The Saudi judicial system has witnessed remarkable developments in recent years, in line with Saudi Arabia's Vision 2030, which aims to enhance the business and investment environment. Among the most notable developments is the issuance of the new Saudi arbitration law, designed to resolve commercial and non-commercial disputes, ensuring justice and fairness for all parties involved. This article provides a comprehensive overview of the new Saudi arbitration law, highlighting its importance and role in dispute resolution, as well as an overview of different types of arbitration.
What is Arbitration?
Arbitration is a legal system that offers an alternative means of resolving disputes outside of court, where the case is referred to one or more arbitrators for resolution based on an agreement between the parties. This system provides flexibility and speed in reaching solutions that suit all parties, making it a preferred choice for companies and individuals seeking to avoid the complexities of judicial procedures.
Recent Amendments to the Saudi Arbitration Law
The arbitration law has seen significant updates with the issuance of a new executive regulation aimed at enhancing transparency and efficiency in the arbitration process. Key amendments include:
Enhancing the Role of Professional Arbitrators: Standards for selecting arbitrators have been organized to ensure their independence, impartiality, and professional competence.
Simplification of Arbitration Procedures: The time required to resolve disputes has been reduced, and mechanisms for the effective enforcement of arbitration awards have been strengthened.
Introduction of Technology: The use of technological tools and electronic platforms facilitates remote arbitration procedures, easing communication between disputing parties.
Objectives of the law of arbitration saudi arabia
1.Enhancing Efficiency and Speed: The law aims to expedite the dispute resolution process through flexible and swift procedures.
2.Ensuring Justice and Fairness: The law includes mechanisms to guarantee the impartiality and neutrality of arbitrators, which builds trust in arbitration outcomes.
3.Supporting the Investment Environment: By reducing the time and cost of disputes, the law promotes a favorable investment climate in the Kingdom.
4.Developing the Commercial Sector: The law contributes to the development of the Saudi commercial sector by facilitating quick and effective resolution of commercial disputes.
Types of Arbitration
Several types of arbitration are used depending on the nature of the dispute and the agreement between parties. Here’s a brief overview of the primary types:
1.Optional and Compulsory Arbitration:
Optional Arbitration: Parties have the freedom to choose whether to resort to arbitration.
Compulsory Arbitration: Arbitration is imposed by law or by contracts that include a clause requiring arbitration to resolve disputes.
2.Ad Hoc and Institutional Arbitration:
Ad Hoc Arbitration: This type is characterized by its flexibility and independence, as parties agree on selecting arbitrators outside any established arbitration institution. Unlike institutional arbitration, ad hoc arbitration is not governed by pre-set rules, offering greater freedom to design arbitration procedures that suit the nature of the dispute.
Institutional Arbitration: Conducted under the framework of an arbitration institution, such as the International Chamber of Commerce (ICC) or the Saudi Center for Commercial Arbitration (SCCA). The institution manages all aspects of arbitration, including appointing arbitrators and establishing governing rules.
3.International Arbitration:
Used in disputes involving parties from different countries, this type is particularly significant given the expansion of global business activities between Saudi companies and those in other countries.
4.Administrative Arbitration:
This type is used to resolve disputes that arise between individuals or companies and government entities or administrative bodies, providing effective solutions in administrative disputes in line with local laws.
5.Judicial Arbitration and Conciliatory Arbitration:
Judicial Arbitration: The arbitrator issues a binding judgment based on the evidence presented, without considering the parties' opinions.
Conciliatory Arbitration: This type aims to reconcile the parties and find a solution satisfactory to all; if reconciliation fails, the arbitrator has the authority to issue a ruling.
The Role of the Arbitration System in Dispute Resolution
The arbitration system significantly contributes to facilitating and speeding up the dispute resolution process, making it an ideal option for companies and individuals seeking effective alternatives to traditional courts. With its flexibility and expedited procedures, arbitration allows parties to reach dispute resolutions in a way that reduces both financial and time-related costs.
Arbitration is also a powerful tool for preserving business relationships, offering parties an opportunity to achieve satisfactory solutions without prolonged litigation and conflicts that might arise in court.
Arbitration Procedures
Filing an Arbitration Request: The claimant completes an arbitration request form available at the arbitration center. A copy of the request is sent to the respondent. Prescribed fees are paid.
Respondent’s Response: The center notifies the respondent of the arbitration request. The respondent is granted a specified time to respond to the request. The respondent’s reply is sent to the claimant for comments.
Determining Arbitration Procedures: A virtual meeting is held between the parties and the center. Details are decided, including the location of arbitration, language, applicable rules, number of arbitrators, and communication methods. The procedure for appointing arbitrators is agreed upon.
Appointing Arbitrators and Administrative Procedures: The center notifies the appointed arbitrators. Specified procedures are followed as per arbitration rules (such as requests for disclosure and disqualification). Parties pay the final fees.
Commencement of Arbitration Procedures: The arbitration tribunal holds a preliminary meeting with the parties. A timeline is set for the proceedings (sessions, briefs, etc.).
Submission of Evidence and Hearings: Parties present their evidence and briefs. The arbitration tribunal hears the parties and their witnesses. The tribunal declares the closure of hearings after the completion of evidence submission.
Issuance of the Award: The arbitration tribunal examines all submitted evidence. The tribunal issues its decision within the specified period (usually 60 days).
Frequently Asked Questions about the Saudi Arbitration Law
- Where can arbitration requests be submitted?Arbitration requests can be submitted through the center’s website or by visiting the main branch of the office.
- Can arbitration awards be appealed?Yes, an arbitration award can be appealed under specific conditions, such as evidence of corruption or forgery.
- In what cases can an arbitration award be nullified?An arbitration award can be nullified if there is manipulation or fraud in the proceedings, if the arbitrator exceeds their authority, or if fundamental principles of justice and fairness are not respected.
- Can arbitration be used for all types of disputes?Arbitration can be used for most commercial and civil disputes, but it may not be suitable for criminal cases or issues involving fundamental individual rights.
- What are the costs of arbitration procedures in Saudi Arabia?Arbitration costs vary based on the complexity of the dispute, the number of arbitrators involved, and institutional fees if applicable, but they are generally lower than the legal costs associated with court proceedings.
