Electronic Transactions Law: Legally Binding Digital Deals

The Electronic Transactions Law represents a cornerstone in the Kingdom of Saudi Arabia’s efforts to regulate and modernize the digital environment. It provides a comprehensive legislative and regulatory framework for all types of electronic exchanges—commercial, administrative, or personal—conducted via the internet, internal networks, or smartphone applications.

Enacted under Royal Decree No. (M/18) on 27/3/2007, the law seeks to grant legal recognition to electronic transactions, including electronic signatures, while protecting the privacy of individuals and institutions and fostering trust in digital dealings.

What is The Electronic Transactions Law?

The Electronic Transactions Law Saudi Arabia is defined as the legislative and regulatory framework that governs all types of commercial, administrative, or personal exchanges conducted through electronic means, such as the internet, internal networks, or smartphone applications.

The law was enacted in the Kingdom of Saudi Arabia pursuant to Royal Decree No. (M/18) dated 8/3/1428H, corresponding to 27/3/2007G. It aims to grant legal recognition to electronic transactions, including electronic signatures, and to protect the privacy of individuals and institutions while enhancing trust in the digital environment.

What are The Objectives of the Electronic Transactions Law?

The Electronic Transactions Law and its Implementing Regulations aim to achieve several key objectives that regulate and strengthen the digital environment in the Kingdom. Through the Electronic Transactions Law, a comprehensive legal foundation is established to ensure the reliability and legal certainty of electronic dealings.

One of the primary goals of the Electronic Transactions Law is enhancing trust in electronic transactions by adopting official verification mechanisms and reliable digital certification systems that guarantee the authenticity and integrity of electronic dealings.

In addition, the Electronic Transactions Law supports digital transformation by providing a clear legal framework that enables government and private sector entities to deliver digital services efficiently, while also regulating the use and legal validity of electronic signatures.

Furthermore, the Electronic Transactions Law contributes to improving operational efficiency by reducing reliance on paper-based procedures and accelerating transaction processes, while strengthening cybersecurity and data protection through defining the responsibilities of public and private entities in safeguarding electronic data and information.

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How Many Electronic Transactions Law Implementing Regulations?

The Implementing Regulations of the Electronic Saudi transaction law, together with the Law itself, aim to regulate the use of electronic means and technologies in official and commercial transactions, in a manner that ensures reliability, confidentiality, and data integrity, and enhances trust in digital transactions.

The Regulations define the rules governing electronic signatures, digital certification certificates, and licensed certification service providers. They also regulate the responsibilities of the parties involved, users’ rights, and identity verification mechanisms within the electronic environment.

Among the most significant regulatory aspects set forth in the Implementing Regulations are the following:

• Electronic Signature:
  Specifying the conditions and requirements for the validity and legal recognition of electronic signatures, provided that the prescribed criteria are met.
• Digital Certification Certificates:
  Regulating the issuance and management of digital certification certificates, as well as granting licenses to digital certification service providers.
• Certification Service Providers:
  Establishing the terms and requirements for licensing entities that provide digital certification services and monitoring their performance.
• Data Protection and Privacy:
  Obligating all parties to take necessary measures to protect the confidentiality of electronic information and prevent unauthorized access.
• Government Electronic Transactions:
  Enabling government entities to use electronic means in carrying out their official transactions.
• Legal Equivalence:
  Recognizing electronic documents and electronic signatures as legally equivalent to paper documents when the required conditions are fulfilled.
• Identity Verification:
  Setting controls and mechanisms for verifying the identity of parties involved in electronic transactions.
• Penalties and Sanctions:
  Defining violations and the penalties imposed for breaching the provisions of the Law or its Implementing Regulations.

What are The Penalties and Violations under the Electronic Transactions Law?

The Electronic Transactions Law in the Kingdom of Saudi Arabia establishes a set of violations and penalties aimed at protecting digital transactions, ensuring their integrity, and enhancing trust in the electronic environment.

Key Violations                               

Article (23) of the Electronic Transactions Law specifies a number of actions considered violations, including:

• Using an unauthorized or forged electronic signature.
• Issuing digital certification certificates from unlicensed entities.
• Forging or altering electronic documents or digital signatures.
• Unauthorized access to electronic systems or protected data.
• Unauthorized disclosure of personal information or data.
• Intentional destruction or disruption of electronic documents.
• Impersonating an electronic identity for fraudulent or harmful purposes.

Prescribed Penalties

Article (24) of the Electronic Transactions Law defines the penalties for the violations mentioned above, which include:

• Fines: Financial penalties may reach up to 5 million Saudi Riyals, depending on the nature and severity of the violation.
• Imprisonment: Imprisonment for up to 5 years for serious offenses such as electronic forgery or system hacking.
• License suspension or revocation: Licenses of digital certification service providers may be suspended or revoked if they violate the law.

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Conclusion

Electronic Transactions Law and its Implementing Regulations provide a robust framework governing electronic dealings in Saudi Arabia. For legal guidance or professional support in navigating the provisions of the Electronic Transactions Law, entities and individuals can consult Etqan Law Firm, which specializes in advising on compliance, digital contracts, and electronic transactions within Saudi Arabia.

The Etqan Al Mutamayza Law Firm is ready to provide the essential support you need. You can reach their team at the following mobile numbers: +966550600204, +966551020060.

Additionally, feel free to visit our branches located at:

• Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)
• Riyadh: King Abdulaziz Street, across from the Kingdom Tower
• Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

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