Saudi Arabia Focus
Understanding the Statute of Limitations in Saudi Laws and Its Effect on Legal Rights
Law Update: Issue 356 - Saudi Arabia
Mohammed NegmSenior Counsel,Dispute Resolution
Mohamed SaidAssociate,Dispute Resolution
Under the laws of many jurisdictions, the passage of time can result in the termination of a right if the right's owner fails to take legal action within a specified period. However, in Saudi Arabia, where the legal system is based on Islamic Sharia law, rights are considered to be eternal and do not expire unless there is a valid reason for doing so. Time limitations only prevent a judge from hearing a case regarding a right that has been neglected for an extended period of time without an adequate excuse. This is to maintain legal stability and to presume that a delay in exercising one's right may indicate a waiver of the right. Additionally, the passage of a significant amount of time may also make it difficult for a judge to determine the accuracy and validity of evidence. Despite this, the right remains outstanding from the debtor and is not extinguished, and the debtor may still fulfil the right at any time. The judge may issue a ruling regarding the return of the right if the debtor acknowledges or accepts the excuse provided by the creditor. In this article, we will try to tackle this issue in view of the Saudi laws and regulations in details as follows:
The statute of limitations is a crucial aspect to be considered in Saudi Courts, with various laws specifying the time frames for filing lawsuits. The duration of the limitations varies based on the type of claim and the relevant law in question. Here are some examples:The recently enacted Companies Law outlines that claims against managers or members of the Board of Directors for compensation, excluding cases of fraud and forgery, must be filed within five years from the end of the fiscal year in which the harmful action took place, or three years from the end of the service of the manager or board member, whichever is longer.
The Law of Procedures before the Board of Grievances (Administrative Court) states that appeals relating to disciplinary decisions, termination of service, and compensation for unjustified termination must be filed within ten years from the start of the right claimed, provided that it was preceded by an objection or grievance against the resolution of the government entity to which the employee is affiliated.
As per the Negotiable Instruments Law, the limitation period for claims related to these instruments is three years, and the period for recourse of a cheque holder to the drawee, drawer, and enforcer is six months from the date of expiry of the cheque. The claims of recourse between check payment obligators must be filed within six months from the date of payment or from the date the lawsuit was filed against them.
The Labor Law establishes a limitation period of 12 months for employees to file a claim for their rights from the employer, starting from the first day of the termination of the employment relationship.
The Regulations of the Committee for Settlement of Banking Disputes, which deals with disputes between banks and their clients, state that unless the Committee accepts the claimant's excuse, the claim must be filed within five years from the date the amount became due or the date the dispute event was known. The same provision applies to the Regulations of the Committee for Settlement of Financial Violations and Disputes, which deals with disputes between finance companies and their clients.
The Capital Market Law mandates that no compensation claims can be heard before the Committee for Settlement of Securities Disputes in some cases as issuing an IPO prospectus containing incorrect data or omission of material facts, unless the complaint is filed to Capital Market Authority within one year from the date the claimant realizes they became a victim of a violation. The same law also states that such claims cannot be heard before the Committee for Resolution of Securities Disputes (CRSD) after five years from the date of the alleged violation, unless the defendant acknowledges the right or the claimant provides an acceptable excuse to the Committee.
Finally, the Saudi Commercial Courts Law stipulates that claim must be filed within five years from the date the right emerged to be heard before the commercial courts.
The Saudi judiciary operates under the principle of the statute of limitations in a variety of cases, although in many cases there is no clear-cut legal provision that specifies a fixed time period. The determination of the limitation period is left to the discretion of the court and depends on the specific circumstances of each case.
For example, the Supreme Court's decision in case number 51/3/1, dated 8/7/1433 H, stated that "No lawsuit shall be heard for a property that has not been claimed for a period exceeding seventy years."
Additionally, the resolution of the Supreme Judiciary Council in its permanent body case number 284/3, dated 28/12/1407 H, declared that if a person with the right to prevent the revival of a vacant land remains silent and does not intervene, the ruling should be in favor of the current possessor of the property and the use of the land should not be disrupted.
The Court of Appeal has also made several noteworthy decisions in this regard. In decision number 275/J5/B, dated 25/6/1429 H, the court declared that "Concrete evidence is stronger than a statement." This means that if someone remains silent for a long time and does not claim a property while someone else is using it, this is evidence in support of the other party's claim. In decision number 745/J3/B, dated 2/212/14231 H, the Court of Appeal stated that “If a property remains in the possession of one person for a long time, this waives any claims of ownership by others.”
There have been numerous other court decisions that have dismissed claims to properties due to the statute of limitations, such as decision number 3363988, dated 1433 H, which was later approved by the Court of Appeal in decision number 35241783, dated 12/05/1435 H. Despite the stability of the legal conditions arising from the various legal relations that the statute of limitations provides in the Saudi judiciary, its application remains at the discretion of the judge.
The principle of the statute of limitations does not apply to certain crimes in Saudi Arabia due to their grave impact on society and the rights of the state. Such crimes, including terrorism, drug offenses, and theft of antiquities, can be punished at any time. Labor-related crimes such as wage theft, forced labor, and violations of privacy may result in up to ten years of imprisonment and hard labor. Additionally, certain rights cannot be waived by time, such as those related to murder, torture, and impersonation.
Moreover, as per the State Revenue Law, money owed to the state remains always due and is exempt from the statute of limitations. Article 29 of the law states that “Debts owed to the state are privileged and not subject to a statute of limitations.”
In conclusion, the statute of limitations is a crucial aspect of the Saudi legal system, regulating the time frame for starting legal proceedings and resolving disputes. However, it is not absolute and specific exemptions exist to secure justice and protect the rights of all parties involved.
For further information, please contact Mohammed Negm or Mohamed Said.
Published in March 2023
