Law and Compliance in Saudi Arabia
- 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
- CIF or FOB.
- 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.
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|
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|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.|
- 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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The Investors Service Center (ISC) at the Saudi Arabian General Investment Authority (SAGIA) oversees all matters related to foreign investor licensing and registration process.
U.S. Commercial Service Poland on 6 May 2010 related to Law and Compliance in Saudi Arabia
U.S. Department Of Commerce, Poland