Author: Basil Al-Ismaili

The Ministry of Justice and Legal Affairs held that the confiscation of a performance bond is a contractual penalty that may only be imposed where a law, regulation, or the contract expressly provides for it. Neither the Tender Law nor the 1999 Standard Contract for the Construction of Buildings and Civil Works permits a government entity to confiscate a contractor's performance bond when it withdraws the works and executes them at the contractor's expense. Once the entity has recovered its price differences, delay fines, and expenses from the contractor, the 1999 Standard Contract requires it to return the bond.

The Supreme Court held that an arbitration clause is not a matter of public order and may be waived expressly or impliedly, but whether a party has in fact waived it is a question of fact for the trial court. A letter in which a party denies being bound by any agreement with the other side, and on that basis declines a proposal to arbitrate, does not amount to a waiver of the arbitration clause in that agreement.