Issuing Body: GUOZUN CATHAY ASSOCIATES Saudi Arabia Office
Case Closing Date: 10 January 2026
Core Outcomes: Completed full-dimensional compliance review and clause optimisation of the contract, facilitated consensus on core lease terms, and guaranteed zero compliance risks for the client’s factory construction project in Saudi Arabia.
This case was jointly handled by GUOZUN CATHAY ASSOCIATES Saudi Arabia Office and the Foreign-related Compliance Team of the Beijing Headquarters. Strictly abiding by the laws and regulations of China and Saudi Arabia as well as international cross-border investment compliance norms, and relying on Guozun’s experience in legal services in the Middle East region and dual-jurisdiction practice qualifications, we provided Chinese-funded enterprises investing in Saudi Arabia with a full-chain compliance solution covering “preliminary due diligence – contract review – negotiation support – performance guidance”.
This case has been included in Guozun’s 2026 Typical Case Library for Middle East Foreign-related Compliance. Its case-handling model of “local rule verification + cross-border clause design + dual-track negotiation support” has been widely applied in legal service scenarios for Chinese-funded enterprises investing in factory construction in Saudi Arabia.
I. Case Background and Entrustment Process
The client is a domestic manufacturing enterprise that plans to invest in constructing a production base in a national-level industrial park in Saudi Arabia. It has initially reached a land lease intention with the park operator and obtained the standard lease agreement text issued by the park. Due to unfamiliarity with Saudi Arabia’s land regulatory system, investment access rules and foreign-related contract risks, the enterprise was concerned about unequal rights in the standard contract and investment losses caused by local compliance defects. In December 2025, it was connected to the Saudi Arabia Office through the Beijing Headquarters of GUOZUN CATHAY ASSOCIATES.
Given that the case involved three core difficulties: verification of local land ownership in Saudi Arabia, adaptation of park policies, and balance of cross-border contract rights and interests, the Saudi Arabia Office activated the “China-Saudi Joint Case Handling Mechanism” on the same day, and established a special case-handling team in conjunction with the Beijing Headquarters. The team consists of 2 locally licensed lawyers in Saudi Arabia responsible for local regulation verification and offline negotiation support, and 3 members from the Foreign-related Lawyer Talent Pool of the Beijing Lawyers Association responsible for China compliance control and contract system construction, who are fully authorised to handle the special review service of this land lease agreement.
II. Full Process of China-Saudi Joint Case Handling
This case adopts the standardised collaborative model of “the Beijing Headquarters is responsible for China jurisdiction compliance coordination and cross-border clause design, while the Saudi Arabia Office is responsible for local legal verification and park negotiation implementation”. Written outcomes and traceable records are formed in all links:
1.13 December – 15 December 2025: Establishment of Dual-Jurisdiction Review Framework
Beijing Headquarters: Completed comprehensive sorting of the draft lease agreement and project background materials submitted by the client, clarified six core dimensions of contract review in combination with China’s overseas investment compliance requirements, issued the Project Compliance Review Framework Plan, and anchored the client’s core rights and interests protection objectives.
Saudi Arabia Office: Simultaneously completed full retrieval and sorting of Saudi Arabia’s land lease laws and regulations and investment management policies of the corresponding industrial park, verified the land management qualification of the park operator and industrial land regulatory rules, and determined the compliance review benchmarks and risk red lines under Saudi local law.
2.16 December – 20 December 2025: First Round of Full-Dimensional Contract Risk Investigation
Beijing Headquarters: Proceeding from the general rules of cross-border transactions, completed a comprehensive review of general modules such as contract validity, performance guarantee, liability for breach of contract, and dispute resolution, formed the first-round risk list, and marked common problems such as unbalanced rights and vague agreements in the standard contract.
Saudi Arabia Office: Focusing on unique local legal risks in Saudi Arabia, verified local clauses one by one, including the legality of the leased subject matter’s ownership, land use restrictions, tax and fee rules, and expropriation compensation, supplemented prompts on contract validity risks and administrative compliance risks under Saudi law, and formed special opinions on local compliance.
3.21 December – 26 December 2025: Contract Clause Revision and Dual-Jurisdiction Adaptation
Beijing Headquarters: Combined the client’s business demands and risk tolerance, completed the overall revision of contract clauses, adjusted the liability for breach of contract on an equal footing, supplemented foreign-specific clauses such as cross-border payment rules and exchange rate risk bearing, and formed the first draft of the revised contract.
Saudi Arabia Office: Conducted localised compliance verification on the revised draft against Saudi Arabia’s Real Estate Lease Law and park management rules, refined clauses corresponding to local regulatory requirements such as land development progress, use change approval, and reconstruction and expansion procedures, to ensure that the contract content fully complies with local regulatory provisions in Saudi Arabia.
4.28 December 2025 – 5 January 2026: Multiple Rounds of Negotiations and Resolution of Core Differences
Beijing Headquarters: Assisted the client in formulating negotiation strategies and bottom-line lists, provided negotiation support from the perspectives of commercial interests and China compliance, and simultaneously adjusted clause expressions to adapt to the client’s business demands.
Saudi Arabia Office: Relying on local practice resources and park communication channels, participated in multiple rounds of offline negotiations with the park operator. On the four core differences of lease term, land use restrictions, tax and fee bearing subjects, and expropriation compensation distribution, conducted professional demonstration combined with Saudi local judicial practice and policy rules, and promoted the two sides to gradually reach consensus.
5.6 January – 10 January 2026: Final Draft Confirmation and Project Delivery The China-Saudi joint team conducted dual-jurisdiction compliance review on the final contract text, confirming that all clauses comply with the legal requirements of both China and Saudi Arabia and the client’s business objectives. Upon official delivery of the project, the Final Contract Text and the Performance Compliance Guidance Manual were simultaneously provided to the client, clarifying compliance precautions during the subsequent lease performance process. The client highly recognised the review results and full-process services, and the case was successfully closed.
III. Core Case-handling Difficulties and Authoritative Solutions
This case focuses on the common legal risks of Chinese-funded enterprises leasing industrial land in Saudi Arabia. With dual-jurisdiction professional capabilities and experience in Middle East investment services, the Guozun joint team has formed a replicable standardised solution:
1.Prevention and Control of Rights Defects and Unauthorised Disposal Risks of the Leased Subject Matter
Professional Basis: Saudi Arabia’s Real Estate Lease Law, Saudi Industrial Property Authority Park Management Rules, China’s Guidelines for Compliance Management of Enterprises’ Overseas Operations
Solution: The Saudi Arabia Office verified the industrial land nature of the subject land and the legal disposal authority of the park operator through local land management channels in Saudi Arabia, and comprehensively investigated whether the land has rights burdens such as mortgage, seizure, and ownership disputes. The Beijing Headquarters simultaneously added a rights defect guarantee clause in the contract, clarifying the lessor’s full compensation liability in case of unauthorised disposal, covering all the client’s investment losses in preliminary survey and preparation.
2.Clarification of Compliance Boundaries for Industrial Land Development and Use Restrictions
Professional Basis: Saudi Arabia’s Investment Law, Industrial Land Regulatory Provisions of Saudi Municipal and Land Management Authorities, Management Rules of the Corresponding Industrial Park
Solution: The Saudi Arabia Office verified the industrial access scope, development and construction cycle requirements, construction density and floor area ratio and other construction intensity standards of the park one by one; supplemented clauses on the approval process and responsibility division for use change, reconstruction and expansion in the contract, and clarified the relief methods for project obstruction caused by the lessor’s policy changes, to avoid construction period delays and investment losses of the client due to regulatory restrictions.
3.Clarification of Rights and Responsibilities for Cross-border Rent Payment and Local Taxes and Fees
Professional Basis: Relevant provisions of Saudi Arabia’s tax collection and administration, China’s Law on the Application of Law for Foreign-related Civil Relations, International Cross-border Payment Practices
Solution: Clarify the rent denominated currency, the subject bearing exchange rate fluctuation risks, and the time and process requirements for cross-border payment in the contract; the Saudi Arabia Office comprehensively sorted out all types of taxes and fees involved in land lease in Saudi Arabia, the payment subjects and the declaration procedures, and clearly divided the tax and fee bearing boundaries of both parties in the contract, to avoid the client bearing hidden tax costs and compliance risks.
4.Balanced Adjustment of Unequal Liability for Breach of Contract in Standard Contracts
Professional Basis: Saudi Arabia’s Real Estate Lease Law, the Principle of Performance Fairness under the United Nations Convention on Contracts for the International Sale of Goods, the Contract Part of China’s Civil Code
Solution: In response to the unequal problems in the standard contract, such as excessively high penalty standards for the lessee’s overdue payment and development delay, and vague liability for the lessor’s land delivery defects and rights defects, we revised all breach clauses on an equal footing, unified the calculation standard for breach compensation, clarified the compensation scope and relief paths for the lessor under various breach circumstances, and balanced the rights and obligations of both parties.
5.Optimisation of Cost and Enforceability of Cross-border Dispute Resolution
Professional Basis: Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), Saudi Arabia’s Civil Procedure Law, China’s Law on the Application of Law for Foreign-related Civil Relations
Solution: Evaluate the rights protection costs and rule barriers of exclusively agreeing to the jurisdiction of local courts in Saudi Arabia, combine with cross-border dispute resolution practices, design an optional arbitration resolution path for the client, optimise the applicable law and jurisdiction clauses, improve the cross-border enforceability of dispute resolution results, and reduce the time and economic costs of overseas rights protection for Chinese-funded enterprises.
6.Protection of Investment Rights and Interests in Land Expropriation During the Lease Term
Professional Basis: Relevant laws and regulations on land expropriation and compensation in Saudi Arabia, Saudi Arabia’s Real Estate Lease Law
Solution: The Saudi Arabia Office verified the statutory compensation scope, distribution rules and implementation procedures of local land expropriation in Saudi Arabia; specially added an expropriation compensation clause in the contract, clarifying the lessee’s right to compensation for self-owned investments such as above-ground buildings, production equipment and relocation losses, as well as the compensation standard for early termination of the contract when the land is expropriated during the lease term, to fully guarantee the safety of the client’s investment assets.
IV. Authoritative Legal Bases Applicable to This Case
(I) Chinese Laws
1.Article 2 of the Measures for the Administration of Overseas Investment: An enterprise conducting overseas investment shall abide by the laws and regulations of the host country, follow the principle of mutual benefit and win-win results, and perform the overseas investment filing or approval procedures in accordance with the law.
2.Article 10 of the Guidelines for Compliance Management of Enterprises’ Overseas Operations: Enterprises shall establish a compliance review mechanism for key overseas operation areas such as contract management, intellectual property rights, and labour and employment, to effectively identify and prevent legal risks in the host country.
3.Article 41 of the Law of the People’s Republic of China on the Application of Law for Foreign-related Civil Relations: The parties may choose the law applicable to the contract by agreement; if the parties do not make a choice, the law of the place of habitual residence of the party whose performance can best reflect the characteristics of the contract or other laws most closely related to the contract shall apply.
(II) Saudi Arabian Laws
1.Saudi Arabia’s Investment Law: Foreign investors licensed by the Saudi Ministry of Investment (MISA) may lease industrial land within the scope of compliance; land lease in industrial parks shall comply with the corresponding industrial access and land management requirements of the park.
2.Saudi Arabia’s Real Estate Lease Law: A land lease agreement shall specify core elements such as the leased subject matter, lease term, land use, and rent standard. The lease term and renewal rules of industrial land shall comply with the relevant provisions of Saudi municipal and land management authorities.
3.Saudi Industrial Property Authority Park Management Rules: Lessees of industrial land in industrial parks shall abide by the park’s development progress requirements, shall not change the land use without authorisation, and shall go through the park’s approval procedures for sublease, reconstruction and expansion.
(III) International Conventions
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention): Where arbitration is selected as the method of dispute resolution, eligible arbitral awards may be recognised and enforced within the scope of contracting states, which is more suitable for the resolution needs of cross-border investment disputes.
V. Authoritative Practical Suggestions Based on the Experience of This Case
Combined with years of experience in Middle East investment legal services of GUOZUN CATHAY ASSOCIATES Saudi Arabia Office, the following three practical suggestions are put forward for Chinese-funded enterprises carrying out industrial investment and land lease in Saudi Arabia:
1.Pre-positioned Local Compliance Due Diligence: Before signing a lease intention or paying a deposit, entrust a service team with local practice capacity in Saudi Arabia to conduct special due diligence on land ownership, park policies and industrial access, to screen out rights defects and compliance risks in advance and avoid early investment losses.
2.Localised Customised Revision of Contracts: Avoid directly applying domestic contract templates or directly signing the park’s standard contract. It is necessary to conduct localised revision and equalisation adjustment of contract clauses in combination with Saudi local laws, regulatory rules and the actual situation of the project, to clarify core rights and responsibilities and risk bearing boundaries.
3.Advance Planning for Dispute Resolution: Plan the dispute resolution path at the contract negotiation stage, give priority to the arbitration mechanism that can be enforced cross-border, and cautiously agree to the exclusive jurisdiction of the host country’s courts, to reduce the rule barriers and cost risks of subsequent rights protection.