RIYADH: Saudi Arabia on Sunday implemented its new Civil Transactions Law, in what one expert described as a “quantum leap” in the nation’s legal system.
The groundbreaking legislation, which was approved by the Saudi Cabinet in June, is a key component of the Vision 2030 reform plan and seeks to ensure the Kingdom has a clear, fair and transparent legal system amid a period of rapid development.
Written to reflect Islamic values, the law covers such areas as the regulation of financial transactions, and compensation for damage caused to property or persons. It also sets out definitions for contracts, including their validity, termination and all aspects of ownership.
Lawyer Dr. Saud Al-Ammari, who manages a law firm and has trained in both Saudi Arabia and the US, said the new legislation was part of a significant upgrading of the Kingdom’s judicial system and introduced a wide-ranging set of laws and regulations.
“This marks a milestone as the first codification of civil law in the Kingdom,” he said. “Previously, civil law matters in Saudi Arabia were governed by courts’ interpretations of Shariah-based guidelines and principles.”
Its introduction was as “a quantum leap in the Saudi legal system,” he said.
“While the civil law does not violate Shariah, the codification of many Shariah principles enhances the judicial system’s consistency and predictability. Specifically, the new law focuses on contractual and property rights, tort and other commercial and personal injury matters,” Al-Ammari said.
“It stabilizes transactions, reduces the causes of contract invalidation and termination, and expands contractual freedom. In addition, it speeds up the process of resolving disputes and reduces variation in judicial rulings.”
He added that the law would provide both domestic and foreign investors with a clear, consistent and modern legal framework for conducting business in the Kingdom.
“In addition to guiding the way to proper contract drawing, it limits causes of contract invalidation and speeds up the process of resolving contractual disputes,” he said.
“As for dispute resolution, the law encourages alternative dispute resolution, including mediation and arbitration, to resolve disputes efficiently and amicably. The Saudi Center for Commercial Arbitration has distinguished itself globally with best in class institutional arbitration rules for handling mediation and resolving disputes via arbitration.”
Al-Ammari, who with colleague Amnah Kidwai prepared a research paper for Chambers and Partners on the new law, said that a significant feature of the new legislation was “good faith, which requires the parties to act honestly, reasonably and with integrity when fulfilling their contractual obligations.”
“As for the application of this law in courts, there should be no issues whatsoever. I know that Saudi judges and lawyers are well trained and can readily adapt to the application of the new law.”
