Saudi Arabia Investment License : Unified License Guide
When Facts Speak Louder… How We Recovered Over SAR 1.6 Million Despite Pandemic Claims and Legal Complexities
In the world of business, trust between partners is often the cornerstone of success… yet sometimes, that trust transforms into a legal challenge that demands resolution.
Our story begins when a leading company in the fashion and leather industry leased a prime commercial unit in a renowned mall in Jeddah to an investor seeking to establish a women’s beauty business. The lease agreement was executed with clear terms and conditions, stipulating an annual rent starting at SAR 300,000 and increasing to SAR 350,000 in the following years.
Everything Seemed on Track… Until It Wasn’t
The tenant took possession of the premises and commenced operations. A portion of the rent was paid initially, but soon after, everything began to unravel.
Accumulated Rent… and a Breach of Commitment
As the years passed, payments slowed and eventually stopped. The lessor attempted to communicate, issued reminders, and opened the door for amicable resolution—but to no avail. By the time the premises were returned, the outstanding rent had accumulated to over SAR 1.6 million.
At this point, the company had no choice but to pursue legal action. That’s when Al Madani & Co. stepped in.
Where We Began…
Our specialized team received the case file. The attorney assigned to the matter meticulously reviewed the documents, analyzed the contract terms, and compiled the evidence supporting our client’s entitlement to the claimed amount.
We did not immediately proceed to court. Instead, we initiated an amicable resolution attempt, contacting the tenant on behalf of the lessor and proposing mutually satisfactory solutions. However, the tenant disregarded our efforts. Litigation became inevitable.
A lawsuit was filed before the General Court in Jeddah, supported by all necessary documentation—contracts, handover minutes, payment proofs, and more.
But the Case Was Far From Simple…
Tactical Defenses and Delaying Tactics
In the first hearing, the defendant’s counsel raised a lack of standing defense, arguing the contract was signed under a different company name and not in her personal capacity.
Our team dismantled this claim using the explicit contractual provisions. The next defense was jurisdictional: the defense asserted that the matter was commercial and thus should fall under the jurisdiction of the Commercial Court.
The tenant also challenged the contract’s validity, claiming it was an unregistered paper agreement not documented through the “Ejar” platform—arguing this rendered it unenforceable and devoid of legal effect. This was a strategic attempt to nullify the contractual relationship altogether.
Note: “Ejar” is an official electronic platform established by the Saudi Ministry of Municipal and Rural Affairs and Housing, aimed at organizing the real estate rental sector and electronically documenting landlord-tenant relationships. While important, failure to use the platform does not automatically invalidate a lease contract that otherwise meets the legal requirements—an interpretation confirmed by Saudi courts on numerous occasions.
Then came the most aggressive defense: invoking the COVID-19 pandemic, claiming that business closures rendered the premises unusable and thus entitled the tenant to reduced or waived rent.
Even more concerning was the tenant’s allegation of a verbal agreement that the store’s furniture and equipment would count as compensation for the accrued rent—despite the absence of any written or formal consent from the lessor.
Professionalism at Every Turn
Al Madani & Co. chose not just to defend—but to strategically lead the legal offensive.
First, we countered these arguments with precise legal reasoning, establishing that the contract satisfied all essential legal elements: consent, object, cause, and was duly signed and executed. Handover records, bank receipts, and written correspondence clearly proved the lease relationship. We emphasized that “Ejar” registration is a regulatory measure—not a condition for validity. The court later upheld this view, rejecting the tenant’s objection.
We also demonstrated that the contract was signed by the defendant personally—not on behalf of another company. As for jurisdiction, we successfully argued that the General Court had authority over the case. In response to the pandemic claim, we highlighted the lack of tangible proof of business disruption caused by COVID-19. The tenant failed to meet the evidentiary threshold.
Regarding the alleged “fixtures-for-rent” agreement, we established that there was no written consent nor any documentation supporting such an arrangement. The record only showed return of the premises—nothing more.
Subsequently, the court appointed a real estate expert to assess the impact of the pandemic on the tenant’s business. Yet, the tenant failed to pay the expert’s fee, citing financial incapacity. As per Saudi evidentiary rules, this forfeited their right to rely on that defense.
Justice Served… A New Beginning
Following several remote hearings and detailed legal submissions, the court ruled in favor of our client, ordering the defendant to pay the entire outstanding amount of SAR 1,625,259.22.
While we also sought legal fees, the court—citing the absence of abusive litigation—chose not to award them. We respect the court’s reasoning under the circumstances.
A Cautionary Tale and a Legal Lesson
This case offers a valuable lesson for both lessors and lessees: properly documenting lease agreements through “Ejar” is a protective measure—not a requirement for validity. It also underscores the importance of retaining all documents and communications evidencing the contractual relationship in anticipation of potential disputes.
The Saudi judiciary prioritizes substantive justice, and when objective evidence is presented, the form becomes secondary.
Trust Translated into Results
This was more than a financial dispute—it was a complex, multifaceted legal test. It involved formalistic objections, disputes over legal standing, jurisdictional challenges, and the extraordinary circumstances of the pandemic.
Al Madani & Co. demonstrated that legal excellence isn’t just about defense—it’s about building cases on solid strategy, supported by law, evidence, and foresight.
Our Services in Real Estate and Commercial Disputes
Facing a property or commercial dispute? Struggling to recover outstanding dues from tenants or counterparties? We are here to assist you in:
- Drafting and filing claims before the competent courts.
- Analyzing and responding to opposing party defenses.
- Representing clients in COVID-19-related litigation.
- Reviewing expert reports and coordinating with evaluators.
- Efficient recovery of rental and commercial entitlements.
Don’t hesitate to reach out to us to assess your legal position and begin the process of reclaiming your rights.
Contact US
Your Trusted Partner
Info@almadanilaw.com
