Bilic took charge of the Pro League side in September 2018 with the boss signing a deal that was due to run until June 2021.
But he was sacked in February 2019 – just five months later – having taken charge of only 17 games.
According to reports in his native Croatia, Bilic enlisted the help of FIFA to get compensation for the early termination of his contract.
And the world governing body has now ordered Al-Ittihad to pay up.
It is not known exactly how much they have to pay but reports suggesting Bilic is owed 15million US dollars – around £12.5m.
Al-Ittihad have been ordered to pay the money within 30 days.
The Saudi Arabia side, though, look set to appeal the decision and take the matter to the Court of Arbitration for Sport.
Bilic was joined in Saudi Arabia by Dean Racunica and Danilo Butorovic – who are also his assistants at Albion.
They too are due to receive compensation under FIFA’s ruling.
Bilic was appointed Al-Ittihad boss with the club languishing in the Pro League relegation zone following the sacking of Ramon Diaz.
Incredibly, he won the Pro League’s Manager of the Month award in January but was sacked just weeks later – with the board acting following a 2-0 home defeat to arch-rivals Al-Hilal.
The Croatian was appointed Albion head coach four months later after agreeing a two-year-deal.
And, so far, his time at The Hawthorns couldn’t have been more successful with the 51-year-old having built an exhilarating side that has sat in the Championship’s top two for the vast majority of the campaign.
At his unveiling as Albion boss, Bilic – who has also managed in Turkey – defended his short spell in Saudia Arabia.
“Saudi was a different challenge,” he said. “I wanted to go there for three years, I liked that culture, I wanted to stay there, it’s a good place to live, people are very friendly, totally opposite to what people think, to what I thought.
“I wanted to stay there, I had big plans.
“Football is very important there, gates can be 50 or 60,000. I was at a big club.
“It’s very important for the town and the fans and everything, like in Turkey.
“The problem is they keep changing the board, and the board change the managers.
“The club improved, that’s why I wasn’t happy. I was double sad when I got sacked, because we had already done the hard job.
“It was in a really bad position when we took over in September.
“In January when it got better and better and we came out of the turbulence, I was voted manager of the month. A month later I was sacked.”
Albion are the fifth side Bilic has managed.
After six years in charge of Croatia, he was appointed manager of Lokomotiv Moscow.
He spent a year in Russia before taking the top job at Turkish outfit Besiktas.
And Bilic then left them to join West Ham – the club where he made his name as a player in England.
In his first season back with the Hammers he guided them to a record Premier League points total.
The following year – West Ham’s first at the London Stadium – they finished 11th in the top flight.
But Bilic was sacked midway through the 2017/18 campaign with the club battling relegation.