Law and Compliance in Saudi Arabia

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Business Contract

General Observation
You must state precisely the obligations of the vendor and the methods of quality control. Contracts have to be made using a local lawyer and fiscal matters have to be dealt via a local accountant. Agreements which have been signed out of the country are not recognized.
Law Applicable to the Contract
Saudi Arabia is not a signatory to the Vienna Convention on International Contracts. Saudi Arabian contract law is formed principally, from the prescriptions and provisions of Islamic law, Sharia. Even when the relevant contract contains a foreign choice of law provision and provides for a foreign forum to have jurisdiction, Saudi courts tend to apply Saudi law.
Advisable Incoterms
Language of Domestic Contract
Generally Arabic. Otherwise English is used, in case dealing with a foreign company.
Other Laws Which Can Be Used in Domestic Contracts
Neither foreign judgment nor any contractual provision contrary to Islamic principles may be enforced in Saudi Arabia.

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Legal Framework of Business

Equity of Judgments

Independence of Justice
No, the rule of law is regularly flouted by the Saudi regime, with frequent trials falling short of international standards - secret trials are common.
Equal Treatment of Nationals and Foreigners
Foreign nationals do not have always an impartial trial from the country’s judicial system. A considerable degree of corruption exits in the country, foreign companies report that they often pay bribes to middlemen and government officials to secure business deals.
Foreign workers from Asia and Africa are subjected to discrimination and have difficulty to use the justice system.
The Language of Justice
Recourse to an Interpreter
Having an interpreter is possible. In case of migrant workers, generally the respective consular officials arrange the translation and interpretation.
Legal Similarities
The main source of the law is Shari'a (the Islamic law) and the ‘ Quran ' is the constitution of the country. However the Basic Law that articulates the government's rights and responsibilities was promulgated by royal decree in 1992. Moreover several secular codes have been introduced and commercial disputes are handled by special committees. Saudi Arabia has not accepted compulsory ICJ jurisdiction.

The Different Legal Codes

Constitutional Law Law of Regions, Law of the Council of Minsiters, Law of the Judiciary, Shura Council Law, The Basic Law
Administrative/Public Law Law of Provinces
Criminal Law Law of Combating Money Laundering
Commercial Law Foreign Investment Act
Company Law Government Tenders and Procurement Law, Cooperative Insurance Companies Control Law
Tax law New Income Tax Law
Labor Law Labor Law
Intellectual Property Law Law of Patents, Layout Designs of Integrated Circuits, Plant Varieties, and Industrial Designs
Shura Council Law Shura Council Law
Banking Law Capital Market Law
Checking National Laws Online
The World Law Guide
The Library of Congress
The Middle East Information Network
Other Useful Resources
Emory Law
Saudia Online
Constitution of Saudi Arabia
Country Guides
Arab Net

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The Jurisdictions

Sharia Courts Supreme judicial council: Supervises courts, provides opinion on special cases, reviews death, amputation, or stoning sentences.

Appellate Court: Has three panels which look into criminal, personal and general cases.

Special Tribunals Settles disputes in specific areas, such as commercial or labor law. These specialized tribunals are part of various ministries outside the Ministry of Justice.
Board of Grievances This does not come under the Ministry of Justice but is directly responsible to the King. The Board of Grievances is composed of the Administrative Division, Commercial Division and Penal Division. These include Audit Panels that act as courts of appeal. Complaints are filed with the chairman of the Grievance Board, who then selects a panel of experts to hear the case.

Court Officials

Practicing lawyers
The practicing lawyers need to be Saudi nationals licensed by the Ministry of Justice to plead cases in the local courts. However, lawyers practicing at the commissions for settlement of disputes are licensed by the Ministry of Commerce and Industry.
Have discretion to issue rulings according to their own interpretation of Islamic Sharia law.
Chief Justice
The Minister of Justice, appointed by the King from among the country's most senior ulama, is the de facto Chief Justice.

The chief justice and a panel of several qazis presided over all cases.

The King
The king is at the pinnacle of the judicial system, functioning as a final court of appeal and as a source of pardon.
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