In brief
Saudi Arabia has undertaken a comprehensive reform of its enforcement framework through the enactment of the new Enforcement Law, issued pursuant to Royal Decree No. M/237 dated 3/11/1447H (corresponding to 20 April 2026). The new law, coming into effect in late October 2026, replaces the existing Enforcement Law issued under Royal Decree No. M/53 dated 13/8/1433H (corresponding to 2 July 2012G).
To preserve direct enforcement, new promissory notes should be issued electronically through Nafith. Although wet-ink notes remain valid as instruments, they may not benefit from the same direct enforcement route once the new regime applies. Existing promissory notes are expected to remain directly enforceable for a one-year transitional period and should be replaced electronically when renewed or extended.
What we know
What has changed?
Under the previous Enforcement Law, a wet-ink promissory note that satisfied statutory requirements generally constituted a directly enforceable instrument. A creditor holding an original duly executed promissory note could apply directly to the Enforcement Court without first obtaining a substantive judgment. What this means in practice is that promissory notes are a commonly used form of credit support in most Saudi financing transactions.
The new Enforcement Law has reframed the concept of what qualifies as an enforcement instrument. Rather than treating all promissory notes as automatically enforceable, the Enforcement Law now expressly provides that promissory notes will only constitute enforcement instruments where they are registered on approved national electronic platforms. As at the date of this alert, the approved national electronic platform for the issuance of promissory notes is the Nafith platform. In other words, direct enforceability is no longer linked solely to the existence of a valid negotiable instrument in wet-ink form; it is now contingent upon compliance with the digital registration requirements established by the new regime.
Accordingly, unless the promissory note has been issued or registered through an approved national electronic platform in accordance with the new Enforcement Law and its Implementing Regulations, it will no longer benefit from the streamlined enforcement route historically available to holders of wet-ink promissory notes.
Are wet-ink promissory notes no longer valid?
The new regime does not invalidate wet-ink promissory notes or diminish their evidential value as proof of a debt or payment obligation. Accordingly, a wet-ink note may continue to evidence the underlying payment obligation. The key change relates to directness of enforcement rather than validity: a non-registered note may not be accepted for immediate enforcement before the Enforcement Court, meaning the holder may first need to establish its claim through substantive proceedings before seeking enforcement.
What does this mean for existing promissory notes?
Existing promissory notes benefit from a one-year transitional period and, during that period, such existing notes are expected to remain directly enforceable. Financial institutions should use the transitional period to replace existing wet-ink promissory notes with compliant electronic instruments. While immediate replacement may not be necessary in every case, electronic replacement should be completed when a note is next renewed, replaced or extended in accordance with the terms of the underlying transaction documents and in any event before expiry of the transitional period.
What does this mean for new transactions?
Financial institutions should adopt electronic issuance through Nafith as the standard approach for new transactions. Transaction timetables should accommodate customer registration, verification of authorised signatories and completion of the required electronic approvals before closing or first utilisation.
What remains to be clarified
Notwithstanding the new framework, a number of important practical and implementation questions remain unresolved. Most notably, there is currently uncertainty as to how the regime will operate for foreign lenders and other non-Saudi beneficiaries. Based on the current functionality of the Nafith platform, non-Saudi entities do not appear to be able to create accounts or otherwise hold electronic promissory notes directly in the system. As a result, it remains unclear whether approved electronic promissory note platforms will be opened to foreign entities, whether additional onboarding requirements will be introduced, or whether foreign entities will need to rely on alternative holding structures, such as appointing a local nominee, trustee or facility/security agent to hold and administer electronic promissory notes on behalf of the underlying lenders.
It is also not yet known whether existing wet-ink promissory notes can be converted into electronic instruments through registration on an approved platform, or whether they must instead be cancelled and replaced with newly issued electronic promissory notes. Relatedly, guidance is required on how the Enforcement Courts will treat non-registered promissory notes following the expiry of the transitional period, including whether such notes will cease to qualify as enforcement instruments altogether or whether any alternative enforcement route will remain available.
What financial institutions should do now
- New transactions: Require promissory notes to be issued electronically through Nafith and include evidence of issuance in the conditions precedent checklist.
- Existing transactions: Identify all wet-ink promissory notes, record expiry and renewal dates, and prioritise higher-risk or near-term exposures.
- Renewals and amendments: Issue the replacement note electronically rather than taking a further wet-ink note.
Looking ahead
As aspects of the new framework, especially the practical application to corporate entities and foreign lenders, are still developing, we are closely monitoring regulatory developments, official guidance and evolving market practice. In the meantime, we remain available to guide you through this transition and assist in navigating the new requirements.
Note: The terms “order note” and “promissory note” are used interchangeably in the Saudi market. Accordingly, references in this alert or in any financing document to either term should be understood as referring to the same instrument.
Status and sources. This alert is based on the Enforcement Law issued by Royal Decree No. M/237 and the August 2026 consultation draft of the Implementing Regulations. The draft regulations may change before final issuance.