Saudi Arabia unveils an administrative court to enhance investor confidence
Saudi Arabia's Justice Ministry declared the establishment of its inaugural administrative enforcement court on Monday, marking a significant step to enhance investor confidence.
This initiative is part of broader judicial reforms led by Crown Prince Mohammed Bin Salman, aimed at modernizing the economy and reducing dependence on oil exports.
The recent enactment of a civil transactions law, which came into effect last month, is a key component of these reforms. It represents Saudi Arabia's first civil code, replacing the previous unwritten system where judges had complete discretion in deciding commercial disputes based on Islamic law.
The introduction of the administrative court and the civil transactions law is a strategic move to address concerns about the transparency of the legal system, particularly among foreign investors considering business engagements in the country.
This new court, designed to have jurisdiction over government entities and officials, is positioned to receive complaints from both local and foreign investors. The primary goal is to expedite conflict resolution through mediation, although the court is empowered to take executive action against government entities and officials when necessary, according to the justice ministry's statement.
The broader context of these reforms aligns with Saudi Arabia's vision of attracting foreign investment. In 2021, Riyadh set an ambitious target of achieving $100 billion in foreign direct investment by 2030. However, recent data indicates that the country received just under $33 billion in inflows in 2022, highlighting the need for measures to instill confidence and create a more investor-friendly environment.
By implementing these reforms, Saudi Arabia seeks to enhance its legal framework, making it more predictable and transparent for investors. The emphasis on mediation and the establishment of a dedicated court for administrative enforcement underscore the commitment to creating a business environment that fosters trust and facilitates smoother dispute resolution, contributing to the broader economic transformation goals set by the Crown Prince.