Saudi Arabia welcomes further clarity on Arbitration Laws

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When the current Saudi Arbitration Law was passed in 2012, replacing the outdated 1982 Arbitration Law, it was considered to be a significant transformation in dispute resolution within the Kingdom. The change was a welcome relief for the growing number of businesses choosing arbitration to resolve their disputes.

Since then, similar changes to the Enforcement Law in recent years have also bolstered arbitration in the Kingdom, bringing the process more in-line with international standards and prompting hope that Saudi might become a more arbitration-friendly jurisdiction as it seeks to diversify its economy and encourage more foreign investment (see our article in relation to a landmark arbitral award enforcement decision in Saudi Arabia successfully handled by our team).

On Monday 22 May 2017, the Saudi Council of Ministers passed the Implementing Regulations of the 2012 Arbitration Law (Implementing Regulations). Five years on, this is another important development in dispute resolution within the Kingdom, not least because the Implementing Regulations clarify many provisions that were previously vague in the Law.

The most significant provisions are as follows:

  • The Implementing Regulations now clarify that the competent authority referred to in the law is the Appeal Court. This applies in all cases other than the exceptions stated in Articles 9(1), 12, and 40(3) of the Arbitration Law. This clears up any confusion or disagreements between the parties to arbitration as to which court should supervise their arbitrations.
  • Summonses to arbitration can now be served electronically (by e-mail, text messages etc.). This is a significant change in Saudi law as traditionally, summonses have had to be served in person. This will now make an electronic communication/document a legally binding document when proving that a party has been officially summoned to arbitration.
  • A claiming party must now submit a copy of the relevant contract, along with the name of, and contact details for, their appointed arbitrator, to the Saudi Center for Commercial Arbitration, or to any arbitral institution which the parties have agreed will administer the arbitration. The use of such institutions will encourage greater transparency in relation to the fees which parties pay to the appointed arbitrators.
  • Challenges to arbitral awards must now be submitted directly to the Supreme Court, as the Implementing Regulations make clear that the Supreme Court is the competent court referred to in Article 55(3) of the Arbitration Law. This is a significant development, as many parties have to date submitted challenges to awards to the Appeal Court, and the Appeal Court has accepted them, because the competent court was not defined in the Law. The requirement to refer such challenges straight to the Supreme Court is likely to mean that such challenges will be dealt with swiftly - which is another very positive signal that Saudi Arabia is adopting a pro-arbitration stance.

The Implementing Regulations will come into force once published in the Official Gazette. We will update you once this happens.