The Duality of the Saudi Legal System and its Implications on Securitisations

Abstract

When taking helicopter view over the Saudi legal system, one can observe clearly the existing legal duality within it. The duality is the result of various legal reforms undertaken by the Government in order to facil itate adopting market-oriented policies to which it committed itself in the recent revised policies and agreements of the Gulf Co-operation Council.1 Adopting such policies requires the developing and deepening of the financial system in order to have proper well-functioning market economy. To this effect, the Saudi government has recently promulgated the Capital Market Law of 2003 (CML).2 The aim of the CML is to deepen the Saudi financial system and in turn to facilitate the transition towards market economy. Financial related laws, however, are functioning within an Islamic Shari'a body of law. this sense, duality is created whereby the conventional financial system is functioning within an Islamic body of law (i.e. a system within system). This, in turn, has led to the duality of the Saudi judicial system where Islamic Shari'a courts have paramount general jurisdiction and other spe cialised committees have been established to hear financial and banking cases. Vogel describes this Saudi duality thus: In most Islamic states . . . the legal system is bifurcated: one part is based on man-made, positive (wadi) law; the other part is Islamic law. . . Saudi Arabia also has dual