International Construction Law Review
SAUDI PUBLIC WORKS CONTRACT
MAHIR JALILI
American attorney and English barrister
INTRODUCTION
Saudi Arabia is unique amongst countries in the Middle East because it does not have any “laws” as such. The Sharia,
which is made up of the Koran and the traditions of the Prophet Mohamed, is the law of the land. All statutes and other legislative output are called “regulations” instead of “laws”. However, this state of affairs does not mean that Saudi regulations are incomprehensible to a Western lawyer. In fact, most modern regulations are based on Western precedents. For example, in 1988, the Saudi Government adopted a standard form Public Works Contract. This standard form is based on the 3rd edition of the FIDIC conditions of contract (1977). The FIDIC conditions themselves are based on the English ICE conditions. Therefore, it can safely be said that, in general, the English conditions of civil engineering contract are compatible with Sharia
law.
TENDER REGULATIONS
All Saudi government public work projects are subject to the Tender Regulations of 19771
and their Rules for Implementation.2
The Tender Regulations contain only 14 articles, the most important of which are:
- Article 7: The contractor must provide the government with a performance bond equal to 5% of the contract price.
- Article 8: The government may provide the contractor with an advance payment of 20% of the contract price. The amount is reduced to 10% in Article 50 of the standard form of contract.
- Article 9: The contractor is subject to a delay penalty not exceeding 10% of the contract price if he delays the works, unless the delay is caused by force majeure, an emergency, or a cause beyond the contractor’s control. The employer may extend the contract period if
1 Royal Decree No M14 dated 7/4/1397 AH (27 March 1977).2 Executive Regulations No 2131/17 dated 5/5/1397 AH (21 April 1977).
Pt. 1]Saudi Public Works Contract179