The Commercial Court in Saudi Arabia: Jurisdiction under the Commercial Courts Law, Notice, Filing, Costs, and Appeal

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What is the Commercial Court, and what law governs it?

The commercial courts are specialized courts under the Ministry of Justice. Their procedures are governed by the Commercial Courts Law issued by Royal Decree No. (M/93) dated 15/8/1441H and in force since 24/10/1441H, corresponding to June 16, 2020, together with its Implementing Regulations issued by resolution of the Minister of Justice. Before this law, commercial lawsuits were heard under the Law of Sharia Procedure with certain special provisions; now the commercial judiciary has an independent procedural law, with recourse to the Law of Sharia Procedure where it contains no provision.

Standalone commercial courts exist in a number of major cities, including Riyadh, Jeddah, and Dammam; elsewhere, commercial lawsuits are heard by commercial circuits within the general courts. Litigation is conducted electronically via Najiz at most stages, including video hearings and the exchange of memoranda.

What is the jurisdiction of the Commercial Court under Article 16?

Article 16 of the Commercial Courts Law defines the jurisdiction of the Commercial Court, most notably:

• Disputes arising between merchants from their original or ancillary commercial activities.
• Lawsuits brought against a merchant arising from their commercial contracts, where the value of the original claim exceeds the threshold set by the Implementing Regulations, which was announced upon their approval as five hundred thousand riyals.
• Disputes between partners in companies.
• Lawsuits and violations relating to commercial laws, without prejudice to the jurisdiction of the Board of Grievances.
• Bankruptcy lawsuits, and the imposition and lifting of interdiction on bankrupt persons.
• Other commercial disputes.

The core idea is that what matters is the nature of the dispute and the capacity of its parties. A dispute between two companies over a commercial supply contract, or a dispute between partners over profits or the management of the company, falls squarely within the jurisdiction of the Commercial Court. A lawsuit by a non-merchant against a merchant for a small amount, however, may fall within the jurisdiction of the General Court. Choosing the wrong court delays the dispute through a plea of lack of jurisdiction, so it is worth verifying before filing.

Must the defendant be notified before filing a commercial lawsuit?

Yes, in the lawsuits specified by the Implementing Regulations: Article 19 of the Commercial Courts Law requires the plaintiff to notify the defendant in writing to pay the claimed right at least fifteen days before filing the lawsuit. Its purpose is to give the debtor a final opportunity to pay before resorting to the courts, and to reduce cases that could have been resolved with a letter.

In practice, the notice should ideally include:

• The details of the plaintiff and the defendant as shown in the Commercial Register.
• The source of the right, such as the contract, purchase order, or invoices, with their numbers and dates.
• The specific amount claimed and how it was calculated.
• An express demand for payment within a period of no less than fifteen days.
• A delivery method that can be proven, such as the email address designated in the contract, registered mail, or official notification.

Attaching proof of the notice and its date to the statement of claim avoids having it returned. And because the lawsuits subject to this requirement are specified by the Regulations, the safer course is to send a notice in commercial monetary claims generally, since it does no harm and keeps the process on track.

Is reconciliation or mediation required before a commercial lawsuit?

In some lawsuits, yes. The Commercial Courts Law permits the Regulations to specify lawsuits in which recourse to reconciliation and mediation is required before registration, handled by competent bodies such as reconciliation centers. If reconciliation ends in an agreement, the settlement record becomes an enforceable instrument submitted directly to the Enforcement Court; otherwise, the lawsuit is registered.

Even outside the mandatory cases, the Ministry of Justice’s Taradhi platform allows reconciliation to be requested electronically in many commercial disputes. To compare reconciliation, mediation, and arbitration, and when each is most suitable, read reconciliation, mediation, and arbitration.

How do you file a lawsuit with the Commercial Court via Najiz?

Commercial lawsuits are filed electronically through the “Statement of Claim” service on Najiz, which covers the commercial courts alongside the other courts. The steps, in summary:

• Log in to Najiz with Nafath, then select the statement of claim service.
• Select the commercial category that fits the nature of the dispute, such as commercial contracts, companies, or commercial papers.
• Enter the parties’ details, including the establishment’s registered name and Commercial Register number.
• Write the facts and the specific requests, with their amounts and supporting grounds.
• Attach the contract, invoices, and correspondence, and proof of notice where required.
• Review and submit the request, then track its registration and the hearing date.

The Implementing Regulations require certain categories of commercial lawsuits to be filed through a lawyer; otherwise, they will not be accepted. It is therefore advisable to verify this requirement according to the type and value of the lawsuit before filing. If you hold an enforceable instrument such as a check or a promissory note, you may not need a lawsuit at all, but rather a direct enforcement request, as explained in the Enforcement Court guide.

How much are the fees for a lawsuit at the Commercial Court?

Commercial lawsuits are subject to the Law of Court Costs published in the Official Gazette on 10/2/1443H (September 17, 2021), which provides for court costs not exceeding five percent of the claim value, capped at one million riyals. Its Implementing Regulations detail the brackets and cases, and the law also imposes costs on appeal requests, incidental requests, and certain other requests.

The Law of Court Costs excludes certain lawsuits from its scope, such as criminal, administrative, and bankruptcy lawsuits, but ordinary commercial lawsuits fall within it. The costs due in each case can be ascertained through Najiz and the Ministry of Justice at the time of filing, because their application and brackets are governed by the Regulations and implementing decisions, which may change.

The practical point here is that costs make accuracy in setting the claim amount more important; an exaggerated claim not only weakens your position before the court but may also raise the cost for the party who loses it.

How are Commercial Court judgments appealed?

A Commercial Court judgment is challenged by an appeal request within thirty days of receiving a copy of the judgment as a general rule, with a shorter period in urgent matters. The objection is filed electronically via Najiz with the commercial circuits of the Court of Appeal.

Excluded from appeal are what qualify as small claims: under the Implementing Regulations of the Commercial Courts Law, lawsuits whose value does not exceed fifty thousand riyals are small claims, which are heard under summary procedures and whose judgments are final as a general rule. Upon approving the Regulations, the Ministry also set maximum periods for deciding commercial cases, including one hundred and eighty days at first instance for cases other than small claims.

An appeal request is built on the grounds of the judgment: an error in applying the law or the contract, overlooking material evidence, or a procedural violation that affected the outcome. Simply retelling the case as it was rarely helps.

What Is the Limitation Period for Hearing a Commercial Claim?

A commercial lawsuit will not be heard after five years from the date the claimed right arose, unless the defendant acknowledges the right or the plaintiff has an excuse acceptable to the court, under Article 24 of the Commercial Courts Law. This period differs from the twelve-month limitation period for labor claims and from the deadlines for administrative lawsuits.

Because this topic has its own details, such as determining when the right arises in continuing contracts, the effect of acknowledgment and correspondence, and the difference between a claim not being heard and the right lapsing, we have dedicated a separate explanation to it in the limitation period for commercial claims. To calculate the date on which the period expires in your case, you can use the statutory deadlines calculator.

What should be reviewed before filing a commercial lawsuit?

Most of what delays a commercial lawsuit could be caught before filing with a careful review. Before submitting, check the following:

• Does the dispute fall within the jurisdiction of the Commercial Court based on its nature, the capacity of its parties, and its value?
• Has written notice been sent and have fifteen days elapsed, if the lawsuit is one that requires it?
• Does the type of lawsuit require reconciliation before registration, or filing through a lawyer?
• Does the contract contain an arbitration clause that makes court the wrong route?
• Are the requests specified in amounts, and is each amount supported by a document?
• Is the lawsuit still within the five-year period?

You can request a consultation under the commercial cases service to review the contract and documents and determine the appropriate route before filing.

Frequently asked questions

What is the difference between the Commercial Court and the General Court?

The Commercial Court has jurisdiction over the commercial disputes listed in Article 16 of the Commercial Courts Law, such as disputes between merchants in their commercial activities, disputes between partners, and bankruptcy, and it applies a special procedural law. The General Court hears matters that do not fall within the jurisdiction of another specialized court.

How long is the notice period before filing a commercial lawsuit?

At least fifteen days before filing the lawsuit, in the lawsuits specified by the Implementing Regulations, under Article 19 of the Commercial Courts Law. The notice is given in writing, demanding payment of the claimed right.

Can a commercial lawsuit be filed without a lawyer?

It depends on the type and value of the lawsuit: the Implementing Regulations of the Commercial Courts Law require certain categories of lawsuits to be filed through a lawyer and exempt others. The requirement should therefore be verified before filing so that the lawsuit is not rejected.

Can judgments in small commercial lawsuits be appealed?

Small claims, which under the Implementing Regulations are those whose value does not exceed fifty thousand riyals, are heard under summary procedures, and their judgments are final as a general rule. Other judgments are appealed within thirty days of receiving a copy of the judgment as a general rule.

What is the limitation period for lawsuits at the Commercial Court?

Five years from the date the right arose, unless the defendant acknowledges the right or the plaintiff has an excuse acceptable to the court, under Article 24 of the Commercial Courts Law.

Can a commercial dispute be taken to court if the contract contains an arbitration clause?

As a rule, a valid arbitration clause makes arbitration the agreed route, and the defendant may raise it as a defense before the court. The contract is therefore reviewed first, and if it contains an arbitration clause, its effect is assessed before filing any lawsuit.