Astra Food claims SAR 41.3M from SACO in arbitration lawsuit

Logo of Saudi Company for Hardware (SACO)

Saudi Company for Hardware (SACO) received, on August 2, a statement of claim in commercial arbitration proceedings filed by Astra Food Co., in connection with an ongoing arbitration dispute between the two parties relating to a franchise rights license agreement.

The arbitration lawsuit constituted to resolve the arbitration dispute between Astra Food and SACO, pursuant to the arbitration agreement executed between the parties, the company said in a statement to Tadawul.

According to the statement of claim, the claimant alleges the existence of a dispute concerning the duration and termination of the franchise agreement and the resulting financial consequences, including matters relating to the bank guarantee, inventory, and certain compensation claims.

SACO confirmed that all these claims represent allegations made by the claimant only and do not constitute any admission by SACO as to their validity or the entitlement to any of the amounts claimed. It stressed that it reserves all of its legal rights and defenses and will submit its response, defense, and counterclaims before the Arbitral Tribunal in accordance with the applicable legal procedures.

According to the statement of claim, the claimant seeks an order requiring SACO to pay a total amount of SAR 41.3 million, in addition to attorney fees amounting to 5% of the claimed amount and future arbitration costs.

The company also said it will disclose any material developments as they occur in accordance with the applicable laws and regulations. At this stage, SACO does not believe that this dispute will have any material operational impact on its business or operations.

SACO has appointed specialized legal counsel to represent it in the arbitration proceedings and to undertake all necessary legal actions to protect its rights and interests, including preparing and submitting its response to the statement of claim. It also intends to submit counterclaims in accordance with the applicable legal procedures.

At this stage, it is not possible to estimate the potential liability that may arise from these proceedings, as the arbitration remains at an early stage, according to the company.

SACO also noted that it will disclose any material developments in due course in accordance with the applicable laws and regulations.