Saudi Cabinet approves Civil Transactions Law

Saudi Cabinet approves Civil Transactions Law
Crown Prince Mohammed bin Salman announced Tuesday Saudi Cabinet’s approval of the Civil Transactions Law after it was reviewed by the Shoura Council. (SPA)
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Updated 14 June 2023

Saudi Cabinet approves Civil Transactions Law

Saudi Cabinet approves Civil Transactions Law
  • The newly approved law is the third of four laws announced as part of legal reforms in 2021

Riyadh: The Saudi Cabinet has approved the Civil Transactions Law, the third of four laws announced as part of legal reforms in 2021.

Crown Prince Mohammed bin Salman announced the approval of the law following its review by the Shoura Council.

The remaining law is the penal code for discretionary sanctions.

The crown prince said that the Civil Transactions Law represents a “remarkable transformation” within the system of specialized legislations.

“The law was prepared in a way taking advantage of the latest legal trends and the best international judicial practices, in light of the provisions of the Islamic Shariah and its purposes. It also comes in harmony with Saudi Arabia’s international obligations in light of the agreements that have been ratified by it so as to keep pace with the developments of contemporary life,” he said.

He added that the law was based on foundations represented by the protection of property, stability and validity of contracts, identification of sources of rights and obligations and their effects, and clarity of legal positions.

“The law will have a positive impact on the business environment and increase its attractiveness, and will also contribute to regulating economic movement and the stability of financial rights, in addition to facilitating decision-making with regard to investment. It will also enhance transparency and increase the ability to predict judgments in the field of civil transactions and reduce discrepancies in judicial reasoning to reach prompt justice, apart from contributing to bringing down disputes,” the crown prince said.

He highlighted the delay in the law’s approval, originally expected in the fourth quarter of 2022, saying that it was necessary to carry out further studies as well as scrutinize the provisions of its regulations.

The Civil Transactions Law includes provisions that define contracts, such as the elements of a contract; its validity; its effects among the contracting parties; the provisions related to its invalidity and termination; and the provisions of the harmful act and rules for compensation. The statutory texts of the law also deal with all forms of ownership and their provisions.

Dr. Khalid Al-Yousef, president of the Saudi Court of Grievances and head of the Administrative Judiciary Council, said that the Cabinet’s approval of the Civil Transactions Law will enhance the efficiency of dispute settlement and preserve the legal positions of people, due to the existence of clear objective rules governing disputes that occur between contracting parties and others.

This will achieve judicial safety for all parties, raise the confidence of customers and consolidate the principles of justice and integrity, he added.

Al-Yousef extended his thanks and gratitude to King Salman and Crown Prince Mohammed bin Salman, noting that the law represents a modern model for specialized legislation. It also reflects the Kingdom’s keenness to develop the legislative environment, and showcases the depth and strength of the regulatory authority, as well as its progress and development, he added.

The law contains provisions on the regulation of contracts and financial transactions in daily life, such as the organization of sales and lease contracts, participations, contracting and others, the provisions on the compensation for damage in the event of an act by a person who caused damage to others, such as property damage or self-damage, and the amount of compensation to which the injured person is entitled.

Other provisions deal with establishing rules and provisions that guarantee creditors rights and balance the interests of creditors with those of debtors.

Minister of Commerce Majid Al-Qasabi said on Twitter: “The Civil Transactions Law was prepared in an integrated manner, based on Islamic Shariah and the developments of contemporary life to protect property and stability of financial rights, and to achieve prompt justice in accordance with international best practices.”