Egypt: The Assignment Of Right As Per The Egyptian Law

Last Updated: 22 October 2019
Article by Muhamad Rabie
Most Read Contributor in Egypt, October 2019

The Egyptian Civil Law regulated the assignment of right under the articles nos. 303,304,305,306,307,308,309,310,311,312,313,314.

The Definition of the Assignment

The assignment of right is a contract by which the creditor assigns his right to a third party who shall replace the original creditor, so the assignee shall take the place of the assignor and the latter is not entitled to fulfill the assigned right from the debtor.

"Muhammad Azmi Albakri, a head of the court of appeal Doctrine and Jurisprudence series in civil law, volume V, page no. 298"

Article 303 of the Egyptian Civil Law states that:

"A creditor may assign his right to a third party, provided that the assignment is not prohibited by the provision of the law or an agreement between the parties or by its nature. The assignment shall be valid without the consent of the debtor"

As per this article, the creditor may assign his right, with its all features and characteristics, to a third party without creating a new obligation on the part of the debtor.

The Court of Cassation ruled that "the assignment, as it was established by the Court of Cassation, shall not create a new obligation on the part of the debtor, however it transfers the existing obligation with its all features and characteristics.

(Appeal no. 352 of the judicial year 41 dated March 22, 1977)

The Court of Cassation confirmed the same principle by a new judgment stating that "the assignment, as it was established by the Court of Cassation, is an agreement by and between the assignor and assignee to assign the right of the assignor to the assignee. The assignment shall not create a new obligation on the part of the debtor, however it transfers the existing obligation with its all features and characteristics"

(Appeal no. 7867 of the judicial year 63 dated Feb26,2001)

The Enforcement of the assignment

Article 305 of the Egyptian Civil Law states that "An assignment shall not be effective against a debtor or a third party unless it has been accepted by the debtor or notified to him. The acceptance by the debtor does not render the assignment valid as against third parties unless it has a pre-determined date".

Therefore, Article 305 states that the assignment shall not be enforced against the debtor or a third party unless:

1- The debtor accepts it.

Or

2- The assignor notifies the debtor.

"Muhammad Azmi Albakri, a judge at the court of appeal, volume V, page no. 315. Also, please refer to page 411, Elsanhory, civil law series, volume III revised by Al-Maraghi"

It was established by the Court of Cassation that "the key point for the validity of the rental contract assignment vis-a-vis the Lessee and his commitment to pay the rent to the assignee, is formed by the notification, the acceptance or the payment of the rent to the assignee. If the assignment is enforced against the lessee, the latter shall remain indebted for the amount of the rental to the purchaser until he pays."

"Appeal no. 179 of the judicial year 61 dated Jan 1, 1995; Muhammad Azmi Albakri, a judge at the court of appeal, Doctrine and Jurisprudence series in civil law, volume V, page no. 315"

Consequently, the reference in the validity of the assignment is the knowledge on the part of the debtor, through notification or by his express acceptance.

The Court of Cassation confirmed the above-mentioned principle and stated that "the key point for the validity of the rental contract assignment vis-a-vis the Lessee and his commitment to pay the rent to the purchaser for the leased premises (the assignee), is his knowledge that the premises leased to him was sold to a purchaser who has registered his purchase contract and to whom the ownership was transferred. If the Lessee has knowledge of this fact, he shall remain indebted for the amount of the rent to the purchaser until he pays".

"Appeal no. 597of the judicial year 48 dated May 12, 1983; Elsanhory, civil law series, volume III revised by Al-Maraghi, page no. 466"

Hence, we can conclude that If the assignment is valid, the assignor shall not be entitled to receive any dues from the debtor, otherwise the debtor shall be indebted by the assigned debt and the debtor shall be obliged to pay the debt again to the assignee.

It was established by jurisprudence that the validity of the assignment means that the assignee is entitled to claim his right against the debtor and the latter shall cease to pay outstanding amounts to the assignor.

Elsanhory confirmed the previous principle expressly and stated that "Since the debt itself was assigned from the assignor to the assignee regarding the debtor, the latter only has one creditor, to whom he must repay the debt, he therefore may not pay the debt after receiving notice or giving his approval to the assignor, as such payment will not discharge him from the debt. The assignee can obtain his right from the debtor yet again, and the debtor will then only refer to the assignor with regard to the amount he paid to him unlawfully".

"Elsanhory, civil law series, volume III revised by Al-Maraghi, pages nos. 466 & 467"

Moreover, it was established by the Court of Cassation that "The Lessee's knowledge that may be relied upon in determining the validity of the Lease Contract assignment and his commitment to pay the rental to the purchaser of the leased premises (the assignee), is whether he was knowledgeable that this property was sold to a purchaser who has registered his purchase contract and to whom the ownership was transferred. If the Lessee is knowledgeable of this fact, he shall remain indebted for the amount of the rent to the purchaser until he pays."

"Appeal no. 67 of the judicial year 31 dated Nov 30, 1965; Elsanhory, civil law series, volume III revised by Al-Maraghi, pages nos. 466"

The Court of Cassation confirmed the same principles and states that "the assignment shall not be valid against the debtor except as from the date he accepts it or the date of notification which results in the replacement of the assignor with the assignee, against the debtor, concerning the assigned right in its full value, with all its components and characteristics. The assignor not the assignee becomes a third party, as the assignee has capacity in claiming the right subject matter of the assignment, consequently, the debtor may not agree with the assignor (third party) to deduct from the value of the right except upon the acceptance of the assignee who has become a party to this assignment, so he may not be ignored. If this deduction occurred without his approval, it may not be invoked against him as the assignment is a binding contract upon both the assignor and the assignee, therefore it shall not be canceled or amended except with their mutual, express or implied approval."

"Appeal no. 449 of the judicial year 70 dated April 24, 2001; Elsanhory, civil law series, volume III revised by Al-Maraghi, page no. 467"

If the debtor paid an installment to the assignee, hence the said payment confirmed the validity of the assignment as it was established by the Court of Cassation "the key point for the validity of the rental contract assignment against the Lessee and his commitment to pay the rent to the assignee, is formed by the notification, acceptance or by the payment of the rent to the assignee."

"Appeal no. 179 of judicial year 61 dated Jan 1, 1995; Azmi Albakri, a judge at the court of appeal, Doctrine and Jurisprudence series in civil law, volume V, page no. 315."

Moreover, it was established by the Court of Cassation "The acceptance of the assignment can be either express or implicit. The debtor's voluntary payment to the bank of ten installments out of the twelve parts of the assigned debt shall be considered as an acceptance of the assignment process with no preservation, thus hindering him from proceeding with the clearance according to Article 368 of the civil code."

"Appeal no. 775 of the judicial year 50 dated March 7, 1983; Anwar Tolba, Head of the court of appeal, Civil law series, volume I, page no. 780"

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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