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Overview of Saudi Domestic and Foreign Corporate Laws

 

LEGAL FRAMEWORK:

Saudi law is based on Islamic Law, or Sharia. In Islamic law, there are four main schools of jurisprudence: Hanbali. Hanafi. Shafai and Maliki. The Saudi courts and judicial committees generally apply the Hanbali school. The Saudi government, from time to time, issues rules and regulations to supplement Islamic law when the need arises. In the event of a conflict between Islamic law and government rules and regulations, Islamic law will generally prevail.

GENERAL PRINCIPLES OF ISLAMIC LAW:

According to Islamic law, the payment or receipt of sums in the nature of interest is not enforceable. Contracting parties must maintain principles of fairness and equity in their dealings. Contracts where one party gains unjustly at the expense of another could be considered void especially if the party gaining unjustly has a monopoly or market dominance in the subject matter of the contract. In each contract. the commercial substance of the transaction must be analysed to evaluate whether or not the party's actions would amount to unjust enrichment under Islamic law.

 

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