Cooperative society cases in Saudi Arabia vary between internal administrative disputes, financial claims, and regulatory violations that may lead to dissolution. With the New Execution Law 1447 AH coming into effect, the mechanisms for handling judgments have changed, especially regarding debt collection and public fund protection.
Types of Cooperative Society Cases
Disputes related to cooperative societies fall into several major legal paths:
- Administrative and Membership Disputes: Includes disputes over the validity of general assembly meetings and cases of membership termination due to lost qualifications or breach of trust.
- Financial and Contractual Cases: Claims from suppliers and contractors, disputes over profit distribution, and administrative corruption cases involving illicit gains.
- Dissolution and Liquidation Cases: Lawsuits to dissolve a society when it fails to meet obligations or neglects its activities for more than a year.
Cooperative Societies Under the Execution Law 1447 AH
Execution procedures against societies are subject to strict controls that balance right recovery with public benefit continuity:
- Asset Seizure: Assets may only be seized to satisfy debts based on a final judicial ruling.
- Protection of Public Facilities: The law prohibits the seizure of tools and equipment designated for managing public facilities or providing services to the public.
- Limited Liability: A member's liability is limited to their shares and does not extend to personal assets except in cases of trespass or gross negligence.
Steps to File a Lawsuit Against the Board of Directors
To initiate a lawsuit, the following legal sequence must be followed:
- Administrative Step: Filing a formal complaint with the Ministry of Human Resources to clarify violations; the Ministry has the right to dissolve the board or appoint temporary members.
- Determining Jurisdiction: (General Court) for private rights, (Board of Grievances) for administrative decisions, or (Criminal Courts) for embezzlement and forgery.
- Execution via "Najiz": Filing the lawsuit electronically, specifying the defendant's capacity (official or personal), and attaching the bylaws and evidence.
Legal Advice: The New Execution Law allows for immediate execution against the society's assets. If board members are found to have smuggled assets to obstruct execution, they may face penalties including imprisonment.