Sham litigation is defined as a lawsuit brought before the judiciary without a genuine dispute between its parties. Instead, its objective is to achieve a specific legal outcome (such as obtaining a court judgment) to harm a third party or circumvent regulations. In such cases, the parties are not seeking 'justice' but rather 'legitimization' for unlawful actions.
In estate cases, sham litigation takes a dangerous form. A dispute is fabricated between a 'company' owned by some heirs and the 'heirs' themselves. The ultimate goal is to transfer ownership of assets from the estate to this company, away from the scrutiny of judicial oversight or the other heirs who are unaware of this scheme.
One of the fundamentals of justice is that 'an adversary cannot be the judge.' However, in sham litigation, we witness the phenomenon of an identity of the parties' standing. This occurs when the individuals representing the plaintiff company (the chairman and members of the board of directors) are the same individuals who are the defendants in their capacity as heirs, and they are also the ones who appoint lawyers for both sides!
This identity of standing deprives the lawsuit of its fundamental pillar: 'conflict.' When lawyer (A), representing the company, files a claim, and lawyer (B), representing the heirs, admits the claim's validity, with both operating under the direction of the same people, we are witnessing a legal charade. The danger lies in exploiting the company's corporate personality to siphon assets from the general estate pool into a private one controlled by some heirs to the exclusion of others.
The Saudi judiciary, drawing its rulings from Islamic Shari'ah and the Law of Procedure before Shari'ah Courts, has established strict conditions for accepting a lawsuit, the most important of which is the existence of a 'legitimate and existing interest.' If the judicial circuit finds that the lawsuit is a sham or collusive, it has the full authority to dismiss it.
The system does not recognize admissions made in a suspicious context, especially if these admissions aim to burden the estate with massive financial obligations without conclusive documentation. The jurisprudential and legal principle states that 'an admission is evidence only against the one who admits it,' and its effect cannot extend to harm the other heirs who did not admit or authorize anyone to admit on their behalf in dubious lawsuits.
An expert judge does not only look at the submitted documents but also reads between the lines and seeks indicia that reveal the sham, most notably:
- Timing of the lawsuit: These lawsuits often appear as a 'reaction' after an heir demands the compulsory partition of the estate.
- Contradictory admissions: For example, the heirs admit in a previous case that there are no debts on the decedent, then claim in a subsequent case the existence of enormous debts to their own company.
- Absence of essential documents: In large-scale contracts, such as for contracting and construction, the claim of a 'moral impediment' preventing the documentation of contracts is not acceptable, especially if the parties are accustomed to documenting smaller-value transactions.
- Temporal contradiction: Claiming a contract was made with 'the heirs' at a time when 'the decedent' was still alive—a contradiction that nullifies the basis of the contract.
Some resort to using notarized powers of attorney as a tool to admit to fabricated debts. Here, it must be clarified that an agent's admission on behalf of their principal in cases where there is suspicion of collusion is not legally recognized if it contradicts reality or harms the other partners in the estate.
If the agent represents a group of heirs who are themselves the interested parties in the plaintiff company, their admission becomes suspect. The Saudi judiciary protects estates from this 'dual representation,' as an admission that leads to the removal of real estate or funds from the estate based on a 'mere allegation' and without conclusive evidence is a void admission for violating the trust of agency and the principles of justice.
One of the most dangerous methods of manipulating estates is retroactive contractual fabrication—that is, writing contracts with old dates to prove rights that did not exist at the time of the decedent's death. The Saudi judiciary counters these practices by:
- Requesting the companies' certified financial statements to verify that the funds were actually disbursed.
- Matching contract dates with the reality of the properties' readiness and construction permits.
- Verifying regulatory approvals, especially concerning the shares of endowments (waqf) and minors, which require stringent oversight procedures.
The judiciary acts as a bulwark against attempts to 'fragment the estate' under the guise of labor claims or fictitious contracting debts, restoring matters to their rightful legal course.
To protect your rights in estates, you must pay attention to the actions of the management in family companies and ensure there are no 'inter-party' lawsuits being filed with the aim of obtaining court judgments that legitimize the seizure of real estate. Awareness of the mechanisms of 'sham litigation' is the first step to recovering your rights.
- Sham Litigation: A fabricated dispute lacking a genuine conflict, aimed at harming others.
- Unity of Interest: The same individuals acting as both plaintiffs and defendants nullifies the seriousness of the dispute.
- Strong Indicia: Contradictions in dates and the absence of bank transfers prove the fictitious nature of a debt.
- Protection of Estates: The Saudi system prevents the exploitation of family companies as a means to siphon off the decedent's assets.
- Judicial Oversight: The judiciary has the authority to uncover and reject retroactively fabricated contracts.
Disclaimer: This article is for general educational purposes and does not constitute professional legal advice. Regulations and laws are subject to updates, so a specialized legal advisor should always be consulted when dealing with estate and corporate matters.
Disclaimer: This article is general legal material for informational purposes only and is not considered a legal opinion or consultation on a specific case. To obtain a binding opinion on your case, please contact the Aqdih law firm for advocacy and legal consultations.