Project Commission Agreement Template for Saudi Arabia

When you need to commission a project in Saudi Arabia, a Project Commission Agreement serves as your essential legal foundation. This contract establishes the relationship between you as the commissioner and your chosen contractor, defining project scope, deliverables, timelines, and payment structures while ensuring compliance with Saudi commercial law and Sharia principles.

When do you need this document?

You'll need this agreement when engaging contractors for construction projects, infrastructure development, technology implementations, or consulting services in Saudi Arabia. It's particularly crucial for government contracts subject to the Government Tenders and Procurement Law, Vision 2030 projects requiring local content compliance, or international partnerships involving foreign investment regulations. The document becomes essential when your project involves multiple stakeholders including government authorities, technical consultants, subcontractors, or requires project financing from financial institutions.

Key legal considerations

Your agreement must address several critical elements to ensure legal enforceability in Saudi Arabia. Payment terms should align with Islamic finance principles and specify milestone-based payments, retention amounts, and dispute resolution mechanisms. Include comprehensive scope of work definitions, change order procedures, and intellectual property provisions that comply with Saudi IP laws. Risk allocation clauses must address force majeure events, including religious holidays and weather conditions specific to the region. Quality standards should reference Saudi technical standards and international certifications recognized by Saudi authorities. Ensure warranty provisions cover both workmanship and materials, with clear procedures for defect remediation.

Legal requirements in Saudi Arabia

Saudi law requires specific compliance measures that must be incorporated into your Project Commission Agreement. The contract must adhere to Sharia law principles, particularly regarding interest payments and prohibited contract terms. If your project value exceeds certain thresholds, you must comply with Saudi Labor Law requirements for worker protection and local hiring quotas. Foreign contractors must satisfy Foreign Investment Law requirements and may need local partners depending on the business sector. Government projects must follow the Government Tenders and Procurement Law procedures, including transparency requirements and bid evaluation criteria. Engineering projects require compliance with the Engineering Professional Practice Law, ensuring licensed professionals oversee technical aspects. Additionally, insurance requirements must meet Saudi regulatory standards, and all contracts exceeding SAR 200,000 must be documented in Arabic or include certified Arabic translations for legal validity.