Force Majeure Clauses in Saudi Contracts

Few clauses are misunderstood as often as force majeure. Under Saudi law, whether an event actually excuses performance depends on a specific legal question — not on whether the event sounds dramatic. This guide walks through how the Civil Transactions Law actually treats disrupted contracts, and how to draft a clause that reflects that framework rather than a generic international template.

01  What Is Force Majeure Under Saudi Law?

The principal general statutory framework for force majeure in private and commercial contracts is the Saudi Civil Transactions Law, issued by Royal Decree No. M/191 dated 29/11/1444H, currently in force. The Decree also provides that the Civil Transactions Law applies to commercial transactions, provided this does not conflict with the nature of the commercial transaction and where no special commercial legislation provides otherwise.

It would be inaccurate to say that Saudi law contains one statutory definition of force majeure applied identically to every contract. A more accurate description is that Saudi law recognizes force majeure and other causes beyond a party’s control through several provisions dealing with impossibility of performance, liability, and allocation of contractual risk — each triggered by different facts and producing different consequences.

02  The Civil Transactions Law and Force Majeure

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Article 94 — a validly concluded contract may not be revoked or amended except by agreement of the parties or under a statutory provision. A party cannot simply declare a contract suspended because an unexpected event occurred; the event must fall within the contractual clause or satisfy the relevant statutory requirements

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Article 95 — a contract must be performed according to its terms and in a manner consistent with good faith, with obligations also including consequences arising from legislation, custom, and the nature of the contract. This principle is relevant to practical conduct after a disruptive event — cooperation, timely communication, and a genuine assessment of whether performance is still possible — though Article 95 does not itself create a fixed force majeure notice period

03  When Does Impossibility of Performance Terminate a Contract?

Article 110 is one of the most important provisions in this area. In a bilateral contract, if performance of an obligation becomes impossible because of a cause beyond the debtor’s control, the affected obligation is extinguished, the corresponding obligation is also extinguished, and the contract is automatically dissolved by operation of law in the case of total impossibility.

Article 294 provides that the debtor’s obligation is extinguished if the debtor proves that performance became impossible for a cause beyond its control; the corresponding obligation, if any, is also extinguished. This is an important practical point — the party relying on impossibility must be able to prove both the relevant external cause and its actual effect on the contractual obligation. The analysis should focus on evidence and causation, not simply on identifying that a disruptive event occurred.

04  Partial and Temporary Impossibility

Article 110 expressly addresses partial impossibility: where impossibility affects only part of the obligation, only that part and its corresponding obligation are extinguished. The same approach applies to temporary impossibility in contracts involving continuing or successive performance.

In these situations, the creditor may in appropriate circumstances request termination, although the court may reject termination where the impossible portion is of minor significance compared with the overall obligation. This distinction — total versus partial versus temporary — is exactly why a force majeure clause should address partial performance and suspension separately, rather than treating any disruption as an all-or-nothing event.

05  Force Majeure vs Exceptional Circumstances and Hardship

This is the distinction most often blurred in practice, and it matters enormously. Article 97 deals with exceptional circumstances of a general nature that could not have been foreseen at the time of contracting and that make contractual performance excessively burdensome to the debtor, to the extent of threatening the debtor with a grave loss. This is not the same as impossibility.

Where Article 97 applies: the debtor whose contractual obligation has become excessively onerous may, without unjustified delay, invite the other party to negotiate; the request to negotiate does not entitle the debtor to stop performance; if the parties do not reach agreement within a reasonable period, the court may, after balancing their interests, reduce the burdensome obligation to a reasonable level; and an agreement contrary to Article 97 is void.

Issue	Force Majeure / Impossibility	Exceptional Circumstances / Hardship
Effect on performance	Performance becomes impossible	Performance remains possible
Economic impact	Impossibility is the key issue	Obligation becomes excessively onerous and threatens the debtor with grave loss
Immediate consequence	May extinguish obligations under Article 110/294	Right to seek renegotiation
Can debtor stop performing?	Depends on impossibility and contractual/statutory consequences	No — requesting renegotiation does not permit stopping performance
Court intervention	May arise regarding contractual consequences or disputes over impossibility	Court may reduce the onerous obligation to a reasonable level
Can parties contract out?	Force majeure risk can be contractually allocated (Art. 174)	No — agreements contrary to Article 97 are void

A severe cost increase is a common point of confusion. A significant increase in cost does not, by itself, establish impossibility of performance. Depending on the facts, the issue may instead fall within Saudi Arabia’s exceptional-circumstances framework under Article 97, rather than being treated as force majeure. Categorical claims about any specific event — price spikes, supplier problems, inflation, material shortages — should be avoided without examining the facts and the contract’s own risk allocation. Article 125, within the Civil Transactions Law’s rules on liability for harmful acts, identifies force majeure as one example of a cause beyond a person’s control — it is not the primary provision governing contractual force majeure, and Saudi legislation does not provide a universal closed list of events that automatically qualify in every contractual situation.

06  Can Parties Allocate Force Majeure Risk by Contract?

Yes. Article 174 provides that the parties may agree that the debtor bears the risk of force majeure. It would therefore be inaccurate to say Saudi law always excuses the affected party irrespective of the contract — Saudi law permits parties to allocate certain force majeure risks contractually, which is exactly why the specific wording of the clause matters so much.

This also has a boundary. Article 173 allows parties to agree to exempt a debtor from compensation arising from contractual non-performance or delay, but that exemption does not extend to damage caused by the debtor’s fraud or gross fault, nor does the law permit contractual exemption from liability arising from a harmful act in the manner Article 173 describes.

On compensation, Article 170(3) provides that compensation for non-performance under Article 170(1) and (2) is not awarded where the debtor proves that the non-performance resulted from a cause beyond its control. Article 171 similarly provides that a debtor is not liable to compensate the creditor for delay where the debtor proves that the delay resulted from a cause beyond its control. These provisions should not be read as eliminating every financial consequence of a force majeure event; the contract’s allocation of risk and any applicable special legislation must still be considered.

07  What Events May Be Included in a Force Majeure Clause?

Potential events may include natural disasters, war or armed conflict, government prohibitions, export or import restrictions, epidemics or public-health restrictions, closure of infrastructure, and certain sanctions or legal prohibitions. These should be understood as potential force majeure events, not events that automatically produce a force majeure defense. The legal analysis should instead focus on:

—	Was the event outside the affected party’s control?
—	Did the event actually affect the specific contractual obligation?
—	Did it make performance impossible rather than simply inconvenient?
—	Does the contract expressly allocate the relevant risk?
—	Was only part of the obligation affected?
—	Was the impediment temporary or permanent?

08  Notice and Evidence Requirements

For a general private commercial contract, the Civil Transactions Law does not prescribe a universal fixed 7-, 14-, or 30-day notice period for force majeure claims. The applicable notice period should first be checked in the contract itself and in any special legislation governing the transaction. Article 97 is different in one respect: in a hardship situation, the debtor must invite the other party to negotiate without unjustified delay, though the statute does not convert that phrase into a fixed number of calendar days either.

Evidence is central to any claim. It is not enough for a party to merely state that a force majeure event occurred — consistent with Article 294’s requirement that the debtor prove impossibility, the affected party should be prepared to demonstrate the event itself, the affected contractual obligation, causation, the period of impact, whether performance was wholly, partially, or temporarily impossible, the contractual notices given, relevant correspondence, official orders or restrictions, and any attempts to continue or adapt performance where appropriate.

09  How to Draft a Force Majeure Clause for Saudi Contracts

The following are contract-drafting recommendations, not a checklist that Saudi statute itself mandates.

—	Definition — define what constitutes a force majeure event under the contract
—	Causation — require a direct relationship between the event and the failure or delay in performing the affected obligation
—	Events included — natural disasters, government restrictions, war, epidemics, or other specified events. If specific events are listed, make clear whether they are contractual examples or an exhaustive contractual list, depending on the parties’ intended allocation of risk under Article 174 — they should not be presented as a statutory list of force majeure events
—	Events excluded — consider expressly addressing ordinary market fluctuation, foreseeable shortages, or financial inability as risks a specific party is intended to bear
—	Notice — specify the method, recipient, deadline, required information, and any continuing update obligations
—	Evidence — require reasonable documentary support covering the event’s occurrence, its impact, relevant government orders, the interruption period, and the affected obligations
—	Mitigation — include reasonable efforts to reduce the event’s impact and explore alternative methods of performance, as risk-management practice rather than a standalone statutory checklist
—	Suspension — specify whether affected obligations are temporarily suspended and which unaffected obligations continue
—	Partial performance — explain how unaffected portions of the contract remain in force, consistent with Article 110’s distinction between total, partial, and temporary impossibility
—	Long-stop termination — a contractual mechanism allowing either party to terminate after a defined period if the event continues, distinct from the statutory rules governing impossibility
—	Allocation of costs — specify who bears standby costs, demobilization and remobilization expenses, storage costs, additional logistics costs, and amounts already accrued before the event

10  Force Majeure in Saudi Government Contracts

11  Common Force Majeure Drafting Mistakes

—	Treating force majeure and hardship as the same doctrine — incorrect, since Articles 97 and 110 provide materially different tests and remedies
—	Listing events without requiring causation — the occurrence of an event should not automatically produce contractual relief if it had no actual effect on performance
—	Assuming every cost increase is force majeure — a severe economic burden may raise an Article 97 hardship question rather than an Article 110 impossibility question
—	Saying performance always stops immediately — incorrect, particularly under Article 97, where requesting renegotiation does not authorize the debtor to stop performing
—	Ignoring contractual allocation of force majeure risk — Article 174 expressly allows the debtor to assume force majeure risk by agreement
—	Applying private-contract rules to government contracts without qualification — government contracts require review of the Government Tenders and Procurement Law and Article 74 specifically

12  Practical Checklist for Saudi Businesses

1	Identify whether the situation is genuinely about impossibility (Article 110) or hardship (Article 97) before deciding on a strategy
2	Check whether the contract already allocates the relevant risk under an Article 174-style clause
3	Confirm whether the counterparty is a government entity, which triggers the separate Government Tenders and Procurement Law framework
4	Gather evidence of the event, its timing, and its direct effect on the specific obligation before making or responding to a claim
5	Review the contract’s own notice provisions rather than assuming a fixed statutory deadline applies
6	Where hardship applies, initiate renegotiation promptly while continuing performance, since Article 97 does not permit stopping work on that basis alone

Frequently Asked Questions

Does Saudi law recognize force majeure?

Yes. The Civil Transactions Law expressly recognizes force majeure and causes beyond a debtor’s control across provisions concerning liability and impossibility of performance.

Does force majeure automatically terminate a Saudi contract?

No. The result depends on whether the impossibility is total, partial, or temporary, together with the contract terms and any applicable special legislation. Article 110 expressly distinguishes these situations.

Is an increase in cost force majeure?

Not automatically. Where performance remains possible but becomes excessively onerous due to qualifying exceptional general circumstances, Article 97 may be more relevant than a force majeure analysis.

Can the parties change the allocation of force majeure risk?

Yes. Saudi Civil Transactions Law expressly allows the parties to agree that the debtor will bear the risk of force majeure under Article 174.

Can a party stop performing while requesting renegotiation because of hardship?

No. Article 97 expressly provides that requesting renegotiation does not entitle the debtor to stop performing the obligation.

Are government contracts subject to the same force majeure rules?

Not exclusively. Government contracts are also subject to the Government Tenders and Procurement Law and related implementing rules, including Article 74 regarding contract extensions and exemption from certain delay penalties.

Official Legal Sources