Few aspects of construction guarantees provoke as much concern among contractors as the prospect of a guarantee being called. It is therefore worth setting out, in some detail, exactly how the Saudi Executive Regulations structure this process, and the meaningful constraints they place on the government authority's power to act. Article 104 makes clear that the calling of the guarantee is neither automatic nor discretionary in the way contractors sometimes fear.

Among the various guarantees required under Saudi public procurement, the advance payment guarantee stands out for a feature that is, in relative terms, unusually favourable to contractors: it is designed to reduce automatically as the underlying advance is repaid. Article 102 of the Executive Regulations sets out this mechanism in clear terms, and it merits detailed attention from any contractor managing liquidity across multiple concurrent projects.

Saudi Arabia has aligned its public procurement guarantee framework with the mechanism most widely used in construction contracting internationally: the on-demand, or "unconditional," guarantee. Article 105 of the Executive Regulations of the Government Tenders and Procurement Law codifies a cluster of principles governing how bank guarantees function once issued.

The recent war in Middle East and the consequent closure of the Strait of Hormuz are causing substantial issues to the international commerce. When a project is affected by conflict, sanctions, shipping problems, or supply-chain disruption, the immediate issue is usually delay. The hidden issue is documentation. In construction industry and international commerce, delay claims often succeed or fail depending on what the affected party did in the first days and weeks after the event.

In the context of Iran‑linked hostilities and the force majeure declarations by Iraq and Qatar on oil‑supply contracts to the EU, contractors increasingly face a crucial question: is the disruption caused by the recent event a force majeure event or hardship? The answer has a direct impact on whether you can stop performance, claim an extension of time, or simply request a price adjustment.

With the escalation of hostilities involving Iran and its regional impact, contractors are increasingly asking whether war or armed conflict can be treated as a force majeure event in their contracts. The answer is yes -but only if strict legal conditions are met. In this article we will look at the laws of Saudi Arabia.