The single most significant question from a legal perspective is whether specific laws or regulations will be developed to govern PPPs. Typically, a general procurement law is not a suitable basis for PPP procurement as the procedures, evaluation requirements, etc. do not sit well with the nature and specific features of a PPP procurement. To fully unlock the potential of the PPP market outside of the power and water sectors, some form of specific regulation or exemption from the Procurement Law is likely to be required.
To the extent that the Procurement Law remains relevant, it is very important to be familiar with its requirements as there are consequences for failure to follow them including criminal sanctions. These laws include for example required evaluation criteria, priority to national manufactured goods, products and services, restrictions on extensions and variation to the contract etc.
New entrants to the market should also be aware that Saudi laws and the regulatory framework in KSA are continually evolving and developing. Advice that is sought by any private party whether it is an international or local entity should be based on an understanding of the local laws and regulations as they apply including comments on practice to the extent that it is inconsistent with the general interpretation of any law. Commercially, the applicable laws, the creditworthiness of the contracting government and bankability issues are key issues that are considered by potential investors.
Labour-related matters are also of significance in operating projects in the Kingdom independently or in conjunction with the government. Consideration of Saudization rates, the transfer of know-how, the training of Saudi employees will shed positive light on the investor's operations. These are key themes in the Vision 2030 for Saudi Arabia but are also obligations to doing business in Saudi Arabia which are followed up on through the Ministry of Labour 's initiatives and SAGIA, as applicable. Compliance with employment matters affects the ability to provide visas to foreign workers and ensures that the private entity remains on the right side of the law with regards to the statutory requirements of the labour law, where applicable.
Vision 2030 and the NTP also contain local content targets for ministries to achieve, and these may also need to be factored into PPP procurements.
Finally, the restriction on Saudi government entities resolving a dispute in Arbitration may be deemed problematic by some investors as the court system is sometimes considered like other countries to be slow and inexperienced in some of the complex concepts in infrastructure projects like water, construction and electricity. Courts can also be less flexible in its proceedings than an alternative dispute resolution mechanism such as arbitration.