Overview

Under UAE law, the commercial pledge is a possessory pledge, which means that the possession of a pledged asset is transferred to a pledgee or to an agreed third party as security for the loan. This definition was approved by the Dubai Supreme Court when it stated that the pledge restricts the rights of the borrower in disposing of the pledged assets, but keeps the pledged assets under ownership of the borrower^.

Such possession and security also entails a prohibition by the pledgee to directly acquire the pledged assets in the event of default of the pledgor, except through court proceedings. If this is the case, how does the pledge of a banking deposit qualify? This briefing from UAE specialists Habib Al Mulla explores the complex issues of ownership of the deposited funds and the acquisition by the pledgee of the funds in the event of default.

Click 'View Briefing' to read on.