Commercial Lawsuit is Now TIME-LIMITED
OVERVIEW
The recently-enacted Commercial Court Law issued under Royal Decree No. (M/93) dated 15/08/1441 AH stipulated prescription of financial rights, i.e. the loss of the right to file a commercial lawsuit due to the plaintiff’s delay in filing it. Article 24 stipulates that The following: (As long as there is no special provision for it, the lawsuits that are considered by the court will not be heard after five years have passed from the date on which the claimed right was established unless the defendant acknowledges the right or the plaintiff presents an excuse acceptable to the court).
Coupled with Article (36) of the implementing regulations of the system, which stipulates the following: (If the claimed right arises before the law comes into force, then the period stipulated in Article 14 of the system shall be calculated from the date on which the system comes into effect) as Article (37) of the same regulation stipulates The following: (In the absence of a special text, the period stipulated in Article Twenty-Four of the Law shall take effect from the day on which the debt becomes due for payment).
Since the aforementioned system was published in the official gazette “Umm Al-Qura” on 24/08/1441 H, the implementation of a statute and its implementation will take place after sixty days have passed from the date of the aforementioned publication, ie on the date (24/10/1441 AH); Therefore, the deadline for accepting commercial lawsuits filed by the plaintiff falling within the jurisdiction of commercial courts and arising before the date (10/24/1436 AH) is (on 10/24/1441 AH).
It is necessary for every creditor plaintiff to pay attention and to observe the period of non-hearing of the lawsuit in the consideration of the commercial judiciary, which starts from the date of maturity of the commercial debt until the date of the entry into force of the above-mentioned law.
CONCLUSION
Royal Decree has drawn the road map very clear for Government Agencies that require consultation services to engage experienced Saudi nationals, consultancy offices, and national companies.
This has come in parallel to the Saudization major plan where Government Agencies have been held responsible for reconsideration of their position before the Saudi People since national companies were thereby prioritized.
We do not believe that current contracts conducted by a government agency with a non-Saudi company or office that provides consultancy service might encounter instantaneous termination, even if a given contract entitled the agency to do so. Yet, we highly anticipate that those contracts might not be renewed regardless of the need of the government agency for such service.
If you are a non-Saudi company, branch, or office, and, in the meantime a consultancy service provider of a government agency, or planning to be one, you are highly recommended to look for a Saudi Partner who may enhance your vision and represent your business before the government agency.