Making sense of Saudi Arabian personal bankruptcy law

This brought the Execution Law of 2012 back to the fore as the sole refuge for bankrupt individuals.<br><br>This thesis primarily aims to critically analyse the Execution Law of 2012, specifically Chapter 5 on the bankruptcy of individual non-traders. This analysis will explore the logical underpinnings upon which the articles of the current law are based. Additionally, the analysis will determine to what extent this law can resolve the dilemma of the relationship between a debtor and his creditors while at the same time granting the debtor a fresh start that enables him to reintegrate effectively into his community in an economic sense.

Towards this end, the thesis reviews several bankruptcy theories from various perspectives, including economics, moral philosophy and theology and morality. Reviewing these theories enables identification of an appropriate theoretical framework through which to examine the current law. The analysis of this law will examine a series of legal obstacles arising from Sharia law, and seek the development of an alternative solution within the Sharia framework, with which any proposed reform to Saudi law must comply.<br><br>The results of the study indicate that the achievement of a fresh start for the debtor from an economic perspective requires the consideration of four main aspects: providing full protection of some of the debtor’s basic assets, protecting the debtor’s future income, granting the debtor the right of discharge from debts, and the determination of the appropriate cost which the debtor should bear in consideration of getting the right of discharge.

According to these four criteria, the study has found that the current law provides the debtor with a partial protection that may ultimately be insufficient to give him a suitable fresh start. In addition, the basic weakness of the current law lies in that an effective bankruptcy law must provide an appropriate discharge mechanism through which bankruptcy procedures can be closed and the debtor’s reintegration into society achieved.

But the notion of the discharge in its essence is contrary to the principles of Sharia, under which a creditor may be encouraged to forego the balance of the debt but cannot be compelled to do so. The solution proposed by the thesis is the necessity of restating the concept of temporary discharge in Sharia more realistically, together with allowing for the outstanding balance to be paid in some cases, either in whole or in part, from the proceeds of zakat.