Litigation 2026

SAUDI ARABIA Law and Practice Contributed by: Andreas Haberbeck, Derayah LLPC

1. General 1.1 General Characteristics of the Legal System Since the creation of the Kingdom of Saudi Arabia on 23 September 1932, it has been the government’s express policy that the country is governed by Islamic law (Sharia). This was confirmed in 1992 by the Basic Law of Rule, Royal Order No A/90 of 27 Sha’ban 1412 Hejra, corresponding to 1 March 1992, which is, in effect, the country’s constitution. Historically, the Hanbali school of Islamic law has been dominant in the territory that is now Saudi Arabia. The Islamic law texts that Saudi jurists regard as authoritative were compiled during the 13th to 17th centuries CE; as such, they reflect the concerns of a pre-industrial society and do not address many commercial, busi- ness or economic issues. There are numerous areas of law where Islamic law offers few or no guidelines, and where government- made legislation is, therefore, the only law. For exam- ple, company law, capital markets law, foreign invest- ment law, and employment law are largely governed by self-contained codes. However, until recently, the Saudi Arabian government was reluctant to legislate in areas where the subject matter was covered in some detail in authoritative Islamic law texts. This has changed with an ambitious reform pro- gramme under the supervision of the Main Commit- tee for the Preparation of Judicial Legislation, which has been working on a modern model of legislation consistent with Islamic law principles and international norms. The Evidence Regulation was enacted under Royal Decree No M/43 of 26 Jumada Awwal 1443 Hejra, corresponding to 30 December 2021, the Per- sonal Status Regulation under Royal Decree No M/73 of 6 Sha’ban 1443 Hejra, corresponding to 9 March 2022, and the Civil Transactions Regulation under Royal Decree No M/191 of 29 Shawwal 1444 Hejra, corresponding to 18 June 2023. Taking their cue from the codes of other Arab states, as well as from European and North American laws, these new Regulations are primarily a codification of Islamic law, with guidance from internationally accept- ed principles on which Islamic law is silent or unclear.

Therefore, they are not a radical departure from Saudi law, but rather have consolidated and clarified exist- ing rules, with some changes where this is possible without conflicting with Islamic law. For example, Article 385 of the Civil Transactions Regulation, 2023, confirms the clear Islamic law rule that agreements to charge or pay interest are void, while Article 137 of the Civil Transactions Regulation, 2023, permits awarding damages for loss of antici- pated income, which was traditionally opposed by the Saudi judiciary without being based on a clear Islamic law prohibition. An obvious advantage of the new Regulations is that one no longer has to ascertain legal principles with reference to four to eight-hundred-year-old texts, the language of which requires a specialist education to understand (the equivalent of reading Blackstone’s commentaries in their original language). Furthermore, the authoritative Islamic law texts do not always offer clear solutions to a given issue, for example, by stat- ing that there are differing views. This uncertainty has been eliminated by the Civil Transactions Regulation, 2023, which sets out clear rules. 1.2 Court System Saudi Arabia has courts that are administered by the Ministry of Justice and specialised tribunals. The General Courts (also known as the Sharia Courts), the Commercial Courts and the Labour Courts are under the administration of the Ministry of Justice. Among the other specialised tribunals (whose names mostly explain their scope of jurisdiction) are: • the Administrative Court, also known as the Board of Grievances, which has exclusive jurisdiction over disputes to which the government or government agencies are party; • the Committee for the Resolution of Securities Disputes, which deals with disputes falling within the ambit of the Capital Markets Regulation and its Implementing Rules; • the Committee for Banking Disputes; and • the Committee for the Settlement of Insurance Disputes.

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