Date of Award

9-2022

Document Type

Dissertation

Degree Name

Doctor of Juridical Science (SJD)

Abstract

This dissertation studies the treatment by Saudi judges under Islamic Sharia law of liquidated damages clauses in contracts, a critical part of modern commercial transactions.

After introducing the basic and secondary sources of Islamic law and discussing the current treatment of the liquidated damages clause by Saudi judges according to general Islamic rules and the four jurisprudence schools, this dissertation demonstrates that Saudi judges have broad discretion in applying jurisprudence rules, particularly Hanbali jurisprudence, the applicable jurisprudence in the Saudi courts.

Numerous interpretations of the same jurisprudential rule exist, resulting in multiple judicial rulings for the same jurisprudential rule. Among factors affecting the judicial rulings are the impact of the judge’s cultural and social background, the judge’s tendency not to rule on moral compensation, and his strictness in scrutinizing and recognizing the evidence of damages when ruling on compensation in general and in cases of the liquidated damages clause in particular, and the scarcity of ruling compensation for future damages along with the role that the Saudi judge plays in selecting applicable legal rules.

This dissertation presents a survey and field study of Saudi judges’ positions on the liquidated damages clause and contains it in contracts. The survey indicates that the Saudi judge has broad discretion when considering the liquidated damages clause. There are differences among the judges with regard to the liquidated damages clause depending on the type of contract included in it. The Saudi judge applies the theoretical aspects of legal texts and jurisprudence rules to the facts and practical issues related to the liquidated damages clause influenced by fatwa.

In response, this dissertation considers several possible solutions. These include codifying jurisprudence provisions; notating judicial rulings; and requiring Saudi judges to apply them, particularly in cases of the liquidated damages clause; issuing judicial journals and notations to increase transparency; and documenting contracts that include the liquidated damages clause to make them binding without the need for a court ruling.

Finally, the dissertation propose recommendations that, if endorsed by the Kingdom’s judicial authorities, will help limit the judge’s discretionary authority and facilitate judgment in estimating the liquidated damages clause as agreed upon by the contracting parties. These include codifying the provisions of Islamic jurisprudence in the form of sequenced, arranged legal articles and provisions related to contracts and the conditions they contain, including the liquidated damages clause. The importance of establishing judicial principles or a legislative code becomes apparent in terms of the main mechanism for how a judge exercises his discretion when dealing with a vague legal text or rule that requires interpretation or contradicts another rule or principle. It is important to emphasize parties’ responsibilities to state the functionality of the liquidated damages clause in the contract, to continue the notation of judicial rulings and publishing, and expand notarized contracts that include the liquidated damages clause as an executive document to limit the discretionary authority of judges when considering what the parties have agreed upon.

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