The KSA Civil Code: A New Era for Contractual Relationships

Amr Reda Abdullatif , LL.M

Ben Cowling – Clyde & Co said ” The KSA Civil Code is stated to come into effect 180 days after it was published, which date is 16 December 2023. The KSA Civil Code also states that, when it comes into effect, all provisions that contradict it shall be abolished. As such, contracts signed after 16 December 2023 will be subject to the KSA Civil Code (as opposed to the uncodified Sharia) and all disputes decided on that basis.”

The Dawn of the KSA Civil Code

The KSA Civil Code is set to come into effect 180 days after its publication, on 16 December 2023. Upon its implementation, all provisions that contradict it will be abolished. Therefore, contracts signed after this date will be subject to the KSA Civil Code, marking a departure from the uncodified Sharia.

The Implications for Existing Contracts and Disputes

The situation becomes more complex when considering contracts signed before 16 December 2023. The Royal Decree states that the KSA Civil Code will apply retrospectively, except where a party seeks to rely on conflicting statutory provisions or judicial principles that pre-date its entry into force.

In essence, the KSA Civil Code will apply to all contracts subject to Saudi law, including existing contracts and those signed before 16 December 2023. However, if a contracting party can demonstrate a conflicting Sharia principle, the uncodified Sharia will apply to those contracts to the exclusion of the KSA Civil Code. The burden of proof lies with the party seeking to rely on the uncodified Sharia principle.

For any dispute arising from an existing contract, the KSA Civil Code will be the default law applied. If a party wishes for the uncodified Sharia to apply to the dispute instead, they would need to commence the dispute and press for a final and binding decision before the KSA Civil Code comes into effect on 16 December 2023.

The Road Ahead

The introduction of the KSA Civil Code undoubtedly changes the risk allocation of contracts to which it applies. This includes contracts previously signed under the assumption that the uncodified Sharia was the governing law. The significance of this change will depend on the specific type of contract and the stipulations of the KSA Civil Code regarding that contract.

Parties should consider these changes when deciding whether to enter into new contracts or commence disputes before the KSA Civil Code becomes effective on 16 December 2023.