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Saudi Arabia becomes officially the 96th State Party to the UN Convention on the International Sale of Goods (CISG)
On 14 June 2023, the Kingdom of Saudi Arabia approved its accession to United Nation Convention on Contracts on International Sales of Goods (CISG), by virtue of Royal Decree M/196 dated 04/12/1444 H. The Convention entered into force on 1 September 2024. However, Saudi Arabia decided to opt-out of its article 74 (Part III) and article 84 no. 1 because these provisions regulate interest in transactions which are prohibited in Saudi Arabia.
The CISG sets forth a comprehensive set of legal rules that regulate the formation of contracts for the international sale of goods. It outlines the obligations of both buyers and sellers, provides remedies for contract breaches, and addresses various other contractual aspects. By offering a fair and contemporary uniform framework for sales contracts, which are fundamental to international trade, the CISG applies across all nations, regardless of their legal system.
If a transaction falls within the scope of the CISG and the parties have not explicitly excluded its application, the CISG applies in Saudi Arabia. This means that the CISG principles will govern the interpretation and fulfilment of contractual obligations in KSA, if both contract parties are CISG members, and it will limit the discretion and interpretation of the courts in KSA. Experience with the application of the CISG in Saudi jurisdiction naturally does not yet exist. The development of rulings regarding the CISG by and before Saudi courts will be observed with great interest.
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