Overview of New Civil Law in Kingdom of Saudi Arabia

New Civil Law in Kingdom of Saudi Arabia 2023

On June 19, 2023, the Kingdom of Saudi Arabia enacted the Civil Transactions Law proclaimed by Royal Decree M/191 dated 18 June 2023 (Dhul-Qi'dah 29 1444 AH). The Code, which goes into force on December 16, 2023 (Jumada II 3, 1445 AH), marks a significant step to integrate Islamic standards into modern legal concepts, aiming to smooth out transactions and promote economic growth. The KSA Common Code also provides a positive impact on the business environment by increasing its attractiveness, regulating economic movement, and the stability of financial rights. The KSA Civil Code reflects Saudi Arabia's desire to draw in investment and encourage more business action as a component of its wider Vision 2030. The Code will in this way be at the core of the change of Saudi Arabia's economy.

Prior to KSA Civil Code

Before the order of the KSA Civil Code, the regulations in Saudi Arabia are established in view of the Basic Law of Governance, declared by Royal Decree A/90 dated March 2, 1992 (Sha’ban 27, 1412 AH), as amended. The Basic Law states that Sharia law governs the legal sphere in Saudi Arabia, as educated by the Quran and Sunna. The translation of Sharia law in Saudi Arabia is thus dependent upon the four schools of Islamic Jurisprudence, of which the Hanbali school is the most prevailing.

The ongoing framework is largely uncodified and doesn't depend on legal precedent. All things considered, texts composed by, for instance, the Hanbali school are prevalently depended upon to determine legitimate positions. Subsequently, Sharia law, as applied in Saudi Arabia according to commercial contracts, could be said to have the following characteristics:

Absence of codification: Sharia law is derived from religious texts and customs instead of classified laws and guidelines.

Interpretation and application: The understanding of Islamic standards in Sharia law can vary among researchers and law specialists which can make vulnerability about the outcome of specific business situations. Read more>>