RIYADH: In an effort to stimulate the economy and enhance its global position in international trade, Saudi Arabia has acceded to the UN Convention on Contracts for the International Sale of Goods.
The UN CISG is a multilateral uniform international sales treaty that facilitates international trade by removing legal barriers among state parties and providing consistent rules governing global goods contracts.
With this step, the Kingdom becomes the 96th nation that accedes to the agreement, which will officially come into effect on Sept. 1.
The Kingdom’s announcement aims to boost business sector growth and strengthen the integration of the local economy with regional and global peers, well aligned with the objectives of Vision 2030.
Additionally, the move will support alternatives to settling disputes by making it easier to refer to the law applied in such an event.
However, it’s worth noting that Saudi Arabia will exclude part III of the agreement that pertains to 'riba' or interest, as it is prohibited under Islamic law.
King Salman's Council of Ministers backed the plan for Saudi Arabia to join the CISG in June. This move will not only enhance the nation’s domestic contract system but also provide a clarity boost for businesses engaged in international trade.
Under the CISG, sellers are mandated to transfer ownership and deliver goods in line with contract specifications, while buyers are responsible for payment and accepting goods. Violations of the agreement will allow the aggrieved party to seek performance, damages, or contract termination.
Moreover, the agreement will reduce transaction costs and enhance business certainty for Saudi Arabia, a nation positioned as the 19th largest exporter and the 20th largest import market worldwide.
In addition to facilitating trade, the CISG will help simplify dispute resolution processes, cultivating a conducive environment for all parties involved in international business dealings.
