The arbitration landscape in Saudi Arabia has historically been fraught with difficulty. This was largely attributable to the former Arbitration Law, which was lacking in detail and failed to set reasonable limits on the courts intervention in the arbitral process. As a result, the enforcement of arbitral awards in the kingdom was often problematic.
However, there is now much greater cause for optimism following the passing of both the new Arbitration Law and the new Enforcement Law. These have aligned the legal framework for arbitration in Saudi Arabia much more closely with international standards.
The new Arbitration Law is largely based on the UN Commission on International Trade Laws Model Law and gives parties greater freedom and certainty in relation to the arbitral process. This has fed through to the enforcement of awards, which has been assisted by the creation of an Enforcement Court and the appointment of specialist enforcement and execution judges.
These changes appear to be having a positive effect, with the following additional significant developments recently having taken place, each of which emphasises the pro-arbitration approach adopted by the new Arbitration Law:
- The Saudi Centre for Commercial Arbitration (SCCA) has opened in Riyadh;
- The SCCAs Arbitration Rules have been published;
- The Enforcement Court in Riyadh has enforced a $18.5m International Chamber of Commerce award rendered in London against a Saudi-domiciled award debtor;
- The first female arbitrator has been appointed in a commercial case;
- The Implementing Regulations of the new Arbitration law have been published.
However, arbitration and enforcement proceedings in Saudi Arabia still require a deep understanding of local law. In particular, a failure to comply with sharia law can lead to an award being unenforceable. Accordingly, from a practical perspective, for arbitrations seated in the kingdom, or for foreign arbitral awards that may need to be enforced, it is recommended the arbitral tribunal has some expertise in sharia law and ensures it renders an award that is sharia law compliant.
The introduction of the new Arbitration Law and Enforcement Law, along with recent developments, have prompted the hope that Saudi Arabia is becoming a more arbitration-friendly jurisdiction. We will have to wait to see whether future developments confirm this.
Henry Quinlan, DLA Piper
Henry Quinlan is head of litigation, arbitration and investigations for the Middle East at DLA Piper