Claim for Compensation for Breach of Contractual Obligations in Saudi Arabia 2026

A Claim for compensation for breach of contractual obligations in Saudi Arabia is a legal mechanism designed to protect parties who suffer harm due to non-performance, improper performance, or violation of contractual terms. It enables the injured party to seek financial compensation before the competent courts in accordance with Saudi regulations.

This type of claim is primarily based on proving three essential elements: the existence of a valid contract, the occurrence of a breach, and the resulting damage with a direct causal link.

Claim for Compensation for Breach of Contractual Obligations

A Claim for compensation for breach of contractual obligations in Saudi Arabia is a legal action filed before the competent court to oblige the breaching party to compensate the injured party for damages suffered as a result of non-performance or improper performance of contractual duties, in accordance with Saudi law.

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A Claim for compensation for breach of contractual obligations is primarily based on proving that the damage directly resulted from an actual breach of contract and that such damage was a foreseeable consequence at the time the contract was concluded. Courts rely on the general principles of the Saudi Civil Transactions Law, which provides the main legal framework governing contractual liability and compensation, in addition to relevant special laws depending on the nature of the contract, including:

• Article (77) of the Saudi Labor Law issued on 25/08/1426H and amended up to 05/09/1444H
• Article (113) of the Saudi Law of Civil Procedure issued on 19/05/1435H and amended up to 17/01/1444H

The Claim for compensation for breach of contractual obligations is typically submitted electronically through the Ministry of Justice platform by filing a statement of claim, where the competent court is determined based on the type of contract and the place of performance of the contractual obligations.

To support a Claim for compensation for breach of contractual obligations, the claimant must submit evidence and documents proving:

• The existence of a valid contractual relationship
• The occurrence of a breach of contractual obligations
• The resulting damages caused by such breach

The claim must also clearly specify the financial compensation requested to enable the court to properly assess the case and issue a fair judgment.

The Concept of contractual obligations

In Saudi Arabia, contractual obligations in employment contracts refer to the set of legal duties and rights established by the Labor Law, which both the employer and the employee are bound to observe from the beginning of the employment relationship until its termination.

These obligations mainly include:

• Compliance with all terms of the written employment contract, which cannot be amended or breached unless through a new written and duly signed agreement by both parties.
• Adherence to the provisions of the Saudi Labor Law and the approved internal regulations of the establishment.
• Fulfillment of the employee’s financial entitlements, including wages, allowances, and end-of-service benefits, in accordance with the legally or contractually specified deadlines.
• Compliance with occupational health and safety standards and requirements issued by the Ministry of Human Resources and Social Development.

Any clause in an employment contract that contradicts the provisions of the law or reduces the employee’s rights is considered null and void, in accordance with Article (8) of the Labor Law.

What is Breach of Contract and What are its Types?

A breach of contract refers to the failure of one party to an agreement to fulfill its obligations as stipulated in the contract or under applicable legal provisions. In employment relationships in Saudi Arabia, a breach of contract occurs when either the employee or the employer fails to comply with the agreed contractual terms or the provisions of the Saudi Labor Law.

In general, breach of contract is divided into two main types:

1- Termination by the Employer

This refers to the employer’s termination of the employment contract in specific cases regulated by law, usually due to serious misconduct or breach by the employee, such as gross negligence, fraud, misconduct, or persistent poor performance.

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2- Termination by the Employee

This refers to the employee voluntarily terminating the employment contract in cases permitted by law, such as:

• Non-payment of wages on time
• Assigning duties different from those agreed upon in the contract
• Unsafe or hazardous working conditions
• Exposure to serious misconduct or violations by the employer

In such cases, the employee may retain the right to claim compensation if the termination is due to the employer’s fault.

Reasons to Claim for Compensation for Breach of Contractual Obligations

Article 81 of the Saudi Labor Law provides important protection for employees, allowing immediate termination of the employment contract without notice or liability while preserving all legal and financial rights.

It applies in cases such as:

• Discrimination or humiliation: Any unfair treatment, insulting behavior, or unjust denial of contractual rights.
• Failure to fulfill essential obligations: Such as delayed salaries, denial of leave, withholding allowances, or unsafe working conditions.
• Physical or verbal abuse: Including violence, threats, harassment, or repeated insults.
• Fraud or misrepresentation: Misleading the employee or changing agreed job terms without consent.
• Pressure to resign: Such as unfair demotion, forced transfers, or degrading tasks.
• Assigning unrelated duties: Tasks outside the job description or unreasonable workload.
• Unsafe working environment: Exposure to risks without proper safety measures or protection.

Employees in such cases may document violations and escalate the matter to labor authorities or courts to claim their rights.

Conditions for Filing a Compensation Claim

For a Claim for compensation for breach of contractual obligations in Saudi Arabia to be accepted, three fundamental conditions must be met as required by applicable laws.

These conditions include:

• The existence of a valid and enforceable contract between the parties, properly documented in accordance with the regulations.
• A proven breach of contractual obligations by one of the parties.
• Actual damage suffered by the other party, along with proof of a causal link between the breach and the damage.

When reviewing these requirements, courts rely on the general principles of contractual liability as set out in the relevant regulations.

These requirements are essential when submitting a Claim for compensation for breach of contractual obligations, as the court will not award compensation unless all three elements—contract, breach, and damage are clearly established and supported by evidence.

Lawsuit Filing Procedures

The procedures for filing a Claim for compensation for breach of contractual obligations in the Kingdom of Saudi Arabia are regulated legal steps that require precise preparation and strict adherence to procedural rules. A claim is only accepted if it meets all legal requirements and passes through the judicial process until a final enforceable judgment is issued.

The main steps are as follows:

First: Assessing the claim

The case is reviewed to determine whether it has a valid legal basis for a Claim for compensation for breach of contractual obligations, including identifying the type of breach, the resulting damage, and the competent court.

Second: Preparing the statement of claim

It includes:

• Parties’ details
• Facts of the case and contractual relationship
• Nature of the breach and resulting damage
• Legal basis of the claim
• Amount of compensation requested

Third: Filing the claim electronically

The Claim for compensation for breach of contractual obligations is submitted through the Najiz platform, along with supporting documents such as contracts, correspondence, and any evidence proving breach and damage.

Fourth: Registration and notification

The court registers the claim and notifies the defendant, then schedules hearing dates.

Fifth: Litigation and hearings

The parties present their arguments and evidence. The court may request additional documents or expert reports if needed.

Sixth: Issuing the judgment

The court issues its decision either accepting or rejecting the Claim for compensation for breach of contractual obligations, with the right of appeal within the statutory period.

Seventh: Enforcement of judgment

If the judgment becomes final, it is enforced through the Enforcement Court to recover the awarded compensation.

The Role of a Lawyer in a Claim for compensation for breach of contractual obligations

A lawyer plays a fundamental and essential role in a Claim for compensation for breach of contractual obligations by managing the case from its initial preparation through to court representation, ensuring the protection of the client’s rights and achieving a fair legal outcome.

A specialized lawyer performs several key tasks, including:

• Analyzing contract terms and precisely identifying the legal obligations of each party in a Claim for compensation for breach of contractual obligations.
• Collecting and preparing evidence and documents proving the breach, the resulting damage, and the causal link.
• Determining the competent court based on the nature of the contract and place of performance.
• Drafting the statement of claim, legal memoranda, and responses in accordance with Saudi regulations.
• Representing the client before the court and handling litigation procedures throughout a Claim for compensation for breach of contractual obligations.

The lawyer also advises the client on whether an amicable settlement is preferable or whether to proceed with a Claim for compensation for breach of contractual obligations, while seeking to obtain fair compensation proportional to the damage suffered.

In doing so, the lawyer relies on relevant legal frameworks such as the Saudi Law of Civil Procedure and the Saudi Evidence Law, in addition to established judicial principles and precedents issued by Saudi courts.

Conclusion:

Claim for compensation for breach of contractual obligations represents a vital legal safeguard within the Saudi legal system, ensuring balance between contractual parties and providing effective remedies for harm caused by contractual violations. For specialized legal support and professional handling of contractual disputes, Etqan Law Firm provides expert legal services to assist clients in filing and pursuing claims effectively.

FAQ:

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: ‎+966543104848

Additionally, feel free to visit our branches located at:

Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)

Riyadh: King Abdulaziz Street, across from the Kingdom Tower