The main contradiction between the UPICC and the Saudi Arabia commercial law is based on the fact that the Saudi Arabia law is largely Sharia law. The parties in commercial contracts have the freedom to contract, but the scope of the remedies and other modes of enforcing the contract are regulated by the Islamic law.
The issue has raised several issues of conflict that may pose a considerable danger to the parties entering into the contract if they are motivated by the UPICC remedies. With the UPICC, the contracts are supposed to be uniform from the making process to the enforcement stages. The uniform nature of the contracts has continuously guided state-to-state commercial contracts.
With distinct countries agreeing to enter into international commercial contracts, it has become easier to enforce the contracts. The Saudi Arabia commercial law is largely formulated on the basis of Islamic law, thus there are a lot of contractual differences that are evident.1 The remedies are mainly formulated to correspond with the guidelines of the Sharia law.
The greater portion of the Sharia law is characteristically different between Sharia law and the UPICC. The differences are based on the principles guiding the contracts, as well as the enforcement of the commercial contracts when a breach occurs. This essay will discuss the theoretical differences between UPICC principle and Saudi commercial law in the light of Islamic law.
The first essential point of consideration is the principle of commercial law in the light of Sharia law. Sharia law principles sharply contradict the principles of the international commercial law. Thus, the four schools of Saudi jurisprudence are contrary to the principles imposed by the UPICC. The most important point to note is that when the conflict occurs, the Saudi Islamic law should prevail over other laws.2
This implies that the Sharia law in Saudi Arabia takes pre-eminence over any other statute. In some situations, the enforcement of any right emanating from any other law will be subject to the decision of the court.3 Though there are rules and regulations used to supplement Sharia law, there is a prevailing element of Sharia law if there is any conflict between the rules and Sharia law.
The contradiction between the Islamic law and the international commercial laws is based on the fact that some of the transactions are not enforceable in Sharia law. For instance, any payment in form of receipts and other modes of payments are not enforceable if there is interest imposed on one party.4
There is emphasis on the use of fairness when entering into contracts. The Islamic law highly protects the consumer at the expense of other parties in the contract. The Islamic law is guided on equitable remedies, while it is clear that majority of the commercial contracts are based on the principle of rights and remedies between the parties. The rights and remedies cut across common law and other laws.5 T
here is unnecessary scrutiny of contracts under Islamic law to ascertain that the parties in the contract have not enriched themselves unjustly, yet Islamic law discourages unjust enrichment. If it is evident that a party is enriching themselves justly, then the courts declare the contract void.
The international commercial law is not based on the equitable principles of unjust enrichment, but on the fact that both parties in the transaction engage in a fair bargain; in other words, the parties have the freedom to contract or not.
Once the above principle is evident, any right derived from the contract is enforceable. Commercial transaction regulations do not require proof that the contract does not lead to unjust enrichment, unlike the Sharia law.6
The international commercial laws are aimed at providing remedies where the parties have agreed on the terms of the contracts. Despite the fact that the Islamic law allows the parties in a contract to agree on the conditions of the contract, any contract that is prohibited in the Sharia law does not enjoy this right.7 The Islamic law has provided a strict mechanism of rejecting an award for damages.
This is specifically where the damages represent a loss, either direct or indirect. Any contract that seeks liquidated damages is also classified in this category. The reason why the Islamic law still commands great respect is based on the fact that it serves the majority in the country.
The utility of the law in the given environment ensures that it prevails over other legal principles.8 The utilitarian principle provides that the greater good should be the impetus when deciding whether to incorporate a given principle in the scope of operation.
The Islamic population in Saudi Arabia allows the enforcement of Sharia law. It should be noted that the law does not allow the enforcement of foreign judgments in Saudi Arabia. Some of the foreign commercial judgments are issued in foreign countries, which means that if the judgment is being enforced against a party in Saudi Arabia, then such a party will escape liability.9
The commitment of Saudi Arabia to enforce the laws to conform to the requirements of some of the treaties that the country has entered is of great benefit to the contracting parties. However, the commercial contracts are subject to the Islamic law, thus a party seeking to rely on the provisions of a given commercial judgment will be barred from doing so.
The courts and other bodies of law in Saudi Arabia have a way of ensuring that there are commitments to be met under the provisions in the Islamic law. The Islamic law provides a strict position that does not allow the operation of other laws.
Commercial transactions made in other countries have to be weighed against the provisions of Islamic law. Any of the distinct provisions will not be allowed to take effect if they are not structured according to the provisions of the existing Islamic law.10
Conclusion
The provision of Islamic law imposes strict guidelines that are to be used if parties desire to enter into a contract that is to be interpreted according to the principles of the international commercial law. If the contract is to be enforceable in Saudi Arabia, then parties are required to ensure that the rights and remedies provided in the contract are enforceable under the provisions of the Islamic law.
The courts have a strict tendency of imposing a regulatory framework where they fail to enforce foreign judgments. The duty of the Saudi Arabia government under the treaty law is to ensure that parties to the treaty are protected by the law. However, such protection must conform to the principles of Islamic law.
Bibliography
Glenn, H. Patrick, Legal Traditions of the World: Sustainable Diversity in Law (Oxford University Press 2014).
IBP USA, Middle East and Arabic Countries Company Law Handbook (Intl Business Pubns USA, 2007).
Luttrell, Sam, Bias Challenges in International Commercial Arbitration: The Need for a ‘real Danger’ Test (Wolters Kluwer Law & Business, 2009).
Moore, Kathleen M, The Unfamiliar Abode: Islamic Law in the United States and Britain (Oxford University Press, 2010).
O’Kane, Michael, Doing Business in Saudi-Arabia (Al-Andalus, 2011).
Oser, David, The Unidroit Principles of International Commercial Contracts: A Governing Law? (Martinus Nijhoff Publishers, 2008).
Schaffer, Richard, Filiberto Agusti, and Beverley Earle, International Business Law and Its Environment (South-Western Cengage Learning, 2009).
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Footnotes
1Glenn, H. Patrick, Legal Traditions of the World: Sustainable Diversity in Law (Oxford University Press, 2014), 73.
2Vogel, Frank E, Islamic Law and Legal System: Studies of Saudi Arabia (Brill, 2000), 28.
3Luttrell, Sam, Bias Challenges in International Commercial Arbitration: The Need for a ‘real Danger’ Test (Wolters Kluwer Law & Business, 2009), 46.
4 Moore, Kathleen M, The Unfamiliar Abode: Islamic Law in the United States and Britain (Oxford University Press, 2010), 43.
5Symposium, Islamic Business and Commercial Law (University of Chicago Law School, 2007), 45.
6 IBP USA, Middle East and Arabic Countries Company Law Handbook (Intl Business Pubns USA, 2007), 90.
7Oser, David, The Unidroit Principles of International Commercial Contracts: A Governing Law? (Martinus Nijhoff Publishers, 2008), 64.
8O’Kane, Michael, Doing Business in Saudi-Arabia (Al-Andalus, 2011), 84.
9Shoult, Anthony, Doing Business with Saudi Arabia (Blue Ibex Ltd, 2005) 39.
10Schaffer, Richard, Filiberto Agusti, and Beverley Earle, International Business Law and Its Environment (South-Western Cengage Learning, 2009) 65.