Contractual Ownership provisions in the Jordanian Law on Securing Rights in Movable Assets

Abstract

Within the provisions of the Law on Securing Rights in Movable Assets, the Jordanian legislator has addressed the issue of contractual ownership of collateral as the most prominent legislative amendment according to this law. The law approved the validity of collateral ownership upon the maturity of the secured obligation, contrary to the general legal principles, which establish the nullity of any agreement granting ownership of pledged assets, and thus making a qualitative amendment in the light of real securities.

This study examines the concept of contractual ownership by analyzing its definition, legality, and legal nature in the Jordanian civil law and the law of security rights in movable assets. It also explores the legal framework governing ownership agreements concerning collateral, detailing their conditions, safeguards, and the legal procedures for acquiring the collateral.

The study concludes with several findings, the most significant of which is that the Jordanian legislator approved legal provisions concerning ownership, which represented a qualitative step forward, as it permitted agreements between the grantor and the secured party regarding the transfer of collateral ownership after the due obligation. However, the legal guarantees provided are limited and do not adequately address the associated risks or ensure sufficient protection. Also, it is clear that there is a legislative absence, as the legislator did not outline the mechanism followed in offering ownership, which would increase the chances of exploitation by the guaranteed party, causing harm to the guarantor and violating contractual justice.

The study recommends amending the law to establish a clear legal framework for contractual ownership agreements and bridging legislative gaps related to ownership procedures by incorporating explicit legal provisions outlining the mechanism for enforcing such agreements to ensure balance and protect rights.