Business etiquette in Saudi Arabia: contract law and negotiations

Business etiquette in Saudi Arabia: contract law and negotiations

Contracts and negotiations in Saudi Arabia

What should you know about Saudi Arabian business culture?

Saudi Arabian businessmen are hospitable. They spend time and effort over making outsiders feel comfortable in their country. They may appear lavish and showy but that’s their way. Saudis are gentle people who avoid conflict. In case any disagreements in business arise, these are resolved by intermediaries or middlemen. They are knowledgeable, especially about their country and their particular line of business. It’s usually a profession that’s passed down through the generations, one that they are proud of.

The principal language of Saudi Arabia is Arabic but most of its business people are well versed with English. Here, the working week takes a break on Thursday and Friday with Friday being a holy day.

A local sponsor or wakeel will be required to arrange your appointments and acquaint you. Build a level of trust before you engage in business talk with your Saudi counterparts. Make general small talk about the country, family etc, but refrain from enquiring about a Saudi’s wife! Dress well and present yourself in an impressive manner to the Saudi Arabians as they will judge you on appearances. Also, women are usually not included in any negotiation processes.

What are a few Saudi Arabian business negotiation tactics?

  • Schedule morning appointments a few weeks in advance, even a month if possible
  • Allow them to take their time. Don’t rush decisions
  • Reiterate your points to ensure they take your suggestions seriously
  • Respect their advisors and elders
  • Be firm on pricing, don’t be vague
  • Saudis can be loud and aggressive, so expect this expression of enthusiasm, along with silent pauses

What is a Saudi Arabian contract worth?

Oral agreements are not binding as per Saudi law. Once verbally agreed to, Saudis are likely to change clauses or even dismiss the entire deal. Prepare yourself to celebrate only once you have a written and signed contract in hand.

Check all the clauses with the help of legal aid. When approaching a Saudi businessman with a proposal, factor in a good deal of time before it can actually come to fruition. Some Saudi deals can take up to almost one and half years to actualise.

What does the Saudi Arabian price policy depend on?

Oil is the biggest influence on any price decisions made in Saudi, especially if the commodity or service involves manufacturing and transport.

What are the Saudi Arabian Arbitration and Litigation processes like?

In Saudi Arabia, general jurisdiction is largely conducted under the Shari'a or Islamic Law. Hearings take place in a series of sessions, during which the case is presented. Decisions can take weeks to months, depending on the availability of the judge.

The Saudi Arabian Arbitration Regulation, on the other hand, has introduced huge changes and improvements to arbitration laws, for local and international matters since April 2012. There is less involvement of the legal courts and both parties have the freedom to design the arbitration according to their wishes.

Hence, the Saudi Arabian business environment is an exciting one, once you have established trust and familiarity with them. Also, be prepared for lengthy decision-making periods post the negotiation meetings regarding any business deal.

This entry in Africa & ME was updated on September 28, 2017 by specialist.