What a Riyadh Court Must Now Write Down

A judge in the Kingdom may no longer decide a case on the strength of what he personally knows.

That is Article 2(3) of the Law of Evidence, issued by Royal Decree No. M/43 on 30 December 2021 and, under Article 129, in force one hundred and eighty days after its publication in the Official Gazette. Article 1 applies it to civil and commercial transactions. Article 2(1) places the burden of proof on the claimant and the burden of defence on the defendant; Article 2(2) requires the facts a party intends to prove to be relevant, material and admissible.

The civil code took the attention. This took the discretion.

Predictability is a function of proof

For a foreign counterparty the substantive rule was rarely the unknown. The unknown was what a tribunal would accept as establishing that the rule had been engaged, and whether the reasoning could afterwards be seen.

Article 4 answers both. Where evidence is conflicting and irreconcilable the court admits the evidence with the most probative value, and if it cannot make a determination it excludes all of it; in all cases the court must provide in its judgment the reasons for the inclusion or exclusion of evidence. A duty to state reasons looks like a thin provision beside a substantive rule. It does more work than most of them, because a reason once written can be set beside the next one.

Three further articles belong in the same reading and are almost never quoted together. Article 5: no specific form is required to prove an obligation unless a statutory provision stipulates one or the parties have agreed one. Article 6: the court shall enforce the rules of evidence agreed by the parties unless the agreement is inconsistent with public policy, and such an agreement is valid only if made in writing. Article 13: without prejudice to the Kingdom's obligations under international agreements, the court may accept evidentiary procedures carried out outside the Kingdom unless they are inconsistent with public policy.

Article 6 is the drafting instrument. It makes proof a term of the contract rather than a hazard of the forum, and it is available to a party negotiating from abroad who will never see the inside of a Saudi courtroom.

Article 128 shows what kind of reform this was. It repealed Part 9 of the Law of Civil Procedure and Part 7 of the Law of Commercial Courts. The rules of proof were extracted from two procedural statutes and given a statute of their own, which is what a legislature does when it has decided that proof is the thing being got right.

The code everyone cites

The Civil Transactions Law was issued by Royal Decree No. M/191 on 18 June 2023, runs to seven hundred and twenty-one articles and, by Article 721, entered into force one hundred and eighty days after publication in the Official Gazette, repealing all provisions conflicting with it.

Article 1 sets out the order of resort. The provisions of the Law apply to all matters addressed by it in letter and spirit. Where none of them can be applied, the General Rules provided for in the Concluding Provisions apply. And in the absence of a relevant general rule, the provisions derived from Sharia most consistent with the Law apply.

Three rungs, then, and the second is Article 720.

What is on the second rung

Article 720 sets out forty-one rules. Some are as determinate as anything else in the code. Rule 32: no opinion may be given in the presence of a text. Rule 41: ignorance of the law is not an excuse. Rule 9: freedom from liability shall be presumed.

Others are not determinate, and are not meant to be. Rule 1: matters shall be determined according to intentions. Rule 2: in contracts, effect shall be given to intention and meaning, not to form. Rule 3: custom shall have legal effect. Rule 4: a matter established by custom shall be equivalent to a matter established by text.

Rule 4 repays slow reading. A codification whose own fallback gives custom the force of text has not replaced local knowledge with published rules. It has made local knowledge a legally specified input and stated where in the argument it arrives.

That is the claim worth defending here, and it cuts against the way the reform is usually described. Codification bought a great deal of predictability and almost none of it is predictability of outcome. What it bought is predictability of method: the order of resort is published, the materials a tribunal may reach for are named, the reasons for admitting or excluding evidence must be written down, and a party who holds all three can anticipate what will be argued and in what sequence. A counterparty reading the code to forecast a result has bought the wrong thing. A counterparty reading it to learn what will decide the result has bought precisely the right one.

It follows that a great deal of what determines these matters — what the custom of a trade is, what was understood, what was intended, who actually decides — is not database material and never was. That is a claim about method rather than about the Kingdom, and it is argued at length in Information Is Not Intelligence.

The detail that will cost somebody a claim

Article 2 of the Civil Transactions Law provides that all periods and deadlines under the Law are calculated according to the Hijri calendar.

The lunar year is roughly eleven days shorter than the solar one. A period stated in the Law's own years therefore falls due earlier than the same number of calendar years would suggest, and the gap widens as the period lengthens. A date diarised in Gregorian terms by an adviser abroad who read the article and did not convert it is not a small error. Whether any particular period has run is a question for counsel in the Kingdom, and that is exactly where this desk stops.

What did not change

Both instruments keep the same residual. Article 1 of the Civil Transactions Law ends at the Sharia provisions most consistent with the Law. Article 125(2) of the Law of Evidence provides that evidentiary issues it does not address are subject to the Sharia provisions most consistent with that Law.

Nothing was abolished. The residue was given an address. Previously a foreign party could not say where in a chain of reasoning an uncodified principle would enter; it now enters last, after a published text and a published list, and only where neither reaches. That is a smaller change than the commentary implied and a more useful one, because a party can prepare for a step it can locate.

The regional comparison is instructive rather than competitive. What the Dubai Boundary Actually Divides describes a state that answered the same problem territorially, by disapplying its own private law inside a boundary. Bahrain Regulates the Trustee, Not the Trust describes one that answered it by licensing the person. The Kingdom answered it by publishing. Each answer has its own failure mode, and the failure modes are the only part of any of them worth studying; where the binding constraint is enforcement rather than drafting, The Nigerian Clock Starts in a Foreign Court is the harder case.

This piece describes published legislation. It is not legal or tax advice, it is not a view on any transaction, and it offers no assessment of any institution, official or company; a principal with a Saudi exposure should take advice from counsel in the Kingdom and from an adviser unrelated to Privy Consul.

For principals with counterparty exposure in Saudi Arabia, the questions that turn on custom, intention and who actually decides sit under Local Subject Matter Experts and Due Diligence Investigations; the question of which law and which forum a matter should be sent to at all, under Legal, Tax & Arbitration Coordination.