Shariah mainly is based on the versus of the Holy Quran and the

teachings and practices of the Prophet Mohammed (the Sunna).  The

consensus of opinions and interpretations of religious scholars is
considered a secondary source of Shariah. 

In the Area where the majority of the population is Muslim, there is a

notable trend for the applications of Shariah. While most of the laws are
based on Shariah, specific areas of laws are now increasing adopting 
important aspects of Shariah which will be indicated below where GLS has
advised and assisted clients. 

1. Islamic Banking

Except for Saudi Arabia, the banking laws and practices of countries of the
Area are generally based on western banking systems. A notable trend for
the application of banking based on Shariah (called Islamic Banking)
started in the Area in recent years. Islamic Banking could, in theory, be
fairly straight forward. In accordance with Shariah Muslims can trade and
invest in anything that is accepted (called halal) and not prohibited
(haram). Prohibited matters broadly include things that are illegal or
immoral such as gambling, prostitution, pornography, alcohol, drugs and
similar other matters. The main difficulty arises in the classification of
interest charged on funds in Shariah. While some Islamic jurists and
scholars consider all types of interest as usury which is prohibited in
Shariah, others consider simple interest acceptable and only compounded  
interest to be prohibited. Although the argument on interest continues,
Islamic banking is expanding in the Area where banks and investment
funds based on Shariah banking are being established.

For more information see Extracts from the book "UAE Company Law"

2. Inheritance

Shariah provides specific rules of inheritance that are applied to Muslims.

Generally these rules are based on the principle of providing specific
allocation/shares of the estate of the deceased to certain types of his
relatives such spouse or parents and the distribution of the remainder to
other heirs such as offsprings, brothers/sisters and uncles/aunts. Shariah
rules of inheritance  are applied in the countries in the Area. They might
also apply to the assets of a deceased Moslem person in a western
jurisdiction or a Moslem resident in such a country. 

3. Wills

Wills might form part of the probate of the estate of a deceased Moslem.
Shariah inheritance rules regulate wills by providing that a will can only be
applied and valid to a certain portion of the total estate and to specific
persons.
1. KSA: Country Profile

The present Kingdom of Saudi Arabia was originally several provinces which were also under Ottoman
rule rule until the end of W.W.I. Attempts by the first king Abdulaziz Al Saud to establish the Kingdom
started as early as 1902, which with successes and setbacks were continued for many years until in 1932
when the Kingdom in its present boundaries was established. The Kingdom of Saudi Arabia is a member
of the GCC.

Geographically, it is one of the largest Arab countries with a land area of over 2.1 million square
kilometres extending from the Red Sea to the Gulf  and a population of nearly 20 million. In 1937 oil was
discovered. Since then Saudi Arabia has become the largest oil and gas producer in the Area with the
largest proven reserves. In 1988 Saudi production was over 8.3 million bpd with revenues of $ 37.3
billion. Saudi Arabia was one of the founder members of OPEC. This substantial wealth was, over the
years, used to finance substantial development programmes. The Saudi currency, the Riyal, is also linked
to the US$ at the exchange rate of Riyals 3.7 to $1.

Although Saudi Arabia has a free market economy with a predominant  private sector, the main public
utilities and services are owned by the government. A privatisation programme is being seriously
considered. 

2. Legislative Procedures 

Measures were recently adopted in Saudi Arabia adopted to improve its absolute monarchy system of
government such as the issue of a Constitution and establishment of a Consultative Council. In 1992 a
Royal Decree was issued adopting the Fundamental Government Statute (Constitution).   Article One of
this Statute provides that Saudi Arabia is a sovereign Arab Islamic state with Islam as its religion, the Holy
Quran as its Constitution, Arabic its language and Riyadh its capital. This Statute also provided for the
establishment of a  Consultative Council of a Chairman and 60 members appointed by the King chosen
from amongst people of knowledge, experience and expertise. 

In accordance with the provisions of the above Statute the Holy Quran is the Constitution of Saudi Arabia
and the laws and regulations are promulgated in the Kingdom in accordance with Shariah, the Statute
and the Council of Ministers and the Consultative Council Regulations. These Laws and Regulations are
issued by Royal Decrees upon the approval of the Council of Ministers chaired and the Consultative
Council who also has the right to suggest laws to the Council of Minister.

3. Saudi Main corporate and commercial laws

Royal Decree for the Regulation of Companies No. M6 of 1965 (as amended). 
Royal Decree for the Regulation of Commercial Agencies No. 11 of 1962 (as amended). Implementation
Rules for Commercial Agencies Regulations No. 1897 of 1981

4. The Judicial System

The local Saudi courts who apply Shariah have the jurisdiction to review all matters civil, criminal or
personal status. However, the Royal Decree for the Regulation of Companies No. M6 of 1965 (as
amended) provided in its Article 232 for the establishment of a Commission for the settlement of of
commercial companies disputes. When the jurisdiction of this Commission was later expanded to cover
commercial disputes as well, it became known as the Commission for the settlement of commercial
disputes. Decisions of the Commission maybe appealed to the special appeals tribunal.
5. The Judiciary

While judges of the local courts are usually appointed by the Ministry of Justice from amongst graduates
of recognised Shariah/law colleges, members of the commission for the settlement of disputes are
appointed by the Ministry of Trade.  .

6. The Legal Profession

Practising lawyers have to be Saudi nationals licensed by the Ministry of Justice to plead cases in the
local courts. However, lawyers practising at the commissions for settlement of disputes are licensed by
the Ministry of Trade. While Arab or foreign expatriate lawyers usually serve as legal consultants to Saudi
lawyers, some foreign law firms have established associations with Saudi lawyers.