Asalaamu Alaikum,
This is due to the Dhimmi contract, an act of tolerance towards the other faith. With dhimmi's -
1. They can judge by their own laws, they don't have to go to Islamic courts to settle disputes (as long as no Muslim is involved).
2. The rule of the Majority (ie. Shariah) does not apply to them. So if they drink alcohol, commit adultery or whatever, then they can only be punished depending on their own Christian/jewish laws/courts, not Islamic one's.
The only time the Islamic Shariah is forced to intervene is if the Dhimmi publically drank alcohol on the streets (misleading other people) or did another Anti-Shariah act in public, only then would the Islamic court have to be involved.
Funnily enough, these rights above are more then what secular societies give them.
It's just tolerance.