Explanation of Article 113
The article addresses the second exception to the general principle of rescission, which is that it nullifies the contract and cancels all obligations contained therein; the subject of this exception pertains to the substance of the contract. When a contract is rescinded, all obligations of both parties are nullified, except that the article exempts two types of obligations:
The first type: the dispute resolution clause, which is an agreement between the contracting parties regarding the resolution of disputes that may arise between them. This agreement may be a clause in the main contract or an independent agreement. It usually includes what the contracting parties are obliged to do to resolve the dispute should it arise, including the applicable law, litigation procedures, and alternative methods such as arbitration, mediation, conciliation, negotiation, and other related dispute resolution procedures. This obligation remains in effect between the contracting parties even if the contract is rescinded; because rescission is part of the dispute that the contracting parties presumably agreed to resolve according to the settlement clause between them. Nullifying this condition by rescission renders its stipulation futile, as a contracting party could evade it through rescission. Article (21) of the Arbitration Law in the Kingdom stipulates this concerning the arbitration clause, stating: The arbitration clause in a contract is considered an independent agreement from the other terms of the contract, and the invalidity, rescission, or termination of the contract containing the arbitration clause does not invalidate the arbitration clause itself if this clause is valid in itself.
The second type is the confidentiality obligation; it is an agreement between the owner of trade secrets and the party privy to them to maintain confidentiality. This agreement may occur in the pre-contractual stage, as in negotiation contracts, or it may be included as one of the terms of the contract concluded between the parties. The confidentiality obligation is an obligation to refrain from action, consisting of two main parts: first, refraining from disclosing secrets and ensuring their confidentiality, and second, refraining from exploiting the secrets accessed for personal gain without the owner's permission. For instance, if a contracting party wishes to purchase a certain technology and accesses confidential information about it, they must refrain from disclosing or transferring it to others or exploiting it for personal gain outside the scope of the agreement concluded between them.
Regardless of the legal characterization of this obligation as either an obligation of means or an obligation of result, if the contract includes a confidentiality obligation regarding the information each party obtains from the other, this condition remains in effect between the parties even if the contract is rescinded. The reason for this is evident; confidentiality is not limited to the contract but extends beyond its boundaries, and the nature of this obligation necessitates its continuation even if its source is a rescinded contract.
Related To
Article 113
Without prejudice to legal provisions, clauses relating to dispute settlement and non-disclosure shall remain valid even after the termination of the contract, unless agreed otherwise.