Malicious Lawsuit in Saudi Arabia: Penalty and Compensation

You paid your supplier SAR 150,000, and he signed a final release (mukhalasa). A year later he sued you for the same amount. You attended four hearings and paid a lawyer until his claim was rejected. Was that just a dispute he lost, or a malicious lawsuit for which you deserve compensation?

A malicious lawsuit (da'wa kaydiya) is one filed by a person who knows he has no right in it, to harm or delay his opponent. If the court finds that a lawsuit is malicious or sham, it must reject it, and it may impose a ta'zir (discretionary) penalty on the person found responsible (Article 3 of the Law of Sharia Procedure). A person harmed by it may claim compensation through a request during the case or in a separate lawsuit (Implementing Regulation 3/5). But losing a case does not, on its own, make it malicious.

When is a lawsuit malicious, and when is it just a lost case?

Going to court is the right of anyone who believes he has a claim. A claimant may misread a contract, fail to prove a real debt, or claim an amount the court does not fully accept. In these cases the claim is rejected, but it is not malicious, because the claimant believed he had a right.

Malice appears when the claimant knows his claim has no basis and files it anyway. Indications that help to prove it include:

• A release or earlier acknowledgement of receiving the same debt that is now being claimed again.
• An earlier judgment that decided the same right between the same parties.
• Messages in which the claimant says his aim is to “tie you up” or to pressure you to give way in another dispute.
• Repeatedly filing similar claims and then abandoning them after the opponent has borne the cost of attending.

A sham lawsuit is slightly different. It is one where two parties agree on a false dispute to obtain a judgment to use against a third person, such as moving money out of creditors' reach. The court may also impose a discretionary penalty on anyone proved to have colluded in a sham or malicious lawsuit, such as a witness or expert (Implementing Regulation 3/4).

What is the penalty for a malicious lawsuit in Saudi Arabia?

Article 3 of the Law of Sharia Procedure does not set an amount. It makes the penalty a discretionary one that the court sets according to the facts. Where possible, the penalty is ordered together with the rejection of the claim, and it can be challenged through the ordinary ways of objection (Implementing Regulation 3/6). So there is no fixed prison term or fine for every malicious lawsuit.

There is a separate rule on the criminal side: a person maliciously accused in a criminal case may claim compensation before the court that heard the original case (Article 215 of the Law of Criminal Procedure). The Law of Evidence also has a specific fine of up to SAR 10,000 on a person who claims a document is forged and whose claim is rejected, or who withdraws it, if it is proved he intended malice or to delay the judgment (Article 49).

How do you claim compensation for a malicious lawsuit?

The Implementing Regulations of the Law of Sharia Procedure, as amended by Minister of Justice Decision No. 512 dated 5/1/1445H, give the person harmed two routes: a request to the court panel while the case is being heard, or a separate lawsuit (Implementing Regulation 3/5). The first is faster because the judge knows the file. The second suits someone whose losses only became clear after the case ended.

The basis for compensation is that anyone whose fault causes harm to another must compensate it (Article 120 of the Civil Transactions Law). Compensation covers the harm in full, including the loss suffered and the gain missed (Articles 136 and 137), and moral harm (Article 138). In the Commercial Courts, the court must decide in its judgment on any claim for compensation for material and moral harm, including litigation costs, taking into account how serious the harm is, the amount awarded, the losing party's delay and custom (Article 164 of the Implementing Regulations of the Commercial Courts Law).

Set out your claim with figures and documents: the lawyer's fees with the contract and receipt, the working days you lost, and any deal that was held up by the case, with proof of the link. Do not claim an amount equal to what your opponent claimed. Compensation is measured by your own harm.

A supplier signed a release for SAR 150,000 covering 2025 deliveries, and then claimed the money again.

If the new claim is for 2026 deliveries that the release did not cover, there is a real dispute about the scope of the paper, and no malice.

But if it is for the same invoices listed in the release, his knowledge that the debt was settled is strong evidence of malice. The defendant then submits the release to defeat the claim, and asks for the discretionary penalty and for compensation for his lawyer's fees and costs.

How do you organise your defence against a malicious lawsuit?

1. First answer the claim itself with documents: the contract, transfers, release and any earlier judgment.
2. Then present the evidence of malice separately, so that your main defence is not lost in an exchange of accusations.
3. Prepare a short timeline: when the dealings began, when payment was made, what the opponent knew, and when he filed his claim.
4. Make the compensation request specific, with an amount, a basis and documents, not a general sentence at the end of the memo.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

Practical solutions for both sides

If a lawsuit you consider malicious has been filed against you:

• Keep the releases, earlier judgments and messages that prove what your opponent knew.
• Ask expressly for the claim to be rejected as malicious and for the claimant to be penalised under Article 3.
• File the compensation request during the case if your losses are clear, or keep your right to a separate lawsuit.
• Collect the lawyer's contract, fee receipts and any actual loss with documents.
• Do not respond with a malicious counterclaim. You will lose your position.

If you are the claimant and face an allegation of malice:

• Explain the basis of your claim and the document you relied on when you filed it.
• If you discover a mistake in the calculation or the scope of the claim, correct it quickly through the proper procedure.
• If it turns out the right really has been settled, withdrawing the claim early is better than continuing.
• When settling, write clearly which rights the agreement covers, so the dispute does not return under another name.

If a case against you has ended and you want to know whether you can ask for your opponent to be penalised or for compensation for your fees, send the statement of claim, the judgment and the release on WhatsApp, and we will read the file with you.