Category Archives: Legal Updates

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Exit Strategies in Family-Owned Companies: Legal Pathways for Separation

Posted on August 11, 2025 - 6:39 am by

Family-owned companies remain a cornerstone of economic development in Saudi Arabia and across the broader Middle East. Rooted in deep personal ties and shared long-term goals, these enterprises often evolve from informal arrangements into sophisticated multi-generational structures. As businesses mature and family dynamics shift, some members may inevitably wish to reduce or end their involvement. In such cases, a legally sound and well-governed exit strategy is essential. It not only safeguards business continuity but also helps preserve family harmony.

 

Understanding Exit Scenarios in Family Businesses

An exit in a family-owned business involves the departure of a family member from ownership, management, or both. These exits can be planned, such as through retirement or generational transition, or they may arise from disputes, divergent business priorities, or personal financial goals. Unlike exits in public or widely held companies, family business separations carry emotional, cultural, and reputational dimensions that must be addressed delicately and strategically.

Legal Foundations for Exit Planning

1. Shareholder Agreements

A detailed shareholder agreement is the legal backbone of a sustainable exit plan. It sets out the rights and obligations of each shareholder and provides mechanisms for resolving disputes and managing exits. In family-owned structures, these agreements should also address unique concerns such as:

  • Exit scenarios and triggering events
  • Valuation methods and appointment of independent experts
  • Transfer restrictions and approval protocols for non-family buyers
  • Protections to keep ownership within the family circle
  • Roles of non-operational family shareholders

By documenting these matters clearly, the agreement reduces ambiguity and the potential for intra-family disputes.

2. Memorandum and Articles of Association (MOA and AOA)

The constitutional documents of the company must align with the shareholder agreement. They serve as the legally binding reference for governance, share transfers, voting rights, and dispute resolution. In Saudi Arabia, any amendments to these documents must comply with the 2022 Companies Law and be registered with the Ministry of Commerce via the Qiwa or Meras platforms, as applicable.

3. Valuation Mechanisms

Disagreements over valuation are a common source of tension during exits. To avoid this, family businesses should pre-define valuation methodologies in their legal documents. Options include:

  • Net asset or book value
  • Earnings-based or EBITDA multiples
  • Discounted cash flow (DCF)
  • Independent third-party valuation

Consistency, transparency, and fairness are key to maintaining trust and enabling smooth transactions.

Legal Pathways for Exiting a Family-Owned Business

1. Buy-Sell Agreements

These agreements create binding arrangements that dictate how shares are to be handled under specific circumstances, such as death, disability, retirement, or voluntary exit. They provide financial predictability and help keep ownership within the designated circle of shareholders.

2. Family Settlement Agreements

When disputes emerge or when there is a mutual decision to separate, family settlement agreements can be used to redistribute shares or reassign responsibilities. These agreements are enforceable under Saudi law and typically include:

  • Confidentiality clauses
  • Non-compete obligations
  • Waivers of future claims
  • Clear transfer terms

They offer a private, practical resolution while preserving family relationships.

3. Company Share Buybacks

Under the Companies Law, a limited liability company (LLC) or a joint stock company (JSC) may repurchase its shares, subject to regulatory compliance and capital requirements. This may be preferable when other shareholders are not in a position to acquire the exiting member’s interest. The company must ensure adequate liquidity and must follow the Ministry of Commerce notification procedures.

4. Corporate Restructuring and Spin-Offs

For family groups operating across multiple sectors, corporate restructuring offers an alternative to direct exits. A spin-off or demerger can allocate separate business units to different branches of the family. This allows for operational independence while preserving shared legacy and group identity. Such strategies require careful tax and regulatory planning and may involve approvals from the Zakat, Tax and Customs Authority (ZATCA) and the Ministry of Commerce.

5. Third-Party Sale

Though typically a last resort in family businesses, external sales may become necessary when internal options are exhausted. Protective mechanisms in the shareholder agreement, such as:

  • Rights of first refusal
  • Tag-along rights
  • Drag-along rights

Regulatory disclosures and anti-competition laws must also be considered when selling to third parties.

Aligning Exit with Succession Planning

Exit planning and succession planning should be viewed as two sides of the same coin. The exit of a senior family member often coincides with the need to elevate the next generation. Establishing a formal family council or advisory board helps manage expectations and provide a structured forum for communication and dispute resolution. Legal alignment between succession and exit frameworks ensures continuity and prepares the business for long-term sustainability.

Legal Due Diligence and Risk Management

Before any exit is finalised, thorough legal due diligence is critical. This process should include:

  • Verification of share ownership and compliance history
  • Review of all corporate documents, shareholder agreements, and minutes
  • Tax liabilities and potential exposure
  • Intellectual property and asset entitlements tied to the exiting member
  • Review of any personal guarantees or outstanding obligations

In recent years, the Saudi legal landscape has evolved significantly, particularly with the new Companies Law and increasing regulatory scrutiny. Legal due diligence ensures that all exits are legally valid, commercially reasonable, and compliant with current regulations.

Looking Ahead

In Saudi Arabia, family businesses continue to grow in sophistication, size, and complexity. As such, the need for structured and legally robust exit pathways has become more important than ever. A proactive approach to planning including clear documentation, legal enforceability, and alignment with business strategy helps avoid costly disputes and protects both commercial and personal interests.

Legal advisors play a key role in guiding families through this process, offering solutions that reflect not just legal compliance, but also cultural understanding and emotional sensitivity. With the right frameworks in place, family businesses can navigate separations gracefully and remain resilient across generations.

Digital Contracts and E-signatures: Are They Legally Binding in Saudi Arabia?

Posted on August 11, 2025 - 6:14 am by

As Saudi Arabia accelerates its Vision 2030 agenda, digital transformation continues to reshape both public services and private sector operations. A critical pillar of this shift is the growing reliance on digital contracts and electronic signatures. These tools offer speed, convenience, and traceability, but many organisations remain uncertain about their legal enforceability.

 

This article provides an up-to-date overview of the legal framework, compliance requirements, and practical use cases for digital contracts and e-signatures in Saudi Arabia as of August 2025.

Legal Status of Electronic Signatures in Saudi Arabia

Electronic signatures are legally recognised in the Kingdom under the Electronic Transactions Law. The law treats electronic signatures and digital records as equivalent to their paper-based counterparts, provided they meet specific legal conditions.

To be valid, an electronic signature must:

  • Be linked to the identity of the signer
  • Demonstrate the intent to approve the content
  • Be securely protected from tampering after signing

The law was further reinforced by executive regulations and updates issued by the Digital Government Authority (DGA), which oversees the National Root Certification Authority. This authority licenses and regulates certified digital signature providers, ensuring that digital certificates meet stringent security and authenticity standards.

Are Digital Contracts Enforceable?

Yes. Digital contracts are enforceable under Saudi law so long as they meet the general conditions for contract formation:

  • Mutual consent between the parties
  • A lawful subject matter
  • Legal capacity of the signatories
  • A valid offer and acceptance

The format of the contract, verbal, paper, or electronic, does not affect its validity unless specific legislation or regulations require a particular form (e.g. notarisation for certain real estate transactions or formal registration for franchise or agency agreements).

A digital contract that includes a legally valid electronic signature is fully binding and carries the same legal force as a traditional contract.

Oversight and Infrastructure

Saudi Arabia’s robust digital ecosystem is built on cooperation between key regulatory bodies:

  • Digital Government Authority (DGA) – sets digital governance policies and standards
  • National Cybersecurity Authority (NCA) – ensures the security of digital infrastructure
  • Communications, Space and Technology Commission (CST) – oversees telecom and IT regulations
  • Root Certification Authority – issues and manages digital certificates and ensures Public Key Infrastructure (PKI) compliance

Together, these bodies provide a secure environment for electronic transactions and promote trust in digital services.

Government-accredited providers offer qualified electronic signature solutions, which use encryption and digital certificates to verify the identity of signatories and protect the integrity of signed documents.

Common Use Cases

Electronic signatures are already being widely used across Saudi Arabia’s economy:

  • Commercial Contracts: Agreements for supply, services, partnerships, and joint ventures
  • Employment Agreements: Facilitating hiring, onboarding, and remote work arrangements
  • Banking and Finance: Account openings, loan documentation, and internal approvals
  • Government Platforms: Services such as GOV.SA, Qiwa, Muqeem, and Tawtheeq rely on digital signatures for submissions, verifications, and compliance tasks.

However, some documents, such as real estate title transfers, court submissions, and inheritance proceedings, may still require traditional notarisation or judicial approval in accordance with Sharia and administrative procedures.

Compliance and Risk Management

While the law supports digital signatures, businesses must proactively ensure compliance to reduce legal and operational risks. Best practices include:

  • Using only certified providers authorised by the Root Certification Authority
  • Establishing internal policies on when and how electronic signatures should be used
  • Providing staff training on legal requirements, risks, and proper procedures
  • Storing signed contracts in tamper-proof, auditable formats
  • Conducting regular audits to ensure compliance with applicable laws and standards

Failure to implement these safeguards could expose businesses to disputes around authenticity, consent, or enforceability, especially in high-value or sensitive transactions.

Final Thoughts

Saudi Arabia has firmly established the legal validity and enforceability of digital contracts and electronic signatures. Supported by a comprehensive regulatory ecosystem and a rapidly maturing digital infrastructure, electronic transactions are not only recognised, but they are also increasingly encouraged.

For businesses, embracing these tools represents more than just a compliance exercise. It is a strategic advantage that enables faster decision-making, reduced costs, and seamless collaboration across borders.

To fully realise these benefits, organisations must align their internal processes with national standards, invest in secure technologies, and stay informed of legal developments. In doing so, they can participate confidently in the Kingdom’s digital future, without compromising on legal certainty or contractual integrity.

Data Privacy vs Business Growth: Navigating KSA’s Evolving PDPL Landscape

Posted on August 11, 2025 - 6:06 am by

As Saudi Arabia continues to accelerate its digital transformation under Vision 2030, the balance between data privacy and commercial innovation has become a defining business challenge. The Personal Data Protection Law (PDPL) now plays a central role in shaping how organisations operate in the Kingdom, bringing both regulatory rigour and commercial opportunity.

 

Since its introduction, the PDPL has evolved into a sophisticated framework that aligns with global standards, while being tailored to the Kingdom’s socio-economic context. For companies operating in or interacting with the Saudi market, understanding the PDPL is no longer optional. Compliance is now a strategic imperative.

A Brief Overview of the PDPL Framework

The PDPL was first issued under Royal Decree No. M/19 on 16 September 2021 and is overseen by the Saudi Data and Artificial Intelligence Authority (SDAIA), in collaboration with the National Data Management Office (NDMO). The law aims to establish a transparent, accountable and secure system for the collection and processing of personal data.

Since its inception, the PDPL has undergone significant amendments, with the latest set of executive regulations issued in 2024. These updates introduced a more flexible and risk-based approach, particularly in areas such as international data transfers, consent mechanisms, and the role of data protection officers.

Core Compliance Requirements

Organisations subject to the PDPL must meet several key obligations:

  • Lawful Processing: All personal data must be processed on a lawful basis. Consent remains the default, but exceptions include legal obligations, the protection of vital interests, or legitimate interests that do not conflict with the rights of individuals.
  • Purpose, Limitation, and Data Minimisation: Data must only be collected for clear, lawful purposes and limited to what is necessary to achieve those purposes.
  • Transparency and Rights of Data Subjects: Individuals have the right to be informed about how their data is processed. They can also request access to their data, corrections, deletion in some cases, and object to specific uses.
  • Security and Risk Mitigation: Organisations are required to implement appropriate technical and organisational measures to protect data against unauthorised access, misuse, or loss.
  • Data Breach Notification: Entities must notify SDAIA without undue delay in the event of a data breach. If the breach poses a high risk to individuals, those affected must also be informed.
  • Registration and Governance Roles: Certain entities may need to register with SDAIA and appoint a data protection officer, particularly where large-scale or sensitive data processing is involved.
Cross-Border Data Transfers: A Pragmatic Shift

One of the most notable developments in the updated PDPL is the shift in approach to international data transfers. Initially, the law imposed strict limitations on sending personal data outside Saudi Arabia. However, the revised regime allows transfers subject to specific conditions, including:

  • Adequacy of protection in the receiving jurisdiction
  • Contractual safeguards such as standard clauses
  • Regulatory approval, where applicable
  • Justified business needs or legal obligations

This change is particularly welcome for multinationals and digital service providers, as it brings Saudi Arabia’s framework closer to established models like the EU’s GDPR, without losing sight of national interests.

Key Challenges for Businesses

While the PDPL aims to support innovation, it introduces several operational and legal complexities:

  • Rising Compliance Costs: Achieving and maintaining compliance requires investment in legal advisory, IT systems, internal training, and policy development. This is especially challenging for SMEs with limited resources.
  • Slower Product and Service Rollouts: New products must be designed with privacy in mind from the start. This “privacy by design” principle can add time and cost to development pipelines, particularly for data-reliant services like AI, analytics, or targeted advertising.
  • Complex Third-Party Ecosystems: Businesses are responsible for the data practices of their service providers and partners. Due diligence, contractual oversight, and regular audits are now essential.
  • Evolving Legal Landscape: Executive regulations and technical guidance continue to develop. Staying compliant means staying up to date with SDAIA’s latest requirements and being ready to adapt internal practices quickly.
A Strategic Approach to Compliance and Growth

Rather than viewing compliance as a regulatory hurdle, forward-looking organisations are embedding privacy into their long-term business strategy. Recommended actions include:

  • Build Privacy into Design: Whether developing digital products or structuring internal processes, integrating privacy from the outset reduces future risks and builds trust with users and partners.
  • Appoint Internal Leadership: Even where not required, designating a data protection lead or team ensures internal accountability and strengthens governance.
  • Embrace Privacy-Enhancing Technologies: Automation tools that support consent management, audit logging, and data access requests can streamline compliance while supporting scalability.
  • Conduct Routine Data Audits: Regular reviews of data processing activities help identify gaps, assess risk exposure, and ensure data is only held for valid purposes.
  • Maintain a Dialogue with Regulators: Engaging with SDAIA and the NDMO through consultations or industry roundtables can help clarify expectations, especially in novel use cases or high-risk sectors.
Privacy as a Competitive Advantage

Saudi Arabia’s PDPL is more than a regulatory milestone; it is a cornerstone of the Kingdom’s broader ambition to become a global digital leader. Organisations that treat data privacy not just as a legal requirement, but as a business enabler, will be best placed to thrive.

Compliance can unlock greater customer confidence, smoother cross-border operations, and increased investment readiness. In today’s digital economy, trust is currency, and privacy is its foundation.

By adopting a forward-thinking, principles-based approach to data governance, businesses can not only meet PDPL obligations but also drive innovation, protect their brand, and contribute to a resilient and future-ready Saudi economy.

Construction Disputes in the Kingdom

Posted on August 11, 2025 - 5:59 am by

Saudi Arabia continues to experience exceptional expansion in its construction and infrastructure sectors. Fuelled by a portfolio of transformative giga-projects, the Kingdom has become one of the most active construction markets globally. From NEOM and The Line to the Red Sea Global and Diriyah Gate developments, the scale and ambition of ongoing projects are vast.

 

While these initiatives present significant opportunities, they have also led to a notable rise in construction disputes. The combination of complex project structures, evolving regulations, and high-value contracts has created a legal and operational environment where disputes are increasingly common. Understanding the dynamics behind these disputes is critical for contractors, developers, consultants, and legal counsel working in the Kingdom.

The Evolving Construction Landscape

The Kingdom’s construction sector is defined by large-scale, fast-paced developments involving both local and international players. Projects often include multi-tiered arrangements with main contractors, subcontractors, specialist consultants, government bodies, and investment authorities. The interaction of these parties across complex contractual frameworks can create friction, particularly when expectations are misaligned.

Recent developments have further accelerated the market, including increased privatisation efforts, heightened foreign investment, and tighter regulatory enforcement. As timelines compress and budgets expand, so too does the potential for disputes over scope, delivery, and compliance.

Key Drivers of Disputes

Construction disputes in Saudi Arabia often arise from the following recurring issues:

  • Delays in Delivery: Time overruns continue to be a major flashpoint. Causes include regulatory approval bottlenecks, labour and material shortages, weather-related disruptions, and changes in design or scope. Claims for time extensions and associated costs are frequently contested.
  • Cost Escalations and Variations: Unexpected changes to contract scope, disagreements over variation orders, or price fluctuations in materials often lead to financial disputes. Without precise variation mechanisms and strong documentation, parties can find themselves at odds.
  • Quality and Technical Non-Compliance: Divergences between what is built and what is contractually expected remain a leading cause of conflict. Issues may relate to construction standards, use of substandard materials, or misinterpretation of technical drawings and specifications.
  • Ambiguous Risk Allocation: Poorly drafted or inadequately localised contracts often lead to confusion over risk ownership. This is particularly problematic when dealing with force majeure, regulatory intervention, or unforeseen ground conditions.
Contractual Frameworks and Pitfalls

While many projects in Saudi Arabia continue to use FIDIC-based standard forms, these contracts are typically amended to reflect local legal and regulatory norms. Saudi laws, including the Civil Transactions Law, Public Procurement Law, and sector-specific mandates also govern contracts.

A persistent challenge lies in the failure to tailor contracts to project-specific risks appropriately. Vague drafting around critical areas such as delay claims, extension of time, force majeure events, and payment procedures can result in costly disputes. Precision in language and alignment with current legal standards are essential.

Well-drafted contracts should outline:

  • Clear procedures for notices and approvals
  • Defined timelines for claim submissions
  • Consequences of non-compliance
  • Dispute resolution mechanisms that are enforceable in the Kingdom
Trends in Dispute Resolution

In recent years, Saudi Arabia has made significant efforts to enhance its dispute resolution infrastructure. The commercial courts remain available, but alternative dispute resolution mechanisms are increasingly preferred.

  • Arbitration under the SCCA
    The Saudi Centre for Commercial Arbitration (SCCA) has seen a substantial increase in usage for construction disputes. It offers an efficient, neutral, and enforceable forum for resolving disputes. With updated rules (as of early 2025), the SCCA now supports expedited procedures, remote hearings, and digital filings, making it more accessible to international parties.
  • Mediation as a Strategic Tool
    Mediation is gaining wider acceptance as a first-line resolution tool. It allows parties to preserve commercial relationships and avoid lengthy proceedings. The Ministry of Justice has recently launched initiatives promoting pre-litigation mediation across several sectors, including construction.
  • International Enforceability
    Saudi Arabia’s continued commitment to the New York Convention ensures that arbitral awards from approved institutions are enforceable, offering reassurance to foreign investors and contractors.
Legal and Regulatory Developments

The Kingdom is actively reforming its regulatory landscape to foster transparency, accountability, and investor confidence. Notable recent developments include:

  • Updates to the Saudi Building Code to ensure higher safety and sustainability standards
  • Enhanced project oversight mechanisms, especially for state-backed projects
  • Enforcement of more precise payment terms, including retention management and milestone-based payment schedules
  • Introduction of the Civil Transactions Law (2023), which harmonises many contractual principles with international standards while preserving Sharia foundations

In parallel, digital transformation is playing a key role in reducing disputes. Tools such as Building Information Modelling (BIM), e-invoicing, and integrated project management platforms are now standard in significant projects. These technologies improve transparency, coordination, and evidence retention.

Frontline Lessons and Practical Insights

From recent projects and disputes, several practical lessons stand out:

  1. Prioritise Documentation
    Meticulous recordkeeping remains the cornerstone of claim substantiation. Daily site records, approvals, meeting minutes, and variation logs should be maintained and reviewed regularly.
  2. Align Contracts with Reality
    Avoid overly standardised templates. Contracts must be customised to the realities of each project, particularly where multiple jurisdictions or public-private interfaces are involved.
  3. Address Risks Proactively
    Early identification of risks, clear escalation procedures, and regular legal review can significantly reduce the likelihood of disputes.
  4. Engage with ADR Early
    Disputes need not escalate to formal proceedings. Well-timed use of mediation or early neutral evaluation can resolve issues faster and at lower cost.
  5. Understand the Local Legal Landscape
    Familiarity with local law, procedure, and regulatory practice is vital. Legal counsel with in-Kingdom experience is essential for strategic decision-making and dispute prevention.
Looking Ahead

Construction disputes remain a real and present challenge in Saudi Arabia’s fast-moving development sector. However, the Kingdom’s maturing legal framework, enhanced dispute resolution institutions, and greater regulatory clarity offer a path to more efficient and predictable outcomes.

As Vision 2030 projects continue to move from planning into execution, proactive legal and commercial risk management will be vital. With robust contracts, effective project governance, and early engagement with disputes, parties can navigate Saudi Arabia’s complex construction landscape with greater confidence and clarity.

ChatGPT in the Saudi Legal Framework: Privacy, Privilege, and Potential Reform

Posted on August 4, 2025 - 11:09 am by

In a widely discussed podcast episode between comedian Theo Von and OpenAI CEO Sam Altman, Altman raised a striking point that people are increasingly confiding in ChatGPT, sharing personal stories, emotional struggles, and even seeking legal or psychiatric guidance. Altman warned that these conversations are not covered by any form of legal privilege, unlike speaking to a lawyer or doctor, and could potentially be used in legal proceedings if requested by authorities.

 

We have recently heard from our surroundings that people are increasingly using ChatGPT as a companion, seeking psychiatric comfort, informal legal counsel, or daily advice. This blurring of lines between “tool” and “trusted confidant” makes Altman’s warning highly relevant for Saudi Arabia: What legal status does these AI conversations hold here, and could they be used as evidence in court?

I. Current Saudi Data Protection & AI Governance Framework

Saudi Arabia has made sweeping moves to regulate data and AI through the Personal Data Protection Law (PDPL) (Royal Decree No. M/19 of 2021) and the Saudi Data & Artificial Intelligence Authority (SDAIA). The PDPL governs how personal data is collected, processed, and shared, imposing obligations on data controllers and giving individuals rights to consent, access, and erasure.

Complementing the PDPL, the National Strategy for Data & AI and SDAIA’s ethical AI principles promote transparency, accountability, and responsible use. But none of these framework’s address “legal privilege” in the evidentiary sense, they regulate data privacy, not whether an AI conversation is shielded from use in litigation or prosecution.

II. The Privilege Gap

Traditional legal privilege in Saudi Arabia is narrow and profession specific. Lawyer–client communications are treated confidentially under the Law of Advocacy; doctor–patient communications are similarly protected under health regulations. AI chats don’t fit this category. A conversation with ChatGPT is not the same as seeking advice from a licensed lawyer or physician. There is no statutory or doctrinal privilege that would prevent disclosure of AI chat content if requested by a court or regulator. The “trust” users feel toward AI is, legally, misplaced.

III. Can ChatGPT Conversations Be Used as Evidence in Saudi Courts?

The short answer is potentially, but it would depend on the circumstances.

Under the Saudi Law of Evidence (Royal Decree No. M/43 of 2021), which came into force in July 2022, “electronic data, digital records, and communications” are broadly recognized as admissible if certain conditions are met. This category covers emails, text messages, and app chats and, by extension, could encompass AI generated chat logs. However, admissibility is not automatic.

Key considerations:

  • Authenticity & Integrity: Any party wishing to submit a ChatGPT transcript would need to demonstrate that the record is genuine, complete, and untampered, something that may require technical evidence, provider authentication, or forensic support.
  • Context of Use: Courts would weigh the relevance and probative value of such conversations. For instance, chats could be examined for intent, admissions, or patterns of behaviour, but their weight as evidence might be debated.
  • Judicial Discretion: Saudi judges have wide latitude under the Law of Evidence to accept or reject materials depending on credibility and the surrounding facts.

Crucially, there is still no recognized “AI privilege” in Saudi law. If regulators such as the Public Prosecution, ZATCA or CMA formally request AI chat records, providers could be compelled to disclose them. The PDPL ensures that personal data is processed lawfully and securely, but it does not shield those records from lawful court or investigative demands.

Both the U.S. and EU are grappling with the same issue Saudi Arabia faces. AI chats are protected as “data” but not privileged as “confidential communications.” There is no jurisdiction yet that grants AI conversations the same legal shield as a doctor or lawyer discussion.

IV. Policy and Legal Reform Considerations

Sam Altman’s comments spotlight a legal vacuum that users often treat AI like a “trusted advisor,” yet the law sees it as an unprotected channel. Saudi policymakers may consider:

  • Clarifying rules for “AI privilege” particularly where AI is used in legal, medical, or religious professional contexts.
  • Enhancing PDPL guidance to require explicit user warnings about non privileged AI chats.
  • Establishing procedural protections for certain categories of AI stored data (e.g., enterprise licensed legal tools) to avoid indiscriminate disclosure.
V. Conclusion

Sam Altman’s warning may have been global, but it resonates sharply in Saudi Arabia. The Kingdom has cutting edge data laws and an ambitious AI strategy, but no legal privilege yet attaches to AI conversations. Under Saudi law, a ChatGPT chat is an electronic record, and if its authenticity is proven, it can be admitted as evidence in court.

In the meantime, the safest stance is simple: treat every AI conversation as if it might one day be read aloud in court.

Sports Sector in Saudi Arabia: Development and Legal Considerations

Posted on July 22, 2025 - 9:40 am by

Over the past decade, Saudi Arabia’s sports sector has experienced a profound transformation, emerging as a central pillar of the Kingdom’s Vision 2030 goals. Driven by ambitious government strategies to diversify the economy, promote social well-being, and elevate Saudi Arabia’s international stature, sport has become a dynamic industry attracting massive investments and wide public engagement. This article reviews the sector’s evolution, highlights recent key developments, and examines the critical legal considerations shaping its future trajectory.

 

Transformational Growth Under Vision 2030

Vision 2030 explicitly positions sports as a catalyst for national development, emphasizing its role in enhancing quality of life, stimulating private sector investment, and improving Saudi Arabia’s global image. The Ministry of Sport, established in 2016, has spearheaded efforts to create an inclusive, competitive, and commercially sustainable sports ecosystem.

Saudi Arabia has invested heavily in state-of-the-art infrastructure and sport-specific facilities, supporting national federations and enabling the hosting of numerous world-class international events. Notable recent highlights include the Dakar Rally, Formula E and Formula One Grand Prix, WWE shows, high-profile boxing matches, and the Saudi Cup, the world’s richest horse race. Looking ahead, the Kingdom is preparing to host the 2027 AFC Asian Cup and remains a strong contender to co-host the 2034 FIFA World Cup.

At the grassroots level, initiatives like the Quality-of-Life Programme and Saudi Sports for All Federation have dramatically increased public sports participation, especially among women and youth. Enhanced support for community clubs, school sports programs, and talent development academies underscores a commitment to sustainable growth and social inclusion.

Private Sector and Investment Dynamics

The growing role of the private sector is a key driver of the sports industry’s rapid development. Saudi Arabia’s Privatisation Programme aims to transfer ownership and management of various sports clubs and facilities to private entities, boosting efficiency, innovation, and profitability.

The Public Investment Fund (PIF) remains a central player on the global stage, with high-profile acquisitions such as the 2021 takeover of Newcastle United Football Club highlighting Saudi Arabia’s expanding sports footprint. PIF’s investments have also extended to LIV Golf, motorsports, esports, and combat sports, reflecting a diversified portfolio designed to build influence and expertise.

These global ventures attract world-class talent, sponsorships, and know-how, while fostering domestic capabilities and generating economic returns. However, the increasing international presence demands enhanced governance and transparency.

Legal and Regulatory Framework

To support this growth, Saudi Arabia has strengthened its legal and regulatory infrastructure, aligning domestic sports law with global best practices. The establishment of the Saudi Sports Arbitration Centre has introduced independent, specialised dispute resolution for sports-related conflicts, enhancing confidence among stakeholders.

Recent regulatory reforms have addressed club ownership structures, player contracts, anti-doping enforcement, broadcasting rights, sponsorship agreements, and intellectual property protection. This comprehensive framework aims to safeguard integrity, encourage commercial investment, and foster cross-border collaborations.

Sports law is now recognised as a specialised discipline within Saudi legal education, with universities and institutions offering dedicated programs to prepare practitioners for the complexities of modern sports governance.

As Saudi Arabia deepens its involvement with international bodies such as FIFA, the International Olympic Committee (IOC), and the World Anti-Doping Agency (WADA), compliance with global standards concerning human rights, transparency, and ethical conduct becomes paramount.

Socio-Cultural Impact and Inclusion

Sport’s societal impact in Saudi Arabia has been transformative, particularly regarding gender inclusion. Women’s participation in sports has expanded rapidly, with the formation of female leagues, national teams, and leadership roles in sports organisations reflecting broader social reforms.

Sports serve as a platform for community building, youth engagement, and national pride. Government-backed programs promoting sports tourism, mass participation, and inclusive events contribute to public health, social cohesion, and cultural exchange.

Challenges and Future Outlook

Despite remarkable progress, challenges remain. Sustaining grassroots development, building professional leagues, and maintaining Saudi Arabia’s international credibility require ongoing efforts. The legal and governance frameworks must adapt swiftly to emerging issues such as digital sports, esports regulation, intellectual property enforcement, and anti-corruption measures.

Heightened global scrutiny of Saudi sports ventures necessitates balancing domestic priorities with international expectations, particularly on human rights and ethical governance.

Looking forward, priorities will include nurturing talent pipelines, enhancing fan engagement, and integrating cutting-edge technologies like AI, data analytics, and immersive digital platforms. Continued strategic investments combined with responsive policy and legal reforms position Saudi Arabia to become a global sports powerhouse.

The sports sector in Saudi Arabia is undergoing a historic and multifaceted transformation that aligns ambition with opportunity. Supported by visionary government policies, substantial investment, and a rapidly evolving legal landscape, the Kingdom is charting a dynamic course toward regional and global sports leadership. Success will depend on maintaining a delicate balance between growth, integrity, inclusivity, and global standards—ensuring a sustainable and credible future for Saudi sports.

Arbitration in Saudi Arabia: Trends and Best Practices

Posted on July 22, 2025 - 8:37 am by

Arbitration in Saudi Arabia has undergone a remarkable transformation, establishing itself as a cornerstone of commercial dispute resolution in a jurisdiction historically rooted in Sharia law. In line with Vision 2030, the Kingdom continues to promote arbitration to enhance legal predictability, attract foreign investment, and align with global standards. This article examines the latest trends and best practices in Saudi arbitration, offering guidance to investors, legal practitioners, and businesses operating in or with the Kingdom.

 

A Modern Legal Framework Anchored in Reform

The Saudi Arbitration Law (2012), modelled after the UNCITRAL Model Law, remains the legal foundation for arbitration in the Kingdom. It brought a paradigm shift by affirming party autonomy, competence-competence, separability of the arbitration clause, and finality of awards, subject to compliance with Saudi public policy and Sharia.

The Enforcement Law of 2012, complemented by the specialised Enforcement Courts, has improved the efficiency and predictability of arbitral award recognition and enforcement. As of 2025, the Saudi courts increasingly demonstrate a pro-enforcement orientation, including for foreign awards, provided procedural integrity is maintained and public policy is not violated.

Recent court decisions (2023–2025) have further clarified ambiguities surrounding enforcement timelines, the role of public policy, and the validity of foreign-seated arbitrations, reinforcing Saudi Arabia’s commitment to modern dispute resolution.

The Role and Maturation of the Saudi Center for Commercial Arbitration (SCCA)

Since its establishment in 2014, the Saudi Center for Commercial Arbitration (SCCA) has grown into the Kingdom’s leading arbitration institution, playing a central role in advancing dispute resolution in line with international standards. The revised 2023 SCCA Arbitration Rules introduced several modern features, including expedited proceedings, emergency arbitration, virtual hearings, online case filing, bifurcation and consolidation procedures, and greater transparency in arbitrator appointments. These enhancements reflect the SCCA’s commitment to efficiency, fairness, and procedural innovation.

The SCCA continues to expand its presence and capabilities. In early 2025, it opened a branch in NEOM, reinforcing its alignment with the region’s vision as a futuristic commercial and innovation hub. The launch of the SCCA Court, an independent body composed of prominent international arbitration professionals to oversee case administration, marked another milestone in the institution’s maturation. Furthermore, in 2024, the SCCA began administering investor-state disputes under tailored rules, reinforcing Saudi Arabia’s broader strategy to attract and protect foreign direct investment by offering robust legal certainty.

Trends: Harmonisation with International Norms

Saudi Arabia’s arbitration environment continues to strike a careful balance between localisation and globalisation. While Sharia compliance remains a foundational element, Saudi courts are increasingly pragmatic in their interpretation of public policy, particularly in commercial matters. The Kingdom’s commitment to the New York Convention, in effect since 1994, remains strong, and recent decisions by the Enforcement Courts reflect a growing deference to international arbitral standards.

Arbitration clauses that reference institutional rules such as those of the SCCA, ICC, or LCIA with seats in Riyadh, Jeddah, or even foreign jurisdictions are increasingly recognised and enforced by Saudi courts. This trend is particularly evident in sectors such as construction, infrastructure, energy, and technology, where arbitration is becoming the preferred method of dispute resolution. These developments are closely linked to the Kingdom’s Vision 2030 initiatives, including megaprojects like The Line, Qiddiya, and Diriyah Gate, which demand sophisticated, reliable, and enforceable dispute resolution mechanisms.

Best Practices for Arbitration in Saudi Arabia

To effectively navigate arbitration in Saudi Arabia, parties should observe the following best practices:

  1. Draft Robust Arbitration Clauses
    Clearly specify the arbitration institution (e.g., SCCA), seat of arbitration, governing law, procedural rules, and language. Avoid vague or conflicting terms.
  2. Appreciate Sharia and Public Policy Parameters
    While modern in form, Saudi arbitration law remains anchored in Islamic law. Ensure that the dispute is arbitrable and the subject matter does not contravene core Sharia principles.
  3. Use Bilingual Documentation When Necessary
    Arabic remains the official language of the courts. While SCCA and other institutions operate bilingually, translating key documents into Arabic can avoid delays in enforcement or recognition.
  4. Select Arbitrators with Regional and Sectoral Expertise
    Consider arbitrators with strong knowledge of both international arbitration and Saudi law or regional practice. This can help avoid procedural missteps and align expectations with local sensitivities.
  5. Leverage Digital Tools and Institutional Platforms
    The SCCA’s digital case management system allows for seamless filing, hearings, and document exchange. Utilising these tools can significantly enhance efficiency, especially in complex disputes.
Challenges and Opportunities Ahead

Despite marked progress, challenges persist in the Saudi arbitration landscape. Public policy exceptions can still be unpredictably interpreted by courts, particularly in cases involving interest (riba) or vague contract provisions. Additionally, the discretion afforded to domestic judges during the enforcement phase remains a concern for some parties, especially those unfamiliar with the nuances of Sharia-based legal interpretation.

However, these concerns are increasingly being addressed through consistent judicial guidance and greater transparency in SCCA-administered proceedings. The growing presence of licensed foreign law firms in Saudi Arabia, which has expanded significantly since 2023, has also contributed to enhanced legal sophistication and international best practices. Furthermore, ongoing reforms focused on judicial training, alternative dispute resolution mechanisms, and increased private sector engagement continue to strengthen the Kingdom’s arbitration framework and its global credibility.

The New SFDA Law: A Transformational Regulatory Framework for Food, Drug, and Health Oversight in Saudi Arabia

Posted on July 14, 2025 - 9:58 am by

Saudi Arabia has enacted a new Law governing the operations and authority of the Saudi Food and Drug Authority (SFDA). This Law represents a significant development in the legal and institutional architecture of regulatory oversight in the Kingdom, consolidating and enhancing the SFDA’s role in ensuring the safety, quality, and effectiveness of food, drugs, medical devices, and a wide range of health-related products. From a legal standpoint, the Law introduces far-reaching implications for businesses, regulators, and consumers alike, ushering in a new era of accountability, compliance, and governance.

 

At the heart of the new Law is the formal recognition of the SFDA as a legally independent body, vested with both financial and administrative autonomy. Article 2 of the Law expressly grants the SFDA legal personality, enabling it to act in its own name, contract with third parties, and manage its own budgetary and organisational matters. Importantly, the SFDA reports directly to the President of the Council of Ministers, reinforcing its institutional stature and ensuring that it operates with the authority and independence necessary to fulfil its mission. Headquartered in Riyadh, the SFDA is also empowered to establish regional branches and offices as needed to facilitate nationwide regulatory enforcement.

One of the defining features of the new legislation is the clear articulation of the SFDA’s overarching mandate, as outlined in Article 3. The SFDA’s primary objective is to regulate, monitor, and ensure the safety, quality, and efficacy of food and drug products within its jurisdiction. Its mandate extends beyond human consumption to include animal health, biologicals such as vaccines and serums, cosmetics, health-related products, and medical devices.

The Authority is also responsible for overseeing bottled and non-bottled water, diagnostic and electronic medical equipment, and pesticides used in agriculture and public health. What distinguishes the SFDA’s mandate is its dual commitment to regulatory control and public awareness, ensuring not only that products meet technical standards but also that consumers are informed of their rights and responsibilities in relation to these goods.

The Law is structured around three core functional domains: regulatory, executive, and monitoring duties, each of which is elaborated in Article 5. From a regulatory perspective, the SFDA is empowered to develop policies, frameworks, and standards that govern the entire lifecycle of regulated product, from manufacturing and importation to market clearance and post-market surveillance. It is responsible for setting mandatory specifications for a broad array of items, including food products, health preparations, cosmetics, herbal medicines, laboratory reagents, and medical devices.

The Authority also defines compliance protocols for facilities involved in the manufacture or handling of such products, including food establishments, pharmaceutical plants, water bottling facilities, and pesticide factories. These regulatory functions are to be exercised in coordination with the Ministry of Health and other relevant governmental bodies, ensuring that the SFDA’s work aligns with the broader health infrastructure of the Kingdom.

From an executive standpoint, the SFDA has been granted enforcement authority to implement the Law and its accompanying regulations. This includes conducting laboratory testing and analysis of food, water, drugs, and medical devices to verify their conformity with approved standards. The Authority is also responsible for registering drugs, authorising their circulation in the market, and approving the clearance of imported goods subject to its jurisdiction. It can impose penalties on non-compliant actors, manage emergency responses relating to contaminated or unsafe products, and license private laboratories engaged in testing activities. Notably, the Law authorises the establishment of a central reference laboratory at the SFDA headquarters and specialised branch laboratories across the Kingdom. These institutions will play a vital role in ensuring scientific accuracy, standardisation, and quality assurance.

Another critical aspect of the Law is the SFDA’s monitoring function. The Authority is tasked with supervising the implementation of all relevant licensing procedures, including those for food factories, pharmaceutical companies, and manufacturers of medical devices and pesticides. It must also monitor compliance with Good Manufacturing Practices (GMP) and international safety standards. Inspections of retail markets, warehouses, restaurants, water plants, and herbal shops fall under its purview, often in coordination with municipal and sectoral agencies.

The Authority is further expected to track the quality and authenticity of products in circulation, ensuring that they meet not only the mandatory technical specifications but also the specific manufacturer standards. The inclusion of digital databases, research collaboration with universities, and regional and global partnerships further demonstrate the SFDA’s intent to become a knowledge-based, internationally integrated regulator.

The Law also introduces a number of definitions that serve to eliminate ambiguity and provide legal clarity regarding the scope of the SFDA’s jurisdiction. These definitions cover food, drugs, pesticides, biologicals, cosmetics, water types, medical equipment, and food establishments, among others. The comprehensive nature of these definitions ensures a shared legal understanding among regulated entities, consumers, and enforcement bodies, thereby reducing the risk of misinterpretation or loopholes in enforcement.

From a commercial and legal advisory perspective, the Law significantly impacts how businesses operating in the Kingdom, particularly in the pharmaceutical, healthcare, consumer goods, and food industries, must structure their operations. Companies will need to ensure that their manufacturing practices, importation procedures, advertising protocols, and supply chain systems are fully compliant with the SFDA’s updated requirements. Contracts with suppliers and distributors should be reviewed in light of the SFDA’s expanded enforcement powers, and risk management frameworks should be recalibrated to account for the possibility of regulatory action, including fines, recalls, or suspension of licences.

Moreover, the Law requires businesses to engage more proactively in workforce training and product testing. The SFDA is now mandated to conduct and accredit training programmes for professionals in food and drug-related fields, meaning that compliance is no longer limited to technical product specifications but extends to human capital as well. Businesses may find value in partnering with accredited institutions or investing in internal training infrastructure to remain ahead of regulatory expectations.

The Law of the Saudi Food and Drug Authority represents a landmark development in the Kingdom’s regulatory landscape. It modernises the governance of critical sectors impacting public health and consumer safety, while aligning domestic practices with international benchmarks. For legal practitioners and clients alike, the new Law offers both a challenge and an opportunity, a challenge in navigating enhanced compliance requirements, and an opportunity in shaping safer, more transparent, and more competitive markets. As the SFDA evolves into a more commercially active and scientifically driven authority, we anticipate further implementing regulations to follow, which will provide even greater detail and structure for industry actors to operate within the Kingdom’s legal framework.

We advise all stakeholders to proactively assess the implications of this legislation on their operations and to seek legal counsel where necessary to ensure compliance and readiness for regulatory engagement.

The 2025 Amendments to Saudi Labour Law: A New Era for Workforce Rights and Saudization

Posted on July 4, 2025 - 12:20 pm by

Saudi Arabia continues accelerating its labour market reform agenda by introducing comprehensive amendments to the Labour Law in 2025. The changes aim to balance employee protection with employer clarity while advancing the Kingdom’s Vision 2030 localisation strategy. These updates redefine key employment practices and signal a broader shift towards a more regulated, attractive, and future-ready labour market.

 

Strengthening Employment Clarity for Non-Saudi Workers

A significant highlight of the new law is the formalisation of employment contracts for non-Saudi nationals. All such contracts must now be written and fixed term. If a term is not explicitly stated, the law defaults to a one-year duration, renewable automatically. This offers much-needed transparency, minimising disputes and ensuring that employers and employees operate with mutual understanding and legal safeguards.

Extended Probation for Better Fit

The probation period has been increased from 90 to 180 days, granting both parties more time to evaluate fit, performance, and organisational alignment. This is a significant move for employers seeking assurance before committing to long-term hires, while employees gain more leeway to assess the role and workplace environment without penalty.

Mandated Housing and Transportation Benefits

Employers are now legally obliged to provide suitable housing, a housing allowance, and transportation or a transport allowance. Once optional or inconsistently applied, these provisions are now enshrined in law, enhancing workers’ welfare and aligning employment conditions more closely with international labour standards.

Enhanced Leave and Compensation Protections

Parental and compassionate leave provisions have also been upgraded. Maternity leave now totals 12 weeks—6 of which are mandatory after childbirth—an increase from the previous 10-week period. Importantly, employees are now entitled to 3 days of bereavement leave upon the death of a sibling, recognising the importance of familial bonds and emotional well-being.

Unlawful termination has also come under stricter scrutiny. Employers found to have unjustly dismissed employees will face clear and enforceable financial penalties. These rules are coupled with refined procedures for resignation, which must now be submitted in writing, free from coercion, and formally acknowledged by the employer.

Overtime, Notice Periods, and Fair Exit Terms

Employees required to work overtime must be compensated at 1.5 times their hourly wage or granted equivalent compensatory leave—whichever is mutually agreed upon. Notice periods have also been differentiated by party: employees must give 30 days’ notice when resigning, whereas employers must provide 60 days’ notice for termination, reflecting the power imbalance in employment relationships and offering greater protection to workers.

Boosting National Employment Through Saudization

Beyond employee protections, the amendments take deliberate steps to strengthen the localisation of jobs across strategic sectors. Updated Saudization (Tawteen) quotas now apply to a range of professions:

  • Healthcare: 80% for clinical nutrition and physiotherapy, 70% for medical laboratories, and 65% for radiology roles.
  • Accounting: Saudization will start at 40% in October 2025, with plans to escalate to 70% in later phases.
  • Tourism and Hospitality: This includes hotel managers, receptionists, travel agency managers, and tour guides—areas that are expected to be major drivers of economic diversification.
  • Engineering & Technical Jobs: 30% Saudization for companies employing five or more engineers or technicians. For detailed compliance rules, refer to the official Procedural Guide for Saudization of Technical Engineering Jobs.
  • Pharmacy and Dentistry: Localisation targets gradually increase from 35% to 55%, depending on the phase and profession. For more, view the official announcement on the Saudization of Pharmacy Professions.

These policies align directly with Vision 2030’s national objectives: to create a resilient and inclusive labour market, reduce reliance on foreign talent in key sectors, and build a sustainable economy driven by Saudi talent.

Summary of changes:

A Strategic Turning Point

Collectively, these legislative updates represent more than just labour law reform—they symbolise Saudi Arabia’s commitment to fostering a fairer, more transparent, and opportunity-rich work environment for both local and expatriate communities. Employers must revisit their HR frameworks and compliance procedures, while employees gain from clearer entitlements and protections.

In the years ahead, the actual impact of these reforms will be measured by their implementation and enforcement. Yet, what is certain is that Saudi Arabia has taken a decisive step towards aligning its labour system with international standards while tailoring it to meet its unique national development goals.

Real Estate Laws in Saudi Arabia: Investment Opportunities and Legal Requirements

Posted on June 17, 2025 - 6:32 am by

Saudi Arabia has emerged as one of the most dynamic real estate markets in the Middle East, driven by its Vision 2030 agenda, rapid urban transformation, and ambitious economic diversification goals. The sector’s ongoing liberalisation, especially the historic opening of the market to foreign ownership, is unlocking unprecedented investment opportunities across residential, commercial, and industrial real estate.

 

A Transformative Legal Landscape

Over the last several years, Saudi Arabia has significantly overhauled its legal framework to make the real estate sector more accessible, transparent, and investor-friendly. The cornerstone of these reforms was the 2023 Cabinet approval permitting full property ownership by foreign individuals and entities, including in key urban centres such as Riyadh, Jeddah, and Dammam. This change marks a major departure from previous restrictions and underscores the Kingdom’s commitment to attracting global capital.

However, restrictions still apply in Mecca and Medina, where non-Saudis are not permitted to own property. Outside these areas, foreign investors can acquire real estate subject to regulatory approval and licensing through the Ministry of Investment (MISA).

Investment Opportunities in a Fast-Growing Market

Several national megaprojects are powering Saudi Arabia’s real estate boom:

  • NEOM, the futuristic smart city
  • The Red Sea Project, focused on luxury eco-tourism
  • Qiddiya, an entertainment and sports hub
  • Diriyah Gate, a heritage urban development

These projects offer direct entry points for global developers, institutional investors, construction companies, and hospitality operators.

Meanwhile, Riyadh’s transformation into a global city is catalysing demand for commercial, mixed-use, and residential developments. The growing expatriate population, government relocation plans, and international business inflows are intensifying interest in the capital’s real estate sector.

The Premium Residency Program, updated in 2024, now offers expanded benefits, including multi-property ownership, investor visas, and family sponsorship, targeting high-net-worth individuals and skilled professionals.

Legal Requirements for Real Estate Investment

Foreign investors must meet specific legal conditions to operate in the Saudi property market:

1. Foreign Ownership and Licensing

  • 100% ownership is now permitted in most areas, but registration through MISA is mandatory
  • A valid commercial licence must be obtained for real estate development, leasing, brokerage, or facility management
  • Investment in strategic or restricted zones may require additional government approvals

2. Due Diligence and Title Verification

  • Investors should validate land titles via the “Sak” digital real estate registration system, which is now mandatory for all formal property transactions
  • Zoning compliance, environmental clearance, and land-use approvals must be verified before acquisition

3. Contracting Standards

  • Contracts must be written in Arabic and comply with Saudi contract law
  •  It is advisable to engage bilingual legal counsel with experience in Saudi property law, particularly for large or long-term commercial deals

4. Tax and Financial Obligations

  • Real Estate Transaction Tax (RETT): 5% on the value of the property transfer
  • Value Added Tax (VAT): 15% may apply on real estate services (e.g., brokerage, management)
  • The recent 2024 guidelines issued by ZATCA clarify that mixed-use property transactions must allocate taxable vs exempt components appropriately

5. Dispute Resolution

  • Disputes may be resolved through Specialised Real Estate Courts or commercial arbitration, including via the Saudi Center for Commercial Arbitration (SCCA)
  • Saudi Arabia is a signatory to the New York Convention, supporting the enforceability of foreign arbitral awards
Strategic Considerations for Foreign Investors

Investors should adopt a long-term strategy aligned with Vision 2030, incorporating:

  • Joint ventures with local developers or sovereign-backed real estate funds
  • Smart-city and ESG-aligned project design, which is increasingly favoured by regulators and urban planners
  • Engagement with government-backed infrastructure and public-private partnership (PPP) models to gain strategic access

Additionally, green building standards, climate-adaptive architecture, and energy-efficient developments are being promoted through sustainability regulations under the Ministry of Municipal, Rural Affairs and Housing.

Saudi Arabia’s real estate sector is entering a transformative era characterised by legal liberalisation, mega-infrastructure projects, and the integration of foreign investors. With supportive regulation, strong government backing, and rising demand in key cities, the Kingdom offers significant potential for real estate developers, institutional investors, and asset managers. To unlock these opportunities, investors must remain attuned to the evolving legal landscape, tax obligations, and strategic entry routes available within one of the fastest-growing property markets in the world.

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