When Can a Contract Be Terminated Due to “Force Majeure” in Saudi Arabia?
When Can a Contract Be Terminated Due to “Force Majeure” in Saudi Arabia?
What Is Force Majeure?
Force majeure refers to any unforeseen and uncontrollable event that makes fulfilling contractual obligations impossible or practically unfeasible. Common examples include:
- Natural disasters
- Wars or political unrest
- Government-imposed restrictions
- Pandemics (e.g., COVID-19)
Example: A government-imposed lockdown that shuts down commercial activities and prevents execution of lease or supply contracts.
Is Force Majeure Recognized Under Saudi Law?
Yes. While not explicitly codified, Saudi legal practice—rooted in Sharia principles—acknowledges the concept of impossibility of performance (“Ta‘adhur”) as equivalent to force majeure. This is also reflected in the Executive Regulations of the Saudi Civil Procedure Law.
What Are the Conditions for Force Majeure?
- The event must be beyond both parties’ control
- It must be unforeseeable at the time of signing the contract
- It must make performance impossible
- Its impact cannot be avoided or mitigated
Note: Financial loss alone is not sufficient. There must be true impossibility to perform the contract.
What Types of Contracts Are Commonly Affected?
- Lease contracts (especially during mandated closures)
- Construction and supply agreements
- Event and venue booking contracts
- Long-term agreements with fixed conditions
Is Court Evidence Required?
Yes. The affected party must submit:
- Proof of the force majeure event (e.g., official government decision)
- A direct link between the event and inability to perform
- Prompt notice to the other party
The court may then decide to terminate the contract, suspend its execution, or modify obligations depending on the facts.
Was COVID-19 Considered Force Majeure?
Yes. Saudi courts have recognized COVID-19 as a valid force majeure in many rulings post-2020, provided the damage is direct and well-documented. This was affirmed in several judicial reports by the Saudi Bar Association.
Related Links:
Conclusion:
Force majeure is a legally accepted principle under Saudi law and may be relied upon to terminate or amend contracts when performance becomes impossible. It is highly recommended to include a force majeure clause in your agreements to protect all parties in case of unforeseen events.
Comments