The annual legal award -- one of the world's oldest -- is presented to lawyers who "through their work, activities or suffering defend the respect for human rights," the prize's founder Bertrand Favreau said from Amsterdam.
Al-Khair, who is the founder of the Monitor of Human Rights in Saudi Arabia (MHRSA) was last year handed a 15-year sentence on six charges by a specialised court in connection with his work.
Al-Khair is the brother-in-law and lawyer of local blogger Raif Badawi, who has been sentenced to 1,000 lashes and 10 years in jail for insulting Islam.
The sentence was met by worldwide condemnation and Badawi, 31, has already received the first 50 lashes outside a mosque in the Red Sea city of Jeddah on January 9. Subsequent rounds of punishment have been postponed.
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Rights groups however fear he could be flogged again soon, despite appeals from the United States, European Union and France for his sentence to be rescinded.
It has been awarded 20 times over the last three decades and is judged by defence lawyers representing human rights bodies at several major European bars.
It also consults non-governmental organisations and humanitarian organisations worldwide, who are invited to nominate candidates.
The prize is named after the 19th-century French lawyer Ludovic Trarieux, a human rights law pioneer who was a staunch defender of Alfred Dreyfus, who was falsely accused of treason in France.
Al-Khair has previously received the Swedish Olof Palme Prize for defending human rights in Saudi Arabia.