New Mortgage Law in the UAE: preliminary view

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Published March 2017

Federal Law no (20) of 2016 concerning the mortgage of movable assets as a security for a debt (the “Law”) was recently issued in the UAE and it provides a neat and tidy solution for creditors to create a security/lien over moveable asset within the UAE. Particular dote should be paid to the fact that a creation of a fixed charge on assets of a company is applicable across all Emirates and companies registered within the jurisdiction, including the Free Zones.  It should also be noted that the Law is only applicable to moveable assets and as such does not include property.

Similarly, security over company shares is further detailed within the UAE Company Law of 2015 which has introduced the option of providing company shares as security, provided that all the proper approvals are first obtained.  

The Law provides for the ability for a mortgage/charge to be created over moveable assets as per Articles 3 and 5.  The creation of such a charge would depend greatly on the nature of the assets in question.  The Law provides under Article (2) 3 that the provisions of the Law shall ‘not apply to the moveable assets, which the effective laws require to register all disposals thereon in a special record’.  Such assets may include certain vehicles owned by the company.  It should also be noted that the Law provides for a Register to be established within which all such mortgages/charges are to be registered.  To our knowledge, to date the Register has not yet been created or put into effect.  The Register also requires the parties to register their Mortgage Contract and the basic details of the mortgage along with the appropriate forms to be submitted for the same.  There is still no confirmation from the authority on whether the Mortgage Contract must be presented in a particular template form or whether it requires their pre-approval before registering and no forms for the registration of the mortgage in the Register have yet been publicized. 

Additionally, an interesting point to note would be the provisions in Article 7 of the Law that allow the parties of the mortgage to determine whether they wish the registered mortgage in the Register to be made known to the public or remain ‘hidden’ to a certain extent.  However, the same article does allow the public access to ‘basic’ information in the Register ‘within the conditions provided for in the Executive Regulation thereof’.  No details are provided with respect to the Executive Regulation or its content – this point remains unclear.

While the Law permits such mortgages/charges to be created and registered in the UAE, the supporting facilities as detailed within the Law itself have not yet been publicized and there remain a number of practical aspects of the Law and its implementation that are unclear, most notably those details surrounding the process and documentation required to register the mortgage/charge and what details may be made available to the public.

While the Law provides a great deal of clarity on processes involved with the nature and registration of the mortgage, including each party’s ability to enforce the same and rights of third party beneficiaries, it is still in its early stages of implementation and until it has run the rigors of the local courts and its registration processes, its effectiveness remains unclear.


If you are interested in discussing the content of this article, please contact Ziad Choueiri, Partner




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