Following the issuance of the Council of Ministers’ Decree which allows the foreign law firm to set up offices in Saudi Arabia (with certain conditions and requirements), the Ministry of Justice of Saudi Arabia has just released the draft of the ‘Rules for Setting up of Foreign Law Firms’ for public consultation. Comments were able to be provided until 14 April, 2022.
Here is a short note covering the major provisions proposed in the draft:
Objectives: Further development of legal practices, enhancing efficiency, adopting international experiences, and creating more qualitative job opportunities for citizens.
Primary Conditions for licensing of foreign law firms:
- Absence of any judgment (final verdict) against the firm on charges of misuse of trust or dishonesty, or material violation by the firm in carrying out its practice
- Practice exceeding 10 years from the date of its inception and having offices in at least three countries or five regions within a country (refer to Article 45 of the Advocacy Law); it must be duly licensed in those countries and regions to undertake legal practice and have a minimum of 3 employees carrying the practice through each of the minimum required offices.
- The countries in which the foreign law firm is carrying out the practice are considered ‘economically advanced’ countries.
- Two partners of the foreign law firm must reside in Saudi Arabia for a period of no less than 180 days and be licensed to practice under the Advocacy law of the Kingdom or other jurisdictions regulating legal practice. They must have an overall experience of 7 years out of which a minimum of 3 years of experience should have been garnered after obtaining a license to practice.
- If the foreign law firm wishes to set up its office in partnership with a Saudi licensed lawyer, the Saudi partner should have experience of no less than 3 years of practice; the Saudi partner should have at least 25% voting rights in the board of managers as well. Only Saudi licensed attorneys shall undertake pleading works as well as provide legal advice on issues related to Saudi laws and regulations in this situation.
- The foreign law firm carrying out practice on its own without having any partnership with a Saudi licensed lawyer shall not provide consultation or advice on issues involving Saudi laws and regulations. Exceptionally, they may provide consultations on very specific and specialized projects after obtaining prior approval from the concerned authority.
- The foreign law firm that wishes to set up an office will have to apply electronically through its authorized representative and provide a host of documents and basic information evidencing fulfilment of the requirements stipulated in the Advocacy Law and these Rules.
- The law firm shall not commence practice until it completes the entire process and obtains all the required licenses which include obtaining an investment license, registration in the Saudi Bar Association, obtaining a place to carry out the practice, obtaining tax registration, and fulfilling other regulatory requirements.
Obligations on the Foreign Law Firms:
- The foreign law firm shall comply with the Saudization ratio specified for the firms carrying out legal practice in the Kingdom (the ratio being 70% from 03/1444 H.).
- Provide 20 hours of training to all Saudi employees engaged in the profession and employed by the firm.
- Adoption of a mechanism to second Saudi employees to the head office or branch offices of the firm.
- Implementation of a program to prepare Saudi employees for promotions.
- Implementation of a program to train new graduates.
- Contribution to sponsoring conferences and workshops covering the legal profession and practice.
- Publication of study papers in Arabic language and articles related to Saudi laws and regulations in other languages.
- Consultation on issues related to Saudi laws and regulations referred to any office outside of Saudi Arabia should not exceed 30% of the total consultation work done by the firm. However, consultations provided on issues related to other laws and regulations shall not be counted under this restriction.
The Ministry of Law may grant a temporary license to a foreign law firm for providing consultation services on specific and specialized projects where Saudi Arabia does not have enough experience. However, only one temporary license will be granted per year except in very special cases as determined by the Minister of Law. The firm licensed to provide consultation under the temporary license shall not provide advice on any matter not included in the license.
No law firm licensed to carry legal practice shall seek services or employ a non-Saudi counsel except after registering the counsel in the register of non-Saudi counsels. Except for the requirement of nationality, the applicants shall have to fulfill all the qualifications, standards, and requirements stipulated in the Advocacy Law and Rules of its Implementation to be submitted in the Register of non-Saudi counsels. The conditions and requirements for granting of a license to practice by other jurisdictions under which the application for the counsel was made should not be less stringent than the ones applicable in Saudi Arabia.
Application for the register of non-Saudi counsels must be made electronically with the Ministry as per the forms and procedures, stipulated therein along with a copy of the employment contract and documents evidencing fulfilling the conditions for registration.
The license to practice by the non-Saudi counsel shall be revoked upon termination of the employment and if the non-Saudi counsel did not submit an employment contract evidencing employment with another licensed lawyer.
Al Ghazzawi & Partners