The Right of Retention under the Civil Transactions Law

The Civil Transactions Law encourages the fulfillment of contractual obligations to ensure stability in transactions between individuals. It also provides certain guarantees to ensure the performance of obligations by the debtor. One of these guarantees is the right of retention.

The provisions governing the right of retention are as follows:

Provisions of the Right of Retention

1. A person who is obligated to perform an obligation may withhold performance thereof for as long as the creditor fails to perform an obligation owed by the creditor, which arose as a result of the debtor’s obligation and is connected therewith, unless the creditor provides adequate security for the performance of such obligation.
2. Any person who incurs necessary or useful expenses in respect of another person’s property, while such property is lawfully in his possession, may retain the property until he recovers the amount due to him.
3. A person exercising the right of retention shall safeguard the retained property and provide an account of its proceeds. If the retained property is at risk of destruction or damage, or if the period of retention has become excessively long according to custom, the person retaining it may sell it with the court’s permission, or without such permission in cases of urgency. In such case, the right of retention shall attach to the proceeds of the sale.

The right of retention does not grant the person exercising it any priority in satisfying his claim from the retained property.

Cases of Extinguishment of the Right of Retention

The right of retention shall cease in the following cases:

• If the retained property is destroyed.
• If the person exercising the right of retention receives full satisfaction of his claim from the debtor.
• If the retained property ceases to be in the possession of the person exercising the right of retention.

Note

If the retained property leaves the possession of the person exercising the right of retention without his knowledge or despite his objection, he may petition the court for its recovery within 30 days from the date on which he becomes aware that the property has left his possession, and in all cases before the lapse of one year from the date on which it left his possession.

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