New regulations to protect against pandemic’s impact
Since the outbreak of the coronavirus disease (COVID-19), Saudi Arabia’s Ministry of Justice has received many cases concerning the impact of the pandemic on legal contractual obligations of different kinds.
In order to end confusion arising from the pandemic and its consequences, the Supreme Court issued Judicial Principle No. 45, stipulating clear-cut mechanisms governing contractual obligations in these extraordinary times. The court laid out rules and regulations to ensure the protection of rights of both parties to a contract and defining jurisdiction of legal authorities in implementing the law.
Judicial Principle No. 45 stipulated several conditions that must be fulfilled before the rules take effect. A contract must have been concluded before the announcement of the precautionary measures, the impact of the pandemic on the contract must be direct, and the contract must not be affected by any other cause in addition to the pandemic.
Parties to the contract should not have waived or reached reconciliation in which case the new laws will not be applicable.
One of the most important issues presented through this judicial principle is the issue of renting properties, which affected many people due to the lack of use of the property during the pandemic.
For example, it stated that if the tenant was unable to fully or even partially use a rented property, the court would order a proportionate reduction in the rent to benefit the tenant. Also, the court will not approve the lessor’s right to rescind the contract in the event that the tenant delays paying the rent for the period during which he was unable to use this property.
As for contracting and supply contracts, in the event that the value of materials or wages increases, the court will increase the value of the contract, and the obligated party will have to bear that increase, but the court will only increase the value to a reasonable level. However, in case of increased commitments, an obligee reserves his right to terminate a contract. As for the cases of temporary price increase, the court suspends the implementation of the obligation temporarily.
Finally, it is worth noting that this judicial principle came after studying and analyzing the announcements related to this matter, and ministerial decisions dealing with the effects of the pandemic.
Undoubtedly, the endorsement of such a judicial principle will effectively contribute to unifying the efforts of the judiciary in achieving justice, and raising and mitigating the damage, as well as greater control of the discretionary power of the courts in this regard.
• Dimah Talal Alsharif is a Saudi lawyer and legal consultant. Twitter: @dimah_alsharif