By Othman Altamimi & Co
Introduction
Arbitration has become an increasingly popular method for resolving commercial disputes globally, and the Kingdom of Saudi Arabia (KSA) is no exception. Over the last decade, the Saudi legal system has undergone significant reforms to align arbitration practices with international standards, while still respecting the principles of Sharia law. This article explores the framework, recent developments, and practical aspects of arbitration in Saudi Arabia.
Legal Framework
- The Arbitration Law (2012) – Issued by Royal Decree No. M/34, this law modernized the Saudi arbitration framework by adopting many principles of the UNCITRAL Model Law on International Commercial Arbitration.
- The Enforcement Law (2012) – Provides a mechanism for enforcing domestic and foreign arbitral awards through specialized Enforcement Courts.
- Implementing Regulations (2017) – Further clarified procedural aspects and the role of the courts in supporting arbitration.
- The Civil Transactions Law (2023) – Introduced to codify key principles of contract and obligations law in Saudi Arabia, this law enhances legal certainty and supports arbitration by providing a clearer substantive legal foundation for commercial transactions.
Institutional Arbitration
The Saudi Center for Commercial Arbitration (SCCA), established in 2016, plays a central role in institutional arbitration. It offers modern arbitration rules, case administration services, and training programs. The SCCA’s rules are compatible with international best practices and provide a neutral platform for resolving both domestic and international disputes.
Key Features of Arbitration in KSA
- Party Autonomy: Parties are free to agree on the rules of procedure, the seat of arbitration, and the choice of arbitrators, subject to compliance with Sharia.
- Limited Court Intervention: Courts generally have a supportive role, such as appointing arbitrators when parties fail to agree, but do not interfere with the merits of the dispute.
- Recognition and Enforcement: KSA is a signatory to the New York Convention (1994), and enforcement of foreign awards is now more streamlined, provided they do not conflict with public policy or Sharia.
Recent Developments
- Digital Arbitration Services: SCCA launched online arbitration and expedited procedures.
- Vision 2030 Reforms: Emphasis on improving the legal infrastructure and attracting foreign investment includes strengthening alternative dispute resolution mechanisms.
- Court Judgments: Recent court decisions have shown increasing deference to arbitration clauses and enforcement of awards, signaling a shift toward arbitration-friendly jurisprudence.
Challenges and Considerations
- Sharia Compliance: Arbitrators and parties must ensure that awards do not contravene Sharia principles.
- Language and Cultural Factors: Arbitration proceedings may require bilingual capabilities and sensitivity to local legal culture.
- Public Policy Exception: Saudi courts may refuse to enforce awards contrary to public policy, a concept broadly interpreted in some cases.
Conclusion
Arbitration in Saudi Arabia is undergoing a transformation aligned with global practices while retaining its legal and cultural identity. With a robust legal framework, institutional support, and an improving enforcement regime, KSA is becoming an increasingly attractive venue for arbitration, particularly for parties engaged in cross-border commercial transactions in the region.
Legal practitioners and businesses operating in the Kingdom should closely monitor legal developments and consider arbitration as a viable and effective dispute resolution tool.
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Website – https://otamimi.com/
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