Article 17 of the Saudi Privatization Law
المادة 17 من نظام التخصيص
No government entity may conclude a privatization contract without the competent authority's approval, and a contract concluded in breach is void unless the competent authority ratifies it.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز لأي جهة حكومية إبرام عقد تخصيص دون الحصول على موافقة الجهة المختصة، ويقع باطلًا كل عقد تم إبرامه بالمخالفة لذلك، ما لم تجزه الجهة المختصة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 17 explained in plain English
This is one of the Law's most important protective articles, and it sets two rules:
- The prohibition: no government entity may conclude a privatization contract without obtaining the competent authority's approval.
- The sanction: any contract concluded in breach of this is void.
The exception: the competent authority ratifies the contract after it is concluded. The voidness here can therefore be cured by ratification.
Why does this matter to the investor? Because a void contract may not give rise to the rights the investor expects. If an investor signs a privatization contract with a government entity without the competent authority having approved it, the investor risks the contract being void unless it is ratified.
It is therefore advisable for the investor, before signing, to check that the competent authority's approval has been issued, and to keep what proves this approval.
This is linked to Article 16, which explains that the contract is concluded in the government's name with a private party. The text does not detail the effects of voidness on work already carried out, and anyone facing this situation should consult a lawyer who specializes in administrative or commercial matters.
Practical example
A government entity signed a partnership contract with a company in Dammam to operate a public facility without obtaining the competent authority's approval. This contract is void, unless the competent authority later ratifies it.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 17 of the Saudi Privatization Law
What is the status of a privatization contract concluded without the competent authority's approval?
It is void unless the competent authority ratifies it.
Can a privatization contract concluded without approval be corrected?
Yes, if the competent authority ratifies it.
More articles on Concluding and Financing a Privatization Contract
- Article 16
Privatization contracts are concluded in the government's name, with the executing entity representing it, and only with a private party. A body with public legal personality may not contract with the government as a private party.
1- تُبرم العقود الخاضعة لأحكام النظام باسم الحكومة، وتُعدّ الجهة التنفيذية مُمثلًا للحكومة في كل ما يرتبط بالعقد وأي عقد تابع، ما لم ينص قرار الموافقة على توقيع
- Article 18
With written approval from the contracting authority, the private party may take financing and mortgage its own project assets, but may never sell or mortgage State-owned assets.
1- يجوز للطرف الخاص بعد الحصول على موافقة مكتوبة من الجهة التنفيذية ما يأتي: أ- إبرام عقود تمويل للأعمال والخدمات محل مشروع التخصيص مع جهة مصرفية، أو تمويلية، ع
- Article 19
At the private party's request and with the competent authority's approval, the contracting authority issues a certificate confirming that the competent authority approved the contract and that it and its documents are subject to the Law.
تُقدّم الجهة التنفيذية -بموافقة الجهة المختصة- بناءً على طلب الطرف الخاص شهادة له تتضمن ما يأتي: 1- أن الجهة المختصة وافقت على العقد، أو العقد التابع. 2- أن الع
- Article 25
A partnership contract may not be assigned without written approval from the contracting authority, while subcontracting is allowed and the private party remains directly responsible.
1- لا يجوز للطرف الخاص التنازل كليًّا أو جزئيًّا عن عقد الشراكة بين القطاعين العام والخاص -أو العقد التابع- للغير إلّا بعد الحصول على موافقة مكتوبة من الجهة الت
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.