Shipping 2026 Comparisons

In Saudi Arabia, maritime and shipping disputes are governed by a modern, codified legal framework, primarily the Commercial Maritime Law (2019). The system does not have dedicated maritime courts but instead utilises specialised circuits within the Commercial Courts.

Main Domestic Laws Establishing Maritime Authorities

The legal authority for maritime matters is established through:

• the Commercial Maritime Law (Royal Decree No M/33, 2018) – published in 2019, this is the primary, comprehensive legislation governing maritime navigation, vessel registration, maritime liens, contracts (charterparties, carriage of goods) and collisions;
• the Commercial Courts Law (2020) – empowers specialised commercial circuits within the judiciary to hear maritime disputes;
• the Enforcement Law and its Regulations – governs the procedures for the arrest, detention and forced sale of vessels; and
• the Transport General Authority (TGA) – the primary regulatory body responsible for licensing, inspecting and managing maritime transport and ports.

Common Maritime and Shipping Claims in Practice

In Saudi Arabia, the most common claims filed are related to active trade through the Jeddah, Dammam and Yanbu ports. These include:

• cargo claims (damage/loss) – claims arising from damaged, short-landed or lost cargo under bills of lading or sea waybills;
• ship arrest and maritime liens – proactive arrest of vessels to secure debts, including fuel supply (bunkering), port dues, repairs or crew wages;
• charterparty disputes – claims arising from breaches of time or voyage charter agreements, such as demurrage, off-hire or non-payment of charter hire;
• maritime accidents and collisions – disputes over liability for vessel collisions in territorial waters, damage to port infrastructure or wreck removal;
• salvage claims – claims for rewards by salvor vessels for assisting vessels in distress; and
• marine insurance disputes – disputes related to protection and indemnity (P&I) or hull and machinery (H&M) insurance coverage.

Competent Courts and Authorities

Maritime disputes are adjudicated based on the nature of the claim.

Claim types include:

• substantive commercial disputes (cargo, charter, collision)       – commercial courts (specialised maritime circuits) are the competent courts;
• vessel arrest/detention       – commercial courts (for orders) and enforcement courts (for sale) are the competent courts;
• administrative violations (fines, licensing, pollution) – the TGA and specialised committees (appeals within 14 days) are the competent authorities;
• maritime labour disputes – labour courts (or commercial courts, depending on the contract nature) are the competent courts; and
• contractual arbitration – the Saudi Center for Commercial Arbitration (SCCA) is the competent authority.

Saudi Arabia operates a robust port state control (PSC) system, primarily governed by the Riyadh Memorandum of Understanding (Riyadh MoU) on Port State Control, which was signed in 2004 and is designed to harmonise inspection regimes across the Gulf Cooperation Council (GCC) region. The system aims to ensure foreign vessels visiting Saudi ports comply with international safety, environmental and labour standards, acting as a second line of defence against sub-standard shipping.

System and Regulatory Framework

The Riyadh MoU aligns with international standards set by the International Maritime Organization (IMO) and the International Labour Organization (ILO). The system covers the International Convention for the Safety of Life at Sea (SOLAS), the International Convention for the Prevention of Pollution from Ships (MARPOL), the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW), load lines and the Maritime Labour Convention (MLC).

The system is enforced through the Saudi Commercial Maritime Law (issued 2019), which applies to all foreign vessels in Saudi waters and empowers authorities to enforce safety and environmental standards.

Authorities and Powers

The TGA is the primary body responsible for maritime safety, including PSC.

Powers of port state control officers (PSCOs) include:

• inspections – authorised to board foreign ships to verify certifications, crew competence, structural integrity and working/living conditions;
• detention – if significant deficiencies are found (eg, in navigation, safety or pollution prevention), PSCOs have the power to detain vessels in Saudi ports until rectification;
• rectification – deficiencies must be corrected in the port of inspection or at an agreed repair yard; and
• refusal of access – ships that fail to comply with safety requirements or bypass detention orders can be banned from entering Saudi ports.

Powers in Relation to Marine Casualties

In the event of marine casualties, the TGA has comprehensive powers to ensure safety and environmental protection.

• Seafarer casualties/fatalities: Under the MLC 2006 framework, PSC inspections specifically target the living and working conditions of crew. If deficiencies such as lack of proper rest, inadequate food or unsafe working conditions are found to have contributed to accidents or fatalities, the vessel can be detained.
• Grounding and wreck removal: The Kingdom has acceded to the Nairobi Wreck Removal Convention (2007). Following a grounding, authorities can order the owner to remove the wreck and, if necessary, take action to ensure the safety of navigation and protect the marine environment.
• Pollution: As a signatory to MARPOL, Saudi authorities have the power to inspect for pollution violations, detain vessels that cause pollution and require evidence of financial security (insurance) for pollution.
• Investigations: the TGA has the authority to investigate accidents occurring in territorial waters and can restrict the movement of vessels involved until investigations are complete.

In Saudi Arabia, the key legislation for ship registration is the Commercial Maritime Law (issued by Royal Decree No M/33 in 2018), which governs vessel nationality, ownership and registration, including bareboat charters. The TGA is the primary governmental body responsible for registering vessels and maintaining the ship registry.

Key pieces of domestic legislation include:

• the Commercial Maritime Law (2018) – replaced the older 1983 law, establishing the legal framework for registering commercial vessels, yachts and offshore rigs;
• the Implementing Regulations of the Commercial Maritime Law – detailed rules covering survey, tonnage measurement, registration procedures and flag-state requirements;
• the Regulation for the Registration of Ships and Marine Units – specific guidelines governing the registration process and documentation; and
• the Maritime Law/Regulations (various updates) – cover safety standards, environmental protection (ballast water/emissions) and navigation permits.

The governmental authorities handling registration are:

• the TGA – as the central regulatory body, the TGA handles the registration, licensing and inspection of vessels, often utilising the "Maritime Gate" portal for applications; and
• the Ministry of Transport (MoT) and logistics services – often works in conjunction with TGA in the registration process.

Vessels registered in Saudi Arabia must generally be owned by Saudi nationals or companies with at least 51% Saudi ownership, requiring registration with the TGA. While foreign ownership is restricted, joint ventures or specific corporate structures may be permitted. Vessels under construction can be registered, as the law recognises ship construction contracts.

The requirements for vessel registration in Saudi Arabia are as follows:

• ownership – a vessel must be owned either entirely by a Saudi national or by a company where the Saudi capital share is at least 51%;
• registration – all vessels must be registered with the TGA to establish identity, nationality and legal ownership; and
• documentation – owners must provide documents proving ownership and the vessel’s technical specifications.

Regarding foreign ownership and registration, the following applies.

• Restrictions: Full foreign ownership of a vessel is generally not permitted for registration under the Saudi flag; it requires majority Saudi ownership.
• Foreign entities: While 100% foreign ownership is allowed in some sectors, it is not universal. However, foreign entities can own/operate vessels, though they may not be able to flag them as Saudi-owned, or they must operate through a locally incorporated company meeting the 51% threshold.
• Bareboat charter: A foreign party may charter a vessel under a bareboat charter arrangement.

Regarding vessels under construction, it is possible to register a vessel that is still under construction. The Commercial Maritime Law requires that ship construction contracts be in writing.

Saudi Arabia’s Commercial Maritime Law permits the temporary registration of vessels, including bareboat charter registration for up to two years. Dual registration (dual-flag flexibility) is also allowed, enabling foreign vessels chartered by Saudi entities to fly the Saudi flag while suspending their original registration, and vice versa.

Key details regarding vessel registration in Saudi Arabia are as follows.

• Temporary registration: Foreign vessels under a bareboat charter to a Saudi party can be registered temporarily. A temporary certificate can be issued for one or more voyages, or for up to six months (renewable up to two years).
• Dual registration/flagging: The law permits a foreign vessel chartered bareboat to a Saudi entity to be registered in Saudi Arabia, treating it as a Saudi vessel during the charter term. Conversely, a Saudi vessel chartered to a foreign party may suspend its Saudi registration and fly the foreign flag.
• Requirements: Vessels must be registered with the Saudi maritime authority (Public Transport Authority) to operate within the Kingdom’s waters.
• Ownership: Generally, to fly the Saudi flag, a vessel must be owned by a Saudi national or entity (at least 51% share for corporate ownership).
• Temporary foreign entity registration: Foreign companies newly operating in the Kingdom may receive temporary registration for their vessels while establishing a permanent commercial registration, typically valid for one year.

In Saudi Arabia, the ship ownership and mortgage registry is managed by the TGA and relevant maritime authorities, which serve as the central, albeit not entirely open, repository for legal ownership and vessel encumbrances. Registration is required for legal recognition and priority of mortgages.

While not a public, free-search database like some land registries, information can be verified by interested parties through specific legal processes and official enquiries.

The following applies regarding access to ship registry information.

• Legal standing: The registry acts as conclusive proof of title and mortgage. Registration ensures that mortgages are effective against third parties.
• Verification methods: Information can be obtained through official requests to the TGA, the competent authority for vessel registration.
• Judicial/official access: In cases of debt or arrest, creditor notification and court processes allow for the verification of registered ownership and encumbrances.
• Registration details: The register includes the vessel name, owner details and the nature of the mortgage, allowing for verification of ownership, although not fully public.

Concerning mortgage and ownership registration, the following applies:

• registration duty – the registration of a mortgage is essential to give it effect against third parties;
• application process – ship-owners submit applications to the TGA, providing documents that prove ownership and the vessel’s technical specifications; and
• transfer of ownership – any sale or transfer of ownership must be registered to be effective against third parties.

Ship loan financing in Saudi Arabia is very sophisticated, involving a mix of conventional, Sharia-compliant and sale-leaseback transactions, generally underpinned by the Commercial Maritime Law (Decree No 33, 1440 AH).

Key Terms and Operative Provisions: Debt and Equity

Debt financing (most common)

Pertinent details are as follows:

• structures – conventional term loans and revolving credit facilities are common, often utilising Loan Market Association (LMA) templates;
• Sharia compliance – due to the prohibition of interest (Riba), Murabaha (cost-plus financing) and Ijara (leasing) structures are widely used;
• loan-to-value (LTV) ratios – generally 50–60% of the vessel’s value;
• key clauses – specific LTV maintenance covenants require periodic independent valuation reports; and
• regulatory approval – syndicated loans in Saudi Riyal involving foreign banks require prior Saudi Central Bank (SAMA) approval.

Equity financing

The following applies to equity financing:

• joint ventures – preferred for large maritime infrastructure projects;
• ownership requirement – to fly the Saudi flag and access local financing, 51% Saudi ownership is generally required, although exemptions exist; and
• public investment fund (PIF) involvement – PIFs play a significant role in providing equity to develop the local maritime sector.

Ship Mortgages (Key Provisions)

Ship mortgages are a vital, distinct form of security in Saudi Arabia, governed by the 1955 Ship Mortgage Regulations and reinforced by the 2019 Commercial Maritime Law:

• registration – must be registered with the Saudi Ministry of Transport (MoT) at port offices in Dammam or Jeddah to be effective;
• capacity to mortgage – only vessels registered under the Saudi flag can be mortgaged;
• formalities – the mortgage must be an official, written contract, signed by both parties, often requiring authentication by a Chamber of Commerce or notary;
• required documentation – a declaration from the mortgagor (stating no prior liens) and a summary of the mortgage details are required;
• default and enforcement – the mortgagee can enforce the mortgage through Saudi enforcement courts, which may order a public auction; and
• precedence – maritime debts (like crew wages) have priority over ship mortgages.

The most common transactions are:

• sale and leaseback, often structured as an Ijara (leasing) agreement – this is common for ship-owners seeking to free up capital;
• syndicated loans – used for financing large fleet modernisation; and
• Murabaha facilities – common in Islamic banking for vessel acquisitions.

Security packages beyond mortgages include:

• assignment of earnings – lenders frequently require the assignment of charter party income and earnings, usually paid into a controlled bank account;
• earnings account pledge – security over the account where earnings are received;
• insurance policies assignment – assignment of insurance proceeds (H&M, P&I);
• corporate/personal guarantees – often provided by parent companies or owners; and
• promissory notes – frequently used to support the mortgage and facilitate enforcement.

Ship leasing transactions are increasing in Saudi Arabia. The Saudi maritime fleet grew by 32% in 2025, the second-fastest among G20 nations, indicating a massive surge in investment.

Trends in Ship Finance

These include:

• shift in finance sources – there has been a notable shift towards diversified financing, including sale and leaseback, Sharia-compliant structures (such as Ijara) and private debt;
• Chinese leasing houses – Chinese leasing companies have expanded significantly into the market, taking advantage of the gap left by traditional bank lending restrictions and providing alternative capital;
• alternative credit providers – though currently small (2% of debt stock), private capital financing and alternative credit has grown tenfold since 2020 to reach USD3.7 billion in 2024; and
• bank lending – despite the rise of alternatives, traditional bank loans remain a cornerstone of shipping finance in the region, particularly for established players.

Lessor/Lessee Versus Lender/Borrower

Important points include the following.

• Ownership: In a lease (specifically a sale and leaseback), the lessor is the registered owner of the vessel. In a traditional loan, the ship-owner retains ownership, and the bank holds a mortgage as security.
• Default handling: If a borrower defaults on a loan, the lender must go through legal proceedings to enforce the mortgage. If a lessee defaults on a lease, the lessor (as owner) can typically terminate the charter and take possession of the vessel more easily than a mortgagee, making it a faster, less cumbersome process.
• Relationship: The lessor/lessee relationship is generally closer, resembling a “buyer and operator”, whereas lender/borrower is more of a “creditor and debtor” relationship.

Differences in Enforcement

These include:

• mortgage enforcement – enforcing a mortgage requires legal proceedings and can be affected by the vessel’s condition, or if the mortgagor goes bankrupt;
• lease enforcement – sale and leaseback structures often allow for smoother repossession of assets upon default, particularly under Sharia-compliant Ijara (leasing) agreements; and
• court system: Saudi Arabia has established a specialised execution/enforcement judge (EJ) system for enforcing contracts, especially for authenticated documents like lease agreements.

Sale and Leaseback Transactions

Sale and leaseback transactions are common in Saudi Arabia, particularly for financing new or second-hand tonnage, as they allow owners to improve liquidity and access capital without incurring high debt on their balance sheets. These are often structured to be Sharia-compliant, frequently using Ijara structures where the owner sells the vessel to a financier and leases it back, with an option to repurchase at the end of the term.

In Saudi Arabia, the liability of ship-owners and interested parties for pollution and wreck removal is governed by a combination of international conventions ratified by the Kingdom and domestic laws, most notably the Commercial Maritime Law of 2019 (Royal Decree No M/33). The legal framework emphasises strict liability for pollution and wreck removal, with requirements for compulsory insurance.

Applicable international conventions

Saudi Arabia has ratified several key IMO Conventions:

• Nairobi International Convention on the Removal of Wrecks (2007) – ratified by Saudi Arabia, this Convention holds registered owners strictly liable for the costs of locating, marking and removing ships that pose a hazard in their territorial waters or exclusive economic zone (EEZ);
• MARPOL 73/78: Saudi Arabia has acceded to Annexes I–V and the Protocol relating to Annex VI, covering pollution from oil, noxious liquids, sewage and garbage;
• International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969 and 1992 Protocols – governs the liability of tanker owners for oil pollution damage, establishing a strict liability regime and requiring insurance;
• International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunkers Convention) – ensures compensation for pollution damage caused by spills of oil carried as fuel in ships’ bunkers; and
• 1996 Protocol amending the1976 Convention on Limitation of Liability for Maritime Claims (LLMC) – acceded to on 6 April 2018, this framework allows ship-owners to limit their liability for certain claims, including pollution and wreck removal.

Relevant Domestic Laws

These include the following.

• The Commercial Maritime Law (Royal Decree No M/33, 2019): This is the primary legislation applying to Saudi-flagged vessels and foreign vessels in Saudi waters. It covers vessel registration, ownership, liability and marine insurance.
• Maritime Zones Law (Royal Decree No M/6): Defines Saudi sovereignty and rights over its territorial sea, EEZ and continental shelf, providing the jurisdictional basis for enforcement.
• General environmental regulations: Prohibit unauthorised pollution of territorial waters, the seabed and subsoil.
• Saudi Aramco Oil Ports and Terminals Rules: Specific, stricter rules apply to terminal operations at Ras Tanura, Ju’aymah, etc.

Liability for Pollution

Under CLC and Bunkers Conventions, the registered owner is strictly liable for pollution damage. Ships of 1,000 gross tonnage and above (bunkers), and tankers, must maintain insurance covering their liability. Claimants can take direct action against the insurer.

Liability for Wreck Removal

The registered owner is strictly liable for the costs of locating, marking and removing the wreck if it constitutes a hazard. If the owner fails to remove a wreck, and in urgent cases, the Saudi authorities can remove the wreck and recover costs. The Nairobi Convention requires ships of 300 GT or more to carry a wreck removal insurance certificate.

Limitation of Liability

While Sharia law (the foundation of the legal system) generally allows full compensation, the 2019 Commercial Maritime Law incorporates the 1996 Protocol to the LLMC Convention, which enables ship-owners to cap their liability for wreck removal and pollution claims.

Saudi Arabia’s liability framework blends the Commercial Maritime Law (2019) with international conventions and Sharia principles. The 2019 Maritime Law governs all vessels in Saudi waters. However, Sharia remains the fundamental legal principle, emphasising “full compensation” for harm, which can sometimes override statutory liability caps.

Relevant international conventions include:

• International Convention on Salvage (1989) – regulates rewards based on success and environmental protection efforts (special compensation);
• LLMC 1976/96 Protocol – allows owners to limit liability for claims like collisions based on vessel tonnage; and
• Convention on the International Regulations for Preventing Collisions at Sea (COLREGs) 1972 – used to determine negligence in collision cases.

Regarding collision liability, owners are generally jointly and severally liable for damages unless they prove no negligence occurred. In cases of common fault, liability is split proportionally based on the degree of responsibility.

The 1996 Protocol amending the LLMC is applicable in Saudi Arabia, which acceded to it on 6 April 2018, with the protocol entering into force for the Kingdom on 5 July 2018.

The status of amendments and legislation is as follows.

• 1996 Protocol: In force since July 2018.
• 2012 Amendments (to the 1996 Protocol): While the 1996 Protocol is in force, there is conflicting information regarding whether the 2012 amendments (which significantly increased limits) have been formally ratified or applied by Saudi courts, as some sources indicate it was not initially adopted. However, the 2019 Maritime Law aims to align with international conventions.
• Domestic legislation: The applicable legislation is the new Commercial Maritime Law, issued under Royal Decree No M/33 dated 5 Rabi’ II 1440H (January 2019), which came into effect on 3 July 2019. This law regulates maritime liability, replacing older, outdated regulations.

The 1969 Vienna Convention on the Law of Treaties (VCLT) is applicable in Saudi Arabia. The Kingdom of Saudi Arabia officially acceded to the Convention on 14 April 2003, and it entered into force for the country on 14 May 2003.

The UK Supreme Court’s use of the VCLT for treaty interpretation in MSC Mediterranean Shipping Company SA v Conti 11 Container Schiffahrts-GmbH & Co KG MS “MSC Flaminia” has several implications for Saudi Arabia.

• Applicability: As a party to the VCLT, Saudi Arabia acknowledges the rules regarding the interpretation of treaties, particularly Articles 31 and 32 (general rules of interpretation, good faith, context, object and purpose), which form part of international law.
• Contextual application: While Saudi Arabia is a party to the 1969 VCLT, its legal system is based on Sharia (Islamic law). When implementing international conventions (such as those regarding maritime claims), the Saudi authorities generally ensure compliance with international obligations while adhering to internal legal principles.
• Judicial interpretation: The principles of treaty interpretation established in the VCLT are used to guide the interpretation of international agreements, including maritime law, in Saudi legal contexts.

To cap liability for maritime or financial claims, parties must file a formal application with a competent Saudi court to deposit a specific sum representing their maximum liability.

• Eligible parties: The fund can be established by liable parties such as ship-owners, charterers and insurers, or by authorised capitalmarketinstitutions for investment-related funds.
• Calculation: The fund amount is typically calculated based on statutory limits using Special Drawing Rights (SDRs) converted into Saudi Riyals, or based on vessel tonnage for maritime incidents.
• Mandatory deposit: To legally constitute the fund, the applicant must lodge a financial deposit or guarantee with the court covering the calculated liability amount.

Although Saudi Arabia has not ratified the MLC 2006, it has integrated similar standards into its domestic Commercial Maritime Law (2019), which applies to all Saudi-flagged vessels and foreign ships in its waters. This is supplemented by the KSA Labour Law (2005) where specific maritime statutes are silent.

Seafarer protections include:

• contracts and wages – written contracts are mandatory for all crew members and must be recorded in the vessel’s log;
• working hours – work is capped at 14 hours per 24-hour period and 72 hours per week, with a minimum of ten hours of rest daily.
• welfare – ship-owners are legally obligated to provide free food and medical care, pay wages during sickness, and cover repatriation costs upon contract expiry or injury; and
• safety – the law enforces strict adherence to international competency standards (the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers – STCW), requiring crew members to be medically fit and at least 18 years old.

Saudi Arabia is not a signatory to international conventions like the Hague-Visby, Hamburg, or Rotterdam Rules. Instead, carriage by sea is governed principally by domestic legislation. The primary authority is the Commercial Maritime Law (2019), which applies to all vessels in Saudi waters. This is supported by the 2013 Carriage of Goods by Sea Rules and the Electronic Transactions Regulation (2007), which makes electronic bills of lading legally binding.

Key provisions include:

• mandatory details – bills of lading must list specific particulars, including the goods’ weight, marks, and the names of the shipper and consignee;
• liability limits – compensation for loss or damage is capped unless the value of the goods is explicitly stated in the bill; and
• time bar – legal actions regarding cargo damage generally must be initiated within one year.

Under the Saudi Commercial Maritime Law, the lawful holder of the bill of lading – whether a named consignee or an endorsee – possesses the primary right to claim delivery and sue the carrier for loss or damage.

A shipper may sue if they still hold the bill or have suffered the loss directly. Additionally, cargo insurers acquire the right to sue via subrogation once they have indemnified the cargo owner.

Saudi courts recognise the assignment of the title to sue, typically executed by endorsing and transferring the bill. While valid between parties without the carrier’s consent, the assignment only binds the carrier (debtor) if they are officially notified or explicitly accept it.

Under the 2019 Maritime Law and Hague-Visby principles, carriers are liable for cargo loss, damage or delay from receipt to delivery – unless they can prove the cause was force majeure, shipper fault or “perils of the sea”. Liability is strict if the vessel was unseaworthy and the owner failed to exercise due diligence.

Liability is typically capped at 666.67 SDR per package or 2 SDR per kilogram (whichever is higher), unless the cargo’s value was declared before shipment.

The contractual and actual carrier are distinguished thusly:

• contractual carrier – the party issuing the bill of lading (often a charterer or forwarder) bears primary responsibility to the cargo owner; and
• actual carrier – the ship-owner physically performing the transport may still be liable directly under tort law, or jointly and severally with the charterer, particularly regarding vessel seaworthiness.

Under the Saudi Maritime Commercial Law (Article 79) and the Civil Code (2023), shippers are liable for damages resulting from inaccurate declarations of goods in the bill of lading.

• Dangerous goods: Shippers face strict liability for misdeclaring dangerous cargo, covering costs for vessel contamination, container damage and emergency response.
• Recoverable damages: Carriers can file recourse actions to recover compensation paid to third parties (eg, cargo owners), as well as surveyor fees, legal costs and lost profits resulting from the breach.
• Judicial approach: Saudi courts strictly enforce the contract of carriage. If a carrier proves a discrepancy (eg, weight exceeding the declared amount) or inadequate packaging, the shipper is generally held responsible for the resulting losses.

Maritime cargo claims generally lapse 365 days after delivery (or when delivery was due). Air cargo limits are significantly tighter: 14 days for damage, 21 days for delay and 120 days for total loss from the air waybill date.

A broader five-year limitation period applies to general commercial suits under the Commercial Courts Law. Under the Civil Transactions Law (2023), limitation periods are rigid but may be interrupted if the defendant admits liability, or suspended due to force majeure or a “lawful excuse” (such as bona fide negotiations making filing impossible).

Statutory liability limits may be voided if it is proven that the carrier acted with intent or gross negligence.

Saudi Arabia is not a party to international arrest conventions (1952 or 1999); instead, arrests are governed entirely by domestic laws rooted in Sharia principles.

The primary statute is the Commercial Maritime Law (2019), which replaced older Ottoman-based laws. Procedural aspects are handled under the Enforcement Law and the Law of Procedure Before Shari’ah Courts.

• Requirements: A ship can only be arrested for a specific “maritime debt”, as defined in Article 75. Applications are filed online with Commercial Courts, which must respond within three days.
• Scope: Arrests of “sister-ships” (same registered owner) are permitted, but arrests of “associated ships” (common control/different owner) are generally not.
• Release: To release a vessel, the defendant must typically provide a bank guarantee from a local Saudi bank; courts may also demand counter-security from the applicant to cover potential wrongful arrest damages.

Saudi Arabia recognises maritime liens as privileged debts that take priority over registered mortgages and attach directly to the vessel, surviving changes in ownership.

• Scope: These liens typically secure claims related to crew wages, salvage and maritime torts (including crew injury indemnities).
• Distinction: The jurisdiction distinguishes between these high-priority maritime liens and broader maritime claims (such as contractual charterparty disputes), which do not carry the same privileged status.
• Time bar: A maritime lien is valid from the moment the claim arises but is generally extinguished after one year unless the creditor files a lawsuit or arrests the vessel within that period.

Owner Versus Charterer Liability

Generally, a creditor can only arrest a vessel if the registered owner or demise (bareboat) charterer is personally liable for the debt. Debts incurred by time charterers typically do not justify an arrest unless they generate a specific maritime lien.

Maritime Liens (“Guilty Vessel”)

A ship can be arrested regardless of the owner’s personal liability if the claim constitutes a maritime lien (eg, crew wages, collision damage, salvage). These “privileged debts” attach directly to the vessel itself rather than the owner.

Sister Versus Associated Ships

Saudi law permits the arrest of sister ships (vessels sharing the exact same registered owner). However, arresting associated ships (different owners within the same fleet or management) is generally not possible.

A bunker supplier in Saudi Arabia can arrest a vessel for unpaid fuel as a valid maritime claim, but success depends on who ordered the fuel and the supplier’s status.

Owner Versus Charterer Liability

Arresting a vessel is straightforward if the ship-owner ordered the bunkers. However, if a charterer ordered them, the supplier faces significant challenges. A charterer’s debt does not automatically create a lien against the vessel unless the supplier can prove the charterer had specific authority to bind the vessel owner.

Supplier Status

A physical supplier (who actually delivered the fuel) generally has a stronger claim than a contractual supplier (a middleman or trader). The physical supplier is better positioned to prove the fuel was provided on the vessel’s credit.

Authority to Bind

Charterers typically lack the inherent authority to bind the vessel for necessaries like fuel. If the supplier knew the charterer was ordering for their own account, the right to arrest the owner’s ship may be negated.

Arresting a vessel is an expedited process under the Saudi Maritime Law 2019, typically concluded within 48–72 hours via the Commercial Court’s online portal.

Mandatory Documentation

Applicants must submit an apostilled power of attorney (POA) and a formal affidavit with supporting evidence (contracts, invoices). Crucially, all foreign documents must be translated into Arabic by a certified translator.

Urgency and Security

The claimant must provide evidence that the debtor intends to remove the ship or will not settle. Additionally, the court often requires a security deposit (counter-security) to cover potential damages if the arrest is later found to be wrongful.

Next Steps

To maintain the arrest, a substantive lawsuit regarding the debt must be filed within a strict timeframe (typically days) following the arrest order.

Vessels

The 2019 Commercial Maritime Law permits the arrest of vessels for maritime debts (eg, unpaid charter fees or supplies). Courts typically issue warrants within three days, and sister-ship arrests are allowed if the owner is the same.

Bunkers (Fuel)

Arresting fuel independently is generally not possible under standard law. Unpaid suppliers usually arrest the vessel itself, as bunker claims qualify as maritime debts.

Cargo

Seizing cargo is possible but difficult; it generally requires the cargo to be owned by the party liable for the maritime debt, often arising when a carrier fails to deliver goods.

Saudi Arabia permits the arrest of a sister ship to secure a maritime debt, provided it shares the same registered owner as the debtor’s vessel.

• Procedure: Claimants apply via the commercial court’s online system, with decisions typically rendered within three days.
• Limitations: Courts generally do not pierce the corporate veil. Therefore, arresting associated ships (vessels with different registered owners but similar management) is generally prohibited.
• Time limit: To maintain the arrest, the claimant must initiate substantive legal proceedings within ten days of the order.

Beyond ship arrests, creditors in Saudi Arabia can secure claims through precautionary attachments (saisie conservatoire) under the Enforcement Law.

• Precautionary attachment: Creditors can petition the court on an ex-parte basis (without prior notice) to attach a debtor's assets – such as cargo or equipment – if they prove a credible claim and a risk of asset dissipation.
• Bank and property freezes: EJs can order the freezing of bank accounts to prevent fund transfers and attach movable property like machinery.
• Third-party and investment assets: Attachment orders can extend to real estate, corporate shares and even funds owed to the debtor by third parties (garnishment).
• Pledge (Rahn): Parties can also create a Rahn (pledge or mortgage) over movable or immovable assets to secure a debt in accordance with Sharia principles.

Vessels arrested in Saudi Arabia can be released by depositing a security determined by the court, typically via a local Saudi bank guarantee, or through an amicable settlement. While P&I club letters of undertaking (LOUs) are sometimes accepted, they are not guaranteed to be accepted by the court, and a local bank guarantee is more likely to secure a swift release.

Regarding options to release an arrested vessel in Saudi Arabia:

• the owner must deposit the security amount determined by the court (usually not exceeding the value of the ship) to obtain a release order;
• amicable settlement – an agreement between the parties can lead to the arresting party submitting a request to the court to release the vessel;
• grievance/objection – the defendant can file a grievance against the arrest order, arguing for its release; and
• timeframe – release typically takes up to 72 hours from submission of the security.

Acceptable security types include the following.

• Local bank guarantee: This is the most secure and readily accepted form of security by Saudi courts.
• Foreign bank guarantee: These are generally accepted, provided they are in conformity with the approved form, and an Arabic translation is provided.
• P&I club LOU: While common in international maritime law, in Saudi Arabia, a P&I club LOU is not guaranteed to be accepted. It is generally only accepted if the claimant specifically agrees to it.
• Cash deposit: Cash can be deposited with the court.

Judicial Sale and Maintenance Liability

The judicial sale of vessels is governed by the Commercial Maritime Law (2019) and executed through public auctions overseen by enforcement courts.

• Procedure and release: Claimants apply for arrest warrants via the Najiz portal (with a three-day response time). Crucially, to release a vessel, defendants must provide a bank guarantee from a local Saudi bank; P&I club LOUs are not accepted.
• Public versus private sale: Private sales are generally prohibited to ensure transparency. However, a court may order a sale pendente lite (before final judgment) if the vessel is rapidly deteriorating or endangering third parties.
• Creditor liability: The party seeking the arrest is financially responsible for the vessel’s maintenance (including port fees and crew expenses) during detention and must usually provide an undertaking to cover these costs when applying.

Saudi Arabia’s Bankruptcy Law (2018) establishes a framework analogous to US Chapter 11, prioritising corporate rescue over liquidation.

• Automatic stay: Procedures like financial restructuring trigger a mandatory moratorium, preventing creditors from taking legal action against the debtor or their assets to avoid piecemeal dismantling of the company.
• Prohibition on arrest: Consequently, maritime courts are generally prohibited from arresting or selling a vessel owned by a debtor once restructuring has commenced.
• Creditor recourse: Instead of pursuing an independent in rem arrest, creditors – including those with maritime liens – must submit their claims to the bankruptcy trustee or the commercial court overseeing the insolvency.

Saudi courts award damages for wrongful arrest if the detention is arbitrary, lacks legal justification or results from malicious prosecution, following the Sharia principle of “no harm” to restore the victim’s prior state.

Grounds for Liability

Liability arises from detaining someone without a warrant (unless caught in flagrante delicto), violating procedural time limits, or initiating malicious prosecution based on fabricated allegations. Additionally, a final acquittal establishing innocence or illegal detention regarding private debts can trigger liability.

Types of Compensation

These include:

• material damages – covers financial losses like lost income and legal fees;
• moral damages – compensates for emotional distress, defamation and damage to reputation;
• daily compensation – courts often award a specific amount for each day of unjust imprisonment; and
• judicial costs – the Court of Grievances may impose legal costs on the responsible party, whether a private entity or government authority.

Maritime passenger claims in Saudi Arabia are governed by the Commercial Maritime Law (2019), alongside the LLMC Convention (1976/1996 Protocol) and Sharia Law where statutes are silent.

• Time limits: Claims arising from passenger carriage contracts and marine insurance generally have a limitation period of two years.
• Liability limits: Under the LLMC/1996 Protocol, a ship-owner’s liability for personal injury or death is capped at 175,000 SDR multiplied by the vessel’s passenger capacity. This limit is virtually unbreakable – unless it is proven that the owner acted with personal intent or recklessness to cause the loss.
• Legal status: Claims for passenger injury or death are officially classified as “maritime debts” under Article 75 of the Commercial Maritime Law.

Courts in Saudi Arabia generally recognise and enforce law and jurisdiction clauses stated in bills of lading, but this is subject to significant limitations based on public policy, Sharia principles and mandatory local laws.

With the modernisation of the Saudi legal system, courts are more likely to respect party autonomy and exclusive jurisdiction clauses (eg, in favour of London or other international courts) to ensure international procedural comity, provided they do not conflict with Saudi law.

Key aspects of enforcement in Saudi Arabia include:

• respect for forum selection – Saudi commercial courts often respect clauses directing disputes to foreign courts if the parties are professional entities (eg, importers) and the clause is clearly part of the contract;
• mandatory Saudi law – even if a foreign law clause is present, Saudi courts will apply Saudi law to mandatory provisions, particularly regarding liability for cargo damage, and will not apply foreign substantive law;
• Sharia compliance (public policy) – a foreign judgment or clause that contravenes Sharia principles, such as the payment of interest (riba), will not be enforced;
• reciprocity – for foreign judgments or arbitration awards arising from these clauses to be enforced in Saudi Arabia, there must be reciprocity, meaning the foreign country must also enforce Saudi judgments; and
• exclusive jurisdiction limitations – if the defendant resides in Saudi Arabia or the dispute involves assets located in the Kingdom, Saudi courts may refuse to relinquish jurisdiction despite a contrary clause.

Courts in Saudi Arabia generally recognise and enforce law and arbitration clauses of a charterparty that are incorporated by reference into a bill of lading, provided specific legal requirements are met. Under the Saudi Arbitration Law (Royal Decree No M/34), a reference in a bill of lading to an arbitration clause in a charterparty is considered a valid, written arbitration agreement if the reference clearly incorporates the clause.

Key requirements for recognition and enforcement in Saudi Arabia include:

• clear reference – the bill of lading must expressly refer to the charterparty and specifically indicate that the arbitration clause, along with other terms, is incorporated;
• written agreement – the arbitration clause must be in writing, which is satisfied by the reference in the bill of lading;
• non-signatory binding – while a holder of a bill of lading is often not a signatory to the charterparty, Saudi courts may uphold the clause if the incorporation is clear, often treating the bill of lading as an independent contract that binds the holder;
• Sharia compliance – the arbitration agreement must not violate Shari principles or public policy; and
• validity challenges – Saudi courts adhere to the principle of “competence-competence”, meaning the arbitral tribunal, rather than the court, generally determines its own jurisdiction and the validity of the arbitration clause in the first instance.

The 1958 New York Convention is applicable in Saudi Arabia, which acceded to it in 1994, typically with a reciprocity reservation. Foreign arbitral awards are enforceable, primarily governed by the Enforcement Law (Royal Decree No M/53) and the 2012 Arbitration Law (Royal Decree No M/34), provided they do not violate Sharia principles.

Key aspects of arbitration law in Saudi Arabia include the following:

• applicable convention – the 1958 New York Convention is in force;
• primary domestic law – the Arbitration Law (Royal Decree No M/34 of 2012), which is based on the UNCITRAL Model Law;
• enforcement mechanism – the Enforcement Law (Royal Decree No M/53 of 2012) (and its Implementing Regulations) governs the recognition and enforcement of foreign awards;
• public policy exception – foreign awards must comply with Islamic Sharia principles, as enforcement may be refused if it violates public policy; and
• competent authority – the Enforcement Court is responsible for enforcing foreign awards.

Saudi courts generally grant provisional vessel arrests to secure maritime debts, even if the underlying contract mandates foreign arbitration or jurisdiction.

• Legal authority: Under the Saudi Arabian Maritime Law (Royal Decree No M/33), arrests are treated as provisional measures to secure a claim rather than a final judgment on the dispute. Commercial courts typically issue arrest warrants within three days of an application.
• Procedural timeline: To maintain the arrest, the claimant must file the substantive lawsuit in the agreed foreign forum and validate the arrest in Saudi courts, typically within eight days.
• Key requirements: Applicants must establish a valid maritime debt (eg, unpaid supplies, charterparty breach) and provide counter-security (usually a local bank guarantee) to cover potential damages if the arrest is deemed wrongful. All documents must be translated into Arabic and accompanied by an apostilled POA.

Saudi Arabia has a premier domestic arbitration institution that handles maritime claims, along with a specialised legal framework for the maritime industry.

The SCCA

The SCCA is the primary institution for domestic and international arbitration in Saudi Arabia, including maritime disputes. While the SCCA handles general commercial disputes, it is explicitly noted as a venue for settling maritime disputes, aiming to create a safe environment for both foreign and domestic parties in this sector.

The SCCA operates under rules modelled on the UNCITRAL Arbitration Rules, which allow for the appointment of arbitrators with specific subject matter expertise, including maritime law. The SCCA provides expedited procedures for less complex cases, which can be useful for maritime claims.

Saudi courts generally uphold foreign jurisdiction and arbitration clauses, supported by the Arbitration Law (2012, amended 2023).

• Dismissal of proceedings: Under Article 11, if a lawsuit is filed in breach of an arbitration clause, the court must dismiss the case, provided the defendant raises the objection before submitting any other defence. Courts also respect foreign jurisdiction clauses unless they violate Sharia or public policy.
• Mandatory referral: Article 12 obliges courts to refer parties to arbitration if a valid agreement exists, even if the dispute is currently pending before the court.
• Interim measures: To prevent asset disposal, parties can apply to Saudi courts for precautionary attachment (freezing orders) or use emergency arbitrator procedures while proceedings are pending.
• Competence-competence: Saudi law adopts the principle that the arbitral tribunal has the authority to determine its own jurisdiction, allowing it to confirm its mandate even if parallel court proceedings have been initiated.

Tax Relief for Saudi Shipping Companies

Unlike some jurisdictions, Saudi Arabia does not utilise a “tonnage tax” regime, but instead offers structural tax incentives and a low-tax environment:

• zero-rated VAT – international transportation services for passengers and goods, including vessel leasing, are subject to 0% VAT;
• logistics zone incentives – companies established in the Special Integrated Logistics Zone (SILZ) are eligible for a 0% corporate income tax rate for up to 50 years on qualifying maritime activities;
• regional headquarters (RHQs) – multinational companies setting up RHQs can access 0% income tax on qualifying income and 0% withholding tax for up to 30 years; and
• standard regime – mainland companies are generally subject to 20% corporate tax (or 2.5% Zakat for GCC-owned entities), with provisions to deduct operating expenses and vessel depreciation from taxable income.

Under the Civil Transactions Law (2023) and Sharia principles (specifically Jawaih), non-performance is excused as force majeure only if an event is external, unforeseeable and renders performance impossible rather than just difficult or expensive:

• qualifying events – valid grounds include severe natural disasters (Jawaih), government bans or port closures, acts of war or piracy, and major non-negligent infrastructure failures;
• excluded scenarios – routine port congestion, predictable weather and subcontractor defaults typically do not qualify as force majeure; and
• protocol – to invoke this defence, the affected party must provide prompt notification to the counterparty immediately following the event.

Saudi Arabia has incorporated and implemented the IMO 2020 sulphur content regulations.

• Implementation status: According to Circular No 21 of 2019, the Saudi Ports Authority (MAWANI) mandated compliance with the MARPOL Annex VI Regulation 14, requiring that from 1 January 2020, all international (Saudi/non-Saudi) ships entering Saudi Arabian territorial waters must use fuel oil with a sulphur content not exceeding 0.50% mass by mass (m/m).
• Limits: The limit is 0.50% m/m for vessels operating in Saudi territorial waters and calling at its ports, unless they are fitted with an approved exhaust gas cleaning system (EGCS/scrubber). A ban on the carriage of non-compliant fuel oil (fuel with sulphur content >0.50%) came into force on 1 March 2020, unless scrubbers are installed.
• Responsible authority: The Saudi Ports Authority (MAWANI) is responsible for enforcing these limits.
• Enforcement actions: While specific, detailed public reports of recent punitive actions were not highlighted in the search results, the regulatory framework in place empowers the authorities to take actions against ships that fail to comply with the 0.50% sulphur limit or fail to manage non-compliant fuel correctly. The region has seen active measures to prepare for and enforce these regulations, including restrictions on the discharge of wash water from scrubbers in some Middle Eastern ports.

Legal Basis

Instead of a single sanctions law, Saudi Arabia enforces sanctions through a combination of Royal Orders, Ministerial Decrees, and specialised legislation on anti-terrorism and anti-money laundering.

Enforcement

The State Security Presidency and Ministry of Interior collaborate with international bodies (like the UN Security Council) to target terrorism financing and money laundering. Penalties typically include asset freezes, criminal prosecution and travel bans.

International Alignment

While the Kingdom does not officially adopt all unilateral Western sanctions (eg, US/EU), its financial system strictly adheres to international compliance standards. Regarding the Ukraine conflict, Saudi Arabia has not sanctioned Russia but maintains high scrutiny on secondary sanction risks within its banking sector.

International conflicts like Houthi attacks in the Red Sea have significant commercial and legal implications in Saudi Arabia, causing shipping reroutes, increased insurance premiums and potential contractual disputes. Key impacts include invoked force majeure, frustration of contracts and rising war risk premiums, leading to higher logistics costs and delays.

Key commercial and legal implications in Saudi Arabia include the following.

• Shipping and carriage contracts: The Houthi attacks have led to, at minimum, a 20% increase in journey times, as ships avoid the Suez Canal and detour around the Cape of Good Hope. This causes severe, prolonged delays and potential non-delivery or late delivery of goods.
• Force majeure and frustration: Suppliers may invoke force majeure clauses to excuse delays, while contracts might be argued as frustrated if performance becomes impossible, though this is a high threshold under Saudi legal principles.
• War risk insurance: Shipping insurance premiums have spiked due to the high-risk, unpredictable nature of attacks, increasing operational costs for firms shipping to/from Saudi ports.
• Deterioration of goods: Extended transit times due to rerouting (often an additional 10–14 days) pose significant risks for perishable goods and time-sensitive cargo, potentially leading to increased claims for cargo damage.
• Constructive total loss: If a vessel is seized or trapped for an extended period, it may lead to claims of constructive total loss under marine insurance policies, though this is less common than temporary delays and damage.
• Economic impact: The disruption has forced the rerouting of 40% of Europe-bound crude oil via the Cape of Good Hope, increasing transportation costs by roughly USD1 million per voyage.

There is no relevant legal information that has not been dealt with in the foregoing sections.