Jubran Alsughayyir (Legal solution) has posted When Step-In Becomes Substitution: The Hidden Contract-Assignment Effects of Saudi PPP Direct Agreements on SSRN. Here is the abstract:
Direct agreements are intended to keep a project alive when the project company cannot. In Saudi public-private partnerships, that commercial logic now sits beside an express statutory regime for assignment of contractual status. The Civil Transactions Law (CTL), particularly Articles 255–258, links contractual substitution to advance consent, discharge of the outgoing party, defenses, and the survival of security. At the same time, the National Center for Privatization & PPP (NCP) guidance templates effective from 1 January 2026 expressly contemplate lender step-in, suspension of termination, and replacement of the project company. This paper asks a narrow but consequential question: when does lender intervention cease to be cure and become an assignment of contractual status under Saudi law? Using the controlling Arabic text of the Civil Transactions Law, the PSP framework, the 2026 NCP templates, and comparative project-finance materials, it develops a four-route characterization model—cure, temporary intervention, same-entity rescue, and new-entity substitution—and a Continuity Test for distinguishing an Article 255 transfer from a termination-and-regrant or ownership change. It further argues that Articles 256 and 258 should at minimum operate as anti-silence rules: transaction documents should not assume that outgoing-party liability or third-party support survives a consented substitution without a legally sufficient basis for that result. Private-law consent under Article 255 also remains distinct from regulatory, ownership, qualification, licensing, and project-specific approvals. The resulting Saudi Step-In Paradox is that the drafting that makes permanent replacement commercially credible can simultaneously activate statutory consequences that generic step-in language does not answer. The paper converts that problem into a transaction architecture: a Two-Consent/Three-Gate approval model, a Cure–Substitution Gap analysis, Legacy Liability and Security Continuity Schedules, and a six-part enforceability test. More broadly, it advances a Transactional Characterization Principle: cross-border market labels such as “step-in” and “novation” do not determine legal effect in a codified system; local law attaches consequences to what the transaction actually does.
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