| (a) | General rule
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| | The provisions of a Netting Agreement will be enforceable in accordance with their terms, including against a Bankrupt Party, and, where applicable, against a guarantor or other natural or corporate person providing Collateral or security for any obligation of a Bankrupt Party and may not be stayed, avoided or otherwise limited due to the following:
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| | (1) | any action taken or power exercised by a Bankruptcy Trustee or the Bankruptcy Commission.
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| | (2) | Any other provision applicable to a Bankrupt Party by virtue of its being subject to Bankruptcy Proceedings according to the Bankruptcy Law.
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| | Paragraph (1) and (2) above shall not affect the component authority’s powers, according to the Law of Systemically Important Financial Institutions, to stay the right to terminate, liquidate and/or accelerate any present or future payment or delivery obligations or entitlements under or in connection with one or more Qualified Financial Contracts to which a Netting Agreement applies.
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| (b) | Limitation on the Obligation of Payment or Delivery
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| | After the initiation of a Bankruptcy Proceedings in relation to one Party, the only obligation, if any, of either Party to make payment or delivery in respect of all entitlements and obligations terminated, liquidated or accelerated pursuant to the application of Netting under a Netting Agreement shall be its obligation to pay a net amount to the other Party as determined in accordance with the terms of the Netting Agreement.
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| (c) | Limitation on Right to Receive Payment or Delivery:
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| | After the initiation of a Bankruptcy Proceedings in relation to one Party, the only right, if any, of either Party to receive payment or delivery in respect of all entitlements and obligations terminated, liquidated or accelerated pursuant to the application of a Netting under a Netting Agreement shall be equal to its right to receive a net amount from the other Party as determined in accordance with the terms of the Netting Agreement.
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| (d) | Limitation on Powers of the Bankruptcy Trustee and the Bankruptcy Commission:
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| | Any powers of the Bankruptcy Trustee or the Bankruptcy Commission to assume or repudiate individual contracts or transactions will not prevent the termination, liquidation and/or acceleration of all payment or delivery obligations or entitlements under one or more Qualified Financial Contracts to which a Netting Agreement applies, and will apply, if at all, only to the remaining net amount in respect of all such Qualified Financial Contracts after the liquidation and/or acceleration of all payment or delivery obligations or entitlements of the Parties in accordance with the terms of the Netting Agreement; where such remaining net amount will be considered as bankruptcy assets subject to the provisions of the Bankruptcy Law .
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| (e) | Limitation of Bankruptcy Laws Prohibiting Netting:
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| | The provisions of a Netting Agreement which provide for the determination of a net balance of the close-out values, market values, liquidation values or replacement values calculated in respect of accelerated and/or terminated payment or delivery obligations or entitlements under one or more Qualified Financial Contracts to which a Netting Agreement applies will not be affected by any applicable Bankruptcy Law provisions in the Kingdom limiting the exercise of rights to set off, offset or net out obligations, payment amounts or termination values owed between a Bankrupt Party and another party.
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| (f) | Preferences and Fraudulent Transactions:
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| | The Bankruptcy Trustee or the Bankruptcy Commission are not entitled to nullify, suspend or refrain from executing any of the following obligations or transactions on the ground that they constitute preference of an outstanding debt or related to a fraudulent transaction in respect of a Non-Bankrupt Party, unless there is a clear and sufficient evidence that the Bankrupt Party conducted any of these obligations or transactions with actual intent to hinder, delay, or defraud any entity to which the Bankrupt Party was indebted or became indebted, on or after the date such transaction was made, or such obligation was incurred, and such obligations and operations are as follows:
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| | (1) | transfer, substitution or exchange of cash, collateral or any other interests from the Bankrupt Party to the Non-Bankrupt Party under or in connection with a Netting Agreement; or
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| | (2) | any payment or delivery obligation incurred by the Bankrupt Party and owing to the Non-Bankrupt Party under or in connection with a Netting Agreement;
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| (g) | Preemption: |
| | No stay, injunction, avoidance, moratorium, or similar proceeding or order, whether issued or granted by a court, competent entity, Bankruptcy Trustee or the Bankruptcy Commission pursuant to the Bankruptcy Law, shall limit or delay the application of otherwise enforceable Netting Agreements in accordance with paragraphs (a), (b) and (c) of this Article.
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| (h) | Realization, Appropriation and Liquidation of Collateral:
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| | Unless otherwise agreed by the Parties, the realization, appropriation and/or liquidation of Collateral under a Financial Collateral Arrangement shall take effect or occur without any requirement that prior notice shall be given to, or consent be received from, any Party, natural or corporate person or entity, provided that this paragraph is without prejudice to the provision of any applicable Laws in the Kingdom related to the realization, appropriation and/or liquidation of Collateral to be conducted in a commercially reasonable manner.
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| (i) | Scope of this Article:
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| | (1) | A Netting Agreement shall be deemed to be a netting agreement notwithstanding the fact that such Netting Agreement may contain provisions relating to agreements, contracts or transactions that are not considered Qualified Financial Contracts according to Annex (1) of this Regulation, provided that, for the purposes of this Article, such Netting Agreement shall be deemed to be a Netting Agreement only with respect to those agreements, contracts or transactions that fall within the definition of "Qualified Financial Contract" in terms of Article (Two) and Annex (1) of this Regulation.
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| | (2) | A Financial Collateral Arrangement shall be deemed to be a Financial Collateral Arrangement notwithstanding the fact that such Financial Collateral Arrangement may contain provisions relating to agreements, contracts or transactions that are not a Netting Agreement or Qualified Financial Contract to which a Netting Agreement applies in terms of Article (Two) of this Regulation, provided that, for the purposes of this Article, such Financial Collateral Arrangement shall be deemed to be a Financial Collateral Arrangement only with respect to those agreements, contracts or transactions that fall within the definition of "Netting Agreement" or "Qualified Financial Contract" in terms of Article (Two) of this Regulation.
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| | (3) | For the purposes of this Article, a Netting Agreement and all Qualified Financial Contracts to which a Netting Agreement applies shall constitute a single agreement.
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| | (4) | For the purposes of this Article, the term "Netting Agreement" shall include the term "Multibranch Netting Agreement" as defined in Article (Two) of this Regulation, provided, however, that in a separate bankruptcy of a branch or agency of a foreign party, as defined in Article (Two) of this Regulation, in the Kingdom of Saudi Arabia the enforceability of the provisions of the Multibranch Netting Agreement shall be determined in accordance with Article (Six) of this Regulation.
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