Qualitative shift: Saudi Arabia's new Enforcement Law

International Arbitration Newsletter

By:

Saudi Arabia is currently going through major legislative and regulatory reforms.

One of the most significant is the new Enforcement Law, issued by Royal Decree No. M/53, which  is now in effect in the Kingdom of Saudi Arabia (KSA).

The Law represents a qualitative shift in enforcement procedures in KSA and is a significant step forward in creating specialised forums to enforce judgments and awards that are rendered locally or internationally.

The new Law, in effect since March, contains provisions that affect all aspects of executing local and foreign judgments, as well as foreign arbitral awards, in KSA. All local and foreign companies and individuals operating in KSA or doing business with KSA entities are affected, because the Law controls the execution of all judgments in KSA. The new Law also addresses the jurisdiction and powers of "execution judges", who play a key role in the enforcement of civil judgments and awards in KSA.

Article 1 of the Law defines an execution judge as one of the following: the Execution Circuit head and/or judge, the Execution Circuit Judge or the Judge of the court that monitors the Execution Judge's duties.  The Execution Judge is responsible for, among other things, enforcing and overseeing the enforcement of all judgments and awards in KSA (except for judgments and decisions related to administrative and criminal cases). The Execution Judge is supported by law enforcement officers and is required to follow the enforcement procedures outlined in the local sharia (Islamic law) principles, unless the Law stipulates otherwise.

Along with the enforcement of local judgments, the Law also explicitly grants the Execution Judge jurisdiction over the enforcement of foreign arbitral awards and foreign judgments. Prior to the Law, the enforcement of foreign arbitral awards was within the jurisdiction of the Board of Grievances (BoG)  pursuant to Article 13(g) of the Grievances Bureau Law (GBL). Procedural aspects of the BoG were lengthy and exhaustive: parties seeking the enforcement of foreign judgments or awards had to face significant delays in executing foreign judgments or awards in KSA and risked the re-opening of the merits of disputes. This hurdle has now been removed, because Article 96 of the Law repeals Article 13(g) of the GBL. Subsequent to the Law, all parties that seek to enforce foreign arbitral awards and foreign judgments in KSA must do so through the Execution Judge.

The Execution Judge can enforce all local and foreign judgments or awards that are issued in the form of an execution deed. According to Article 9 of the Law, forms of execution deed include, among other things, final judgments, decisions and orders issued by the courts, final arbitral awards, settlement agreements issued by authorised entities or authenticated by the relevant courts, commercial papers, authenticated contracts and instruments, judgments or judicial orders and authenticated instruments issued in a foreign country. Accordingly, a claimant who is seeking to enforce a foreign judgment or award must ensure that the final judgment or award falls under one of the listed forms of Execution Deed to ensure enforcement in KSA.  If the award is not final, it will not be executed by the Enforcement Judge. 

Article 11 of the Law states that the Execution Judge may only enforce a foreign arbitral award on the basis of principles of reciprocity and if the arbitral award:

  • is in final form in accordance with the law of the seat of the arbitration
  • does not contradict a judgment or order issued on the same subject by a judicial authority of competent jurisdiction in KSA and
  • does not contain anything that contradicts public policy in KSA (for example, a claim seeking interest payments on delayed outstanding payments).

Before foreign claimants can request the enforcement of a foreign arbitral award in KSA, they must ensure that these conditions are met.

In theory, the new Law means that the process of enforcing foreign judgments and awards in KSA is significantly improved and awards should be far less susceptible to  challenge than previously. However, the practical aspects of the new Law and the process for enforcing foreign judgments and awards in KSA await the test of practical application in the Saudi courts.

DLA Piper has significant experience of the enforcement of judgments and arbitration awards in KSA.  For more information, please contact Amer Al Amr.

SUBSCRIBE
Would you like to receive other DLA Piper publications?  Please let us know where you are and we will help you choose. Click here if you are based in the Americas, here if you are based in Europe, the Middle East or Asia and here if you are based in Australia.