Navigating the cultural legal challenges of doing business in Saudi Arabia
Andrew Renton, Founder & Senior Partner, Castletown Law
Complex legal and cultural challenges can seem daunting to many organisations looking to do business in Saudi Arabia. Andrew Renton, Founder of Castletown Law, explains how he is using his experience of living and working in Saudi Arabia to help clients across the energy and infrastructure sector in the Kingdom.
Many firms will perceive there to be a lot of difficulties in doing business in Saudi Arabia. It can take significant investment in time and money and it needs to be done with consideration and care. In the case of Castletown Law, we have forged strong links with a Saudi law firm, Al Amer Bin Ali and initial discussions with specialist firms in the energy sector are progressing. Jointly they have been listed in some of the government’s advisory panels, but their core client business is in the delivery side of the energy and infrastructure sector.
As Saudi Arabia moves away from largely state-funded projects towards a project finance model for investment, there is a need for those participating to be guided through the risk matrix of the reality of delivering projects in a country where the legal structures are complicated by a mixture of civil law and Islamic law, Arabian culture and western pre-conceptions of how to do things.
Castletown Law – How we work
• One of the strengths of Castletown Law is our experience in delivering projects in multiple international jurisdictions, adapting to the needs of the project in the local environment. We don’t subcontract or delegate to local lawyers or firms, we take responsibility for delivering the service the client needs to deliver the project.
• We become part of the client’s team and take responsibility for the scope we are charged with. We don’t simply quote the law and leave the client to decide - we become part of the client’s decision making process at all levels. It is this approach that binds us into relationships with our clients as we take the time to understand their business and make sure it is protected in the environment it is operating in.
• Our approach takes more than just legal knowledge; it needs a real understanding of what it takes to make projects work in any given jurisdiction. It needs the understanding and foresight of pending and future changes - actual and potential - in the particular jurisdiction and internationally, and a way of explaining the risks arising from that perspective to the client.
• We do not assume that everyone understands the English language and English law, but rather that clarity of expression and respect for local law in the context of international projects is a critical factor.
• All our lawyers are senior professionals and we give direct advice at this level - we do not delegate downwards. We work through long-term structured relationships with fellow professionals we can rely on to work in the way we do and who will respect the need to deliver excellence in service to clients.
Castletown Law USPs
Andrew’s engineering background has given him experience of practical delivery of projects across the Middle East. Andrew’s legal work has built on that experience and provides a highly developed understanding of the risks and nuances in the sector.
Our clients like the fact that we are all experienced lawyers located across a number of jurisdictions focused only on the energy and infrastructure sector. As we mention above, we have a long and strong relationship with our partner firm, Al Amer Bin Ali in Riyadh.
What makes us different is that we use a direct advisory model, we are not from the usual mould using teams of lawyers. Our approach also means that clients get the benefit of advice very quickly and if we can’t do something with the benefit of our experience and knowledge, we tell the client and agree how to manage it with them.
We were established as a digital and international practice, so that we can operate anywhere in the world. Before the pandemic, we adopted a Zoom-call culture, because we believed it was a better way to work with clients across the world, rather than waiting to catch planes and trains to attend meetings in person. This has worked to our advantage in maintaining connections with clients and alliance firms internationally. We do, of course, travel and meet clients face to face when the need arises. We recognise the importance of striking the right balance.
Doing business in Saudi Arabia
When it comes to doing business in Saudi Arabia, many firms try to get alignment along political relationships, rather than creating a profile of their own based on capability and experience. That’s partly driven by the historic regulation in Saudi, which is changing in 2022. It meant you always had to have a Saudi law firm as your lead practice, so any international firm had to sit behind a local practice, which was largely driving the relationships that developed in Saudi Arabia.
The process of engagement has been very difficult due to these regulations, however this is going to change. Many Saudi businesses and Government departments were non-responsive - if you wanted to do work in Saudi you had to find your way through a maze to find the right person to speak to. Those apocryphal stories of going to meetings, sitting in a waiting room for hours only to be then told to come back tomorrow are real stories - we’ve done it!
One major challenge is the expectation challenge and what clients expect from you, going in as a lawyer. Lawyers in the West are used to being regarded in a certain way as they have a regulated and protected professional status. In Saudi not all lawyers are so regarded and most are seen as a consultancy service, so part of the challenge is thinking you are going to manage and control a situation, when the clients don’t see the lawyer’s role as being that.
Addressing cultural issues
We have worked in many countries and generally people you talk to want very similar things – to
have a stable and happy place to live and to raise and educate their families. There are differences in the ways people live in Saudi from the way they live in the UK and differences in the way business
The impact on business can be difficult to understand and that is why people get frustrated or concerned at what it is like to do business in Saudi. Business values are global and the basis of a good deal in Saudi is the same as in other countries, but people misunderstand this and think that, because it is Saudi Arabia, a good business deal will look different there than elsewhere.
The way you get to that deal can be different in Saudi from another country. You need experience and understanding of how the process of getting deals done works and you have to understand in Saudi particularly, that in order for you to be able to advise a company there, you have to go and meet and build a level of trust and understanding.
A rich field of opportunity for UK business
The first thing anyone must do is find out about Saudi Arabia and its very rich history. Understand
that this is a culture which is not based on the same origins as Western cultures and businesses. Don’t go expecting that they will adapt to your culture, but understand that they will expect you to adapt
There are a number of key areas such as energy and infrastructure with major opportunities, and there is also population growth and an urbanisation occurring that leads to pressure on utilities, such as water supply and food supply in a country which imports virtually all its food requirements. Anyone looking for opportunities there should consider the various pinch points facing the future of the economy and the plans for the economic development of Saudi Arabia. This includes internationalisation of the economic development of new industrial facilities, growth of technology and leading-edge scientific developments and expanding a supply chain for support of imported goods which are essential to the growth pattern envisaged.
There is the opportunity for energy exports, including the potential for interconnectors into East Africa to power the economies there, and other countries which have supply chains into Saudi Arabia and participation in coalitions which will look at the energy and infrastructure needs across multiple states in the Middle East.