DOING BUSINESS IN SAUDI ARABIA

Although the Saudi Arabian government has been attempting to diversify the Saudi economy for over 20 years, the central source of Saudi prosperity is the petroleum industry. The petroleum industry is mature. Hence, the government is beginning to realize that it needs foreign investment in order to decrease the dependence on oil and to encourage sustainable growth and development.

Foreign investors look at many factors in making the decision to invest in another country. One of the main factors is the stability of the government. Stability has not been a problem in Saudi Arabia. Another major factor is the overall investment climate, especially the structure of the legal system and its predictability, as well as the commercial laws. The commercial laws must not be restrictive and protectionist, nor obscure.

These are problems in Saudi Arabia. The system of laws is based on Shari'ah, religious law with its roots in the Quran. The commercial law is also protectionist, which means that Saudi Arabia is not currently a member of GATT or the WTO. In addition, financial infrastructure is unevenly developed, at least partly because of the problem of modernizing commercial law in a country ruled by religious law that did not deal with many of our modern problems or issues.

Still, the government is interested in foreign investment and has made some efforts to encourage that. I

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ng contracts or determining property damage issues. The Majella is basically organized as a series of short statements, termed articles, which are clustered together under a number of headings in books dealing with specific subjects. The first part of the Majella includes general maxims of Muslim jurisprudence. Book 1, following this first section, deals with principles relating to sale of goods and property. Book 2 deals specifically with issues of hire, while Book 3 deals with guarantee. Each of these includes principles relevant to the creation of contracts. For example, in Book III, Section II, dealing with a contract of guarantee, the Majella specifies conditions attaching to this type of contract. Those conditions include such things as the requirement that the individual must be of sound mind and must have arrived at the age of puberty in order to make a contract of guarantee. On the other hand, the person guaranteed does not have to be either of sound mind nor at the age of puberty. A valid contract can still be entered. The Majella contains well over a thousand of these articles, which provide foreign lawyers with a basic understanding of the general principles of Shari'ah as applicable to common legal problems an
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Approximate Word count = 7645
Approximate Pages = 31 (250 words per page)

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