Article 23 of the Saudi Finance Lease Law

This article protects the lessee if the lessor itself fails, that is, if the lessor is declared bankrupt or its business is liquidated. In that case the lessee is not left without options, as the article gives it two routes:

• Continuing to perform the contract on its terms: so the contract stays in place on the same terms that were agreed.
• Returning the asset: with the consent of the bankruptcy trustee or liquidator.

The decision here is the lessee's, in choosing which of these two routes suits it, within what the text says. The bankruptcy trustee or liquidator is the one who handles the lessor's affairs at this stage, which is why the article ties returning the asset to their consent.

The article did not detail the procedures for exercising this option or its financial effects, so nothing more should be drawn from it than what it says.

This article is linked to Article 22, which regulates termination of the contract on total loss of the asset or a ban by the authorities on all use, and refers to the Regulations the criteria for what each party is entitled to when the contract is terminated or dissolved during the lease term. It is also linked to Article 24, which makes the competent court the body that decides disputes arising from applying the Law and its Regulations.

Because bankruptcy and liquidation are complex matters in which creditors' rights overlap, it is advisable for the lessee to consult a lawyer specializing in banking, finance and finance lease cases before making its decision.