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Global | Publication | July 2023
The Kingdom of Saudi Arabia has in recent history set about to introduce legislative reforms, with a view to increasing the efficiency of judicial institutions and court processes and to develop the uniform application of Saudi law by the courts. On 19 June 2023, the new landmark Civil Transactions Law was issued in Saudi Arabia by Royal Decree No. M191/1444. This announcement follows numerous significant reforms to the KSA legal system of late.
The publication of the new law, consisting of 721 articles, marks a significant moment in the development of the codification of Saudi Law, which has to date been derived primarily from the principles of the Holy Qur’an and the teachings of the Prophet Muhammad. Its impact will undoubtedly be felt widely, at a time in which the Kingdom seeks to attract investment into the country, under the umbrella of its Vision 2030.
The new law will come into force within 180 days of the date of its publication in the Official Gazette. We expect therefore, that the new law will come into force by mid-December 2023.
The new law has retrospective effect. Accordingly, its provisions will apply (where relevant) in most cases to contracts entered into both prior to the date on which the new law takes effect, and those entered into thereafter.
The new law contains a set of Final Provisions, which in effect codify 41 Shariah principles. Where the new law does not contain a specifically relevant provision, it provides that the Final Provisions (the codified Shariah principles) shall be applied. These principles include (amongst others):
Where no such principle/maxim is applicable, the new law provides that the broader principles of the Shariah shall be applied, as a fallback position.
Additionally, the new law has introduced a plethora of new articles to be applied by the courts. These include, amongst others:
Over the next few weeks and months, stay tuned as we continue to digest the expansive provisions of the new law, and bring you the key updates.
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