Arbitration in Saudi Arabia – Introduction
Arbitrating in Saudi Arabia has not been a trendy move but the possibility has recently opened up with the developments of their last arbitration law, the set in place of an arbitral institution in Riyadh and more importantly their current desire to attract foreign investments and become a business reference jurisdiction.
This publication gives answer to 5 key questions when considering arbitrating in Saudi Arabia.
Does Saudi Arabia have an arbitration Law?
Saudi Arabia has an Arbitration Law released in 2012. You may access its full text kindly click here.
The Saudi Arbitration Law:
- Allows the selection of any arbitral institution.
- Allows the selection of the governing law.
- Allow the selection of the seat of the arbitration.
The above being said, despite the legal freedom, one must be mindful of the need to be versed in Shari’a Law in order to ensure that even if a foreign law is selected to govern the relationship and to rule on a potential dispute that the arbitral process in furtherance of the governing law and the applicable with respect to the seat of arbitration are respectful and compliant with Saudi Arabia’s mandatory Shari’a Law predicaments.
How many arbitral institutions exist in Saudi Arabia?
There’s only one arbitral institution in Saudi Arabia. This is the Saudi Center for Commercial Arbitration, established in Riyadh in 2016.
To access their Rules kindly click here.
To access their home site and gain access to additional information on governance, full services (mediation and facilities), fees, expedited procedures, model clauses, kindly click here.
Is Saudi Arabia a member of the New York Convention?
Saudi Arabia is a member to the New York Convention without reservations but with the declaration that it restricts the application of the Convention to the recognition and enforcement of arbitral awards made in the territory of a Contracting State only.
The accession to the Convention became effective in April 1994.
For those of you not versed with the New York Convention, this is a key tool of international arbitration. It applies to the recognition and enforcement of arbitral awards. Today it has 170 contracting states.
Without the New York convention arbitration awards rendered abroad could not be executed in the country where an award debtor has assets.
For additional information on the New York Convention kindly visit its official site here.
To complement its membership to the New York Convention it is important to stress that countries can be compared having the New York Convention as reference based on the broadness of their public policy concept. It has been the case in Saudi Arabia that public policy has been and is linked to Sharia Law, as such not only for the drafting of awards but also for the execution of foreign awards is crucial that arbitrators are well versed with Sharia Law to ensure that the award could be executed in Saudi Arabia.
Any hints on drafting an arbitration agreement selecting to arbitrate in Saudi Arabia?
Article 9 of the Saudi Arabia Arbitration Law reads as follows:
“1. The arbitration agreement may be concluded prior to the occurrence of the dispute whether in the form of a separate agreement or stipulated in a specific contract. The arbitration agreement may also be concluded after the occurrence of a dispute, even if such dispute was the subject of an action before the competent court. In such a case, the agreement shall determine matters included in the arbitration; otherwise, the agreement shall be void.
2. The arbitration agreement shall be in writing; otherwise, it shall be void.
3. An arbitration agreement shall be deemed written if it is included in a document issued by the two parties or in an exchange of documented correspondence, telegrams or any other electronic or written means of communication. A reference in a contract or a mention therein of any document containing an arbitration clause shall constitute an arbitration agreement. Similarly, any reference in the contract to the provisions of a model contract, international convention or any other document containing an arbitration clause shall constitute a written arbitration agreement, if the reference clearly deems the clause as part of the contract.”
Pursuant to the above:
- Mandatorily the agreement needs to be in written, be it in:
- A contract executed before the dispute arises or thereafter.
- It can be inserted in exchanges.
- It can be by reference to set of rules that do include an arbitration clause. In this case it would need to be sufficient reference without doubts to the intention to also include the arbitration agreement in the reference.
For additional information on arbitration agreements kindly visit our publications here.
What other information may be of relevance when considering arbitrating in Saudi Arabia?
Mandatory Provisiones Shari’a
When arbitrating in Saudi Arabia or considering to arbitrate in Saudi Arabia we cannot stress sufficiently the flying hand of mandatory provisions of Shari’a. In the UAE we did observe the same evolution towards the limitation of Shari’a mandatory provisions. It is left to see how close Saudi Arabia will follow.
As examples of how this mandatory provisions may impact the arbitration:
- An award could be non-enforceable if at the hearing testimony was taken without prior oath of the witnesses.
- An award could be non-enforceable if it awards punitive of exemplary damages.
Confidentiality
Article 43 of the Saudi Arabia Arbitration Law reads as follows:
“1. The arbitration tribunal shall deliver to each arbitration party a true copy of the arbitration award within fifteen days from its date of issuance.
- The arbitration award may not be published in whole or in part except with the written consent of the parties to arbitration. “
Court Support
Arbitration in Saudi Arabia is supported by local courts in accordance with the Arbitration Law, namely: (a) making orders to witnesses, experts, document production, precautionary measurs; and (b) assigns the competent court in charge of appointing arbitrator/s in the absence of parties’ agreement.
For more information published in English you can visit all our publications at this link as well as the videos in English of our Managing Partner Maria Rubert. You can also email us at info@rubertpartners.com
*The information on this page is not intended to be legal advice. This article is intended to provide an initial introduction to the visa amendments in the UAE.