In the past two decades Saudi Arabia has made considerable progress in the modernization of its legal system. Statutory law regulates today such fields of activity as trade and commerce, business and banking, labor and social security, customs and taxation, and the settlement of commercial disputes and arbitration-fields that until recently were the exclusive preserve of traditional Islamic law. In adopting these contemporary regulations, Saudi Arabia has been following, in its own particular way, the example of countries from Turkey to Japan, which embarked over a hundred years ago upon a process of legal modernization and reform. But whereas in the majority of these countries the wholesale adoption of European codes in the civil, commercial, penal and procedural fields signified an unambiguous break with the past, and, in the case of some Islamic countries, with the Sharia (Islamic law) as the source of law in favor of the legislative authority of the state, in Saudi Arabia the Sharia continues to exercise a restraining influence over the content and the validity of the new laws. Justified by the demands of changing economic conditions and expanding business relations, these statutory enactments have succeeded in supplementing a substantial segment of the traditional legal structure without, however, abrogating any of the rules of the Sharia. The result has been the emergence of a temporal legal subsystem, autonomous but not fully independent of the Sharia. The purpose of this paper is to outline the Saudi approach to the reform and modernization of the law that has so far sought to reconcile two competing priorities: on the one hand, to meet the needs of social and economic change and, one the other, to safeguard the values of Islamic society and its rules of morality embodied in the Sharia. Other states in the region, following the example of civil law countries, succeeded in reconciling these priorities through the instrumentality of the civil code, except in the area of personal status and domestic relations. Saudi Arabia is still groping for the best formula to modernize its legal system. Will it opt for a gradual con-