Attorney’s Fees Compensation Claim in Saudi Commercial Courts: Analysis of a Precedent from the Riyadh Commercial Court

Introductory overview

Commercial Court – Fourth Commercial Circuit, Riyadh | Case No. 4470506588 (1444H) | Judgment No. 4430964682

This article examines the attorney’s fees compensation claim in Saudi commercial litigation, as a separate claim brought after a successful judgment on the merits. The discussion is based on a precedent issued by the Fourth Commercial Circuit of the Commercial Court in Riyadh, in Case No. 4470506588 (1444H), Judgment No. 4430964682. In that case, a company filed an independent claim seeking compensation for the legal fees it had paid to its lawyer in an earlier commercial case, in which it had obtained a final judgment for the price of electrical appliances supplied to the defendant.

The article is addressed to in-house legal departments, contractors, suppliers, and investors operating in the Saudi market. It highlights when a losing party may be ordered to compensate the other party’s legal costs, the role of the 10% benchmark that has developed in practice, and how companies can factor this risk into their litigation and settlement strategy.

What will you read in this article?

• The legal framework governing an attorney’s fees compensation claim before Saudi commercial courts.
• A brief overview of the facts of the case between two companies and how the claim for fees arose.
• The reasoning of the Riyadh Commercial Court and its reliance on a 10% benchmark of the original judgment amount.
• The judicial rule derived from the precedent and its practical implications for companies litigating in Saudi Arabia.
• Key judgment details and practical takeaways for corporate clients of Mohammed Almuzayen Law Firm.

About the author

Lawyer and arbitrator Mohammed Almuzayen has more than fifteen years of experience and is specialized in construction disputes, infrastructure and engineering claims, government contracts, and franchise agreements. He holds an LL.B. in Law from King Saud University in Riyadh (2009) and has extensive practical experience through his work with several major national companies, including Al-Majdouie Group, Binzagr Company, United Mining Investments Company, Al-Mawarid Joint Stock Company (listed), and Golden Petroleum Investment Company.

1. What is the legal framework for an attorney’s fees compensation claim in Saudi Arabia?

An attorney’s fees compensation claim in Saudi law is grounded in the general principles of liability and compensation in Islamic jurisprudence, as applied by the Saudi judiciary, and in the practical approach developed in the commercial courts. The key elements may be summarized as follows:

1.1 Substantive basis: fault, damage, and causation

The courts rely on the classic components of liability:

• wrongful conduct or undue delay (trespass/negligence) by the defendant,
• actual damage suffered by the claimant, and
• a causal link between the wrongful conduct and the damage.

When a creditor is forced to litigate to collect a due and payable debt because of the debtor’s unjustified refusal or delay, the litigation expenses reasonably incurred by the creditor may be treated as compensable damage.

1.2 Forcing the creditor to litigate

The Riyadh Commercial Court explicitly referred to the writings of classical scholars, including Ibn Taymiyyah, who stated that:

“Whoever procrastinates in paying what is due to another until he forces him to complain (litigate), then whatever the latter spends because of that is upon the unjust wrongdoer, provided that such spending is within the customary limits.”

The court also relied on well-known fatwas that distinguish between:

• a party who litigates knowing that he is wrong and oppressive, who may be held liable for the other side’s expenses; and
• a party who litigates in good faith believing that the right may be on his side, in which case he is not automatically burdened with such expenses.

1.3 Judicial practice: the 10% benchmark

The judgment confirms that the practice in many commercial chambers has been to assess reasonable
attorney’s fees compensation at approximately 10% of the amount awarded in the original case, subject to proof that:

• the defendant’s conduct forced the claimant to litigate, and
• the legal fees actually paid were within customary limits and properly evidenced.

1.4 Standard of reasonableness

The court emphasized that the amount awarded must be:

“Reasonable and appropriate to make good the damage suffered by the successful party as a result of the legal fees incurred in defending itself or recovering its right.”

Thus, the court retains discretion to adjust the amount, and is not strictly bound by the fee figure stated in the engagement letter between lawyer and client where that figure exceeds what is considered reasonable.

2. What were the facts of the attorney’s fees compensation claim in this precedent?

2.1 Type of case and court

Type of case: independent claim for compensation of attorney’s fees (litigation expenses) arising from a previous commercial dispute.
Court: Commercial Court – Fourth Commercial Circuit.
City: Riyadh.
Case number: 4470506588 (1444H).
Judgment number: 4430964682.
Judgment date: 23 Dhul-Qi’dah 1444H.

2.2 Background: the original commercial case

The claimant company had earlier filed a commercial lawsuit before the Commercial Court in Dammam, Case No. 439480710 dated 07/11/1443H, against the same defendant company. The subject matter was a claim for the price of electrical appliances supplied to the defendant. The amount claimed was SAR 497,496.

The Dammam Commercial Court ruled in favor of the claimant and ordered the defendant to pay the full amount, under Judgment No. 433979305 dated 16/01/1444H. The Court of Appeal upheld this judgment under Judgment No. 4430102207 dated 02/03/1444H, rendering the decision final and enforceable.

2.3 The new claim: compensation of attorney’s fees

After securing a final judgment for the principal debt, the claimant filed a new case before the Riyadh Commercial Court seeking compensation for the legal expenses borne in the previous litigation:

• The claimant had engaged a law firm under a fee agreement (No. 04/43) dated 16/06/1443H to represent it in the original case.
• Under this agreement, the claimant paid SAR 57,500 as attorney’s fees.
• The claimant supported its new claim with the written fee agreement and bank transfer slips showing payment of the agreed fees to the law firm.
• The relief sought was an order obliging the defendant to pay the full amount of SAR 57,500 as compensation for litigation expenses (attorney’s fees).

2.4 The defendant’s main defenses

In its memorandum of defense, the defendant company raised, among others, the following points:

1. Lack of the elements of compensation: the claimant had not shown that the conditions of liability were satisfied (wrongdoing, damage, and causation), and the dispute was said to be only an accounting disagreement, not deliberate wrongdoing.
2. Reliance on religious opinions: the defendant cited fatwas emphasizing that a party should only be compelled to bear the opponent’s litigation costs if he knowingly persists in wrongful conduct; whereas a party litigating under genuine belief that he may be right should not be burdened with such expenses.
3. Challenging the link between the transfers and the case: the defendant argued that the bank transfers submitted did not conclusively prove that the amounts were paid in relation to the specific lawsuit brought against it.
4. Allegation of excessive fees: it was asserted that the amount of SAR 57,500 exceeded what is commonly accepted in practice and judicial precedents, and that it was higher than the widely accepted 10% threshold of the principal claim.

3. What did the court decide, and what judicial rule can be derived?

3.1 Court’s reasoning

The Riyadh Commercial Court developed its reasoning in several steps:

First, scope of review in attorney’s fees claims.
The court stated that the subject of an attorney’s fees compensation claim is to verify whether one party to a contractual or commercial relationship has forced the other to litigate, causing the latter to incur legal expenses in the ordinary course of defending or enforcing its rights.

Second, reliance on classical and contemporary opinions.
The court referred to the scholarly view that a debtor who delays payment until the creditor is forced to litigate must bear the reasonable expenses incurred by the creditor. It also referred to modern fatwas distinguishing between the litigant who knows he is wrong and persists in wrongful conduct, and the litigant who genuinely believes the right could be his.

Considering that the claimant had already obtained a first-instance judgment in its favor for the full debt and an appellate judgment affirming that decision, the court treated the defendant’s conduct as unjustified resistance to payment, which compelled the claimant to resort to litigation.

Third, application of the reasonableness standard.
The court emphasized that the compensation must reflect a reasonable and appropriate amount to repair the harm arising from attorney’s fees. It is not required to match exactly the contractual fees agreed between the client and its lawyer.

Fourth, use of the 10% benchmark.
The court noted that in practice, in similar lawsuits, attorney’s fees compensation is commonly assessed at 10% of the amount awarded in the original case. Accordingly, it decided to apply this benchmark to the amount of SAR 497,496 that had been awarded in the earlier Dammam case.

3.2 Operative part of the judgment

On this basis, the court ruled as follows:

• It ordered the defendant company to pay the claimant company an amount equal to 10% of the original judgment amount of SAR 497,496.
• The court calculated the compensation at SAR 49,749.60 (forty-nine thousand, seven hundred forty-nine Saudi riyals and sixty halalas).
• This amount was awarded as compensation for attorney’s fees and litigation expenses incurred by the claimant in the original lawsuit.

3.3 Judicial rule derived from the precedent

From this decision, the following rule can be formulated:

An attorney’s fees compensation claim may be upheld by the Saudi commercial courts where it is proven that the defendant’s unjustified refusal or delay in paying a due debt forced the claimant to litigate and incur legal fees within customary limits. In such cases, the court may, in light of prevailing practice, award compensation equivalent to around 10% of the amount adjudged in the original case, without being bound to the full contractual fee agreed between client and lawyer if that fee exceeds what is reasonable.

4. What does this judgment mean for corporate clients, and how can they benefit from it?

This precedent sends several practical messages to companies operating in Saudi Arabia:

1) Litigation has cost consequences for the party who resists clear obligations.
A company that refuses to settle an evident debt or persists in a weak defense risk not only a judgment for the principal amount, but also a separate attorney’s fees compensation judgment in favor of its opponent. This can significantly increase the total financial impact of the dispute.

2) Attorney’s fees can be factored into the business case for litigation.
For creditors, the precedent confirms that legal fees are not always a sunk cost. Where the conditions are met, an independent claim may be brought to recover part of these expenses, especially in high-value disputes. This should form part of the internal assessment of litigation strategy and cost-benefit analysis.

3) Importance of documented fee arrangements.
The claimant’s position was strengthened by having a written fee agreement with its law firm, bearing a clear number and date, along with bank transfer slips evidencing actual payment. Companies are therefore advised to enter into clear written engagement letters with their counsel and to maintain proper payment records.

4) Understanding the 10% benchmark and court discretion.
The 10% figure is a judicial practice, not a statutory rate. Courts retain wide discretion to adjust the amount depending on the circumstances of each case. A company should not assume that it will recover the entire contractual fee, nor that it will never be ordered to pay more than 10% if circumstances justify a different assessment.

Services of Mohammed Almuzayen Law Firm in attorney’s fees compensation claims

In light of the growing volume of commercial disputes and the increasing complexity of litigation strategies in Saudi Arabia, Mohammed Almuzayen Law Firm offers corporate clients specialized services in relation to attorney’s fees compensation claims, including:

• Drafting and reviewing lawyer engagement letters and fee agreements to ensure enforceability and alignment with Saudi regulations and professional ethics.
• Providing pre-litigation advice on the feasibility of bringing an attorney’s fees compensation claim, or on the risk of facing such a claim after losing a case.
• Representing companies before the Saudi commercial courts in claims for unpaid debts, as well as in subsequent claims for compensation of attorney’s fees and litigation costs.
• Assisting clients in negotiation and structured settlements, with a view to reducing exposure to additional cost claims and avoiding prolonged disputes where possible.

Companies, particularly those engaged in large-scale construction, supply, and services contracts, can benefit from a proactive litigation and settlement strategy that takes into account the potential impact of attorney’s fees compensation claims.

Legal consultation

If your company is considering filing an attorney’s fees compensation claim, or if you are facing such a claim from a commercial counterparty, you may contact Mohammed Almuzayen Law Firm for a tailored legal assessment. The firm can review your case files, fee agreements, and litigation history, and recommend the most appropriate course of action in light of Saudi law and current judicial trends.

Frequently Asked Questions (FAQ)

Judgment text and details

Court details
Court: Commercial Court – Fourth Commercial Circuit.
City: Riyadh, Kingdom of Saudi Arabia.
Case number: 4470506588 (1444H).
Judgment number: 4430964682.
Judgment date: 23 Dhul-Qi’dah 1444H.
Type of case: independent claim for compensation of attorney’s fees (litigation expenses) arising from an earlier commercial case.
Original lawsuit: claim for the price of electrical appliances amounting to SAR 497,496.
Original judgment: Judgment No. 433979305 dated 16/01/1444H, upheld by the Court of Appeal under Judgment No. 4430102207 dated 02/03/1444H.

Expanded summary of the judgment
The claimant company filed an independent claim seeking SAR 57,500 as compensation for attorney’s fees it had paid to its law firm under Fee Agreement No. 04/43, in connection with the earlier Dammam lawsuit where it obtained a final judgment for SAR 497,496. The claimant submitted the fee agreement and supporting bank transfers. The defendant argued that the conditions of compensation were not fulfilled, that the original dispute was only an accounting difference, that the transfers were not clearly linked to the case, and that the fees were excessive.

The court determined that the defendant had in fact forced the claimant to litigate to recover a due debt, as evidenced by the original and appellate judgments. It concluded that attorney’s fees can be compensated when they are incurred “in the usual manner” and that the amount should be reasonable and proportionate. Relying on established practice, the court assessed the compensation at 10% of the original judgment amount and ordered the defendant to pay SAR 49,749.60 to the claimant as compensation for attorney’s fees and litigation expenses.

Conclusion

This precedent from the Riyadh Commercial Court confirms that an attorney’s fees compensation claim can be a realistic remedy for successful litigants who have been forced to incur legal costs to collect their debts. It also warns companies that unjustified resistance to clear contractual obligations may expose them not only to the principal claim but also to additional cost judgments. Corporate decision-makers are therefore well advised to evaluate the legal and financial risks of continuing a weak defense, and to obtain specialized legal advice before rejecting settlement options or prolonging litigation.

Related articles

• Legal Consultations in Saudi Arabia for Companies – A Practical Guide from Mohammed Almuzayen Law Firm.

Short descriptive summary

This article analyzes the attorney’s fees compensation claim in Saudi commercial courts through a precedent issued by the Riyadh Commercial Court (Case No. 4470506588, Judgment No. 4430964682). Written for Mohammed Almuzayen Law Firm, it explains how courts may award compensation of attorney’s fees at around 10% of the original judgment amount where a debtor’s unjustified conduct has forced the creditor to litigate. The article outlines the legal framework, case facts, judicial reasoning, and practical implications for companies litigating in Saudi Arabia.