The Evolution of Saudi Arabia’s Legal Framework

Over the past two decades, Saudi Arabia has been undergoing a remarkable transformation, which has touched nearly every aspect of life in the Kingdom. This is especially true of its legal framework, which has been a critical part of this transformation process.

To better understand how this evolution has taken shape and the potential implications for businesses, it is important to explore what has changed and what is still changing. In this article, we will explore the changing legal framework in Saudi Arabia, the impact this has had on businesses in the Kingdom, and what changes are expected to come in the near future.

Saudi Arabia’s Changing Legal Landscape

The Saudi government’s National Transformation Program put in place in 2016 marked a dramatic shift toward modernization. As part of this, the government has made a concerted effort to modernize its legal framework, create new standards for businesses, and promote transparency and accountability. Here are some of the highlights:

• One key change has been the overhaul of the Kingdom’s arbitration laws and the establishment of the Saudi Centre for Commercial Arbitration in 2016. This has led to a dramatic increase in the number of arbitration cases, providing businesses with a more efficient and cost-effective way to resolve disputes outside the courtroom.
• In 2018, the Ministry of Justice published a book detailing Shariah-guided legal principles and a history of previous rulings to provide guidance for litigants in civil and commercial courts. While there is no system of judicial precedents in the Kingdom, this book represented a step towards providing greater legal certainty.
• In 2020, the new Commercial Courts Law was enacted, providing a modernized and streamlined framework to resolve business disputes that required court action.
• Another major change was the introduction of e-filing systems and remote hearings for courts, initially triggered by the global pandemic in 2020. This has made it easier for businesses to file legal documents and launch court cases without the need to travel, leading to a marked improvement in the efficiency of the legal system.
• The Law of Evidence was introduced in 2022, with the aim of reducing court discrepancies in relation to the consideration of evidence across all civil and commercial transaction disputes. This law brings Saudi Arabia further in line with international legal standards and will make it easier for businesses to present their cases in court.

What’s on the Legal Horizon?

The evolution of Saudi Arabia’s legal framework is set to continue in the coming years. In particular, there are plans for further reforms and improvements that will provide additional clarity, consistency, and transparency for businesses in the Kingdom in relation to subjects such as data protection and cyber security. The Personal Data Protection Law, which was initially introduced in 2021, is still being modified and will eventually provide businesses and individuals with a clear set of legal rulings with regard to how they should protect customer data and ensure privacy.

In addition to this, the licensing of foreign law firms is set to become increasingly open and streamlined, making it easier for businesses in the Kingdom to access foreign expertise when needed. Laws related to property and real estate are also expected to become more aligned with international standards, allowing for foreign investments in the sector.

Preventative justice will also become a focus for the Ministry of Justice, with a new committee currently being established to develop a strategy for the implementation of this concept in the Kingdom. This is expected to be beneficial for businesses, providing them with greater clarity and guidance on how to obey the law and avoid legal disputes.

Saudi Arabia: Creating a Better Legal Landscape for Businesses

The changes that have taken place in Saudi Arabia’s legal landscape over the last 20 years, but especially in the past decade, have been remarkable, and are ongoing even today. Businesses in the Kingdom can benefit greatly from these changes as they provide more clarity and consistency in how legal issues are resolved.

What’s more, greater access to foreign expertise and the introduction of preventative justice will help businesses be more proactive about avoiding legal disputes in the first place. With further changes on the horizon, businesses are strongly advised to ensure that they keep up with these developments and work with law firms to ensure that they are both compliant and well-prepared for the future.

By Hammad & Al-Mehdar, Saudi Arabia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact saudiarabia@transatlanticlaw.com

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