New Saudi government tenders and procurement law takes effect

Saudi Arabia’s new government tenders and procurement law has come into force from early December.

The law grants the contracting government authorities the right to recourse to arbitration to settle their commercial disputes after obtaining the minister of Finance’s approval to include an arbitration clause in the contract.

Previously, an agreement to arbitrate government contract disputes could only be entered into with approval of the council of ministers.

Overall, the law aims to regulate procedures of tenders and procurements carried out by the government authorities to ensure they are not influenced by personal interest and result in achieving maximum degree of economic efficiency, experts say.

Read: Understanding Saudi’s new tenders and procurement law: What are the main changes?

“The new law, along with its implementing regulations, is a new chapter for the arbitration industry in its relationship with government institutions and state-owned companies in the kingdom,” said Yassin bin Khaled Khayat, chairman of the Saudi Centre for Commercial Arbitration (SCCA).

“The law grants them the right to include the arbitration clause in contracts, including their major development projects, to settle the commercial disputes that may arise therein with no need to obtain an exception from the Council of Ministers (as previously required).

“The kingdom is becoming an increasingly attractive environment for business and investment – particularly in the context of the continuous modernisation of its legislative framework supporting business growth – further supporting the national development plans and achieving the goals of Vision 2030,” he added.

SCCA CEO Hamed bin Hassan Merah confirmed that the centre provides arbitration and mediation services in more than 15 specialised technical areas.

“Arbitration is conducted in a manner guaranteeing the rights of and achieving the objectives sought by parties to the contract in light of the SCCA’s knowledge, experience and practical competency,” he added.