Zamakhchary & Co

1. Introduction Saudi Arabia has undergone significant legal reforms to enhance its dispute resolution mechanisms, making the Kingdom more accessible for international businesses seeking to enforce foreign judgments and arbitral awards. The enforcement of foreign awards has become far more streamlined in recent years, reflecting the country’s commitment to legal modernization and judicial efficiency. One of the most significant recent developments in this regard is the introduction of the Administrative Enforcement Law (Royal Decree No. M/15 of 1443H) dated 27/1/1443H, corresponding to 4 September 2021. This law simplifies the process of enforcing judgments against administrative entities, ensuring a clearer and more structured pathway for enforcement. Previously, enforcing a judgment against a government entity was an uncertain process, as there was no legislative framework in place for doing so, creating challenges for businesses seeking to recover debts or enforce contractual rights against public bodies. With the introduction of the Administrative Enforcement Law, there is now a dedicated enforcement mechanism that allows private entities to seek enforcement against government bodies through the Board of Grievances. This reduces bureaucratic hurdles and ensures compliance with final judgments, providing a much-needed procedural structure for enforcement against administrative authorities. In addition to simplifying enforcement against government bodies, the Administrative Enforcement Law also provides a structured approach for administrative entities seeking to enforce judgments against private sector parties. By establishing clear procedures and timeframes for compliance, the law enhances both transparency and predictability in administrative enforcement, aligning Saudi Arabia with global best practices. This marks a significant milestone in the Kingdom’s ongoing legal modernization efforts under Vision 2030, further strengthening its attractiveness as a destination for international investment and business operations. This article explores the legal framework, enforcement procedures, common obstacles, and strategic considerations for parties seeking enforcement in Saudi Arabia.   2. Legal Framework for Enforcement The enforcement of foreign judgments and arbitral awards in Saudi Arabia is primarily governed by several key legislative instruments. The Enforcement Law (Royal Decree No. M/53 of 1433H) establishes the procedural framework for enforcement, covering foreign judgments and arbitral awards. The Administrative Enforcement Law (Royal Decree No. M/15 of 1443H) specifically governs enforcement in cases involving administrative entities. Additionally, the Implementing Regulations issued under these laws provide further procedural details, ensuring consistency and clarity in the enforcement process. The enforcement landscape is also shaped by international treaties and conventions that Saudi Arabia has ratified, which facilitate the recognition and enforcement of foreign judgments and arbitral awards. Saudi Arabia is a signatory to several bilateral and multilateral agreements that facilitate the recognition and enforcement of foreign judgments and arbitral awards. These include the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which Saudi Arabia ratified with a reciprocity reservation. The Kingdom is also a party to the 1966 ICSID Convention, which applies to investment disputes, the 1983 Riyadh Arab Agreement for Judicial Cooperation (the Riyadh Convention), covering enforcement among Arab League member states, and the 1996 GCC Convention for the Execution of Judgments (the GCC Convention) applicable within Gulf Cooperation Council countries. These treaties play a crucial role in streamlining enforcement processes by reducing procedural barriers and ensuring foreign judgments are treated in accordance with established international norms.   3. Jurisdiction of Saudi Courts Foreign judgments in Saudi Arabia are enforced through the Enforcement Courts, except for administrative matters, which fall under the jurisdiction of the Board of Grievances. A foreign judgment must meet specific criteria to be enforced in Saudi Arabia, as outlined in Article 11 of the Enforcement Law. The judgment must be final and binding under the laws of the issuing jurisdiction, and there must be reciprocity between Saudi Arabia and the issuing country. Further, the foreign court must have had proper jurisdiction over the case, and the defendant must have been duly notified and represented in the foreign proceedings. Additionally, the judgment must not conflict with Saudi public order or Sharia principles, nor with any prior Saudi court decision on the same matter. Certain types of judgments are not enforceable in Saudi Arabia. These include judgments relating to Saudi real estate (in rem disputes), judgments that involve interest (riba), which is prohibited under Islamic law, and criminal and administrative judgments unless covered by international agreements.   4. Enforcement of Foreign Arbitral Awards and Judgments The enforcement of foreign arbitral awards and judgments is dependent on compliance with the requirements under the Enforcement Law. The first condition that must be met is for there to be reciprocity in enforcement between Saudi Arabia and the jurisdiction in which the foreign judgment or arbitral award was issued. Saudi Arabia enforces arbitral awards under the New York Convention and other relevant treaties. For foreign court judgments, the number of jurisdictions in which there is a treaty of reciprocity with Saudi Arabia is more limited, predominantly being the Gulf and Arab States that are party to the Riyadh Convention and the GCC Convention. If reciprocity is established, further requirements that must be verified by the Enforcement Court, as outlined in Article 11 of the Enforcement Law, include: Finality and Binding Nature – The judgment must be final and binding in the jurisdiction where it was issued. Jurisdiction – The issuing court must have had proper jurisdiction over the case, and the subject-matter of the dispute must not be under the exclusive jurisdiction of the Saudi courts. Due Process – The defendant must have been duly notified and had the opportunity to present their defense in the foreign proceedings. Public Order Considerations – The judgment must not contradict Saudi public order (meaning Sharia principles) Non-Contradiction – The judgment must not contradict a prior Saudi judgment on the same dispute. These safeguards ensure procedural fairness while maintaining the integrity of Saudi Arabia’s legal framework. If the award satisfies all legal requirements, the judge issues an enforcement order under Article 34 of the Enforcement Law. If the debtor fails to comply, execution against assets follows promptly.   5. Practical Process for Enforcement Enforcement applications at the Enforcement Court must be submitted via Najiz, the Ministry of Justice’s online portal. Required documents include a certified copy of the judgment or award, proof of finality and due process, and Arabic translations by an accredited translator. Once the Enforcement Court verifies that the requirements of article 11 of the Enforcement Law are satisfied, the debtor is notified of the enforcement application and is given five days to voluntarily comply. If the debtor does not comply, the Enforcement Court will take steps to withdraw funds from the debtor’s account and seize assets in order to settle the amount due, and may impose sanctions such as travel bans on the debtor. Enforcement measures include freezing of bank accounts, seizure of property and assets, public auctions for asset liquidation, and direct payment orders. Each of these steps must be followed precisely, as failure to adhere to formalities can result in delays or rejections. The debtor is entitled to file an enforcement dispute during the enforcement process, to object to the enforcement for procedural or substantive reasons. For enforcement against government entities, the Administrative Enforcement Law provides a dedicated pathway through the Board of Grievances, ensuring a streamlined process with specific procedural steps.   6. Administrative Enforcement (a) Enforcing Against Government Entities Historically, enforcing a judgment against a government entity was challenging due to the lack of a clear legislative framework. The new Administrative Enforcement Law addresses this issue by introducing explicit enforcement procedures. The law empowers the courts to: Issue warnings to government entities to implement enforcement instruments. Order the government entity to comply with the enforcement instrument. Notify the Ministry of Finance if it is responsible for any delay in enforcement. Impose penalties of up to SAR 10,000 per day for non-implementation, except for debts. Impose criminal penalties, such as fines or imprisonment, on government employees who obstruct enforcement. By creating a structured and enforceable mechanism, the law ensures compliance and reduces risks for private entities engaging in contracts or disputes with government bodies. (b) Enforcement by Government Entities The new law also clarifies how administrative entities can enforce their rights against private sector parties. Government entities can now enforce: Final court judgments issued by the Administrative Courts or any court where the government is a party. Arbitration awards where the government entity is a party. Contracts involving a government entity. Certified documents issued by a government entity. Negotiable instruments in which the government is a party. This structured approach enhances predictability and fairness in administrative enforcement, aligning Saudi Arabia with international best practices.   7. Speed of Enforcement Recent trends indicate a marked acceleration in the speed of enforcement proceedings. The introduction of digital case management systems and procedural reforms has significantly reduced processing times for enforcement applications. In urgent matters, the courts have demonstrated an ability to resolve disputes within a matter of days. For instance, in a recent case, Z&Co. successfully intervened to prevent the wrongful enforcement of a fraudulent promissory note. The Enforcement Court swiftly assessed the dispute, held hearings, and issued an order rejecting the claim and returning the withdrawn funds within ten days. This rapid resolution highlights the increasing efficiency of enforcement courts in handling urgent matters, particularly in cases involving fraud or immediate financial risk. The growing efficiency of enforcement proceedings is further supported by: Enhanced judicial training and specialization in enforcement matters. Strengthened coordination between the Ministry of Justice and enforcement authorities. Increased use of real-time electronic communication between courts and relevant government entities. These developments are positioning Saudi Arabia as a jurisdiction where enforcement proceedings are not only more predictable but also significantly faster than in the past, making the Kingdom increasingly attractive for international businesses and investors.   8. Common Challenges and Defenses One of the main challenges in enforcing foreign judgments in Saudi Arabia is the reciprocity requirement. Saudi courts require proof that Saudi judgments would be enforced in the foreign jurisdiction. If no treaty exists between Saudi Arabia and the issuing country, applicants may need to provide expert opinions or foreign legal confirmations to demonstrate reciprocity. Public order objections present another challenge. Saudi courts may refuse enforcement if a judgment contradicts Islamic law. Usurious interest, penalties, and certain contractual clauses may be deemed unenforceable. Procedural defenses may also be raised by defendants, who may argue lack of jurisdiction or improper service of process. They may also claim prior payment or settlement of the judgment debt. To mitigate these risks, foreign parties should conduct thorough due diligence to ensure compliance with all enforceability conditions before initiating proceedings.   9. Trends and Future Developments Saudi Arabia is undergoing significant legal transformations to enhance its dispute resolution mechanisms. Several upcoming reforms are expected to further streamline enforcement procedures and improve efficiency. A new Enforcement Law is anticipated to introduce further procedural clarity, while digital transformation initiatives will make court processes faster and more accessible. Increasing judicial training will ensure consistent enforcement of foreign judgments, and greater transparency and investor protections will strengthen Saudi Arabia’s position as a pro-business jurisdiction.   10. Conclusion The enforcement of foreign judgments and arbitral awards in Saudi Arabia has significantly improved, driven by legal reforms, judicial modernization, and international cooperation. However, challenges such as reciprocity, public order considerations, and procedural hurdles remain. By understanding the legal framework, anticipating potential obstacles, and adopting best practices, businesses and legal practitioners can navigate the Saudi enforcement landscape effectively and secure successful outcomes.

The Civil Transactions Law (CTL), issued by Royal Decree M/191 dated 29/11/1444 AH (corresponding to 18 June 2023), which came into force on 16 December 2023, has revolutionized the legal system in the Kingdom of Saudi Arabia (KSA) in relation to civil rights and liabilities. The CTL can be considered a codification of Shariah principles. As there may be differences of opinion between Shariah schools of thought on particular matters, it was previously uncertain which opinion may be followed by a particular judge, leading to greater uncertainty in judicial outcomes. The purpose of the CTL is to lift this uncertainty, by requiring the judiciary to follow the particular Shariah opinion that has been codified by the legislator, so as to reduce the risk of investment and civil transactions in KSA. The CTL applies with retrospective effect, except in certain limited circumstances where an existing statutory provision or judicial principle is relied upon by a party, meaning that it will apply to existing contracts and disputes, even if these arose prior to the date on which the CTL came into force. Overall, the CTL provides that obligations derive from the following five sources: contracts, unilateral acts, harmful acts, unjust enrichment, and the statutory provisions of the CTL. In this overview, we will consider four commercial contexts in which the CTL is highly relevant, being (i) Pre-contractual negotiations; (ii) contractual risk-allocation; (iii) harmful acts; and (iv) dealing with bad debt.   A. Pre-Contractual Negotiations The CTL provides clarity on the rights of negotiating parties during the pre-contract stage. If you’re involved in negotiating a contract under KSA law, note the following five developments:   Heads of Terms Negotiating parties often agree on the material terms of a commercial agreement by way of Heads of Terms (HOTs), with non-material terms to be fleshed out in a subsequent agreement. The CTL provides that agreement on material terms is enough to form a contractual agreement, even if the parties disagree on non-material terms, unless the parties have expressly agreed that no contract will be formed until the non-material terms are also agreed. The court has the power to determine the non-material terms if the parties are unable to agree these, by reference to applicable law, the type of transaction and custom and practice. If your commercial intent is for HOTs to be non-binding, make sure this is expressly stated, to avoid a contractual agreement being inadvertently formed at an early stage in the negotiation.   Future promises The CTL offers much-needed clarity in relation to agreements to enter into a contract at a future stage or subject to certain conditions arising (such as an agreement to lease a commercial building once it is constructed, or an agreement to sell shares and exit a company on certain commercial targets being achieved). Previously, such agreements were very much subject to the discretion of the judiciary as to the extent to which they could be deemed enforceable. The CTL clarifies the default position – a promise to enter into a contractual agreement in the future is not binding unless: The parties have agreed all the material terms of the future contract; There is a specified time period for the contract to be entered into; and Any conditions precedent for the contract have been fulfilled If these conditions are fulfilled but a party refuses to enter into the contract, the counter-party can seek a court order to require the contract to be entered into.   Withdrawing an offer The CTL confirms the accepted market position, that commercial proposals cannot be withdrawn or amended during the period allowed for the counter-party to consider and accept the offer. If there is no specified time period for acceptance, then the offer can be withdrawn or amended at any time. However, this should be immediately notified to the persons receiving the proposal, as the CTL provides that failure to notify such persons can lead to compensation claims for costs incurred as a result of continuing to rely on the previous offer.   Bad faith negotiation Conducting negotiation with no genuine intent to enter into a contract, or deliberately failing to disclose a material matter that would impact the negotiations, can constitute ‘bad faith’ negotiation. The CTL provides that a negotiating party who can show that their counter-party negotiated in bad faith can claim compensation for harm caused, which could include costs incurred in the negotiation process. They cannot claim compensation for the anticipated profits that would have been made if the contract had concluded.   Misrepresentation and misleading behaviour A party to a contract can apply to court to have the contract annulled if they can show that they only entered into the contract due to having been deliberately misled by the counter-party in relation to a material term of the contract. The CTL provides that deliberately remaining silent in order to hide an issue that would have prevented the counter-party from entering into the contract is deemed misleading behaviour for these purposes. If the misleading behaviour arose from another person (not one of the parties to the contract), then the contract parties cannot seek to annul the contract unless it can be shown that the counter-party was aware – or ought to have been aware – of the misleading behaviour. It remains to be seen how courts will apply such provisions, particularly where contracts have expressly included ‘non-reliance’ clauses to mitigate the risk of contracts being annulled due to allegations of misrepresentation.   B. Contractual Risk-Allocation The CTL provides welcome confirmation that parties can contractually agree to limitations and exclusions of liability, as well as liquidated damages clauses, allowing greater certainty in the allocation of risk between parties at the commencement of the contractual relationship.   Liquidated damages clauses have long been considered enforceable by KSA courts, unless the amount agreed is so far in excess of the damages that have been suffered by the non-breaching party that to enforce the amount would be unjust. This position has been reflected in the CTL, but with a more detailed framework to regulate the use of liquidated damages clauses, which cannot be contractually waived by the parties: The liquidated damages amount will not be due if the liable party can show that the party to be compensated has suffered no harm. The liable party can seek a court order to reduce the liquidated damages amount if it is clear that the amount is excessive to the harm suffered. The party to be compensated can seek a court order to increase the liquidated damages amount to equal the actual harm causes, if the harm caused exceeded the liquidated damages amount as a result of the liable party’s deceit or gross error.   Limitations and exclusions of liability have traditionally been subject to the risk of being treated as unenforceable by KSA courts, as there were different Shariah views regarding whether or not such provisions could be upheld. Now, the CTL expressly confirms that provisions limiting or excluding liability arising from failure to perform – or a delay in performing – contractual obligations, are enforceable. However, the CTL also expressly prohibits the use of contractual clauses that seek to limit or exclude liability arising from: gross error or deceit - a position that is often reflected by contractual drafting in any event; and a harmful act, which is explained in the law to mean any fault that causes harm. This legal restriction reflects a similar position in many jurisdictions in the region, including the UAE, Qatar, Kuwait, Egypt and Jordan, which have each expressly legislated to prohibit such limitations or exclusions of liability applying. There may be room for argument as to whether an act or omission carried out in the course of performing a contract can be more properly considered a ‘harmful act’ for which liability cannot be waived, or a failure to perform contractual obligations, for which the limitations or exclusions of liability can apply. Therefore, appropriate insurance cover remains an essential arm in a contracting party’s risk-allocation toolkit.   C. Liability for Harmful Acts The CTL recognizes harmful acts as one of the grounds on which liability may arise. Harmful acts relate to faults that cause harm – i.e. a breach of an obligation that results in harm to another. The basis of the obligation in these circumstances would not be contractual, but would arise as a matter of law. The CTL provides that liability for a harmful act can arise from (i) a personal act, (ii) another’s act (vicarious liability) and (iii) custodian liability, which we will consider in turn.   Personal Act The general rule set by the CTL concerning harmful acts is that a person (natural or legal) is liable for compensation if they directly commit any fault that causes harm, unless proven otherwise.   Vicarious Liability In accordance with modern civil law systems and judicial practice in the KSA, the CTL has adopted the principle of vicarious liability; a party will be held liable for the wrongs committed by a third party over whom they are responsible and have control. A typical context for vicarious liability is an employment relationship, which raises the question whether KSA cases will start developing along the lines of other jurisdictions, in which an analysis is made to the extent to which an employer can be liable for employees who commit wrongful acts whilst ‘on a frolic of their own’.   Custodian Liability Under the CTL any person who possesses actual control over an object — whether that control is exercised directly or through others — is considered a custodian of that object. The CTL sets out the circumstances in which the custodian is liable for damage caused by an object under that person’s control unless the custodian can prove otherwise, being harm: caused by animals caused to third parties due to the collapse of all, or part of, a building arising from objects that require special care – whether by their nature or by way of regulatory provision - to prevent their harm.   Exemptions from tort liability The CTL stipulates that a person who commits a harmful act is not liable if that person can establish that the harm arose: from a cause beyond their control, such as an event of ‘force majeure’, or due to the fault of the aggrieved or third party; as a result of defending themselves, their honour or their property, to the extent necessary to prevent the attack against them; from a legitimate use of their right; from their act as a public official, provided that the conditions stipulated in the CTL are met; or from the act of a non-discerning person (a person who is under the age of seven or who is insane), subject to exceptional cases provided by the CTL.   Apportionment of Liability The CTL further provides that if the aggrieved person contributed to the causation of, or aggravated, the harm through fault of their own, the aggrieved party shall bear responsibility for the proportion of that harm to which they contributed. Similarly, liability can also be shared and proportioned between multiple tortfeasors. The court will assess how liability should be apportioned according to each tortfeasor’s contribution to the harm, or otherwise it will be apportioned equally if this cannot be determined.   D. Dealing with bad debt The CTL sets out a detailed regulatory framework relating to debts, on matters such as: the right to enforce against a debtor for failing to pay a debt when due; creditors’ priority rights, including the unenforceability of certain debtor acts as against creditors; consolidation of debts and consolidation among debtors; the right to fulfil debts; designation of debts to be paid by a debtor when its funds are insufficient to pay all debts; and offset of debts. Two major changes brought in by the CTL are, first, a new framework for guarantee contracts (which are a very common form of credit support in financings for corporates established in the KSA or projects carried out in KSA); and second, the confirmation of the right of creditors to sell debts to others.   Guarantees Given the retrospective application of the CTL it will apply to all claims under guarantees, regardless of whether the relevant agreement was signed before or after the CTL’s effective date. It will therefore be important for both guarantors and the beneficiaries of guarantees to carefully consider the terms of any guarantees granted in the past to check if their risk profile has changed as a consequence of the new legal framework.   Taking Guarantees A conservative approach has often been adopted by financiers when putting KSA law guarantees in place, to mitigate the risk of the guarantee being held unenforceable due to breaching the Shariah requirement for certainty. Consequently, rather than uncapped “all monies” guarantees with no expiry date being required from KSA obligors, it is usual for guarantees governed by KSA law to refer to a specific debt as being guaranteed and/or to have a financial cap on the guarantor’s liability. There may also be a specific expiry date for the guarantee, linked to the corresponding date for the underlying financing. It is likely that this approach will continue even after the CTL comes into force. Whilst the CTL now expressly confirms that guarantees may cover future and conditional debts, it is an express requirement for such guarantees that the amount of the liability is fixed and determined in advance. Further, if a guarantee for a future debt does not have a definite term, the guarantor may withdraw the guarantee if the creditor is notified of the withdrawal before the relevant debt matures, allowing for a reasonable period of time. In light of such provisions it is likely that guarantees will still be drafted with the risk of unenforceability due to uncertainty in mind as the CTL does not remove such risk. The CTL defines a guarantee as contract under which the guarantor agrees to meet a debtor’s liability against a creditor if the debtor itself fails to satisfy the liability i.e, a secondary obligation. However, guarantees based on international precedents (such as the LMA standard English law guarantee) will often include both a guarantee and indemnity. Such a structure is adopted so that the indemnity, as a primary obligation of the guarantor, will be effective even where the underlying obligation guaranteed is invalid. When taking guarantees in KSA, there is likely to now be greater consideration by financiers of whether such an indemnity provision should be included in a KSA-law governed agreement, to make the guarantor jointly liable with the primary debtor. This is because the CTL significantly restricts the ability to enforce against a guarantor who is not jointly liable with the debtor to the creditor, as explained in the next section.   Recourse against Guarantors If a guarantor is not jointly liable with the relevant debtor to the creditor, then certain changes are introduced by the CTL for guarantees that may lead to discharge or termination of the guarantee or even potential liability for the creditor. These new provisions can be summarised as follows: a creditor may only take recourse against a guarantor after first taking recourse against the debtor and dispossessing them of their funds; in addition, if the creditor has the benefit of security granted by the debtor, direct recourse against the debtor is not permitted before both enforcement of the security[1] and recourse against the debtor and dispossession of their funds; a claim may be filed by a guarantor to suspend enforcement proceedings against them until enforcement is carried out against the debtor’s funds first and it then becomes evident that such funds are insufficient (if such a claim is filed, the guarantor is obliged at its expense to direct the creditor to the debtor’s funds, but not to funds that are disputed or located outside KSA); the creditor will be liable to the guarantor if the debtor becomes insolvent after the guarantor has directed the creditor to the debtor’s funds without the creditor taking necessary actions in a timely manner; if the debt becomes due and the creditor does not bring an action for the debt against the debtor, the guarantor may notify the creditor requiring it to take such action. If the creditor fails to do so within 180 days from the date of such notice, the guarantor is released from guarantee, even if the creditor has granted an extension of time to the debtor (unless with the guarantor’s consent); and if the creditor loses relevant security due to their own fault or a liquidation procedure is initiated against the debtor and the creditor does not submit a claim then the guarantor will not be liable under the guarantee to the extent that the debt would have been satisfied from the security or insolvency proceeds. In light of the above issues, it may be preferable for financiers to structure their guarantees as a joint primary liability for the guarantor if commercially possible, to avoid the restrictions in enforcing against non-jointly liable guarantors.   Joint Guarantors If there is more than one guarantor of the same debt, then it will be important both from the guarantors’ and the beneficiary’s perspective as part of this risk analysis to consider how the allocation of liability between the guarantors may have changed due to the CTL coming into force. The CTL provides that if there are several guarantors of one debt, it is permitted to bring a claim against any of them for the entire amount, unless they have all provided their guarantees in a single contact which does not mention their joint liability. In that situation it will only be possible to claim against guarantor for their proportionate share of the debt.   Sales of Debts The CTL allows the buying and selling of debts (which is also known as a transfer or assignment of rights) whereby a creditor assigns their rights in debts to third parties. This is an important development because such transactions had previously been considered unenforceable under KSA law. The general practice of the KSA courts was to prohibit the sale of a receivable by the creditor to a third party based on a specific interpretation of Shariah dicta, despite the existence of a contrasting view among Shariah scholars that permitted such transactions.  Whilst there are certain alternative Shariah-compliant structures that can be adopted to try and achieve the same effect as a debt sale, they introduce additional complexity into the structure to be enforceable. One of the key points to note for a sale of a debt after the CTL enters into force is that there is no need for the debtor to consent to the transfer, although there is a requirement that they must be notified of the transfer. Other requirements for a valid transfer are that the seller guarantees that the debt right exists at the time of sale, unless otherwise agreed, or unless the transfer was without consideration. Also, the seller does not have to guarantee that the debtor is solvent, unless otherwise agreed. The CTL provides that if there is a transfer of rights, such as a debt, all relevant guarantees of the debt will also transfer across, provided that the debtor was duly notified of the sale, or unless the parties agreed otherwise. There is no requirement to notify the guarantor or obtain their consent. In light of the new statutory provisions, it is recommended that parties to a debt sale should ensure that certain minimum terms are agreed upon in the transfer agreement. Those terms should address at least the following: notification to the debtor; whether the transferor (or another party) guarantees the repayment of the debt, either at the time of sale or on the due date; and whether the transferor guarantees the solvency of the debtor, either at the time of sale or on the due date. Whilst the changes brought in by the CTL seem to be a game-changer for the secondary debt market, it remains to be seen how these provisions will be implemented in practice, particularly in the context of distressed debt and NPLs. In particular, with the Bankruptcy Law predating the CTL by five years, there is no clear provision in the Bankruptcy Law to detail the impact of an approved creditor transferring its rights in the insolvency to a third party. As the first such cases start to appear, we anticipate discussion with officeholders and the courts will be needed to achieve the registration of the purchaser as the new approved creditor. Once this is achieved, it may only be a matter of time before NPL trading becomes customary in KSA.   Footnote: [1] Article 594