Any award of compensation given by the courts of the Kingdom of Saudi Arabia must comply with Shari'ah principles. Shari'ah principles on compensation generally require the loss which is being compensated to be a direct result of the harm (as opposed to an indirect loss), and for the loss to be readily quantifiable. Due to this, compensation for more intangible harm arising from an incident, such as psychological suffering, mental anguish or traumatic shock (sometimes known as "moral damages"), has rarely been awarded by the KSA courts.
However, a trend has emerged recently within the KSA courts where the courts have been prepared to consider and, in some cases, award moral damages.
[One example is a recent ruling by the KSA general court. The court approved a large figure settlement after an incident which resulted in the physical disability of the claimant. The settlement terms not only sought to compensate for the physical loss in the form of material damages, but also bound the defendant to pay an amount exceeding SAR 2 million in the form of moral damages. ]
In another example, the Administrative Court at the Board of Grievances (BOG) recently issued a final judgement against an airline, awarding moral damages as well as material damages to a family in KSA. The harm was suffered by one of the daughters within the family during a domestic flight after she sat on a ''dirty seat'' which contaminated her body and clothes during the flight. The court found that the incident entitled the family to compensation because the dirty seat caused panic and psychological pain to the family, including because the incident separated the family within the aeroplane making supervision of the daughters more difficult and leading to stress for the parents. The BOG reasoned its judgment on the Shari'ah principle that ''damage should be removed'' and that psychological trauma, such as panic and resentment, is similar to physical loss (and may be more painful).
In recognition of this recent trend, the BOG has conducted a workshop to canvass views in the legal market on the award of moral damages in KSA. The outcome of the workshop was that moral damages are permissible in accordance with Shari'ah and may be awarded on the following basis:
- the court has a discretion on the amount of moral damages to be determined on a case by case basis;
- moral damages will only be awarded if all conditions required for such an award are met. The main condition for moral damages to be awarded under Shari'ah is that the harm giving rise to the claim for moral damages must be a consequence of some material loss. In other words, moral damages will not be awarded in isolation: they will be an additional award to the award of material damages for physical or other tangible harm.
This major shift in the approach of Saudi courts suggests that the court system in KSA is beginning a new phase of development towards international standards. Certainly, such change may impact on estimates of likely compensation as part of the claims handling process and may lead to more amicable settlements.