Loss Of Profit Claims Under The Saudi Civil Transactions Law: Practice Of The Saudi Courts

Since the Saudi Civil Transactions Law (CTL) entered into force in December 2023, there has been understandable interest in whether courts would take a more expansive approach to loss of profit (الربح الفائت / الكسب الفائت) claims, given their express recognition in the CTL as compensable harm.

Judicial practice has now begun to crystallise. A number of Commercial Court of Appeal level decisions issued after the CTL came into force provide a clearer picture of how courts are treating claims for loss of profits in practice.

What the law says

Article 137 CTL provides that compensation for harm should be determined based on the claimant's losses, whether those losses are:

• actually incurred; or
• in the form of lost profits

provided that the loss is a natural consequence of the harmful act and could not reasonably have been avoided by the claimant.

The CTL therefore removes any conceptual doubt as to whether loss of profit may be claimed under Saudi law.

What the courts are doing in practice

Prior to the CTL, courts typically took a restrictive view as to recoverability of lost profits. Generally, courts viewed such claims as speculative and uncertain, and would avoid making awards for lost profit claims on the basis that the claimant could not prove with certainty that such profits would have been achieved.

Post-CTL, the courts appear to be applying the same restrictive standards to recoverability of lost profits. This indicates that the express inclusion of lost profits within article 137 is being treated as a codification of established principles, not as a relaxation of damages standards.

Claims based on projections, financial models, market-share assumptions or "but for" scenarios – even where supported by expert reports – have been characterised as speculative and rejected.

Courts are also using the "natural consequence" requirement as a strict causation filter. Where alleged losses are influenced by market dynamics, regulatory uncertainty, reputational factors, or third-party conduct, courts have been reluctant to find a sufficient causal link even where fault is established.

Practical implications for businesses

• Litigation strategy:

Loss-of-profit claims should generally be approached with caution and should not be relied upon as a primary head of recovery unless supported by near-certain evidence.

• Evidence planning:

Courts expect proof of realised loss and a tight causal chain. Projections and financial modelling alone carry significant risk.

• Contractual risk management:

Loss-of-profit exposure should continue to be managed primarily through:

In summary

While judicial practice may continue to develop over time, current appellate-level decisions across multiple disputes point to continuity rather than expansion of recoverability of loss of profits. While loss of profit is clearly a recognised head of claim in law, Saudi courts remain disciplined in its application, prioritising certainty, direct causation and proof.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.