SAUDI ARABIA Trends and Developments Contributed by: Zeyad Khoshaim, Abdullah Alajlan and Kamil Mehiz, Khoshaim & Associates
Khoshaim & Associates 17th Floor, Tower B
Olaya Tower Olaya District Riyadh 11321 Saudi Arabia Tel: +966 11 461 8700 Email: bd@khoshaim.com Web: www.khoshaim.com
Introduction Saudi Arabia’s Vision 2030 reforms have spurred extensive efforts to modernise the Kingdom’s eco - nomic and legal landscape. A central pillar of these reforms is the establishment of a transparent, predict - able and commercially oriented legal framework that fosters foreign investment and supports cross-border business. One of the most significant legal developments in this regard is the enactment the Saudi Civil Transactions Law (CTL), enacted by Royal Decree No (M-191), which came into force on or around 16 December 2023. The CTL represents the Kingdom’s first comprehen - sive codification of principles relating to contracts, obligations, property rights and torts. It blends the foundational Islamic Shari’ah principles that under - pin Saudi law with contemporary civil law concepts, thereby offering much-needed clarity and certainty to local and international market participants. For international investors and arbitration practition - ers, the introduction of the CTL marks a significant milestone. This article offers an accessible overview of the CTL’s key provisions, its place within the broader Saudi legal framework, and its practical implications – particularly for international stakeholders looking to engage with and seize the tremendous opportunities presented by Saudi Arabia’s Vision 2030. Background and Legal Context Saudi Arabian law is fundamentally based on Islamic Shari’ah, which serves as the Kingdom’s supreme source of legislation and encompasses the entirety of
its legal system. Shari’ah is principally derived from two primary sources: the Holy Qur’an and the Sun - nah – the authenticated sayings and practices of the Prophet Mohammed (peace be upon him). This reli - gious foundation distinctly shapes Saudi Arabia’s legal framework, setting it apart from civil law and common law traditions and establishing a unique legal system. Complementing Shari’ah are formal legal instruments including royal orders, decrees, resolutions of the Council of Ministers and ministerial circulars. All such regulations must be consistent with Shari’ah, and the courts are constitutionally mandated to interpret and apply them in harmony with its principles. Article 48 of the Basic Law of Governance (Royal Order No A/90, dated 1 March 1992) (the “Saudi Constitution”) explicitly states that courts shall apply “the provisions of Shari’ah as indicated by the Qur’an and Sunnah, alongside laws enacted by the State that do not con - flict with these sources”. Together, Shari’ah and enacted statutory laws form the complete body of Saudi Arabian law. Judges interpret and enforce these rules drawing upon religious prin - ciples, customary practices, and prior rulings where relevant. Unlike common law jurisdictions, however, Saudi courts do not follow a doctrine of binding prec - edent (ie, stare decisis); previous decisions serve as persuasive guidance but do not constrain subsequent judgments. This system preserves judicial discretion, allowing flexibility but sometimes resulting in varying legal outcomes. Prior to the enactment of the CTL, private law – cov - ering contracts, torts and property rights – lacked a comprehensive codified framework. Although parts
683 CHAMBERS.COM
Powered by FlippingBook