The Saudi Labor Law guarantees the rights of Saudi and foreign employees, covering the entire employment journey—from the application process to the duration of employment, and through to resignation or termination.

With Saudi Arabia’s growing integration into the global economy under Vision 2030, the increasing presence of foreign workers, the rising focus on Saudization, the rapid launch of thousands of startups, and the expanding demand for employees across diverse roles, understanding the Saudi labor system has become more essential than ever for both local and foreign employees.

In this article, we will explore the key provisions of the Saudi Labor Law, which sets out the regulations governing the relationship between employers and employees, and clearly defines the rights and obligations of each party—whether in the private or public sector.

Employee Rights under the Saudi Labor Law

The Saudi Labor Law ensures comprehensive protection for all employees working in the Kingdom, regardless of nationality. It establishes a clear framework of rights and obligations between employers and workers, fostering fairness, stability, and productivity in the workplace.

Key Employee Rights

• Employment Contract: Every employee must have a formal written contract that specifies essential terms such as working hours, salary, benefits, vacation entitlements, and other relevant conditions.
• Fair Wages & Minimum Salary: Employees are entitled to receive wages in accordance with their contracts, and salaries must not be less than the statutory minimum wage where applicable.
• Working Hours & Overtime: Standard working hours may not exceed eight hours per day. Any additional hours are considered overtime and must be compensated financially.
• Leave Entitlements: Employees are entitled to annual paid leave, sick leave, and all legally recognized public holidays. Paid leave must also be granted for marriage, childbirth, bereavement, and the performance of Hajj.
• Annual Vacation: Employees are entitled to at least 21 days of paid annual vacation, which increases to 30 days after completing five consecutive years of service.
• Safe & Healthy Workplace: Employers are obligated to provide a safe work environment, taking necessary measures to prevent occupational accidents and diseases.
• Compensation for Injuries: Employees are entitled to fair compensation for work-related injuries, supported by social insurance coverage.
• Health & Social Insurance: Employers must provide health insurance for all employees (and their dependents, where applicable). In addition, Saudi employees are covered by social insurance benefits that include retirement pensions, unemployment support, and disability protection. For non-Saudi employees, social insurance coverage is limited, but disability protection and health insurance remain guaranteed under the law.
• Equality & Non-Discrimination: All employees must be treated fairly and equally, with protection against discrimination based on gender, nationality, race, or religion.
• Legal Recourse: Employees have the right to file complaints before competent authorities in cases involving disputes over salary, working hours, or working conditions.
• End-of-Service Benefits: Employees are entitled to an end-of-service gratuity, calculated based on the length of employment and in accordance with labor law provisions.

Conclusion

After outlining the rights of both Saudi and foreign employees under the Saudi Labor Law, an important question naturally arises: What should an employee do in the event of a labor dispute?

In such situations, seeking the assistance of a certified lawyer specializing in labor cases is crucial. A skilled lawyer can guide you toward the most effective legal solution, safeguard your rights, and ensure the proper application of the law.

At Mohammed Al-Khliwi Law Firm, we are committed to handling labor disputes with the highest level of professionalism and precision. Contact us today, and let our team support you in resolving your labor issues efficiently and effectively.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

Companies and organizations worldwide, regardless of their industries, inevitably encounter commercial disputes. In this article, we will focus on Commercial Disputes in Saudi Arabia, how such disputes arise and are resolved in Saudi Arabia. What are their main causes? How are they addressed—through arbitration or the judiciary? We will explore all of this in detail below.

What Are Commercial Disputes?

Commercial disputes, also known as commercial cases, refer to conflicts that arise between individuals or companies during business dealings. These may involve issues such as sales contracts, leases, commercial partnerships, or any other disputes linked to commercial transactions.

In Saudi Arabia, the Commercial Law serves as a fundamental pillar for safeguarding rights and ensuring justice between disputing parties. It establishes the legal framework that governs and regulates commercial activities within the Kingdom.

The purpose of this legal framework is to strengthen the business environment and provide comprehensive legal protection for business owners and investors. This is achieved through a set of specialized laws and regulations, including the Companies Law, the Commercial Court Law, and the Bankruptcy Law, all of which collectively aim to enhance transparency, stability, and fairness in commercial dealings.

Types of Commercial Disputes

Commercial disputes can take many forms, depending on the nature of the business relationship or transaction. The most common types include:

• Commercial Contract Disputes – disagreements arising from breaches or misinterpretations of contractual obligations.
• Partnership Disputes – conflicts between business partners regarding management, profit distribution, or decision-making.
• Bankruptcy and Liquidation Cases – legal proceedings related to financial insolvency, debt restructuring, or winding up of businesses.
• Intellectual Property Disputes – issues concerning trademarks, copyrights, patents, or unfair competition.
• Supply and Distribution Disputes – conflicts involving delivery delays, product quality, exclusivity, or distribution rights.

Common Causes of Commercial Disputes Within Companies

The causes of commercial disputes in Saudi arabia differ from one company to another; however, several common factors often lead to conflicts between businesses. The most notable include:

1. Failure to Comply with the Terms of a Commercial Contract
   Disputes frequently arise when one party breaches a commercial contract by failing to fulfill its agreed obligations. This often results in penalties such as fines, contract termination, or compensation for damages suffered by the other party.
2. Lack of Clarity in Commercial Contracts
   Poorly drafted contracts, missing details, or unclear definitions of each party’s responsibilities can lead to significant misunderstandings. Such ambiguities often escalate into disputes that negatively affect business operations.
3. Failure to Pay Financial Dues
   Non-payment or delayed payment of agreed financial obligations is one of the most common causes of commercial disputes. These situations often strain business relationships and may require legal intervention to resolve.
4. Engagement in Illegal Practices
   Disputes may also arise when companies engage in unlawful or unethical practices, whether intentionally or out of ignorance. Examples include intellectual property violations, customer fraud, or unfair competition.
5. Disputes Between Business Partners
   Partnership conflicts are common and may stem from differences in vision, disagreements over profit distribution, or conflicting opinions regarding strategic decisions. Such disputes often necessitate legal resolution to protect the rights of all parties.

How Are Commercial Disputes in Saudi Arabia Legally Resolved?

In Saudi Arabia, commercial disputes between companies can be resolved through three main legal methods. Each approach is applied depending on the nature of the dispute and the preferences of the parties involved.

1. Litigation Before the Commercial Court

The Commercial Court is the competent judicial authority responsible for adjudicating disputes under the Saudi Commercial Law. It handles cases involving breaches of commercial contracts, conflicts between companies and business establishments, and disputes related to compensation or outstanding financial obligations.

2. Commercial Arbitration

Many companies prefer to resort to commercial arbitration as an alternative to traditional litigation. Arbitration offers faster resolution compared to court proceedings, as well as flexibility in choosing arbitrators, and guarantees confidentiality—making it especially suitable for sensitive commercial matters.

3. Legal Mediation

For parties seeking an amicable resolution without the complexities of litigation or arbitration, legal mediation is often the preferred option. A neutral mediator is appointed to facilitate discussions and help the disputing parties reach a mutually acceptable settlement, saving time, effort, and costs.

Can Commercial Disputes Between Companies Be Avoided?

Yes, absolutely. By taking preventive measures and adhering to best practices, companies can significantly reduce the risk of commercial disputes. The most important steps include:

• Drafting Clear and Comprehensive Contracts
  Ensure all commercial contracts are carefully drafted, with every detail explicitly stated. Ambiguities or missing clauses often lead to misunderstandings that can escalate into disputes.
• Strict Compliance with Saudi Commercial Law
  Abiding by the provisions of the Saudi Commercial Law helps companies operate within a clear legal framework, reducing the likelihood of future conflicts.
• Proper Documentation of All Agreements
  Avoid relying on verbal agreements. Written contracts and notarized legal documents provide strong legal protection and safeguard against manipulation or false claims.
• Engaging a Specialized Lawyer
  Working with a trusted law firm experienced in commercial disputes offers an added layer of security. At Mohammed Al-Khliwi Law Firm, we specialize in handling commercial cases and are committed to resolving disputes efficiently while protecting the best interests of your business.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

The judicial system in the Kingdom of Saudi Arabia is distinguished in the region by its integration of Islamic Sharia principles with modern legislative reforms introduced under the framework of Vision 2030. For foreign investors, businesses, and individuals engaged in contracts or involved in commercial, labor, administrative, and other disputes in the Kingdom, it is essential to gain a clear and detailed understanding of the Saudi judicial system.

In this article, we will provide an overview the Court System in Saudi Arabia, outlining the structure and functions of the courts, and shedding light on the key legal procedures they follow.

Overview

The judiciary in Saudi Arabia is recognized as an independent authority and constitutes one of the three branches of government, alongside the executive and regulatory authorities. According to the Basic Law of Governance, the appointment or dismissal of judges is issued by royal decree. Judges may not be transferred to other positions without their consent, except in cases of promotion, in line with the provisions of the judicial system.

Foundations of the Saudi Judicial System

The Saudi judicial system is primarily founded on Islamic Sharia, derived from the Holy Qur’an and the Sunnah (Prophetic Tradition), along with complementary legislation and royal decrees regulating commercial, civil, and business affairs. The Ministry of Justice oversees the administration of the courts, while the Supreme Judicial Council supervises judges and judicial affairs.

the Court System in Saudi Arabia

the Court System in Saudi Arabia is composed of four main bodies:

1. The Supreme Court

The Supreme Court stands at the top of the judicial hierarchy. It does not resolve disputes directly; rather, it reviews contested rulings issued by lower courts. The Court primarily handles hudud (Islamic criminal penalties) and qisas (retribution) cases, such as murder, amputation, or stoning.
Its role is to ensure the correct application of Sharia and statutory rules, supervise the rulings of the Courts of Appeal, and decide on petitions to reconsider judgments.

2. Courts of Appeal

The Courts of Appeal review decisions issued by first-instance courts after hearing the parties’ statements, in accordance with the Law of Sharia Procedure and the Law of Criminal Procedure. These courts also consider petitions for reconsideration of their own rulings.

3. First-Instance Courts

First-instance courts are the backbone of the Saudi judicial system and are classified into several categories:

• General Courts
• Criminal Courts
• Labor Courts
• Commercial Courts
• Personal Status Courts

They adjudicate cases based on two main principles:

• Type of case: whether commercial, family-related, criminal, urgent, or otherwise.
• Geographical jurisdiction: cases are assigned to the court located within the relevant territorial boundary.

4. Enforcement Courts

Enforcement Courts specialize in handling disputes related to the execution of judgments, regardless of their value. These courts consist of specialized circuits; each presided over by one or more judges. They ensure that judicial rulings, debt collections, and enforcement of contracts or foreign judgments are carried out effectively.

Issuing Laws in the Kingdom of Saudi Arabia

The legislative process in the Kingdom of Saudi Arabia passes through five main stages, as follows:

1. Proposal Stage

This is the initial stage of the legislative process. It begins with the preparation of the first draft of the law and continues until it is submitted to the competent regulatory authority. At this stage, the text is referred to as a draft law, marking the first step toward its adoption.

2. Voting Stage

In this stage, the draft law is presented to the relevant regulatory authority for discussion, approval, or rejection. Once approved, it is referred to the Council of Ministers for further consideration and endorsement.

3. Ratification Stage

At this stage, the President of the Session approves the draft law. It then becomes an official law after receiving the King’s approval and royal signature, which represent the highest level of ratification.

4. Promulgation Stage

This stage signifies the formal issuance of the law and confirms its legal existence.

5. Publication Stage

Finally, the law is published and officially announced, with a specific date set for its entry into force, ensuring clarity and transparency for all stakeholders.

Litigation Procedures Before the Court in Saudi Arabia

Litigation before the courts in the Kingdom of Saudi Arabia may be conducted either by the parties themselves—whether by attending sessions remotely through electronic platforms or by appearing physically before the judge. The general rule is that court sessions are held remotely, except in specific circumstances or where the judge orders in-person attendance. Alternatively, proceedings may be conducted through authorized representatives holding a duly attested power of attorney. The representative must formally declare their presence and submit a copy of the power of attorney to the court. While such representatives are empowered to attend sessions and present arguments on behalf of their clients, they may not undertake substantive actions—such as waivers, settlements, or admissions—unless expressly authorized to do so.

Certain types of cases, however, require by law that representation be made through a Saudi-licensed attorney, particularly in major commercial disputes, corporate matters, and similar proceedings, where representation by non-licensed persons is not accepted.

If the plaintiff fails to appear without a valid excuse, the case is dismissed. Should the absence be repeated, the case may only be reconsidered by decision of the Supreme Court. The absence of the defendant, on the other hand, results in a judgment in absentia if the defendant has not been duly notified. However, if the defendant was notified or has previously submitted a defense, the judgment is still deemed to have been rendered in absentia.

The court also retains the authority to compel the defendant to appear if it is established that they are deliberately delaying proceedings. A defendant convicted in absentia may file an objection within the statutory period by submitting a memorandum of opposition. In such cases, the court may, when deemed necessary, grant relief to the absent defendant by considering the objection and re-examining the judgment, and may also temporarily suspend the enforcement of the judgment until the objection is resolved, provided that the objection satisfies all statutory and procedural requirements

Electronic Judicial Services

The Kingdom of Saudi Arabia places great emphasis on justice and the judiciary by continuously updating laws and expanding the scope of electronic services to facilitate procedures for both citizens and foreigners. Among the most prominent of these services are:

Electronic Filing of Lawsuits: Plaintiffs, defendants, and their representatives can submit case details through the online lawsuit platform without visiting the court.

Electronic Pleadings: Parties to a lawsuit and their attorneys can submit pleadings, respond to court requests, and follow up on proceedings directly through the Najiz portal.

Reconciliation Services: Disputing parties can complete the reconciliation process through the Taradi platform, encouraging amicable settlements outside the courtroom.

Marriage and Divorce Contracts: Issuing marriage or divorce contracts can be done electronically with ease via the Ministry of Justice platform.

Powers of Attorney: Individuals can issue powers of attorney electronically—whether single-party or multi-party—through the Najiz platform.

Civil Status Services: Services such as issuing a death certificate or registering a newborn can be completed online through the Ministry of Justice platform.

Real Estate Transactions: Beneficiaries can electronically list and process real estate transactions, enabling sellers and buyers to complete deals fully online.

Bankruptcy Applications: An electronic service that allows beneficiaries to submit bankruptcy requests and initiate proceedings with the relevant authorities in line with the Kingdom’s bankruptcy law.

Deed Updates: Beneficiaries can request the update or amendment of electronic property deeds without the need to consult a notary public.

Electronic Arbitration in Commercial Disputes

The Saudi Center for Commercial Arbitration has introduced an enhanced version of its electronic arbitration service, providing a fully virtual alternative for resolving small commercial disputes. This advanced service leverages the latest technologies and internationally recognized procedures to ensure efficient, transparent, and reliable dispute resolution.

By adopting this flexible approach, parties can settle disputes in a significantly shorter timeframe and at a much lower cost, without the need for physical attendance. The service reflects the Kingdom’s commitment to fostering a modern, business-friendly environment and strengthening investor confidence in line with Vision 2030 objectives.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

Arbitration Awards in Saudi Arabia play a vital role in resolving commercial disputes efficiently and fairly. With the Kingdom’s Vision 2030 driving economic openness and attracting global investors, arbitration has become an essential mechanism for international compatibility in business relations.

What Are Arbitration Awards in Saudi Arabia?

Arbitration awards are legally binding decisions rendered to resolve disputes between two or more parties, serving as an alternative to litigation before the courts. These awards may be issued under the arbitration rules of a foreign jurisdiction, conducted within the Kingdom, or through international arbitration governed by international agreements.

In Saudi Arabia, arbitration is regulated by the Arbitration Law, issued under Royal Decree No. M/34 dated 24/5/1433H – 14/04/2012 AD. This law grants the disputing parties broad autonomy to shape the arbitration process in line with the nature of their dispute. For instance, hearings are not required to be held in a fixed location, and the parties are free to agree on the language of arbitration, the procedures to be followed, and the applicable governing law—provided that such agreements do not contravene the principles of Islamic Sharia or public order in the Kingdom.

Saudi Arabia is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which facilitates the enforcement of arbitral awards issued in other signatory states.

What Are the Conditions for the Validity of Arbitration Awards?

There are several conditions that must be satisfied to ensure the validity of an arbitration agreement. These include:

• Written Form: The arbitration agreement must be in writing; otherwise, it is deemed void, in accordance with Article 9 of the Arbitration Law.
• Legal Capacity: All parties must have the legal capacity to dispose of their rights, either personally or through authorized representatives, as stipulated in Article 10 of the Arbitration Law.
• Mutual Consent: All disputing parties must mutually agree to resort to arbitration, without any form of coercion or undue pressure.
• Arbitrable Subject Matter: The subject of the dispute must be legally eligible for arbitration under Saudi law. It must not contravene public order and must fall within matters that are capable of settlement through conciliation or arbitration.

What Are the Steps for Conducting Arbitration Awards in Saudi Arabia?

Arbitration procedures in Saudi Arabia are governed by the Arbitration Law and its Implementing Regulations. The main steps can be summarized as follows:

• Agreement to Arbitrate: All parties to the dispute must consent to arbitration.
• Commencement of Proceedings: Arbitration begins on the date the respondent receives the arbitration request. In cases involving multiple parties, proceedings commence on the date the last party receives the request.
• Claimant’s Statement: The claimant must submit a written statement including all relevant information about the parties to the dispute and deliver it to the arbitral tribunal within the specified timeframe.
• Respondent’s Statement: The respondent must file a written response to the claimant’s statement, along with any supporting claims or documents, within the deadline set by the arbitral tribunal.
• Hearing Sessions: The arbitral tribunal may hold hearings to allow both parties to present their arguments and evidence. Alternatively, the tribunal may decide the case based solely on written submissions and documents without convening hearings.
• Record of Proceedings: The tribunal shall document all statements made during the hearings in an official record, which must be signed by the witnesses and the parties present.
• Issuance of Award: After completing the required steps, the arbitral tribunal issues its final award, which must be signed by all arbitrators.

Conclusion

In conclusion, we have examined the key aspects of arbitration awards in Saudi Arabia and provided detailed clarification on their significance and procedures.

If you have any questions or require assistance regarding arbitration awards, please do not hesitate to contact us at Mohammed Al-Khilwi Law Office. Our team will be pleased to support you in navigating and completing all legal procedures smoothly and efficiently.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

The Kingdom of Saudi Arabia’s openness to the world, as part of Vision 2030, has been a key driver in attracting foreign investors and global companies across various sectors. With this openness comes the necessity of a clear legal framework to regulate commercial and judicial relations between local and international parties.

In this article, we explore the enforcement of foreign judgments in Saudi Arabia, a critical issue for every businessperson, whether Saudi or foreign.

What Is The enforcement of foreign judgments in Saudi Arabia?

The enforcement of foreign judgments in Saudi Arabia refers to the process by which enforcement courts implement judicial decisions, court orders, arbitral awards, or notarized documents issued by foreign judicial or arbitral authorities, in accordance with the provisions of the Kingdom’s Enforcement Law.

Saudi Arabia is committed to the provisions of international treaties and agreements it has concluded with other countries regarding the enforcement of foreign judgments and judicial orders. In the absence of such treaties or agreements, the Kingdom applies the principle of reciprocity with the country where the judgment was issued.

What Is the Legal Basis for the Enforcement of Foreign Judgments in Saudi Arabia?

Given the importance and sensitivity of enforcing foreign judgments in Saudi Arabia—particularly in light of the Kingdom’s increasing openness to the world under Vision 2030, the expansion of commercial relations, and the attraction of foreign investors—the procedures, mechanisms, and requirements for enforcement have been regulated under the Enforcement Law issued by Royal Decree No. (M/53) dated 13/08/1433H- 03/07/2012, together with its Implementing Regulations. These provisions are summarized in Article Eleven of the Enforcement Law.

Article Eleven stipulates that enforcement must comply with the relevant treaties and agreements. Furthermore, an enforcement judge may not enforce any foreign judgment or order except based on the principle of reciprocity.

What Are the Conditions for Enforcing Foreign Judgments in Saudi Arabia?

Article 11 of the Enforcement Law sets out specific conditions for the enforcement of foreign judgments in Saudi Arabia. These conditions are as follows:

Reciprocity: The judgment must originate from a country that applies the principle of reciprocity, meaning that judgments issued by Saudi courts are likewise enforceable in that foreign country.  It should also be noted that Saudi Arabia is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which facilitates the enforcement of arbitral awards issued in other signatory states.

Competent Authority: For a foreign judgment or order to be recognized in Saudi Arabia, the case must fall outside the jurisdiction of Saudi courts, and the foreign court must have proper jurisdiction under its own international rules

Due Process: The party against whom enforcement is sought must have been duly notified and given the opportunity to appear before the court, ensuring their right of defense prior to issuance of the judgment.

Finality: The judgment must be final, enforceable, and not subject to further appeal in the country where it was issued.

No Conflict with Saudi Judgments: No final judgment on the same matter should have been issued by a Saudi court, in order to avoid conflicting judicial rulings.

Compliance with Sharia and Public Order: The judgment must not contravene Islamic law (Sharia) or conflict with public order and morals in Saudi Arabia.

What Are the Procedures for Enforcing Foreign Judgments in Saudi Arabia?

The enforcement of foreign judgments in Saudi Arabia is carried out through the following procedures:

Filing the Request: The plaintiff submits a petition to the competent Saudi court requesting the enforcement of the foreign judgment. The petition must be accompanied by all authenticated documents, including the original judgment and, where required, certified translations.

Verification of Conditions: The court verifies that the foreign judgment satisfies all the conditions for enforcement set out in Article 11 of the Enforcement Law.

Granting Enforcement: Once the court has reviewed the request and confirmed that all requirements have been met, it authorizes enforcement by affixing the official enforcement seal to the judgment. This seal renders the judgment an enforceable instrument within the Kingdom.

Execution of Enforcement: The plaintiff then proceeds with the execution procedures in the same manner as for any enforceable judgment issued by Saudi courts.

What Are the Obstacles to the Enforcement of Foreign Judgments in Saudi Arabia?

The enforcement of foreign judgments in Saudi Arabia may be denied if the conditions for enforcement are not met. The main obstacles include:

Conflict with Sharia and Public Order: The judgment contradicts Islamic Sharia principles or Saudi public order and morals.

Lack of Finality: The judgment is not final, enforceable, or remains subject to appeal in the issuing country.

Jurisdictional Deficiency: The foreign court that issued the judgment lacked proper jurisdiction under the rules of judicial jurisdiction recognized in the Kingdom.

Absence of Due Process: The defendant (individual or entity) against whom the judgment was issued was not duly notified of the proceedings and was denied the opportunity to appear before the foreign court.

No Reciprocity: The principle of reciprocity is not established between Saudi Arabia and the foreign country from which the judgment originated.

Conclusion

The enforcement of foreign judgments in Saudi Arabia plays a vital role in protecting rights and strengthening international business relations. By applying the Enforcement Law, respecting treaties, and upholding the principle of reciprocity, the Kingdom ensures a transparent and reliable framework for cross-border dispute resolution.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

Executive Summary

In line with Vision 2030, Saudi Arabia has undergone transformative legal reforms aimed at boosting private sector participation and enhancing investor confidence. Over the past five years, the Kingdom has introduced several new laws—and significantly updated existing ones—to foster a more transparent, efficient, and investor-friendly legal environment.

These changes are significant given that Saudi courts historically relied heavily on Sharia principles. While comprehensive, such reliance often led to uncertainty in interpretation, making it challenging for investors and legal advisors to predict outcomes in transactions and disputes. Today, codifying laws across civil, commercial, and procedural domains marks a turning point that modernizes the business landscape while remaining faithful to Sharia foundations.

This article highlights five significant legal developments that every investor—Saudi or foreign—should be aware of, as they directly impact day-to-day business operations, governance, contractual negotiations, dispute resolution, and workforce management.

1. Civil Transactions Law (Issued: 29/11/1444H – 18/06/2023)

This landmark legislation codifies foundational rules of civil and commercial obligations. With over 700 provisions, it introduces clarity and predictability into contract enforcement, legal rights, and obligations.

Investor Takeaways:

• Codifies how contracts are formed, including verbal agreements.
• Clarifies statutes of limitations and time-barred actions.
• Provides legal grounds for contract rescission, invalidation, and compensation.
• Supports informed decision-making by in-house counsel and stakeholders.

The law aligns with international norms while preserving the essence of Sharia. For investors, it mitigates legal ambiguity and supports more secure commercial dealings.

2. Law of Evidence (Issued: 26/05/1443H – 30/12/2021)

The new Law of Evidence introduces a unified evidentiary framework for civil and commercial litigation.

Key Enhancements:

• Recognition of digital and electronic evidence.
• Standardization of evidentiary procedures.
• Flexibility for parties to agree on evidentiary rules in contracts.
• Guidance on confession, witness testimony, presumptions, and expert opinion.

This law is vital in both the pre-contractual stage and during dispute resolution. Understanding evidentiary burdens and procedural deadlines can significantly reduce litigation risk and strengthen legal positioning.

3. Arbitration Law (Issued: 24/05/1433- 16/04/2012 - Updated: 26/01/1447H- 02/07/2025)

Saudi Arabia continues to modernize its dispute resolution mechanisms to align with global standards.

Investor Benefits:

• Freedom to choose applicable law and dispute resolution forum.
• Flexibility in appointing arbitrators or mediators, including non-Saudis.
• Increased enforceability of local and international arbitral awards.

These reforms provide faster, confidential, and more commercially sensitive dispute resolution pathways—making Saudi Arabia a more appealing jurisdiction for cross-border investors.

4. Companies Law (Issued: 01/12/1443H – 30/06/2022)

The new Companies Law enhances governance frameworks for all business entities, from LLCs to JSCs.

Key Legal Highlights:

• Defines roles and powers of shareholders, managers, and boards.
• Clarifies profit distribution, restructuring, and liability management.
• Requires proper authority to take action to avoid invalidity of contracts.
• Stresses the importance of authorizations (e.g., PoAs and AoA clauses) in corporate disputes.

For investors and executives, knowledge of this law is essential for corporate structuring, protecting shareholder rights, and avoiding unintended personal liability.

5. Labour Law (Issued: 23/08/1426H – 27/09/2005 -Updated: 08/02/1444H – 28/02/2023)

Labour Law reforms continue to play a central role in Saudi Arabia’s goal to build a sustainable private sector.

Investor Relevance:

• Protects employee rights (timely pay, end-of-service benefits, etc.).
• Supports employer interests in confidentiality, non-compete clauses, and data privacy.
• Clarifies contractual obligations and employer liabilities.

Understanding the balance this law strikes between protecting employees and enabling employer efficiency is crucial to building a compliant and competitive workforce.

Saudi Arabia's legal reforms reflect a broader strategy to attract sustainable, high-value investment while supporting transparency, dispute predictability, and governance excellence. From contract formation to company management and dispute resolution, these laws empower investors to engage in the Saudi market with greater confidence and clarity.

For Investors, Legal Consultants, and Decision-Makers:

• Stay proactive in learning these laws.
• Incorporate legal awareness into operational and strategic planning.
• Consult with legal advisors early in your investment lifecycle to minimize exposure and maximize opportunities.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

Saudi Arabia has rapidly become one of the most attractive destinations for global investors, thanks to its ambitious Vision 2030 reforms. While the Kingdom offers numerous opportunities across key sectors, understanding its business culture and regulations is essential for building successful partnerships and navigating the local market effectively.

Saudi Arabia business culture

1. Building Relationships First

In Saudi Arabia, business is built on trust and strong personal relationships. Investors should be prepared to spend time cultivating connections before moving into formal negotiations. A strong network often plays a decisive role in securing deals.

2. Respect for Hierarchy and Authority

Decision-making in Saudi companies is often centralized, with final approval resting in the hands of senior executives or owners. Patience is key, as important decisions may take longer due to hierarchical structures.

3. Communication Style

In Saudi Arabia business culture; Professional communication is formal yet warm. Business meetings usually begin with polite conversations before moving to business topics. It is also common to engage in face-to-face meetings rather than relying solely on email or phone calls.

Business Regulations in Saudi Arabia

1. Investment Regulations

The Saudi Ministry of Investment (MISA) oversees foreign investment. Reforms have removed many restrictions, now allowing 100% foreign ownership in most sectors, subject to licensing requirements.

2. Labor and Employment Laws

The Saudi Labor Law governs employer–employee relationships. It defines working hours, contracts, employee rights, and termination procedures. Employers must also comply with Saudization policies, which aim to increase the employment of Saudi nationals.

3. Taxation and Financial Regulations

Saudi Arabia does not impose income tax on individuals but applies corporate taxes and Zakat on businesses. The Saudi Central Bank (SAMA) regulates financial services, ensuring transparency and stability in banking, insurance, and fintech activities.

4. Licensing and Compliance

Companies must register with the Ministry of Commerce and obtain the necessary licenses to operate legally. Certain sectors, such as mining, healthcare, and media, may require additional approvals from specialized authorities.

5. Intellectual Property Protection

The Kingdom has strengthened its intellectual property laws, protecting trademarks, copyrights, and patents to encourage innovation and safeguard foreign companies’ rights.

Conclusion

Understanding Saudi Arabia business culture and regulations is vital for any foreign investor aiming to succeed in the Kingdom. Respect for relationships, awareness of local customs, and compliance with regulatory frameworks form the foundation of successful ventures. With ongoing reforms under Vision 2030, Saudi Arabia is not only opening its doors wider to foreign investors but also ensuring a transparent, reliable, and globally competitive business environment.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

As part of Vision 2030, the Kingdom of Saudi Arabia aims to diversify its economy and attract foreign investment by opening a broad range of vital sectors. The government has removed many of the previous restrictions and now allows foreign investors to enjoy 100% ownership in most business activities. Below is an overview of the key sectors available and the unique advantages each one offers:

.1The Information and Communications Technology (ICT) sector

It's among the fastest-growing industries in the Kingdom, driven by digital transformation initiatives and advancements in cybersecurity, cloud computing, and artificial intelligence. Investing in this sector offers access to a rapidly expanding market with rising demand for innovative technology solutions, particularly fueled by large-scale smart city projects such as NEOM.

2. The Energy Sector (Including Renewables)

The energy sector in Saudi Arabia extends far beyond traditional oil and gas. It encompasses renewable sources such as solar power, wind energy, and green hydrogen. As part of Vision 2030, the Kingdom aims to generate 50% of its electricity from renewable energy by 2030, unlocking significant opportunities for international companies to participate in large-scale infrastructure and clean energy projects.

3. The Industrial and Manufacturing Sector

The industrial and manufacturing sector serves as the backbone of the Kingdom’s economic development. It covers a wide range of industries, including automotive, electronics, machinery, and consumer goods. To accelerate growth, the government provides financial incentives, supportive policies, and modern infrastructure, with a clear vision to position Saudi Arabia as a leading regional hub for manufacturing and exports.

4. Mining and Metals Sector
Saudi Arabia possesses vast, largely untapped mineral resources estimated to be worth trillions of dollars. Key investment opportunities span gold, copper, phosphates, and aluminum. To unlock this potential, the Kingdom has introduced an ambitious strategy that provides foreign companies with new exploration and production licenses, paving the way for long-term growth in this critical sector.

5. Agriculture and Food Processing Sector
Agriculture and food processing are central to achieving the Kingdom’s food security goals. Investment prospects include smart agriculture, advanced irrigation technologies, food processing, and packaging solutions. This sector benefits from strong domestic demand, coupled with Saudi Arabia’s drive to enhance its food exports and establish itself as a reliable supplier in regional and global markets.

6. Transportation and Logistics Sector
Owing to its unique geographical position at the crossroads of Asia, Europe, and Africa, Saudi Arabia is developing into a global logistics hub. Investment opportunities cover ports, airports, smart warehouses, and last-mile delivery services. The sector is reinforced by bold national initiatives, such as the Global Supply Chain Resilience Initiative, which aims to strengthen connectivity and trade flows worldwide.

7. Healthcare and Life Sciences Sector
The healthcare and life sciences sector are undergoing rapid expansion, driven by population growth and an increasing focus on quality of life. Opportunities exist in hospital management, telemedicine, medical devices, biotechnology, and pharmaceutical manufacturing. With the government’s ongoing efforts to privatize a significant portion of healthcare services, the sector is becoming increasingly attractive to foreign investors seeking long-term partnerships.

8. Real Estate and Construction Sector
Saudi Arabia’s real estate market is among the most dynamic in the region, spanning residential, commercial, and mixed-use developments. Foreign investors can also participate in landmark mega-projects such as New Riyadh and NEOM. With the introduction of new regulations in 2025 permitting foreign ownership of real estate in designated areas, the sector now offers broader foreign investment in Saudi Arabia.

9. Financial Services and Insurance Sector
The Kingdom allows full foreign ownership in banks, insurance providers, and fintech firms, under the supervision of the Saudi Central Bank (SAMA). The sector is undergoing rapid expansion, particularly in financial technology and digital banking services, creating a wealth of opportunities for global investors.

10. Education and Training Sector
Education and training are regarded as priority areas within Vision 2030. Opportunities include private schools, international universities, and vocational training centers. With Saudi Arabia’s strong commitment to developing human capital, this sector provides fertile ground for international education providers and investors.

11. Media Sector
Open to foreign investment since 2018, this sector covers content production, broadcasting, digital entertainment platforms, and advertising. It plays a central role in the Kingdom’s ambition to foster a vibrant creative economy and expand its entertainment industry.

14. Chemicals Sector
Spanning plastics, fertilizers, and industrial chemicals, this sector represents a strategic opportunity supported by the Kingdom’s abundant natural resources and robust petrochemical infrastructure. It offers investors a strong platform for industrial growth and global exports.

15. Environmental Services Sector
This sector focuses on recycling, waste management, and waste-to-energy conversion. Saudi Arabia is actively building a circular economy that reduces dependency on natural resources, while promoting sustainability projects that open the door to new and impactful investment opportunities.

Conclusion
Saudi Arabia is unlocking unprecedented opportunities for foreign investment in Saudi Arabia across a wide range of sectors. By easing regulations, granting full ownership rights, and supporting innovation-driven projects, the Kingdom is positioning itself as an ideal destination for long-term investment. These reforms reflect a clear and ambitious vision: the transformation into a diversified, sustainable, and globally competitive economy powered by international partnerships.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

The Kingdom of Saudi Arabia has become one of the leading investment destinations in the Middle East, driven by the economic and legislative reforms included in Saudi Vision 2030. The government has opened the way for foreign investors to easily establish their companies, granting them 100% ownership in many sectors and providing significant facilitations related to procedures and taxes.

If you are considering starting a business in Saudi Arabia, this article will guide you through the essential steps and requirements you need to know about how establish a Company in Saudi Arabia.

The Legal Framework for Foreign Investors' Business Establishment

The process of establishing companies in Saudi Arabia for foreign investors is subject to the supervision of the Saudi Ministry of Investment (MISA), which is responsible for granting licenses and monitoring investor obligations. Launching the new Investment Law is one of the most significant reforms recently enacted by the Kingdom, opening up broader horizons for international investors and facilitating their entry into the Saudi market.

Among the most important changes brought about by the new law are:

• Abolishing the Local Partner Requirement in Most Sectors

Previously, establishing a Company in Saudi Arabia required a Saudi partner to own a percentage of the capital, which was an obstacle for foreign investors who wished to maintain full control over their project. However, with recent reforms, foreign investors are now allowed 100% ownership in most economic sectors, without the need for a local partner.

This landmark change has unlocked wider opportunities for foreign investment. It gave investors the freedom to manage their businesses according to their own strategies while maintaining their administrative and financial independence.

• Equality between Foreign and Local Investors

The new investment law reinforces the principle of fairness and equality for all investors, whether Saudi or foreign. There is no longer discrimination in treatment in terms of laws, privileges, or obligations.

This means that foreign investors enjoy the same rights to own property, conclude contracts, participate in government tenders, and obtain licenses as their Saudi counterparts. In return, they are also bound by the same obligations, such as paying taxes and fees and employing Saudis according to the specified Saudization ratios.

• Free Repatriation of Profits and Assets

One of the challenges facing foreign investors was the restrictions imposed on the repatriation of profits or capital outside the country. However, Saudi Arabia has removed these obstacles, allowing foreign investors to repatriate their profits and financial assets freely and without any complex restrictions.

This step is very important because it reassures investors that their investment is secure and that they can repatriate capital or distribute profits to their partners at any time. This reflects the Kingdom's commitment to creating an attractive investment environment based on flexibility and full respect for property rights.

• Simplifying Regulatory Restrictions for Foreign Investors

Previously, bureaucratic procedures were one of the most significant challenges hindering investors' entry into the Saudi market. The process of obtaining licenses involved multiple entities and lengthy and complex steps. However, recent reforms have brought about a radical shift, simplifying requirements and transforming most of them into easy and quick electronic registration procedures via unified government platforms such as the Ministry of Investment's (MISA) platform.

As a result, the time required to establish a company has been dramatically reduced—from several months to just a few days, reflecting the Kingdom's commitment to reducing bureaucracy and encouraging foreign investment.

Types of Legal Companies Permitted for Foreign Investors

Foreign investors in Saudi Arabia may select the legal structure that best aligns with their business objectives:

Limited Liability Company (LLC): The most common structure, favored for its flexibility, straightforward establishment process, and limited liability protection for shareholders.

Single Shareholder Company (SSC / One-Person Company): A special form of LLC owned by a single shareholder, offering the same limited liability protection while allowing individuals or corporate bodies to establish a company independently.

Joint Stock Company (JSC): Suitable for large-scale ventures, especially those planning to raise capital through a public offering and list shares on the stock exchange in the future.

Simplified Joint Stock Company (SJSC): A modern and flexible corporate form introduced to attract investors and entrepreneurs. It allows great freedom in drafting the Articles of Association, no minimum capital requirement (unless otherwise specified by regulators), and simplified governance compared to traditional JSCs. It is particularly suitable for startups, venture capital investments, and joint ventures where flexibility and speed of decision-making are essential.

Branch of a foreign company: Enables an existing international company to conduct business in Saudi Arabia under the name and legal identity of its parent company.

Representative Office: Limited to non-commercial functions such as marketing, research, and promotional activities, without the ability to generate direct revenue.

Steps to Establish a Company in Saudi Arabia

1. Obtain an Investment License/ Approval from MISA

Submit an application through the Ministry of Investment's (MISA) platform.

Specify the intended business activity (making sure it is permitted for foreigners).

Pay the required fees and obtain the official approval or investment license.

2. Register the company with the Ministry of Commerce.

Select and reserve a trade name electronically.

Prepare and notarize the articles of association.

Issue the Commercial Registration (CR) certificate

3. Register with Relevant Government Agencies

Zakat and Taxes: Register with the Zakat, Tax, and Customs Authority.

Social Insurance: Enroll employees in the social security system.

Municipality: Obtain the municipal license for the company’s physical headquarters.

4. Open a Commercial Bank Account

Establish a corporate bank account with a Saudi bank in the company’s name.

Basic Requirements for Foreign Investors:

A valid passport.

A clear business plan demonstrating the project's feasibility.

Proof of financial solvency (depending on the type of activity).

A physical headquarters for the company within the Kingdom.

Conclusion

Establishing a company in Saudi Arabia for foreign investors is no longer as complicated as it was. Today, the process is streamlined, transparent, and highly flexible, thanks to comprehensive legislative reforms and the adoption of digital platforms.

With the government’s ongoing support for international projects and its commitment to economic diversification under Vision 2030, the Kingdom offers one of the most attractive investment environments in the region.

If you are a foreign investor looking to launch your business in Saudi Arabia, the opportunities are wide open. At Mohammed Al-Khliwi’s Law Firm Office, we handle every step of the company formation process on your behalf—allowing you to focus on growing your business while we take care of the legal and administrative details.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.

The Saudi Labor Law is one of the key laws that organizes the relationship between employers and workers, whether Saudis or foreigners. It clearly defines the rights and duties of both parties, ensuring fairness and balance in the workplace. This helps maintain a stable labor market in Saudi Arabia and makes it more attractive to investors from around the world.

Objectives of The Saudi Labor Law

1. Regulating the Relationship Between Workers and Employers
This objective forms the cornerstone of The Saudi Labor Law, as it establishes a clear legal framework governing the relationship between workers and employers through a written employment contract. Such a contract specifies all essential aspects of employment, including the nature of the work, working hours, agreed wage and payment schedule, and the duration and conditions of the contract.
By setting these standards, the Law minimizes disputes and exploitation, ensuring that both parties are fully aware of their rights and obligations in advance. In case of conflict, reference is made to the contract or to the Labor Law for resolution.

2. Ensuring a Safe and Fair Work Environment
The Law guarantees the protection of workers’ rights, shielding them from injustice or exploitation. It affirms entitlements such as the right to receive wages on time and the right to work in a safe environment that complies with occupational health and safety standards.
Employers are required to provide preventive measures, training, and protective tools to reduce workplace accidents and injuries. These provisions enhance workers’ confidence and foster a sense of job security.

3. Improving the Efficiency of the Saudi Labor Market
By defining clear rights and responsibilities for both parties, The Saudi Labor Law ensures the smooth functioning of the labor market. Workers are aware of their duties, while employers are bound not to impose obligations beyond what has been contractually agreed.
This clarity enhances discipline and productivity, raising the overall efficiency and competitiveness of the Saudi labor market.

4. Promoting Justice and Transparency
The Law emphasizes fairness and transparency in recruitment and employment practices, prohibiting any form of discrimination based on gender, nationality, or religion. By creating trust between employers and workers, it establishes a more stable workplace environment and encourages foreign talent to contribute to the Saudi economy.

5. Aligning with Saudi Vision 2030
The Saudi Labor Law is dynamic and continuously updated in line with the objectives of Saudi Vision 2030. These reforms aim to increase Saudization by expanding the participation of Saudi citizens in the workforce, while also encouraging greater inclusion of women in various sectors.
Additionally, the Law embraces modern work models such as flexible work arrangements and remote work, making the Saudi labor market more adaptive, competitive, and attractive to foreign investment.

Foreign Labor in Saudi Arabia

The Saudi Labor Law also governs foreign labor, which constitutes a significant portion of the national workforce. Key sectors such as construction, hospitality, healthcare, and domestic services rely heavily on expatriate workers.

This strong dependence on foreign labor has positioned labor laws and employment policies as a central component of the Kingdom’s efforts to restructure the labor market, reduce unemployment among Saudi nationals, and, at the same time, preserve the vital role of expatriate workers as a driving force supporting the national economy.Top of Form

Laws on the Rights of Foreign Workers

The Saudi government has enacted comprehensive regulations to govern the relationship between employers and expatriate workers, aiming to protect the rights of both parties and ensure a fair, balanced, and transparent work environment.

To address common challenges faced by foreign workers—such as unfair dismissal, wage disparities between nationals and expatriates, difficult working conditions in certain sectors, and legal issues arising from the failure to renew residency or employment contracts—the Kingdom has established a robust legal framework.

At the heart of this framework lies the unified employment contract, which clearly defines the rights and obligations of both employers and workers. This contract serves as a reference point in resolving disputes and enforcing compliance with labor laws. Among the most prominent regulations are:

1. Abolishing the Kafala System

The Kafala system previously required foreign workers to remain tied to a single employer (the sponsor) and allowed them to change jobs only with the employer’s consent. Saudi Arabia launched the Labor Reform Initiative to improve contractual relations, effectively abolishing many of the restrictions imposed by the Kafala system.

Under this reform, expatriate workers gained greater freedom to:

- Change employers during or after the contract period, in accordance with specific regulations.

- Exit the Kingdom permanently upon contract termination.

2. Employment Contracts and Rights

Employment contracts are drafted to safeguard the rights of foreign workers, whether the contract is fixed-term or indefinite. Both parties must retain a copy of the agreement, which should include details such as wages, working hours, vacation entitlements, and end-of-service benefits.

3. Settling Labor Disputes

To ensure justice and protect workers’ rights, Saudi Arabia has established specialized labor courts and dispute resolution bodies. These entities address conflicts between workers and employers, including those related to wages, vacation entitlements, or cases of unfair dismissal.

These reforms are designed to strengthen the Saudi labor market, create a more competitive environment among employers, and provide better protection for expatriate workers. The labor system in Saudi Arabia is not limited to protecting nationals but also extends to foreign workers. It goes beyond safeguarding individual rights to reform the labor market as a whole—reinforcing the Kingdom’s position as a leading global investment destination that supports both economic and social development.

How We Can Help?

Whether you are a Saudi national or a foreign worker, an individual or a company, if you are facing challenges or disputes in the workplace, we are here to support you. At Mohammed Al-Khliwi Law Firm, we dedicate our full attention to resolving your issues in the most effective and timely manner.

Contact us and let us handle your legal concerns.

Disclaimer: This content is not legal advice. No liability is assumed. For legal consultation, please contact us.