Qatar Execution Court judgment dated 21/2/2024: Rights over a pledged property

A.  The Judgment

Our Office has succeeded in obtaining a Judgment recently on 21/2/2024 by the Execution Court dismissing a grievance filed by a bank in their capacity as the beneficiary of a pledge over a plant. The bank sought the removal of the plant from the attachment order, asserting their pledge rights over it pursuant to a pledge contract signed between the bank and the Defendant.

The Court decided that (1) Article 269 of the Qatari civil code stipulates that all the assets of a debtor serve as security for his creditors with all creditors holding equal standing, unless any of them has a preferential right, and (2) Article 1128 of the Qatari Civil Code stipulates that a pledge grants its holder priority in debt repayment from the proceeds of the pledged property over normal creditors but does not grant an exclusive right over it.

The Court upheld our Client’s defense that while a pledge grants priority in debt repayment from the proceeds of the pledged property it doesn't prevent other creditors from executing against the pledged property.

B.   Facts of the case

The Commercial Court ruled in favor of our client the Claimant (the “Claimant”), ordering a Defendant (the “Defendant”) to pay a specified amount for a debt.

Despite the judgment, the Defendant failed to comply, leading the Claimant to file an enforcement lawsuit before the Execution Court, and seize the Defendant's assets, including a plant.

The bank, in their capacity as the beneficiary of a pledge over the plant, lodged an objection with the execution Court. They demanded the removal of the plant from the attachment order, asserting their pledge rights over it. Their grievance was supported by a pledge contract signed between the bank and the Defendant. The bank argued that as the beneficiary of a pledge right, they had a real right over the factory and therefore the factory couldn't be subjected to executory attachment orders by any third party.

The Claimant responded by asserting that a pledge doesn't imply ownership but only grants priority in debt repayment from the property's proceeds. A position that was upheld by the Court.