SAUDI ARABIA Law and Practice Contributed by: Andreas Haberbeck, Derayah LLPC
1. General 1.1 General Characteristics of the Legal System The Nature of the Native 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 con- firmed in 1992 by the Basic Law of Rule, Royal Order No A/90 of 27 Sha’ban 1412 Hejra cor- responding to 1 March 1992, which is, in effect, the country’s constitution. Historically, the Han- bali school of Islamic law has been dominant in the territory that is now Saudi Arabia. The Islamic law texts that Saudi jurists regard as authorita- tive were compiled during the 13th to 17th cen- turies CE; as such, they reflect the concerns of a pre-industrial society and do not address many commercial, business or economic issues. There are numerous areas of law where Islamic law offers few or no guidelines, and where gov- ernment-made legislation is, therefore, the only law. For example, company law, capital markets law, foreign investment and employment law are governed by largely self-contained codes. How- ever, until recently the Saudi Arabian govern- ment was reluctant to legislate in areas where a given subject matter was covered in some detail in the authoritative Islamic law texts. This has changed with an ambitious reform pro- gramme under the supervision of the Main Com- mittee 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 Regula- tion was enacted under Royal Decree No M/43 of 26 Jumada Awwal 1443 Hejra correspond- ing to 30 December 2021, the Personal 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 European and North American laws, these new Regulations are primarily a codi- fication of Islamic law rules with guidance from internationally accepted 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 existing 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 anticipated income, which was tradi- tionally 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 princi- ples with reference to four to eight hundred year- old texts, the language of which requires a spe- cialist 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 solu- tions to a given issue, for example by stating that there are differing views. This uncertainty has been eliminated by the Civil Transactions Regu- lation, 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
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