Saudi-Arabien Wirtschaftshandbuch Saudi Arabia Business ... - Ghorfa

isky business dealings
Risky business dealings (arab: gharar) are prohibited.
This refers to business in which one element is unknown
or remains unclear and subjects the parties to the contract
to an uncalculated risk and/or deception. Classic
cases are ambiguities about prices or the product, e.g. the
purchased object or the trade-off. A practical example
e.g. is the sale of unripe dates, because one does not know
whether or not they will actually ripen (also quoted in
Schacht, Chapter 20 No. 4, Page 147). Other areas include
betting or the insurance field as it is not possible to predict
the time and type of return service one will receive when
the contract is concluded. This leads to deceit of one of the
contractual parties and must therefore be seen as illegal.
However just because a business dealing is seen as gharar
does not necessarily make it null and void. Depending on
the type of uncertainty, a business dealing can be categorised
as low-risk (gharar yasir), medium-risk (gharar mutawassit)
or high-risk (gharar fahish). Only serious cases
are considered null and void, as no legal business dealing
is completely free of risk.
High-risk business dealings include any type of gambling
and the insurance sector, if this is not based on the principle
of reciprocity. This is why there was no insurance law
in Saudi Arabia for such a long time. The general feeling
is that insurances are possible if no-one is able to generate
capital for their own self-interest. The joint assumption
of risks is tolerated, which means that so-called cooperative
insurances are permitted in which any surpluses flow
back to the members of the cooperative. The only licensed
insurance company in the country was the NCCI,
the National Company for Cooperative Insurance, that
was founded in 1986 as a public limited company by
royal decree. Then in 2003 the Cooperative Insurance
Companies Control Law, Royal Decree No. M/32 dated
2/6/1424 H (31.7.2003) and the implementation regulations
(Ministerial Decree No. 1/596 dated 1/3/1414 H
(20.04.2004) were enacted. According to this, applicants
can be granted authorisation as a public limited company
under Saudi law by virtue of a royal decree. The precondition
for insurance companies is, in addition to their
suitability, the possession of registered capital of 100 millions
SAR; in the case of reinsurers, a registered capital of
200 millions SR is required.
Assignment (hawala)
The assignment of receivables does not constitute a commercial
transaction in the eyes of the Saudi courts. This
may mean that a claimant in an underlying transaction
with a trade law character cannot put forward a case to
the Chamber of Trade Dealings of the Board of Grievances
because of the assigned law and instead must put his
case through the general civil courts.
The legal validity of the practice of assignment as such
is disputable. The various Islamic legal schools make different
demands on its applicability. These are very high
in the case of the dominant Hanbalitic legal school that
presides in Saudi Arabia. In particular, no disputed rights
may be assigned. This in turn has to do with the previously
discussed principle of the gharar business which
states that risky business dealings are not effective. The
sale of disputed receivables and the resulting assignment
are risky in this case and therefore not effective. In practice,
a claimant from assigned laws will arrange for authorisation
to be issued by the person assigning the right
allowing him active legitimation.
bill and cheque law
rechTliche rAhMenBeDinGunGen – – underlyInG leGAl condItIonS
Sub-areas of the trade laws are regulated in separate
regulations as in the case of the bill and cheque law that
is regulated by the Commercial Papers Law, Royal Decree
No. M/37 dated 11/10/1383 H (24.02.1964). The
Saudi law is based on the Geneva Convention relating
to the uniform bill laws from 7th June 1930 and the
agreement about cheque laws from 9th March 1931 and
is therefore very similar to the corresponding German
statutory regulations.
Before opening court proceedings, protest proceedings
need to be opened with the respectively responsible Chambers
of Industry and Commerce in Saudi Arabia. The responsibility
lies with the respective legal department of
the Chambers of Industry and Commerce. The protest
offices located here must try to solve the dispute out of
court. If this is not successful, the path to the commercial
papers courts is opened. These are not the standard courts
but commissions of the Office for the Settlement of Commercial
Paper Disputes, which were established by ministerial
order in 1388 H (1969) in the towns of Jeddah,
Riyadh and Dammam.
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inVeSTiTiOnSrechT
Zur Gründung von Gesellschaften und Niederlassungen
in Saudi-Arabien ist eine Lizenzierung durch
die saudi-arabische Investitionsbehörde erforderlich.
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