcement, and release of the debtor. It then adds what matters to the creditor: ending the file on certain of those grounds does not prejudice “the creditor’s right to resume the enforcement application once more, in accordance with the Law, where there is justification for doing so”. Closing a file for want of assets is not a release.

What to prepare before opening the file

• The instrument in enforceable form, and proof of its finality or that it carries expedited enforcement.
• Confirmation that the right is “determined and due”, and that ten years have not passed since the due date.
• Confirmation that the bill of exchange or promissory note is registered on the national platform, where that is the instrument and it was issued after the Law came into force.
• Accurate particulars of the debtor and a valid means of service.
• Whatever you know about his assets or about dispositions made close to the date of the demand.

In short

Enforcement is a stage of recovery, not a stage of adjudication. The enforcement court examines the instrument, not the debt. Five working days run from notification before compulsion begins, and a dispute does not halt a measure unless the competent authority so decides.

The thing most worth checking before opening a file is the instrument itself. Open a file on a defective instrument and the time is not recoverable; fix the instrument first and you start where others finish.