Palestine Monetary Authority

Circular No. (167/2016)
To all public lending institutions in Palestine
Date: Wednesday, June 15, 2016

Subject: Securing Rights in Movable Property

Attached for your information is Decision-Law No. (11) of 2016 concerning Securing Rights in Movable Property, published in the Palestinian Gazette Issue (120) dated 26/04/2016, to be implemented accordingly.

---

Supervision and Inspection Department
Palestine Monetary Authority

---

Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Ramallah - Palestine P.O. Box 452
Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Gaza - Palestine P.O. Box 4026
Email: info@pma.ps | Email: info@pma.ps
www.pma.ps

---

The Palestinian Gazette

(Official Journal)
Issued by
The Office of Legal Opinions and Legislation
Issue 120

Correspondence: The Office of Legal Opinions and Legislation
Ramallah - Umm Al-Sharatit - Al-Nabali Building - Second Floor
Fax: 02-2963627
Email: official_gazette@lab.pna.ps

---

The Palestinian Gazette

Issue (120)
2016/4/26

Decision-Law No. (11) of 2016

Concerning Securing Rights in Movable Property

President of the State of Palestine
President of the Executive Committee of the Palestine Liberation Organization

Based on the provisions of the amended Basic Law of 2003 and its amendments, particularly Article (43) thereof,
and the provisions of the Majalla (Ottoman Civil Code),
and the provisions of the Law on Mortgaging Immovable Property to Secure Debt of 1331 AH and its amendments, in force in the Southern Governorates,
and the amendment to the Mortgage Law Chapter (95) of 1920, in force in the Southern Governorates,
and the Notary Public Law No. (11) of 1952 and its amendments, in force in the Northern Governorates,
and the Law on Mortgaging Immovable Property to Secure Debt No. (46) of 1953 and its amendments, in force in the Northern Governorates,
and the Law on Disposing of Immovable Property No. (49) of 1953, in force in the Northern Governorates,
and the Civil and Commercial Procedure Law No. (2) of 2001 and its amendments,
and the Civil and Commercial Evidence Law No. (4) of 2001,
and the Execution Law No. (23) of 2005,
and based on the proposal of the Council of Ministers dated 14/06/2010,
and on the powers vested in us,
and to achieve the public interest,
in the name of the Palestinian Arab people,
we have issued the following Decision-Law:

Chapter One

General Provisions

Article (1)

Definitions

The Ministry: The Ministry of National Economy.
The Minister: The Minister of National Economy.
The Register: The electronic register established by the Ministry of National Economy in implementation of the provisions of this Decision-Law.

---

The Palestinian Gazette

Issue (120)
2016/4/26

The Officer: The officer entrusted by the Minister to manage and supervise the Register in implementation of the provisions of this Decision-Law.
Security Right: A subordinate right arising on a movable property to secure the fulfillment of a financial or non-financial obligation existing prior to or simultaneous with its creation, or having no right.
Collateral: The current or future movable property placed as security for an obligation under a security agreement.
Person: A natural or legal person.
Debtor: The person owing the performance of a secured obligation.
Secured Party: The person for whom the security right is created.
Holder of Priority Right: A person who enjoys a right on a movable property by court order, a liquidator in bankruptcy, or any other person enjoying a security right in accordance with the provisions of this Decision-Law, excluding the holder of a right of retention.
Movable Property: Movable things and intangible things of any kind, and chattel real.
Civil Debt: An unsecured right belonging to the debtor for payments due or deferred with a third party.
Credit Account: A bank credit account, including current accounts, deposit accounts, and savings accounts.
Consumer Goods: Things designated for personal or household purposes, the utility of which is realized through repeated use while retaining their substance.
Documents: Transferable written instruments by delivery or endorsement that prove ownership of goods, including bills of lading and warehouse receipts.
Chattel Real: Movable property affixed to a building for the purpose of serving and exploiting it, and remaining fixed to the building.
Goods: All movable things, including chattel real, crops, and livestock, excluding civil debt, currency, documents, and instruments.
Instruments: Transferable written instruments by delivery or endorsement that prove entitlement to a sum of money, including commercial papers and bank deposit certificates.
Inventory: Goods stored for sale and lease, raw materials, materials in process of manufacture and conversion, and materials used in production.
Notice: The amended notice, extension notice, termination notice, and objection notice filed in the Register to assert rights under the provisions of this Decision-Law, and includes the notice.
Proceeds: The tangible or monetary consideration obtained from disposing of, using, or replacing the collateral, including compensation for loss of value, damage, or any other compensation.

Article (2)

Scope of Application

1. The provisions of this Decision-Law apply to transactions and contracts governed in Palestine that include a provision

---

The Palestinian Gazette

Issue (120)
2016/4/26

requiring the creation of a security right on movable property owned by the debtor, another real guarantor, or the creditor, including:

The following transactions:

a. Absolute pledge in accordance with the provisions of Article (3) of this Decision-Law.
b. Sale of movable property with deferred transfer of ownership until full payment of the price.
c. Sale of movable property with a condition for repurchase or buyback.
2. The provisions of this Decision-Law related to enforceability against third parties and enforcement procedures apply to the following transactions:

a. Possessory pledge of movables.
b. Sale of civil debt.
c. Lease agreements for movables with a duration of six months or more.
d. Finance lease agreements with a duration of one year or more.
e. Right of the seller of goods placed under sales liens.
f. Priority right on movable property.
3. The following are exempt from the provisions of this Decision-Law:

a. Sale of civil debt that is part of the sale of a commercial enterprise.
b. Assignment of rights for the purpose of debt collection.
c. Security rights on movable property subject to registration in a special register in accordance with prevailing legislation, including vehicles, ships, aircraft, and securities.
d. Assignment of financial compensation claims.

Article (3)

Absolute Pledge

1. Movable property may be pledged absolutely, whereby the pledged property remains in the possession of the pledgor, and possession is substituted by registering a notice of pledge in accordance with the provisions of this Decision-Law for the purpose of perfecting the pledge, its binding nature, and enforceability against third parties.
2. Registration of the notice of pledge in accordance with the provisions of paragraph (1) of this article grants the secured creditor all the rights enjoyed as if they were in possession of the pledged property, including the right to trace it in the hands of any possessor, and to take priority over other creditors in recovering their debt from the proceeds of the sale of the pledged property upon enforcement, in accordance with the provisions of this Decision-Law.

---

The Palestinian Gazette

Issue (120)
2016/4/26

Chapter Two

Security Right

Article (4)

Creation of Security Right and Enforceability Between Parties

1. A security right is created on the collateral and becomes enforceable between the parties when the following conditions are met:
   a. The debtor signs a security agreement.
   b. The secured party provides consideration to the debtor or commits to doing so.
2. A security right is not created unless the debtor has the right to create it on the collateral.
3. The security right is deemed to automatically cover proceeds, unless otherwise agreed.

Article (5)

Security Right on Consumer Goods

A security right may not be created on consumer goods except to secure their price.

Article (6)

Execution of Security Agreement

The security agreement must be executed in writing.

Article (7)

Description of Security Agreement

The security agreement must contain a general or specific description of the collateral. Furthermore, a security agreement whose subject is consumer goods must contain a specific description thereof.

Article (8)

Notice to Debtor of Civil Debt

If the collateral is a civil debt, notice to the debtor thereof is not considered enforceable against the secured party of the civil debt.

---

The Palestinian Gazette

Issue (120)
2016/4/26

Chapter Three

Enforceability of Security Right

Article (9)

Enforceability of Security Right Against Third Parties

A security right on the collateral becomes enforceable against third parties by one of the following means:

1. Registration of the notice.
2. Direct or indirect possession of the collateral.
3. Automatic enforceability without taking any other action if the security is created on consumer goods.

Article (10)

Enforceability of Security Right on Proceeds

1. If the security right is enforceable on the collateral, its enforceability on its proceeds continues automatically upon disposition.
2. Enforceability of the security right on proceeds requires registration within fifteen days of the debtor's receipt of the proceeds, except for identifiable cash proceeds or proceeds described in the notice.

Article (11)

Substitution of Enforcement Method

The enforceability of the security right on the collateral continues if the enforcement method is substituted, provided that enforceability is not interrupted.

Article (12)

Assignment of Security Right

If the secured party assigns an enforceable security right against third parties, there is no need to register a notice to continue the enforceability of the security right on the collateral, provided that the debtor is notified thereof.

Article (13)

Expiration of Enforceability of Security Right Against Third Parties

If the validity period of the registered notice expires, the security right becomes unenforceable against third parties, unless enforcement is achieved by another means before the expiration of the notice's validity period.

---

The Palestinian Gazette

Issue (120)
2016/4/26

Chapter Four

Right of Tracing and Priority

Article (14)

Right of Tracing

1. Enforceability of the security right against third parties grants the secured party the right to trace the collateral in the hands of any person to recover their rights.
2. Notwithstanding the provisions of paragraph (1) of this article, the collateral passes to its purchaser, lessee, or any other person acquiring a right thereon free of the enforceable security right against third parties if the secured party consented to such disposition or if the collateral was disposed of within the ordinary course of the debtor's business.

Article (15)

General Priority Rule

1. Subject to the exceptions provided in this Decision-Law, if multiple security rights enforceable against third parties are established or a priority right is established on the same collateral, priority is determined based on the date and time of registration of the notice or the date of enforceability against third parties by any other means stipulated in this Decision-Law.
2. Priority is determined according to the date of publication of rights and their date and time of enforceability, as applicable, with enforceable rights taking precedence over unenforceable ones, provided that enforceability is achieved.

Article (16)

Priority of Security Right Belonging to Purchaser of Instrument or Document

The right of the purchaser of an instrument or document takes precedence over the secured party's right if the purchaser, in the context of their ordinary course of business, provided new consideration and took possession of the instrument or document, unless there is an explicit condition assigning the rights to the secured party.

Article (17)

Priority of Security Right Created to Finance Purchase

1. A security right on equipment and facilities to finance their purchase takes precedence over any other security right, provided it is enforced against third parties before possession by the debtor or within ten days from the date of such possession.
2. A security right enforceable against third parties on goods and facilities to finance their purchase takes precedence over the rights of their purchaser, lessee, or holder of a priority right arising during the period between the creation of the security right and registration of the notice, provided that the notice regarding the security right and facilities to finance the purchase is registered within ten days from the date of the debtor's possession of the goods.
3. A security right enforceable against third parties on inventory or livestock and facilities to finance their purchase takes precedence over other rights, provided that a notice regarding it is registered within ten days from the date of their possession, and provided that holders of prior enforceable rights are notified in writing.