Article 29 of the Saudi Privatization Law
المادة 29 من نظام التخصيص
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 عليها أو إنهائها، فللجهة التنفيذية أن تقرر ما يأتي:
1- نقل هذه العقود -بما يتعلق بها من حقوق والتزامات- إلى الطرف الخاص شريطة موافقته على ذلك، ودون الحاجة إلى إبرام اتفاقيّات إضافيّة، أو موافقة الطرف المتعاقد مع الجهة الحكومية.
2- تقسيم، أو تعديل، أو إنهاء هذه العقود دون حاجة إلى إبرام اتفاقيّات إضافيّة، أو موافقة الطرف المتعاقد مع الجهة الحكومية في تلك العقود.
وفي جميع الأحوال، لا يخل الإجراء الذي تتخذه الجهة التنفيذية بحق المتعاقد مع الجهة الحكومية في المطالبة بالتعويض عن الضرر الذي قد يلحق به بسبب ذلك.
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 29 explained in plain English
When a government service is privatized, the entity usually has existing contracts with contractors, suppliers and service providers. This article regulates what happens to those contracts:
The contracting authority's powers, if implementing the project requires it:
- Transfer: transferring these contracts, with their rights and obligations, to the private party on condition of its consent, without the need for additional agreements or the consent of the party contracting with the government entity.
- Splitting, amending or terminating: without the need for additional agreements or the consent of the contracting party.
Protection of the contracting party: in all cases, what the contracting authority does does not prejudice the right of the party contracting with the government entity to claim compensation for the harm that may affect it as a result.
In practice: a supplier dealing with a government entity may find its contract transferred to a private company, or amended or ended, without its consent being sought. But it does not lose its right to compensation for harm. The text does not say before whom the claim is brought or the amount of compensation.
A contractor whose contract is affected by this measure should document the harm and consult a lawyer who specializes in administrative matters to assess its rights.
Practical example
A small company in Riyadh has a contract to supply a government hospital, and then the hospital's operation is privatized. The contracting authority decides to terminate its contract without its consent because the project required it; the company keeps the right to claim compensation for the harm it suffered.
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 29 of the Saudi Privatization Law
Can my contract with a government entity be transferred to a private company without my consent?
Yes, if implementing the privatization project requires it, it may be transferred to the private party with the private party's consent, without needing the consent of the party contracting with the government entity.
Is the contracting party entitled to compensation if its contract is ended because of privatization?
Yes. The measure does not prejudice its right to claim compensation for the harm that may affect it.
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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.