Article 21 of the Saudi Privatization Law
المادة 21 من نظام التخصيص
Within the contract's controls, when the public interest requires and with the competent authority's approval, the contracting authority may amend a partnership contract in writing or suspend the project; the Implementing Regulations set the effects and compensation unless the contract does.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للجهة التنفيذية -في إطار الأحكام والضوابط المتفق عليها في العقد- متى اقتضت المصلحة العامة ذلك، وبعد الحصول على موافقة الجهة المختصة، ما يأتي:
أ- تعديل شروط عقد الشراكة بين القطاعين العام والخاص، وأحكامه كتابةً.
ب- تعليق تنفيذ مشروع الشراكة بين القطاعين العام والخاص.
2- تحدد اللائحة التنفيذية آثار التعديل، والتعليق المشار إليهما في الفقرتين الفرعيتين (أ) و(ب) من الفقرة (1) من هذه المادة بما في ذلك احتساب التعويض الذي قد يستحقه الطرف الخاص، ما لم يتضمن العقد أحكامًا خاصة بذلك.
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 21 explained in plain English
This article gives the government the power to amend or suspend a partnership contract, but with clear restrictions:
The powers:
- Amending the terms and provisions of the partnership contract in writing.
- Suspending the implementation of the partnership project.
The conditions, all of which must be met:
- It must be within the provisions and controls agreed in the contract.
- The public interest must require it.
- The competent authority's approval must be obtained.
Effects and compensation: The Implementing Regulations set the effects of the amendment and suspension, including how to calculate the compensation the private party may be entitled to, unless the contract contains specific provisions on this. The contract therefore takes precedence over the regulations on this point.
In practice, the contracting authority may amend or suspend once the conditions are met, and the private party may be entitled to compensation. It is therefore advisable for the private party to include clear compensation provisions in the contract for these cases. The text does not state the amount of compensation.
This links to Article 22, which allows extension because of suspension or changes to specifications. Anyone facing an amendment or suspension of their contract should consult a lawyer who specializes in administrative or commercial matters.
Practical example
A contracting authority decides to suspend a partnership project to build a road because of planning developments required by the public interest, after the competent authority's approval. The effects of the suspension and the company's compensation are determined under the contract's provisions if there are any, and otherwise under the Implementing Regulations.
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 21 of the Saudi Privatization Law
Can the government amend a partnership contract?
Yes, if the public interest requires it, within the contract's controls and after the competent authority's approval. The amendment must be in writing.
Is the private party compensated if the project is suspended?
The Implementing Regulations set the effects of suspension and how to calculate any compensation it may be entitled to, unless the contract contains specific provisions on this.
More articles on Amending and Terminating a Partnership Contract
- Article 27
A privatization contract may include a delay fine, penalty clause or compensation for breach, and if the contract so provides the contracting authority may perform it itself or through others after notifying the private party and it fails to correct the breach.
1- يجوز أن يتضمن العقد -أو العقد التابع- فرض غرامة تأخير، أو شرط جزائي، أو تعويض؛ نتيجة إخلال أي من طرفيه في تنفيذ التزاماته التعاقدية، ويحدد العقد -أو العقد ال
- Article 28
With the competent authority's approval, the contracting authority may terminate a partnership contract unilaterally for material breach after notice, bankruptcy, the public interest, or cases set in the contract; the contract determines the effects and compensation.
1- مع مراعاة الأحكام التعاقدية ذات العلاقة، للجهة التنفيذية -بعد الحصول على موافقة الجهة المختصة- إنهاء عقد الشراكة بين القطاعين العام والخاص والعقد التابع أو أ
- Article 29
The contracting authority may transfer, amend or terminate existing government contracts without the counterparty's consent where the project requires it, while preserving the counterparty's right to compensation.
إذا تطلب تنفيذ مشروع التخصيص نقل عقود قائمة لتقديم خدمات، أو مقاولات، أو توريد سلع، بين جهة حكومية وأطراف أخرى متعاقدة معها إلى الطرف الخاص، أو إجراء تعديل عليه
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.