AI Hub Law of Saudi Arabia

Alignment with Vision 2030

The Draft Global AI Hub Law is firmly entrenched in Vision 2030 and the National Strategy for Data and Artificial Intelligence (NSDAI), both of which aim to diversify Saudi Arabia’s economy away from oil and increase its global digital competitiveness. A significant goal is to create the Kingdom as a global AI and data infrastructure powerhouse, strategically positioned at the crossroads of Asia, Africa and Europe.

Data Sovereignty and ‘Data Embassies’

At its foundation is the unique concept of “data embassies“—data centers located within Saudi borders but subject to the laws of foreign countries, similar to diplomatic embassies. While Estonia and Monaco have previously tested this concept, Saudi Arabia is pioneering a comprehensive regulatory structure that includes licensing, data sovereignty, and termination methods.

Concordance with Global AI Ethics & Data Regulation

Saudi law is inspired by the EU AI Act, OECD AI Principles, and UNESCO principles, and closely aligns with its own Personal Data Protection Law (PDPL) and cybersecurity requirements, indicating a commitment to both innovation and responsible AI.

Core Provisions of the Draft Global AI Hub Law

1. Types of AI Hubs

The law establishes three separate hub models:

• Private Hubs

• A foreign government (“Guest Country”) operates entirely in accordance with a bilateral agreement.
• Operate under the guest country’s legal jurisdiction and enjoy diplomatic-like immunity.

• Extended Hubs

• Run by licensed third-party operators with agreements with both Saudi authorities and a foreign state.
• Follow international laws, yet are run by local entities.

• Virtual Hubs

• Managed by local service providers, providing virtual infrastructure governed by a specified foreign state
• Data remains under foreign jurisdiction, despite being physically hosted in Saudi.

These categories are intended to meet a variety of user needs, ranging from sovereign government enclaves to commercial cloud services.

2. Licensing and Registration

• All hub operators, whether local or foreign, must register and obtain a license from CST.
• Licensing requirements include security methods, ethical standards, data protection alignment, and technical skills.
• The licensing and hub governance will be overseen by a selected competent entity, most likely the CST or the Saudi Data & AI entity (SDAIA).

3. Data Localization & Sovereignty

• All sensitive and important data must be stored and processed in Saudi Arabia.
• Cross-border data transfers need specific government consent.
• Data hubs are “sovereign digital spaces” protected by Security, Compliance, and Governance by Saudi jurisdiction, but directed by foreign standards. 
• The law provides for the termination of hub arrangements to preserve national interests, as well as a grace time (up to 120 days) for data movement following termination.

4. Security, Compliance, and Governance

• Operators must comply with Saudi cybersecurity law (National Cybersecurity Authority) and PDPL.

• Required compliance includes:

• Robust security protocols
• Informed consent mechanisms
• Liability rules, audit trails, and user redress

• Ensures appropriate AI and data management.

5. Dispute Resolution & Regulatory Coordination

• Mechanisms include:

• Clear liability models.
• Dispute Resolution Under Saudi Law.
• Cross-border regulatory collaboration, certification, and mutual audits.

• Protects both national sovereignty and foreign investor confidence.

3. Implications for Saudi’s Legal Ecosystem

A. Heightened Demand for Lawyers in Saudi Arabia

Legal professionals particularly those focusing on data, technology, international trade, and regulatory law will be critical in:

• Navigating license with CST.
• Drafting bilateral and multinational agreements.
• Advising on compliance with PDPL, cybersecurity, and AI ethics
• Creating liability and dispute resolution frameworks

This move creates an opportunity for Saudi lawyers to develop diverse competence in developing AI governance.

B. Growth Path for Law Firms in Saudi Arabia

Full-service law firms in Saudi Arabia (both local and international) will profit from:

• Developing AI/data regulatory practices.
• Leading public consultation responses.
• Helping tech investors and digital collaborators
• Organizing data hubs and embassies

Firms with strong commercial and regulatory capabilities will gain a competitive advantage.

C. Strategic Opportunity in Law Firms in Jeddah

Given its economic importance, Jeddah is primed for tech-commercial legal services.

• Law firms in Jeddah can help local/regional investors with licensing, due diligence, and compliance.
• Lawyers in Jeddah are well-positioned to serve as middlemen between foreign hub operators and Saudi authorities.
• Opportunity to collaborate with global firms to serve rising AI infrastructure clients.

D. Key Industry Players and Legal Engagement

Entities such as Humain, the PIF-backed AI infrastructure startup that began in May 2025 and global hyperscalers collaborating on data center projects will require legal advice on

• Regulatory licensing and hub structure
• Foreign jurisdiction recognition agreements
• Negotiations under the Global AI Hub Law.

In this climate, Saudi lawyers, particularly those in Jeddah, play an important role as mediators.

4.   Challenges & Next Steps

A. Balancing Sovereignty and Investment: 

• Maintaining Saudi waiver rights and access to data during crises or security threats.
• Managing the 120-day termination and data migration process.

B. International Coordination:

• Bilateral treaties necessitate negotiation and legal coordination with foreign governments.
• Lawyers in Saudi Arabia having international treaty knowledge will be important.

C. Regulatory Clarity:

• The draft law still requires enacting regulations outlining licensing, operations, infrastructure, and compliance.
• Legal businesses in Saudi Arabia can influence content through public consultation.

D. Harmonizing with Existing Laws:

• Operators must comply with the PDPL, cybersecurity, and AI ethics.
• Lawyers in Jeddah and beyond must help clients develop a coordinated compliance plan.

E. Market Awareness and Legal Preparedness:

• The public consultation period lasted from April 14 to May 14, 2025; the final law will be published in the Official Gazette and will take effect 60 days after publication. 
• Law firms in Jeddah might conduct webinars, workshops, and whitepapers to educate investors and operators.

Conclusion

Saudi Arabia’s Draft Global AI Hub Law places the Kingdom at the forefront of AI, data governance, and digital sovereignty. By recognizing “data embassies” and introducing three hub concepts, the law encourages global entities to establish sovereign digital infrastructure on Saudi land. This growth presents enormous opportunities—and responsibilities—for lawyers in Saudi Arabia, law companies in Saudi Arabia, lawyers in Jeddah, and law firms in Jeddah. Legal professionals play critical roles in the successful implementation of this transformative vision, from drafting bilateral treaties and overseeing licensing procedures to assuring ethical compliance and risk management.

Saudi Arabia’s legal community is presently at a crossroads: either increase competence in AI/data law or risk being eclipsed. As the world’s technological infrastructure shifts toward digital sovereignty, the Kingdom’s lawyers will play a key role in this transformation, both domestically and internationally.