Settlement Agreement in Saudi Arabia: Validity and Enforcement

After months of dispute, you sat down together and agreed: he pays half the amount in three instalments, and the rest of the claim is dropped. You wrote the agreement on a piece of paper and both signed it. After the first instalment, he stopped paying. The question now: is this paper enough for enforcement, or is the dispute back to the start?

The short answer: a settlement (sulh) is binding and cannot be withdrawn (Article 401 of the Civil Transactions Law). But how you collect under it depends on its form. If it is written in the court record, notarised, or issued as an approved record by a reconciliation office, it is an executive instrument (sanad tanfidhi, a document enforceable directly at the Enforcement Court) that you can submit directly in an enforcement request through Najiz (the Ministry of Justice e-portal). An ordinary paper signed between you usually needs a court case to prove it and order the other party to comply.

The new Enforcement Law (published on 14/11/1447H, 1 May 2026) comes into force 180 days after publication, around 28 October 2026, and replaces the Enforcement Law of 1433H. The sections below explain the current position on enforcing a settlement and what will change.

What is a settlement, and when is it valid in Saudi Arabia?

A settlement is a contract by which the parties end an existing dispute or avoid a possible one, with each giving up all or part of his claim in exchange for the other doing the same (Article 391 of the Civil Transactions Law). It is valid for rights whether the defendant admits them, denies them or stays silent (Article 396). It may cover part of what one party claims, a deferral of a debt without any increase, or early payment of a debt with a reduction (Article 397).

• Each party must have capacity to dispose, for consideration, of the rights covered. If the settlement includes giving up a right for nothing, the person giving it up must have full capacity (Article 392).
• The subject of the settlement must be something for which compensation can lawfully be taken (Article 394).
• A settlement is valid even if the right is unknown, if this does not prevent delivery and it is not possible to know it within a short time (Article 395).
• An agent (lawyer or representative) cannot settle in the absence of his principal without a specific authority in the power of attorney (Article 51 of the Law of Procedure before Sharia Courts).

Can you withdraw from a settlement agreement?

No. A settlement ends the rights and claims that either party gave up, and neither party nor their heirs may withdraw from it (Article 401). Its effect is limited to the rights it covers (Article 402), and words of waiver are read narrowly, within the rights that were in dispute (Article 400). So if you write "I waive the claim" without detail, the waiver does not extend to another right that was not part of the dispute.

When is a settlement an executive instrument?

At any stage of a case, the parties may ask the court to record their settlement in the case record, and the court must issue a deed (sakk) for it (Article 70 of the Law of Procedure before Sharia Courts). In the commercial courts, the settlement is recorded in the hearing minutes, signed by the parties and approved by the presiding judge. It then becomes an executive instrument and the case ends (Article 29 of the Commercial Courts Law).

Outside court: a settlement record issued by a reconciliation office (the Taradhi platform) becomes an executive instrument once approved (Article 21 of the Rules of Work in Reconciliation Offices). The current Enforcement Law treats as executive instruments settlement records issued by authorised bodies or certified by the courts, notarised contracts and documents, and ordinary papers whose content the debtor acknowledges (Article 9 of the Enforcement Law of 1433H).

A claim of SAR 200,000. You agree on SAR 100,000 paid in three instalments, and the rest is dropped.

If you wrote the agreement on an ordinary paper and he stopped after the first instalment, today you have two routes: submit it for enforcement if the debtor acknowledges it before the court, or file a case to order him to comply. Under the new law, only the second route remains.

If you had recorded the settlement in the case record or notarised it, you would submit an enforcement request for the remaining amount directly, without any argument about the debt itself.

What changes under the new Enforcement Law?

• Executive instruments include: settlement agreements and settlement documents notarised under the Notarisation Law or issued by authorised bodies, and notarised contracts and acknowledgments (Article 7). The current category of "ordinary papers whose content the debtor acknowledges" is no longer on the list, so an un-notarised paper needs a judgment.
• If the right under a settlement agreement depends on performing an obligation that does not appear from the document itself, the creditor attaches a report from an expert body approved by the Ministry proving that the obligation was performed (Article 8).
• Five working days after the debtor is notified of the enforcement order without payment, credit information providers such as SIMAH are notified and his current and future assets are attached. The court may impose a fine of up to SAR 5,000 per day (Article 18).
• A travel ban is issued at the creditor's request, for up to three years, which can be extended up to six (Article 19).
• An enforcement request is not accepted on an instrument more than ten years past its due date (Article 11).

Who pays the court costs if the case ends in settlement?

If the case ends by settlement, the parties share the court costs equally unless they agree otherwise (Article 13 of the Law of Judicial Costs). The costs are refunded if the settlement is made before the end of the first hearing (Article 16), and reduced to a quarter if it is made after the first hearing and before judgment (Article 15).

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for the receiving and the paying party

If you are the party who will receive payment:

• Record the settlement in the case record, notarise it, or make it through a reconciliation office, so it becomes an executive instrument.
• Write down the instalments and their dates, and state that a late instalment makes the whole balance due.
• Define precisely the rights you are giving up, because waivers are read narrowly.
• If your right depends on work you must do, keep proof that you completed it.

If you are the party who will pay:

• Make sure the settlement ends all claims connected with the dispute, and say so expressly.
• Keep to the schedule. A settlement cannot be withdrawn and may be enforced directly.
• Keep a receipt for each instalment, and a final release after the last payment.
• Agree on the court costs if the case is still pending.

A good settlement is written once and enforced without a new dispute. Send us what you agreed, or the draft, on WhatsApp, and we will review its wording and form before you sign.