A long-term construction contract between a Gulf-based developer and a European contractor falls apart mid-project. Supply chain disruptions, a sudden regulatory shift, and soaring material costs have made performance economically catastrophic. The contractor invokes force majeure. The developer refuses to accept it. Both parties face a Saudi court – and neither fully understands how Saudi law will characterise the dispute.
Force majeure and hardship in Saudi Arabia operate within a distinctive legal regime rooted in Islamic jurisprudence (fiqh) and supplemented by modern commercial legislation. Saudi courts recognise the concept of supervening impossibility – where performance becomes objectively impossible – but apply hardship relief far more restrictively than many civil law jurisdictions. The gap between what international clients expect and what Saudi courts will grant is wide, and closing it requires early, precise contractual drafting combined with a sound understanding of local judicial practice.
This analysis examines the doctrinal foundations of force majeure and hardship in Saudi Arabia, maps competing interpretations in Saudi judicial practice, identifies the critical divergence between statutory text and courtroom reality. Explores cross-border implications for Asia-Pacific and Middle Eastern clients. Additionally, sets out strategic recommendations for businesses operating in or transacting with the Kingdom.
Doctrinal foundations: Islamic law, civil principles, and the regulatory gap
Saudi Arabia does not have a codified civil code in the Western sense. Its contract law draws primarily from Shariah (Islamic law) as interpreted through classical fiqh doctrine, complemented by royal decrees and sector-specific commercial legislation. This doctrinal structure shapes how force majeure and hardship are analysed – and it differs significantly from the frameworks familiar to most international practitioners.
Under Shariah-based contract principles, the doctrine of quwwa qahira (overwhelming force) recognises that a party may be relieved of obligations when performance is rendered objectively impossible by circumstances entirely outside its control. The conditions are demanding. The event must be unforeseeable at the time of contracting, unavoidable, irresistible, and must not have been caused by the claiming party's conduct. All four conditions must be satisfied concurrently. Meeting only two or three is insufficient.
Hardship – where performance remains physically possible but has become economically ruinous due to changed circumstances – is a separate and more contested doctrine. Classical fiqh includes the principle of la darar wa la dirar (no harm shall be inflicted or reciprocated), which some scholars use to support adjustment of onerous contractual obligations. However, Saudi courts have historically been reluctant to apply this principle in a way that redistributes commercial risk between sophisticated parties.
Modern Saudi commercial legislation adds another layer. The Nizam al-Tijari (Commercial Court Law) and related procedural rules govern how commercial disputes are litigated before the Saudi commercial courts. Under civil procedure rules applicable to commercial matters, parties asserting force majeure or hardship bear the full burden of proof. This includes demonstrating the nature of the disruptive event, its direct causal link to the contractual failure, and the absence of any contributory conduct on the part of the claimant. Evidentiary standards are strict.
One non-obvious feature of Saudi doctrine is the treatment of economic hardship caused by state action. Where a regulatory change – such as a new localisation requirement, a revised licensing regime. Alternatively. A sector-wide fee restructuring – materially increases the cost of performance, Saudi courts have at times treated this differently from pure market disruption. State-induced hardship may engage principles of administrative law alongside contractual doctrine, creating a hybrid analytical path that many international clients fail to anticipate.
Government contracts in Saudi Arabia merit separate attention. Contracts with Saudi public entities are subject to the Nizam al-Munaqqasat al-Hukumiya (Government Tenders and Procurement Law), which contains specific provisions on contractor relief for unforeseen circumstances. These provisions operate within a distinct regulatory regime and are administered through government dispute resolution mechanisms rather than through the general commercial courts. A practitioner confusing the two regimes risks filing in the wrong forum entirely – a mistake that compounds delay and cost.
Competing court interpretations and the statute-to-practice gap
Saudi judicial practice on force majeure and hardship is neither uniform nor fully predictable. The Mahkama al-Tijariya (Commercial Court) and its appellate structures have produced a body of decisions that reflect genuine doctrinal tension. Understanding these competing lines of reasoning is essential for anyone structuring a force majeure claim or defence in the Kingdom.
The dominant judicial approach treats force majeure as an absolute defence – but only when the event renders performance completely and permanently impossible. Courts applying this strict standard have repeatedly rejected claims where the disrupting event increased costs substantially or delayed performance significantly without making it categorically impossible. In these decisions, the courts treat rising prices, currency depreciation, and supply chain delays as foreseeable commercial risks that sophisticated contracting parties should have allocated through their agreement.
A secondary line of reasoning – found more often in decisions involving infrastructure and energy projects – takes a somewhat more flexible view. These decisions acknowledge that extreme and prolonged disruption may, in combination, cross a threshold of effective impossibility even where technical performance is still conceivable. This approach borrows implicitly from the hardship concept and applies a proportionality analysis: was the contractor's position so materially altered that holding it to the original terms would amount to an unjust enrichment of the counterparty?
The divergence between these two approaches creates a real strategic problem. A party filing a statement of claim based on hardship, expecting a proportionality analysis from the court, may instead encounter a judge applying the strict impossibility standard. The claim then fails entirely, rather than succeeding partially. Anticipating which approach a particular Commercial Court division will apply requires local counsel with current, granular knowledge of the relevant panel's jurisprudential tendencies.
The gap between the written legislative regime and courtroom practice is widest on three specific issues. First, on the foreseeability requirement: courts have generally held that any event occurring in a sector where disruption is historically common – construction, energy, logistics – is presumptively foreseeable. This presumption is difficult to rebut and catches many international claimants off-guard. Second, on causation: courts apply a close nexus test. If a party can identify any step it could have taken to mitigate the impact of the force majeure event, failure to take that step may defeat the claim entirely. Third, on the duty to notify: where a contract contains a force majeure notification clause and the party failed to give timely notice, Saudi courts have shown little sympathy for post-hoc justifications. Missed notice deadlines are frequently fatal to the claim.
The Mahkama al-Tamyiz (Court of Cassation) – Saudi Arabia's highest judicial authority in commercial matters – has reinforced the strict approach in the majority of reviewed decisions. Its consistent message is that commercial parties are expected to manage contractual risk through their agreements, and that judicial intervention to relieve a party of contractual obligations is reserved for genuinely exceptional circumstances. This conservative posture shapes the entire landscape of force majeure litigation in the Kingdom.
For businesses engaged in corporate disputes in Saudi Arabia, understanding this judicial conservatism is the starting point for any realistic assessment of claim viability.
Practical implications for international contracts and pre-litigation strategy
The practical consequences of Saudi Arabia's restrictive approach flow through every stage of a disrupted contract – from the first signs of difficulty through to enforcement of any judgment obtained. Businesses that have not built force majeure and hardship protections into the contract itself are at a significant disadvantage once a dispute arises.
Contract drafting is the first and most important line of defence. A well-constructed force majeure clause for a Saudi-law-governed contract should go beyond the standard boilerplate used in English-law agreements. It should define the qualifying events with precision, set out the causal standard required, specify the notice period and form, identify the consequences of a qualifying event (suspension. Termination. Alternatively, price adjustment). Additionally, address what happens if the event persists beyond a defined period. Where the contract involves a public entity, the clause should be cross-referenced against the applicable procurement legislation.
A hardship clause – sometimes called a clause de hardship or material adverse change provision – is worth including separately. Such a clause can contractually create a renegotiation obligation when performance conditions change dramatically. Saudi courts will generally enforce a contractually agreed hardship mechanism more readily than they will impose one in its absence. Parties that omit this provision and then invoke hardship before a Saudi court are essentially asking the court to rewrite their contract. Courts rarely oblige.
When disruption occurs, the immediate practical priority is documentation. From the moment a potential force majeure event materialises, the affected party should begin generating a contemporaneous record: correspondence with suppliers, regulatory authorities. Additionally. The counterparty. evidence of the disruptive event and its direct operational impact. records of mitigation steps taken. and financial analysis demonstrating the extent of the impact. Saudi courts place significant weight on documentary evidence filed with the statement of claim. A well-documented file – assembled in real time, not reconstructed after the fact – materially strengthens the evidentiary position.
Interim injunctions (known in Saudi procedural practice as awamer waqfiya or precautionary orders) are available through the commercial courts. They can be used to prevent a counterparty from drawing down a performance bond, terminating a contract, or disposing of assets pending resolution of the main dispute. However, the threshold for obtaining interim relief is demanding. The applicant must demonstrate urgency, a prima facie case on the merits, and the risk of irreparable harm if relief is denied. Courts apply these criteria carefully, and poorly prepared applications are routinely refused. Engaging experienced local counsel before making any application is essential.
Court filing in Saudi Arabia requires precise adherence to procedural requirements. Filings must be in Arabic, and the statement of claim must set out the legal and factual basis with sufficient specificity to put the respondent on full notice. International parties often underestimate the volume of certified translations required and the authentication steps necessary for foreign documents. Delays in meeting these procedural requirements can result in the claim being returned or the hearing being postponed, compounding commercial uncertainty for the affected business.
To receive an expert assessment of your force majeure position under Saudi law, contact us at info@ferrazwhitmore.com.
Cross-border implications for Asia-Pacific and Middle Eastern clients
For businesses operating across Asia-Pacific and Middle Eastern markets, Saudi force majeure and hardship issues rarely arise in isolation. They intersect with choice-of-law provisions, international arbitration clauses, cross-border enforcement questions, and the regulatory conditions of multiple jurisdictions simultaneously.
Choice of law is the threshold question. Many international contracts with Saudi counterparties are structured under English law or the laws of a neutral third jurisdiction, with an arbitration clause specifying ICC, LCIA, or SIAC as the dispute resolution mechanism. Where this structure is in place, the force majeure analysis will follow the governing law of the contract, not Saudi domestic law. An English-law force majeure clause is interpreted under English contract law principles. which, while also demanding. Differ from Saudi doctrine in several important respects. This includes the treatment of economic hardship and the role of implied terms.
However, even where the contract is governed by English law, Saudi-law considerations re-enter the analysis at the enforcement stage. A foreign arbitral award or court judgment must be recognised and enforced in Saudi Arabia through a process of tanfidh (enforcement) before the Saudi enforcement courts. The Kingdom is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Additionally. The Hay'a al-Istithmar (Saudi Investment Authority) and associated regulatory bodies have progressively modernised the enforcement environment. Nevertheless, enforcement proceedings require dedicated effort. A party that obtains a favourable arbitral award still needs competent local counsel to drive the judgment enforcement process through the Saudi courts.
For clients based in Japan, Singapore, South Korea, and India with significant Saudi exposures. whether in energy, construction, technology, or professional services – the force majeure risk calculus has become more acute in recent years. Vision 2030's transformational investment programme has generated an unprecedented volume of commercial activity. With that activity comes contract complexity, performance pressure, and – when conditions change – an increasing number of force majeure and hardship disputes. Clients in these markets benefit from advisers who understand both the Saudi legal environment and the commercial structures common in Asian investment into the Gulf.
For a detailed comparative analysis of force majeure doctrine across the Gulf region, including the UAE's approach to similar disputes, see our deep analysis on force majeure and hardship in the UAE.
The interaction between Saudi law and the laws of civil law jurisdictions – particularly those in continental Europe and East Asia – raises additional complexity when contracts span both systems. Civil law jurisdictions typically have codified hardship doctrines (the French concept of imprévision, for example, or analogous provisions under Japanese contract law). A party accustomed to the relatively more flexible hardship relief available under French or Japanese law will find the Saudi approach considerably more restrictive. Cross-border deals should be stress-tested against the most conservative applicable regime – which, in most Gulf transactions, will be Saudi law if performance occurs there.
The litigation and arbitration practice in Saudi Arabia is evolving rapidly. The establishment of the Riyadh International Disputes Resolution Centre and the expansion of the Saudi Center for Commercial Arbitration reflect a deliberate policy effort to bring Saudi dispute resolution into alignment with international standards. These institutions are beginning to develop their own body of practice on force majeure and hardship. Additionally. Their decisions. while not yet forming a settled body of precedent. are worth monitoring for clients with recurring Saudi exposures.
Strategic recommendations and outlook
The strategic implications of Saudi Arabia's approach to force majeure and hardship are clear. Businesses that wait for disruption to occur before engaging with these doctrines will find themselves at a structural disadvantage. Those that build appropriate protections into their contracts, maintain rigorous operational documentation, and retain experienced local counsel from the outset are materially better positioned.
The following considerations apply to any business with significant Saudi contractual exposure.
On contract architecture: treat force majeure and hardship as separate provisions. The former addresses objective impossibility; the latter addresses economic catastrophe short of impossibility. Both need careful definition. Where the contract is with a Saudi public entity. Verify that the applicable procurement legislation does not contain mandatory provisions that override or restrict the contractual mechanism. such mandatory provisions are not uncommon and can neutralise even carefully drafted clauses.
On dispute avoidance: build structured escalation mechanisms into long-term agreements. A tiered dispute resolution clause – requiring senior management consultation, then mediation, then arbitration – creates multiple checkpoints at which a commercial resolution may be reached before parties become entrenched in litigation. Saudi counterparties often respond positively to structured dialogue, particularly where preserving the commercial relationship has ongoing value.
On litigation preparedness: if force majeure events materialise, act immediately. Notify the counterparty in the form and within the timeline specified by the contract. Begin the documentation process. Assess whether interim relief is warranted. Engage Saudi-qualified counsel to review the evidentiary position. These steps – taken within days of the triggering event, not weeks or months later – determine whether a claim remains viable.
On the regulatory outlook: Saudi Arabia's Vision 2030 programme is driving sustained legislative modernisation. The commercial courts have been restructured and professionalised. New procedural rules have been introduced to reduce backlogs and improve the predictability of commercial litigation. The trajectory is toward a more structured, efficient, and internationally legible judicial system. However, the doctrinal conservatism on force majeure and hardship is likely to persist. These are areas where the courts have been consistent, and there is no clear legislative signal of imminent liberalisation. International businesses should plan accordingly.
The intersection of Islamic legal principles, modern commercial legislation, and rapidly evolving judicial institutions makes Saudi Arabia one of the most legally distinctive markets in the world for commercial dispute analysis. Force majeure and hardship sit at the centre of that complexity. For a tailored strategy on managing contract disruption risk in Saudi Arabia, reach out to info@ferrazwhitmore.com.
Self-assessment: when and how to engage these doctrines
Force majeure or hardship arguments in Saudi Arabia are worth pursuing if the following conditions apply. First, the disrupting event must be objectively verifiable and external – a natural disaster, a declared emergency, a government prohibition, or a comprehensive and unforeseeable supply chain collapse. Second, the event must have directly caused the contractual failure, with no credible argument that mitigation steps could have avoided the outcome. Third, the claiming party must have complied with any contractual notification requirements – missed notice periods are very difficult to excuse. Fourth, the commercial stakes must justify the cost and duration of litigation in the Saudi commercial courts, which – even after modernisation – typically measure contested proceedings in months rather than weeks.
Before initiating proceedings, verify the following: that the contract's governing law is Saudi law or at least applies Saudi performance standards. that the forum is the Saudi commercial courts or a recognised arbitral institution with Saudi enforcement prospects. that the documentation file is complete and covers the period from the emergence of the disrupting event to the date of filing. and that an Arabic-language legal team is engaged with direct experience in force majeure litigation before Saudi commercial panels.
A force majeure claim that lacks any one of these elements should be reassessed before filing. Filing a weak claim in Saudi Arabia carries real costs. procedural delays, adverse cost orders. Additionally. Reputational risk in a market where business relationships are long-term and litigation posture is closely observed by commercial partners and regulators alike.
Frequently asked questions
Q: How long does a force majeure dispute typically take to resolve before the Saudi commercial courts?
A: Timelines vary considerably depending on the complexity of the matter, the volume of documentary evidence, and whether the respondent mounts a substantive defence. Straightforward matters may conclude within several months. Complex commercial disputes – particularly those involving expert evidence on causation or economic impact – can extend over a year or more at first instance. With further time required if the matter proceeds to the appellate courts. Parties should build realistic timeline assumptions into their commercial planning from the outset of any dispute.
Q: Is it a misconception that Saudi courts apply hardship relief generously given the Islamic principle of avoiding harm?
A: Yes, this is a common and costly misconception. While Islamic jurisprudence does include principles directed at preventing unjust outcomes, Saudi commercial courts have consistently held that commercial parties – particularly sophisticated ones – are expected to manage their own risk through the contract. The principle of avoiding harm does not translate into a general judicial power to rewrite commercial agreements. Courts reserve intervention for cases of true impossibility, not economic inconvenience, however severe. Relying on a general Islamic law argument in lieu of a specific contractual or legislative basis for relief is unlikely to succeed.
Q: What steps should an international business take immediately when a potential force majeure event arises in a Saudi contract?
A: The first priority is to review the contract's force majeure clause and identify the precise notification requirements – form, addressee, and deadline. Notification should be sent immediately, preserving all evidence of dispatch. Simultaneously, the affected party should begin assembling a contemporaneous documentary record of the event and its operational impact, and should review whether any interim precautionary orders are needed. Engaging a lawyer in Saudi Arabia with specific experience in commercial litigation is critical at this stage. Delay in taking any of these steps – even by a few days – can weaken the eventual claim or forfeit procedural rights that are difficult to recover later.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our commercial litigation and dispute resolution practice covers force majeure, hardship, and contract disruption matters in Saudi Arabia and across the broader Middle East and Asia-Pacific region. As an international law firm advising clients who need a lawyer in Saudi Arabia, we combine Portuguese civil law expertise with English common law tradition to deliver commercially grounded, results-oriented legal support. The firm's dispute resolution team includes practitioners with experience before regional arbitral institutions and in cross-border judgment enforcement proceedings. Our attorneys have advised on force majeure and contract disruption matters across both civil law and Islamic law systems. Working alongside local Saudi-qualified counsel to manage every stage of proceedings. from statement of claim preparation through to the final enforcement of awards. We work with international entrepreneurs, institutional investors, and in-house legal teams navigating the demands of the Saudi commercial environment. To discuss how these doctrines apply to your contractual position in Saudi Arabia, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.