CISG ARTICLE 78 AND THE SAUDI CIVIL TRANSACTIONS ACT: ASSESSING COMPATIBILITY

This legal article examines Article 78 of the CISG, which entitles creditors to interest in case of delayed payments but lacks specific guidance on the rate and calculation method. This ambiguity has led to divergent judicial and arbitral interpretations across various jurisdictions. The article argues that this vagueness allows for an interpretation compatible with Saudi Arabia’s legal framework, particularly the Civil Transactions Act (CTL). The central claim is that Article 78 should be understood as compensatory rather than usurious. The article suggests that the purpose of entitlement under the CISG is to compensate the creditor for time-value loss due to delay, rather than to generate profit from the debt. This aligns with the compensatory nature of the CTL, which allows for compensation of proven harm, while Sharia law prohibits usury. By using a doctrinal and comparative approach, the article concludes that the vagueness in Article 78 provides room for Saudi courts and tribunals to interpret the provision as delay compensation, which is permissible under Saudi law, provided both parties agree. This interpretation could preserve the CISG’s uniformity while remaining consistent with Saudi legal principles.