{"id":140334,"date":"2026-04-21T12:14:46","date_gmt":"2026-04-21T12:14:46","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=140334"},"modified":"2026-04-24T10:05:22","modified_gmt":"2026-04-24T10:05:22","slug":"saudi-arabia-construction","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/saudi-arabia-construction\/","title":{"rendered":"Saudi Arabia: Construction"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-140334","comparative_guide","type-comparative_guide","status-publish","hentry","guides-construction","jurisdictions-saudi-arabia"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Al Tamimi &amp; Company<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/Al-Tamimi-Company-Global-Logo-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Al Tamimi &amp; Company<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/Al-Tamimi-Company-Global-Logo-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Construction laws and regulations applicable in Saudi Arabia<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your jurisdiction a common law or civil law jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As set out in the Basic Law of Governance, the legal system of Saudi Arabia is founded on Islamic Shari\u2019ah principles. That said, in light of the recent codification of laws, Saudi Arabia is generally characterised as a civil law jurisdiction based on codified legislation, rather than a common law system. In this context, the Civil Transactions Law (\u201c<strong>CTL<\/strong>\u201d) is the primary legislation governing private law matters, including contracts and liability.<\/p>\n<p>The performance and interpretation of contracts are determined by reference to the agreed terms, alongside the principle of good faith, applicable custom, and the nature of the contractual relationship.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key statutory\/legislative obligations relevant to construction and engineering projects?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Key statutory obligations arise under the CTL and applicable regulatory frameworks. Under the CTL, contractors must perform the works in accordance with the agreed specifications, use appropriate materials, comply with time requirements, and remedy defects. The CTL also governs contract performance, termination, compensation, force majeure, and the adjustment of agreed damages.\u00a0 In line with the pervasive principle of freedom of contract, the foregoing principles are frequently embellished and supplemented by contractual provisions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any specific requirements that parties should be aware of in relation to: (a) Health and safety; (b) Environmental; (c) Planning; (d) Employment; and (e) Anti-corruption and bribery?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>These matters are governed by several laws in Saudi Arabia, including the CTL, the Labour Law, the Environmental Law, the Anti-Bribery Law, and the applicable building regulations (including the Saudi Building Code framework).<\/p>\n<p>In general terms, employers (and contractors) must ensure safe working conditions and implement basic health and safety measures; environmental activities require the relevant permits and compliance with applicable standards; construction works require a building permit before commencement and a certificate of completion before commercial use; employment rules require valid work permits for non-Saudi employees and compliance with Saudization requirements; and anti-bribery rules prohibit bribery and related corrupt conduct, with potential criminal and regulatory sanctions, including impacts on public tender eligibility.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What permits, licences and\/or other documents do parties need before starting work, during work and after completion? Are there any penalties for non-compliance?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Before commencing works, a building permit must be obtained, together with any required environmental permits or licences where the project may have environmental impact on air, water, or soil. In practice, building and construction activities must be carried out in accordance with the relevant rules and regulations issued by the Ministry of Municipalities and Housing and other competent authorities, and typically require engagement with a licensed engineering office, which is responsible for coordinating and obtaining the necessary approvals, certificates, and licences for the project.<\/p>\n<p>Upon completion, a certificate of completion must be obtained prior to any use or occupation of the project.<\/p>\n<p>Non-compliance may result in regulatory penalties, including fines, suspension or closure of works, environmental remediation orders, and other enforcement actions (including from a criminal perspective). In addition, breaches may give rise to contractual consequences under the CTL, including termination and claims for compensation, as well as enforcement of agreed contractual remedies.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is tort law or a law of extra-contractual obligations recognised in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The CTL recognises and codifies extra contractual liability (tort type obligations) for harmful acts. In general terms, any fault that causes harm gives rise to an obligation to compensate, subject to proof of causation. Where multiple parties are responsible, liability is joint and several, while contributory fault may reduce compensation and, where appropriate, may exclude liability to the extent the claimant\u2019s own fault caused the damage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who are the typical parties involved in a construction and engineering project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In private construction and engineering projects, the primary parties are the employer and the contractor under a contract for services governed by the CTL. Subcontracting is generally permitted unless restricted by law, contract, or the nature of the works; however, the main contractor remains liable to the employer for performance of the subcontractor, while subcontractors typically have no direct contractual relationship with the employer (and vice versa) unless expressly provided for. Consultants and designers are usually engaged under separate service or mandate agreements for design, supervision, or advisory services, also governed by the CTL.<\/p>\n<p>In public projects, the framework is governed by the Government Tenders and Procurement Law (\u201c<strong>GTPL<\/strong>\u201d), with involvement of government entities, the Ministry of Finance, and the Local Content and Government Procurement Authority, and procurement processes administered through the unified \u201cEtimad\u201d platform.\u00a0 Competitive tendering is required other than in exceptional circumstances.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most popular methods of procurement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In our view, traditional (\u2018construction-only\u2019) procurement remains the most prevalent in Saudi Arabia (i.e., where the Employer procures the design itself and engages a Contractor to execute such design).\u00a0 However, design and build contracting is increasing in popularity (particularly in the context of functional projects where aesthetics are not critical) while EPC contracting is the go-to form of procurement in the oil and gas and power sectors.\u00a0 Additionally, we are seeing an up-tick in PPP\/concession type arrangements, including in the context of utilities and increasingly social infrastructure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most popular standard forms of contract? Do parties commonly amend these standard forms?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Public entities use standard contract templates issued\/approved by the Ministry of Finance under the GTPL. These forms are generally required to be used as issued, and any amendments or deviations are subject to approval by the relevant contracting government entity on a case-by-case basis. In the private sector, FIDIC forms (as amended by particular conditions) are commonly used, while bespoke forms are equally prevalent (particularly in the context of services agreements and concessions).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions or legislative regimes affecting procurement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Procurement is primarily governed by the GTPL, which sets binding principles including in respect of integrity, transparency, fair competition, equal opportunity, and the protection of public funds. It restricts participation to qualified and licensed contractors, imposes planning and publication requirements, and incorporates policy priorities such as local content, SMEs, and qualifying listed companies in award decisions.<\/p>\n<p>Anti-bribery laws apply to public procurement and, in some cases, private-sector conduct. Building and environmental regulations also operate as mandatory requirements affecting commencement and procurement timelines.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do parties typically engage consultants? What forms are used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is common for employers to engage a range of consultants, including architects, engineers (, project managers, and cost consultants. Their role typically covers design, supervision, and contract administration, although the extent of their authority will depend on the agreed contractual framework.<\/p>\n<p>In practice, consultants are typically appointed under bespoke consultancy agreements or amended standard forms. The FIDIC White Book (Client\/Consultant Model Services Agreement) is often used as a starting point, but is commonly adapted to reflect project-specific requirements and the agreed risk allocation. On government projects, consultancy appointments are required to align with the GTPL and its implementing regulations, which prescribe certain procurement processes and contractual conditions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is subcontracting permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Subcontracting is common on construction projects in Saudi Arabia, although the extent to which it is permitted will depend on the terms of the main contract and, in some cases, applicable regulatory requirements.<\/p>\n<p>In practice, contractors will often subcontract elements of the works (for example, specialist trades or packages), particularly on large or complex projects. Under standard forms such as those published by FIDIC, subcontracting is typically allowed but subject to certain restrictions, including requirements for employer consent (particularly for key or nominated subcontractors). It is also common for subcontract arrangements to be structured on a back-to-back basis, reflecting the main contract obligations and including pay-when-paid clauses.<\/p>\n<p>From a legal perspective, the CTL recognises the contractor\u2019s ability to subcontract, while maintaining that the main contractor remains responsible to the employer for the performance of the works, including the acts and omissions of its subcontractors.\u00a0 From a market perspective, we are seeing an uptick in employers requiring collateral warranties from subcontractors (that sometimes include step-in rights).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are projects typically financed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Project financing structures in Saudi Arabia will vary depending on the nature, scale, and procurement model of the project. Broadly, projects may be financed through a combination of equity contributions, bank financing, and, in some cases, government funding.<\/p>\n<p>In practice, large-scale infrastructure and energy projects are often financed on a project finance basis, typically involving sponsor equity alongside debt financing. Public-private partnership (PPP) models are also increasingly used, particularly in the context of projects aligned with Vision 2030, with private sector participation supported by long-term contractual arrangements. On more traditional projects, particularly in the private sector, financing may instead be provided at a corporate level, with developers or contractors relying on internal funding or general lending arrangements.<\/p>\n<p>From a regulatory perspective, PPP structures are governed by the Private Sector Participation Law, while public procurement and government-funded projects are subject to the GTPL and its implementing regulations. The applicable financing approach will ultimately depend on the project\u2019s structure, risk allocation, and the parties involved.\u00a0 However, financing structures should be Sharia-compliant.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kind of security is available for employers, e.g. performance bonds, advance payment bonds, parent company guarantees? How long are these typically held for?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A range of security instruments are commonly used on construction projects in Saudi Arabia to protect the employer\u2019s position. These may include performance bonds, advance payment bonds, retention mechanisms and, in some cases, guarantees from third parties or affiliates. Performance bonds and advance payment bonds are typically issued by banks in favour of the employer. The specific package of security will depend on the project, the parties involved, and the agreed contractual framework.<\/p>\n<p>In practice, performance bonds are typically provided at the outset to secure the contractor\u2019s performance of its obligations, while advance payment bonds are used where the employer makes an upfront payment. Retention is also widely used, with a percentage of payments withheld and released in stages (for example, on completion and at the end of the defects liability period). Parent company guarantees may be required to provide additional recourse, particularly if the employer has concerns as to the robustness of the contractor and its ability to perform.<\/p>\n<p>As to duration, these instruments are generally held until key contractual milestones are achieved. For example, performance bonds are often maintained until completion of the works and issuance of the completion certificate, while advance payment bonds are typically reduced and released as the advance payment is recovered. The precise position will depend on the contractual terms and project structure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there any specific legislation relating to payment in the industry?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no single, standalone piece of legislation in Saudi Arabia that specifically governs payment in the construction industry. Payment is therefore governed by the contractual arrangements agreed between the parties.<\/p>\n<p>That said, the CTL contains provisions relevant to construction contracts, including general principles relating to payment and the contractor\u2019s entitlement to remuneration in certain circumstances (for example, where a price has not been expressly agreed).<\/p>\n<p>In practice, construction contracts will typically include detailed provisions addressing payment procedures, certification mechanisms, and timelines. As a general matter, any entitlement to late payment remedies will depend on the agreed contractual framework and applicable legal principles, including the prohibition of <em>riba<\/em> (interest) and overarching duties of good faith, which may impact how payment obligations and remedies are interpreted and enforced.\u00a0 From a market perspective, contractors often seek to include a contractual right to withhold or suspend performance in the event of payment breaches by the employer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are pay-when-paid clauses (i.e. clauses permitting payment to be made by a contractor only when it has been paid by the employer) permitted? Are they commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no express statutory prohibition on pay-when-paid clauses under Saudi law, and their enforceability will generally depend on the agreed contractual terms and the circumstances in which they are applied.<\/p>\n<p>In practice, such clauses are not uncommon in subcontracting arrangements. Their use will, however, depend on the commercial position of the parties and the level of negotiation between the contractor and subcontractor, and they may be subject to modification (for example, through longstop dates or alternative payment mechanisms).<\/p>\n<p>From a legal perspective, the CTL and general principles of good faith may be relevant in assessing how such clauses are interpreted and enforced. As such, the effectiveness of pay-when-paid provisions will ultimately depend on their drafting (i.e., thresholds and caveats may apply) and the specific facts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do your contracts contain retention provisions and, if so, how do they operate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Retention provisions are commonly included in construction contracts in Saudi Arabia, although their use and structure will depend on the agreed contractual framework and the parties\u2019 commercial position.<\/p>\n<p>In practice, retention typically involves the employer withholding a percentage of the contract price (often 10%, although this will vary) as security for the contractor\u2019s performance. This serves as a risk mitigation measure for the employer, providing a financial incentive for the contractor to complete the works properly and to address any defects. The retained amount is usually released in stages, with a portion released on completion of the works and the balance released following expiry of the defects liability period (being a defined period after completion during which the contractor is required to remedy defects), subject to any outstanding issues being resolved. In some cases, retention may be replaced with alternative forms of security, such as bank issued retention bonds.<\/p>\n<p>The precise operation of retention provisions will depend on the terms of the contract, including the agreed percentages, release mechanisms, and any applicable conditions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do contracts commonly contain liquidated delay damages provisions and are these upheld by the courts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Liquidated delay damages provisions are commonly included in construction contracts in Saudi Arabia. These provisions typically provide for a pre-agreed rate of compensation payable by the contractor in the event of delay to completion.<\/p>\n<p>From a legal perspective, the CTL recognises the validity of agreed damages provisions. However, their enforceability is subject to certain principles. In particular, compensation must correspond to actual loss suffered. The agreed amount may be adjusted by the courts (or tribunals) where it is considered disproportionate to the damage suffered. The party seeking the adjustment shoulders the evidential burden.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are the parties able to exclude or limit liability?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Parties are generally able to agree provisions which exclude or limit liability in construction contracts in Saudi Arabia, subject to certain legal principles.<\/p>\n<p>In practice, limitation of liability clauses are commonly included, for example by capping a party\u2019s total liability at a specified amount (often linked to the contract price in the case of contractors) or excluding certain categories of loss (such as loss of profit, loss of contract and loss of opportunity). The scope and extent of such limitations will depend on the parties\u2019 relative bargaining positions and the overall risk allocation agreed under the contract.<\/p>\n<p>From a legal perspective, the CTL reflects the principle of freedom of contract, subject to certain limits. In particular, limitations or exclusions of liability will not typically extend to fraud or gross negligence. In addition, certain liabilities under Saudi law (such as decennial liability in relation to structural defects) are treated as mandatory and are not capable of being excluded or limited by agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on termination? Can parties terminate for convenience? Force majeure?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Termination rights in construction contracts in Saudi Arabia are primarily governed by the agreed contractual terms and are subject to applicable legal principles.<\/p>\n<p>In practice, contracts will typically include express provisions addressing termination for cause and, in some cases, termination for convenience. Termination for convenience is not uncommon, particularly in employer-friendly forms, although its availability and consequences (including compensation payable to the contractor) will depend on the agreed drafting.<\/p>\n<p>Additionally, the CTL provides a framework for termination in certain circumstances, including for non-performance and where performance is affected by external events. In the context of force majeure, the impact will depend on the nature and duration of the event, and may give rise to rights such as suspension or, in some cases, termination.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rights are commonly granted to third parties (e.g. funders, purchasers, renters) and, if so, how is this achieved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is common in construction projects in Saudi Arabia for certain rights to be extended to third parties, particularly funders, purchasers, and tenants, depending on the nature of the project and its financing or development structure.<\/p>\n<p>In practice, these rights are typically granted through mechanisms such as collateral warranties, direct agreements, novation arrangements, and assignment. Collateral warranties are commonly used to provide third parties with a direct contractual link to the contractor or consultant, enabling them to enforce certain obligations. Direct agreements are often used in favour of funders, allowing them to step in or exercise certain rights in relation to the project in specified circumstances. Novation may be used to transfer contractual rights and obligations from one party to another. Assignment may also be used to transfer rights (particularly from a funder security perspective), although this will typically be subject to the terms of the contract and, in many cases, the consent of the counterparty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do contracts typically contain strict provisions governing notification of claims for additional time and money which act as conditions precedent to bringing claims? Does your jurisdiction recognise such notices as conditions precedent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Construction contracts in Saudi Arabia, particularly those based on FIDIC forms, typically contain strict notice provisions requiring contractors to notify claims for extensions of time and additional payment within specified timeframes. These provisions are generally enforceable and can operate as conditions precedent, such that failure to comply may bar a claim. That said, courts in Saudi Arabia may take into account overarching Shari\u2019ah principles which are embedded in the CTL, including good faith and fairness, and accordingly allow claims to proceed in circumstances where, for example, the employer had actual knowledge of the relevant event or strict enforcement would lead to an inequitable outcome. While it is unlikely in practice for the courts to not recognise such notices, in certain circumstances it may not be viewed as rigidly as in common law jurisdictions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What insurances are the parties required to hold? And how long for?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Contractors\u2019 all risks (CAR) insurance, third-party liability insurance, workers\u2019 compensation, and professional indemnity insurance (in the context of design) are typical. CAR and liability policies are typically maintained for the duration of the works and any defects liability period, while professional indemnity cover is often required for several years post-completion. \u00a0\u00a0Additionally, the contractor is required at law to take out and maintain inherent defects liability insurance, which is a prerequisite to obtaining the building permit and the building completion certificate.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are construction and engineering disputes typically resolved in your jurisdiction (e.g. arbitration, litigation, adjudication)? What alternatives are available?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Construction and engineering disputes in Saudi Arabia are most commonly resolved through arbitration, particularly on large-scale and international projects, although litigation before the Saudi courts (including the Board of Grievances for administrative contracts) remains an available route. Alternative mechanisms such as dispute adjudication boards, expert determination, and mediation are also used, often as preliminary steps before escalation to arbitration or litigation. However, the absence of the \u2018without prejudice\u2019 principle under Saudi law means that safe-guards (i.e., NDAs) should be put in place before alternative dispute resolution mechanisms are invoked.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How supportive are the local courts of arbitration (domestic and international)? How long does it typically take to enforce an award?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Saudi courts are generally supportive of arbitration, particularly following the introduction of the modern Arbitration Law, which is aligned with the UNCITRAL Model Law; and the introduction of the Saudi Centre for Commercial Arbitration (SCCA) and its rules. As a signatory to the New York Convention, KSA recognises and enforces foreign arbitral awards. Enforcement proceedings are relatively efficient by regional standards and typically take between six to twelve months, depending on the complexity of the case and whether challenges are raised.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitation periods for commencing disputes in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Limitation periods in Saudi Arabia are not governed by a single unified statute in the same way as in common law jurisdictions but instead derive from multiple legislative developments. While there is increasing codification, including under the CTL, limitation periods can vary depending on the nature of the claim. As a general guide, contractual claims may be subject to a period of around five years, while decennial liability claims for structural defects are subject to a strict ten-year period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How common are multi-party disputes? How is liability apportioned between multiple defendants? Does your jurisdiction recognise net contribution clauses (which limit the liability of a defaulting party to a \u201cfair and reasonable\u201d proportion of the innocent party\u2019s losses), and are these commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Multi-party disputes are relatively common in the Saudi construction sector, particularly on large and complex projects involving multiple contractors, subcontractors, and consultants. Liability is typically apportioned based on fault and causation, with courts having discretion to allocate responsibility between parties. Net contribution clauses are not a traditional feature of Saudi law and are not widely used; their enforceability remains uncertain, particularly where they may conflict with principles of fairness or joint liability. As a result, parties tend to rely more heavily on contractual indemnities and back-to-back risk allocation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the biggest challenges and opportunities facing the construction sector in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Saudi construction sector presents significant opportunities driven by Vision 2030 as well as the FIFA World Cup 2034 and the World Expo 2030, including large-scale giga-projects, infrastructure development, and diversification initiatives across tourism, entertainment, and renewable energy. The volume and ambition of these projects continue to attract substantial domestic and international investment. However, the sector also faces challenges, including supply chain pressures, material cost escalation, skilled labour shortages, and the need to meet increasingly demanding project timelines. Regulatory developments, including evolving procurement frameworks and local content requirements, require careful navigation. Dispute volumes are rising in line with project activity, placing greater emphasis on effective contract administration and risk allocation. Parties that invest in robust contractual frameworks and proactive project management are best positioned to capitalise on the opportunities ahead.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of projects are currently attracting the most investment in your jurisdiction (e.g. infrastructure, power, commercial property, offshore)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Saudi Arabia is currently experiencing significant investment across a range of project types, driven by the Vision 2030 programme and the Kingdom&#8217;s broader economic diversification agenda. Infrastructure projects, including transport (such as rail, metro, and road networks), utilities, and social infrastructure, continue to attract substantial investment. Large-scale mixed-use and tourism developments, including the giga-projects such as NEOM, The Red Sea, ROSHN, and Qiddiya, represent a major share of current activity. The energy sector remains a key area of investment, with increasing focus on renewable energy (including solar and wind) alongside continued investment in oil and gas infrastructure. Commercial and residential real estate development is also prominent, particularly in major urban centres. Additionally, projects linked to the hosting of major international events, including the FIFA World Cup 2034 and the World Expo 2030, are driving further investment in stadiums, hospitality, and associated infrastructure<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do you envisage technology affecting the construction and engineering industry in your jurisdiction over the next five years?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Over the next five years, technology is expected to have a transformative impact on the Saudi construction and engineering industry, driven in part by the scale and ambition of Vision 2030 projects. Building Information Modelling (BIM) is increasingly being mandated on major projects and is expected to become standard practice, improving design coordination, clash detection, and project delivery. The adoption of modular and offsite construction techniques is anticipated to accelerate, particularly in the context of large-scale residential and infrastructure programmes where speed of delivery is critical. Digital project management platforms, artificial intelligence, and data analytics are likely to enhance cost control, scheduling, and risk management. Additionally, the use of drones, 3D printing, and robotics is expected to grow, particularly for surveying, quality assurance, and the fabrication of building components. From a contractual perspective, these developments will require careful consideration of risk allocation, intellectual property, and liability frameworks, as traditional contract structures adapt to accommodate new methods of delivery and collaboration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What do you anticipate to be the impact from ongoing supply chain issues and the escalation of material costs over the coming year?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Supply chain disruptions and material cost escalation are expected to remain significant challenges for the Saudi construction sector over the coming year. Global and regional factors, including the ongoing conflict involving Iran, are contributing to heightened geopolitical uncertainty, which in turn affects shipping routes (particularly through the Red Sea and the Strait of Hormuz), energy prices, and the availability and cost of key construction materials such as steel, cement, and specialist equipment. These pressures are compounded by the unprecedented volume of concurrent mega-projects under Vision 2030, which is placing additional strain on both material supply and labour availability within the Kingdom. From a contractual perspective, these dynamics are expected to increase the frequency and significance of claims for extensions of time and additional costs, particularly under provisions relating to force majeure, changes in law, and price escalation. Parties are increasingly seeking to address these risks through contractual mechanisms such as price adjustment clauses, provisional sums, and more detailed force majeure and hardship provisions. In our view, employers and contractors would be well advised to ensure that their contractual frameworks adequately address supply chain risk, including through robust procurement planning, early engagement with suppliers, and clear allocation of risk in respect of material price fluctuations and logistical disruption. The current environment underscores the importance of proactive contract administration and effective risk management across the project lifecycle.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4366<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/140334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=140334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}