SAUDI ARABIA Law and Practice Contributed by: Saud AlRomi, Mostafa Ihab and Saleh Elbadry, Mohammed AlDhabaan & Partners Eversheds Sutherland
Mohammed AlDhabaan & Partners Eversheds Sutherland Home Offices Complex, Office 10-11 Al Urubah Rd Al Mathar Al Shamali
Riyadh 12334 Saudi Arabia
Tel: +966 114 844 448 Fax: +966 112 816 611 Email: mail@aldhabaan.eversheds.com Web: www.eversheds-sutherland.com/en/saudi-arabia
1. Fraud Claims 1.1 General Characteristics of Fraud Claims An Overview Fraud-related conduct in Saudi Arabia is addressed through several laws, each targeting a specific type of dishonest behaviour, and a victim may need to engage more than one of them. Deception On the civil side, the Civil Transactions Law (CTL) is the starting point. Under Article 61 of the CTL, decep - tion ( يرغت ) means using fraudulent means – including deliberate silence – to induce someone into a contract they would not otherwise have entered. Under Article 62 of the CTL, the deceived party may seek nullifica - tion of the contract where the deception relates to a material matter. False Statements and Forgery Where documents are involved, the Penal Code for Forgery Offences (the “Forgery Penal Code”) applies. Forgery requires bad faith and causing harm, and extends beyond physical alteration to include insert - ing false facts into a document or deliberately omitting facts that should have been recorded, under Article 3 of the Forgery Penal Code. Penalties vary depending on the type of document. For example, forging a non- official document carries up to three years’ imprison - ment and/or a fine of up to SAR300,000 under Article 9 of the Forgery Penal Code; and forging a Commer -
cial Paper (negotiable instrument) or security, bank instrument or insurance policy carries one to five years and a fine of up to SAR400,000 under Article 13 of the Forgery Penal Code. In a company setting, Article 260 of the Companies Law 1443-2022 (the “Companies Law”) makes it a criminal offence for directors, board members, offic - ers, auditors or liquidators to deliberately include false or misleading information in financial statements or reports, or to intentionally omit material facts in order to misrepresent the company’s financial position. The penalty is up to three years’ imprisonment or a fine of up to SAR5 million, or both. Misappropriation Misappropriation is addressed across two provisions of the Anti-Financial Fraud and Breach of Trust Law (the “Anti-Financial Fraud Law”). Under Article 1 of the Anti-Financial Fraud Law, unlawfully obtaining anoth - er’s money through lying, deception or false impres - sions carries up to seven years’ imprisonment and a fine of up to SAR5 million. Article 2 of the Anti-Finan - cial Fraud Law separately targets those entrusted with money – whether through employment, partnership, deposit, loan, lease, mortgage or agency – and who either unlawfully appropriate it, deal with it in bad faith or intentionally cause damage to it. This carries up to five years’ imprisonment and a fine of up to SAR3 million.
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