Commercial Arbitration

Last verified on Thursday 2nd April 2020

Commercial Arbitration: Saudi Arabia

Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Al Tamimi & Company

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Saudi Arabia

The Kingdom of Saudi Arabia (KSA) acceded to the New York Convention on 19 April 1994 with the following declaration:

On the basis of reciprocity, the Kingdom declares that it shall restrict the application of the Convention to the recognition and enforcement of arbitral awards made in the territory of a Contracting State.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Saudi Arabia

The KSA is a party to:

  • the Convention on Judicial Cooperation between States of the Arab League 1983 (the Riyadh Convention);
  • the Convention of the Arab League on the Enforcement of Judgments and Arbitral Awards 1952 (the Arab League Convention);
  • the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996 (the GCC Convention); and
  • the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States 1966 (the ICSID Convention).

The KSA has also ratified 21 out of the 24 bilateral investment treaties it has signed and is a contracting party to a further 13 treaties containing investment protection provisions out of which eight are in force.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Saudi Arabia

KSA Royal Decree No. M/34 dated 24/05/1433 AH (16 April 2012) concerning the approval of the Law of Arbitration came into force on 9 July 2012 (the Arbitration Law). The Arbitration Law replaced the former arbitration law (KSA Royal Decree No. M/46 dated 12/07/1403 AH (26/04/1983)). The Arbitration Law is inspired by the UNCITRAL Model Law and applies to all arbitral proceedings seated in the KSA.

KSA Cabinet Resolution No. 541 of 1438 issuing the Executive Regulations implementing the Arbitration Law was issued on 22 May 2017 and came into force on 7 June 2017 (the Executive Regulations). The Executive Regulations contain practical clarifications on certain provisions of the Arbitration Law.

KSA Royal Decree No. 53 dated 13/10/1433 AH (30 August 2012) concerning the Execution Law came into force on 27 February 2013 (the Enforcement Law). The Enforcement Law regulates the enforcement of arbitral awards in the KSA.

The Enforcement Law was also complemented by executive regulations issued pursuant to KSA Resolution No. 9892 dated 17/04/1434 AH (28 February 2013).

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Saudi Arabia

The Saudi Centre for Commercial Arbitration (the SCCA) was formally established by KSA Cabinet Decree No. 257 dated 14/06/1435 AH (15 March 2014) and became operational in 2016. The SCCA is located in Riyadh.

The SCCA Arbitration Rules 2016 or its official website (www.sadr.org) do not indicate that the SCCA acts as an independent appointing authority.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

5. Can foreign arbitral providers operate in your jurisdiction?

Saudi Arabia

There are no restrictions on foreign arbitral providers seeking to operate in the KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Saudi Arabia

The KSA does not have a specialist arbitration court. In accordance with article 8 of the Arbitration Law and article 2 of the Executive Regulations, the competent court for the purposes of the Arbitration Law and the Executive Regulations is the Court of Appeal. Furthermore, article 17 of the Executive Regulations authorises the Supreme Court of the KSA to hear appeals regarding validity of arbitral awards.

While historically arbitration has not been a popular method of dispute resolution in the KSA, the recently enacted legislation, in particular the Arbitration Law and the Enforcement Law, and the opening of the SCCA, a modern arbitration centre, provides a reason for cautious optimism that the judiciary’s familiarity with arbitration and the trend for increasingly favouring arbitration as an effective method of dispute resolution in the KSA will continue.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Saudi Arabia

To be valid and enforceable an arbitration agreement must be in writing by an individual or a legal entity with the legal capacity. Otherwise, the agreement will be null and void. See articles 9–10 of the Arbitration Law.

The in-writing requirement is satisfied if the agreement to arbitrate is within the parties’ contract or in a separate document, including an exchange of correspondence, an exchange of electronic communication, a clear reference to an arbitration agreement contained in a model agreement or another document incorporating the agreement to arbitrate as part of the contract) (articles 1(1) and 9(3) of the Arbitration Law).

An arbitration agreement may cover existing and future disputes, pursuant to article 9(1) of the Arbitration Law.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

8. Are any types of dispute non-arbitrable? If so, which?

Saudi Arabia

Article 2 of the Arbitration Law prescribes that disputes pertaining to personal status or disputes that cannot go to conciliation are non-arbitrable. Such disputes include criminal law, administrative law, and public policy matters.

Unless authorised by existing legislation, the KSA governmental bodies require prior authorisation by the KSA Prime Minister to enter into arbitration agreements (article 10(2) of the Arbitration Law).

On 19 January 2019, the President of Council of Ministers issued High Order No. 28004 (the High Order) directing the KSA governmental bodies and state-owned companies seeking to settle their disputes with foreign investors through arbitration to ensure that the arbitration is conducted at the SCCA or other arbitration centres licensed by the Standing Committee for Saudi Arbitration Centres established in accordance with KSA Cabinet Resolution No. 107 dated 08/04/1437 AH (19 January 2016). The High Order requires that governmental bodies and state-owned companies obtain the necessary approvals in accordance with established procedures. The High Order further requires the Ministry of Trade and Investment to review the application of these directions after five years.

The Government Tenders and Procurement Law (KSA Royal Decree No. M/128 dated 13/11/1440 AH (16 July 2019)) provides that, subject to the approval by the KSA Minister of Finance, the KSA governmental bodies may agree to resolve disputes through arbitration in accordance with the relevant Implementing Regulations (article 92(2) of the Government Tenders and Procurement Law). While the Implementing Regulations (Resolution of Minister of Finance No. 1242 on 21/3/1441 AH (19 November 2019)) are silent on the mechanism for seeking approvals from KSA Minister of Finance, article 254 of the Implementing Regulations prescribes the following three conditions that have to be satisfied for the KSA government bodies to validly enter into arbitration agreements:

  • The estimated value of the contract has to exceed 100 million riyals. Adjustments to the limit are within the discretionary powers of the KSA Ministry of Finance.
  • The governing law of the contract has to be the laws of the KSA and the arbitral proceedings may be conducted in accordance with arbitration rules of international arbitration centres located outside the KSA only if the dispute is with a foreign contracting party.
  • The arbitration agreement and its terms have to be set out in the contract.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Saudi Arabia

Generally, under the laws of the KSA, third parties are not bound by arbitration agreements, which they have not signed. Article 13 of the Executive Regulations allows an arbitral tribunal, subject to the agreement of the parties to the arbitration and the third party, to join such third party to the arbitral proceedings. In addition, the parties may agree to a set of institutional arbitration rules that allow for joinder of third parties under certain circumstances. See, for example, article 7 of the SCCA Arbitration Rules 2016.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not address consolidation of arbitral proceedings.  The parties may agree to a set of institutional arbitration rules that allow for consolidation under certain circumstances. See, for example, article 10 of the Arbitration Rules of the International Chamber of Commerce (the ICC).

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Saudi Arabia

Although KSA law recognises the separate legal personality of a company, the doctrine of separate legal personality may, however, be subject to multiple exceptions in the KSA. For example, under KSA Royal Decree No. 3 dated 28/01/1437 AH (10 November 2015) promulgating the Companies Law as amended (the Companies Law), such exceptions may become triggered if company shareholders liquidate the company in bad faith, do not clearly separate the company’s assets and funds from their own, or conduct business activity prior to incorporation with the KSA Ministry of Commerce and Investment.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

12. Are arbitration clauses considered separable from the main contract?

Saudi Arabia

Article 21 of the Arbitration Law expressly recognises arbitration clauses as separate agreements from other provisions of the main contract in which they are contained. The effect of the recognition of the separability doctrine is that arbitration clauses will usually not be affected by the invalidity, revocation or termination of the contracts, if the arbitration clauses itself are valid.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Saudi Arabia

Arbitration Law provides for recognition of the principle of Compétence-Compétence in the KSA by granting arbitral tribunals the power to decide and rule on their own jurisdiction, pursuant to article 20(1), including in relation to claims of absence, expiration or nullification of an arbitration agreement, or that the dispute is outside the scope of the arbitration agreement.

Notwithstanding certain time limits, purusant to article 20(2) of the Arbitration Law, to object to the jurisdiction of an arbitral tribunal, it remains at the arbitral tribunal’s discretion to allow the objection in case of a justified delay.

Article 20(3) of the Arbitration Law prescribes that an arbitral tribunal’s decision regarding its own jurisdiction cannot be appealed in court but it may be used as a ground to challenge enforcement or annul a final award.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Saudi Arabia

An arbitration clause should contain the usual basic elements, for example: institutional rules, the seat or place of arbitration, the governing law, the language of arbitration, the number of arbitrators, and the tribunal’s decision-making powers relating to allocation of costs of the arbitration.

When drafting an arbitration clause it is necessary to ensure that the arbitration clause complies with the mandatory provisions of the Arbitration Law, in particular that it does not contravene the principles of Sharia. Similarly, when selecting the governing law of the contract, it is essential to appreciate that an arbitral tribunal’s findings and decisions based on the governing law should not contain anything contrary to the principles of Sharia and public policy of the KSA. Otherwise, the final award may be partially or completely annulled.

It is also important to prescribe the language of the arbitration in the arbitration clause as the default language of the arbitration in accordance with article 29(1) of the Arbitration Law is the Arabic language.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Saudi Arabia

Historically, and under the former arbitration regime in KSA, ad hoc international arbitration were more common than institutional international arbitration. The UNCITRAL Rules, including amended or customised versions, had also been commonly used in KSA.

With the introduction of the Arbitration Law, which expressly allows the use of foreign arbitration centres and institutional rules, and the establishment of the SCCA in Riyadh, it is anticipated that this historical trend will be reversed and institutional international arbitration will become more common than ad hoc international arbitration.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Saudi Arabia

Article 11 of the Executive Regulations provides that multi-party arbitration proceedings shall commence on the day the request for arbitration is received by the last party.

In absence of the parties’ agreement or the relevant provisions of the applicable institutional arbitration rules, the appointment of arbitrators in a multi-party arbitration will be done by a Court of Appeal of the KSA in accordance with article 15 of the Arbitration Law.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Saudi Arabia

Subject to an alternative agreement by the parties, the arbitral proceedings in the KSA shall commence, pursuant to article 26 of the Arbitration Law, on the day one party delivers its request for arbitration to another party. The information to be included in the requests for arbitration is similar to a typical request for arbitration under institutional rules and is set out at article 9(1) of the Executive Regulations.

In addition, article 11 of the Executive Regulations provides that multi-party arbitration proceedings shall commence on the day the request for arbitration is received by the last party.

An arbitral tribunal has to issue its final award within 12 months from the date of the commencement of the arbitration proceedings, pursuant to article 40(1) of the Arbitration Law. The 12-month period may be extended by the arbitral tribunal on its own accord, and subject to the parties’ alternative agreement, under article 40(2) of the Arbitration Law.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Saudi Arabia

In accordance with article 38(1)(A) of the Arbitration Law, an arbitral tribunal has to apply the substantive (governing) law agreed by the parties, subject to its compliance with the principles of Sharia and the public policy of the KSA. Furthermore, the parties may expressly authorise an arbitral tribunal to have the powers to decide their dispute in accordance with the principles of ‘justice and fairness’ under article 38(2) of Arbitration Law.

Failing parties’ agreement on the substantive law to govern their dispute, an arbitral tribunal will apply the substantive law that it considers to be most relevant to the subject matter of the dispute, pursuant to article 38(1)(B) of the Arbitration Law. In making its decision, an arbitral tribunal has to take into account, as set out in article 38(1)(C) of the Arbitration Law, the provisions of the relevant contract and ‘the current norms in the type of treatment, and customs, and the usual dealing between the parties’.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Saudi Arabia

In accordance with article 14 of the Arbitration Law, an arbitrator must have the necessary legal capacity, be of good conduct and reputation, and hold a university degree in law or Sharia. In a three-member arbitral tribunal, it will suffice for the presiding arbitrator to be a holder of the university degree in law or Sharia. The Arbitration Law does not explicitly prohibit women from serving as arbitrators in KSA-seated arbitrations. In this regard, it is our view that the Arbitration Law is gender neutral. The first appointment of a Saudi woman as an arbitrator, Ms Shaima Aljubran, was confirmed by the Saudi Administrative Court of Appeal of Dammam on 10 May 2016.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not provide for nationality, immigration, gender, religion or any other restrictions for foreign arbitrators.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Saudi Arabia

The default arbitrator appointment mechanism is provided in article 15 of the Arbitration Law.

In case of a default in appointment of any arbitrator, pursuant to an application filed by one of the parties to the dispute, the Court of Appeal shall act as a default appointing authority and appoint the arbitrator(s) within 30 days. In making its appointment(s), the Court of Appeal has to take into account the relevant conditions or qualifications agreed by the parties and the relevant provisions of the Arbitration Law. The Court of Appeal's appointment decisions cannot be appealed.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not address immunity or liability of arbitrators in the KSA. Under the general principles of Sharia, arbitrators in KSA may be liable for losses caused by gross negligence or intentional wrongful conduct.

Article 16 (Exclusion of Liability) of the SCCA Arbitration Rules 2016 provides for immunity of arbitrators appointed under the Rules, ‘except to the extent that such a limitation of liability is prohibited by applicable law’.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Saudi Arabia

A party has to enter into a separate agreement with an arbitrator regarding the arbitrator’s remuneration in accordance with article 24(1) of the Arbitration Law. The separate agreement has to be deposited with, as the case may be, with the SCCA or with another arbitration body/organisation/centre, pursuant to article 7(1) of the Executive Regulations.

If the party and the arbitrator fail to agree on the remuneration figure/mechanism, pursuant to article 24(2) of the Arbitration Law, the fees shall be determined by the Court of Appeal of the KSA without the possibility for an appeal. The Court of Appeal may, when determining the arbitrators’ fees, request a copy of the contracts concluded with the arbitrators in accordance with article 7(2) of the Executive Regulations.

In regard to the fundholding services, article 37 (deposits) of the SCCA Arbitration Rules 2016 provides that the SCCA may request the parties to deposit appropriate amounts as an advance for the costs of arbitration, which may include fees and expenses of the arbitrators.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Saudi Arabia

Under the Arbitration Law, an arbitrator may be challenged if the arbitrator does not satisfy the conditions set out in article 14 of the Arbitration Law (eg, lack of legal capacity) or if there are justifiable doubts as to the arbitrator’s impartiality and independence.

In accordance with article 17 of the Arbitration Law, and subject to the parties’ agreement on the challenge procedure or the relevant provisions in the institutional arbitration rules, a written challenge application, including the reasons for the challenge, has to be submitted to the arbitral tribunal by a party within five days from the date of formation of the arbitral tribunal or of the party becoming aware of the circumstances justifying the disqualification of an arbitrator.

If the arbitration does not withdraw or if the other party does not agree with the challenge within five days from the date of the submission of the application, the arbitral tribunal will have to decide on the application within 15 days of the submission of the application.

If the arbitral tribunal dismisses the challenge, the party may submit its challenge application to the Court of Appeal of the KSA within 30 days. The Court of Appeal’s decision cannot be subject to an appeal.

If the challenge to an arbitrator is upheld by the arbitral tribunal or the Court of Appeal, pursuant to article 17(4) of the Arbitration Law, all previous arbitration procedures and awards will have to be considered to be null and void.

Article 14 of the SCCA Arbitration Rules 2016 provides that the SCCA, not the arbitral tribunal, has the sole discretion to decide on a party’s challenge to an arbitrator if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality and independence.

It is likely that in international arbitral proceedings, where an arbitral tribunal will have the authority to decide and rule on the challenge, that the IBA Guidelines on Conflict of Interest in International Arbitration will be taken into account.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Saudi Arabia

In accordance with article 22 of the Arbitration Law, prior to establishment of an arbitral tribunal, the competent Court of Appeal may order interim or conservatory measures, if requested by a party before the constitution of the arbitral tribunal or if requested by the arbitral tribunal during the course of the arbitration. The arbitral tribunal’s requests for support of the Court of Appeal may include an order for attendance of a witness or an expert and an order to produce a document or its copy.

In accordance with article 23 of the Arbitration Law, the parties may agree to authorise an arbitral tribunal to have the power to order interim or conservatory measures as it sees appropriate.

In addition, article 29 of the KSA Royal Decree No. M/1 dated 22/01/1435 AH (26 November 2013) concerning the Law of Procedure Before Sharia Courts provides for jurisdiction of KSA courts over the precautionary and provisional measures enforced in the KSA, even if such KSA courts have no jurisdiction over the case.

To the best of the authors’ knowledge, to date, there have not been any decisions issued by KSA courts to grant anti-suit injunctions relating to arbitration proceedings brought outside the KSA in breach of an arbitration agreement.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not expressly address the matter of security for costs. However, articles 22 to 23 of the Arbitration Law grant the Court of Appeal and arbitral tribunal, subject to the parties’ agreement, the powers to order interim measures as they see fit, which may include an order for security for costs.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Saudi Arabia

With the introduction of the Arbitration Law, parties have been provided with greater autonomy in tailoring their arbitration procedure and institutional rules. However, while applying party-chosen ad hoc or institutional rules, it is necessary for the arbitral tribunal to be mindful of Sharia, public policy and order of the KSA, and any obligations arising out of the international conventions to which KSA is party.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Saudi Arabia

A party’s failure to participate in arbitral proceedings does not affect an arbitral tribunal’s ability to proceed with the arbitration and issue its final award in accordance with article 35 of the Arbitration Law.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not impose any limits in regard to the admissibility of evidence, which, in any case, should not violate the principles of Sharia and public policy order of the KSA.

In accordance with articles 30 to 31 of the Arbitration Law, parties may enclose with their submissions copies of documents, including witness and expert reports, on which they wish to rely on and an arbitral tribunal has the right to order production of the originals of such documents.

Parties are free to adopt the rules and guidelines of their choice to govern evidentiary issues in their arbitral proceedings, including the IBA Rules on the Taking of Evidence in International Arbitration and the Prague Rules on Efficient Conduct of Proceedings in International Arbitration, subject to their compliance with the principles of Sharia and public policy of the KSA. For example, the principle of Sharia will likely be breached if an arbitral tribunal allows a witness to provide oral witness testimony without a prior administration of an oath.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Saudi Arabia

Article 22(3) of the Arbitration Law provides that, in the interest of an effective conduct of the arbitral proceedings, an arbitral tribunal may seek the support of a competent KSA court, including in summoning a witness or an expert, or in ordering production of documents.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not specifically address document production in international arbitration proceedings in the KSA.

In accordance with articles 30 and 31 of the Arbitration Law, parties may enclose with their submissions copies of documents, including witness and expert reports, on which they wish to rely on and an arbitral tribunal has the right to order production of the originals of such documents.

Parties are free to adopt the rules and guidelines of their choice to govern evidentiary issues in their arbitral proceedings, including the IBA Rules on the Taking of Evidence in International Arbitration and the Prague Rules on Efficient Conduct of Proceedings in International Arbitration, subject to their compliance with the principles of Sharia and public policy of the KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

32. Is it mandatory to have a final hearing on the merits?

Saudi Arabia

Subject to an alternative agreement by the parties, pursuant to article 33(1) of the Arbitration Law, an arbitral tribunal has the power, if it considers it appropriate, to forgo holding a hearing and decide the case on the basis of the parties’ written submissions and documents.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Saudi Arabia

In accordance with article 28 of the Arbitration Law, the selection of the seat of arbitration in KSA does not limit an arbitral tribunal’s ability to conduct hearings and procedural meetings elsewhere.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Award

34. Can the tribunal decide by majority?

Saudi Arabia

Pursuant to article 39 of the Arbitration Law, an arbitral award of an arbitral tribunal, consisting of more than one arbitrator, may be issued by a majority of the arbitral tribunal. In this case, article 42 of the Arbitration Law provides that it will be sufficient for the arbitral award to be signed by the majority of the arbitration tribunal, provided that the reason(s) for not signing the arbitral award by the dissenting arbitrator(s) are also recorded in writing.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not specify the types of relief or remedies that an arbitral tribunal may or may not grant. Under the principles of Sharia, an arbitral tribunal in KSA-seated arbitrations may not grant interest, punitive damages or consequential loss damages.

In addition, typically, arbitral tribunals in KSA-seated arbitrations are reluctant to award claims for loss of reputation, moral damages, loss of future profits, and certain forms of interim and injunctive relief.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Saudi Arabia

The Arbitration Law and the Executive Regulations do not contain any restrictions in relation to dissenting opinions. Article 42 of the Arbitration Law provides that it will be sufficient for the arbitral award to be signed by the majority of the arbitration tribunal, provided that the reason(s) for not signing the arbitral award by the dissenting arbitrator(s) are also recorded in writing. In practice, to the best of the authors’ knowledge, dissenting opinions are not common in KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Saudi Arabia

To be valid and enforceable an arbitral award in the KSA has to be rendered in accordance with the Arbitration Law and the Executive Regulations and cannot violate the principles of Sharia and the public policy of the KSA.

Under article 42(1) of the Arbitration Law, the arbitral award must be in writing, has to provide reasons for the arbitral tribunal’s decisions, and must be signed by the arbitrators. It will be sufficient for the arbitral award to be signed by the majority of the arbitration tribunal, provided that the reason(s) for not signing the arbitral award by the dissenting arbitrator(s) are also recorded in writing.

Pursuant to article 42(2) of the Arbitration Law, the arbitral award must contain the following elements: the date of the award and the place of its issuance; the names and addresses of the parties; the names, addresses, nationalities, and positions of the arbitrators; a summary of the arbitration agreement; a summary of the submissions, claims and the relief sought by the parties; summaries of expert reports, if any; reasoning and the decisions reached by the arbitral tribunal, including a decisions on the arbitral tribunal’s fees, the costs of the arbitration proceedings, and how such fees and costs are to be apportioned between the parties. To avoid uncertainty as to the compliance with the requirements for a valid and enforceable arbitral award, it is advisable to provide comprehensive summaries of the parties’ submissions, extensive reasoning of the arbitral tribunal’s decisions, and to reproduce the arbitration agreement in the award in full.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Saudi Arabia

Article 40 of the Arbitration Law provides that, subject to an alternative agreement by the parties, an arbitral tribunal has to render its final award within 12 months from the date of commencement of the arbitral proceedings. The 12-month period may be extended by the arbitral tribunal by no more than six months, unless the parties agree otherwise.

In case of a replacement of an arbitrator, the time limit to render the final award will be extended by 30 days.

Article 46 of the Arbitration Law, prescribes that within 30 days of the delivery of an award, a party may request an arbitral tribunal to ‘interpret any ambiguity’ in the award. The arbitral tribunal will have to provide its interpretation in writing within 30 days following the date of the party’s request.

A challenge relating to the validity of an award must be made by a party within 60 days of the delivery of the award in accordance with article 51(1) of the Arbitration Law.

While an application for enforcement of the award cannot be made within 60 days of the delivery of the award, a challenge will not automatically suspend the enforcement of the award.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Saudi Arabia

In accordance with article 42(2) of the Arbitration Law, an arbitral tribunal has the discretion to decide on the arbitral tribunal’s fees, the costs of the arbitration proceedings, and how such fees and costs are to be apportioned between the parties. Considering the current uncertainty as to whether or not the costs of the arbitration proceedings cover the parties’ fees for legal representation, it is advisable for the parties to agree in advance on the arbitral tribunal’s powers to award and apportion the parties’ legal fees, to be incurred during the arbitral proceedings.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Saudi Arabia

An award of interest on any sum will probably violate the principles of Sharia and, therefore, is likely to be unenforceable (in whole or in part) and/or challenged in accordance with article 50 of the Arbitration Law.

In applying the principles of Sharia and public policy of the KSA, the Court of Appeal may, if it is able to isolate the part of the award related to interest, enforce the award in part or, if it is unable to delineate the interest component from the awarded damages, declare the whole award invalid and unenforceable.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Saudi Arabia

Pursuant to article 49 of the Arbitration Law, an arbitral award rendered in accordance with the Arbitration Law is final and cannot be subject to an appeal.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

42. Are there any other bases on which an award may be challenged, and if so what?

Saudi Arabia

An arbitral award issued under the Arbitration Law, may be challenged based on the following grounds, which are provided in article 50 of the Arbitration Law:

  • the arbitration agreement does not exist, is null and void, was revoked or expired;
  • at the time of entering into the arbitration agreement, one of the parties was under some incapacity;
  • owing to a lack of a proper notice of the appointment of an arbitrator or of the arbitral proceedings, or for any other reason beyond its control, one of the parties was unable to present its case;
  • the decisions in the arbitral award are not rendered in accordance with the laws to which the parties have subjected their dispute;
  • the composition of the arbitral tribunal or the appointment of the arbitrator(s) was not in accordance with the agreement of the parties.
  • the arbitral award deals with a dispute not contemplated by the arbitration agreement, provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, that part of the award that contains decision on matters not submitted to arbitration may be declared null and void;
  • the arbitral tribunal failed to observe certain mandatory requirements for an arbitral award, which affected its substance; or
  • the arbitral award is issued as a result of fabricated arbitration proceedings.

Under article 50 (2) of the Arbitration Law, an arbitral award may also be nullified by the Court of Appeal, on its own initiative, if the arbitral award is contrary to the principles of Sharia and the public policy of the KSA, or if it is in contravention to what was agreed upon by the parties, or if the subject of the dispute is not arbitrable.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Saudi Arabia

Article 51(1) of the Arbitration Law provides that a party cannot waive its right to challenge the arbitral award before the award is delivered to the parties.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Saudi Arabia

In practice, it is unlikely that an award that has been set aside by the courts of the seat of arbitration be recognised and granted enforcement in the KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Saudi Arabia

The KSA enacted a new enforcement law by Royal Decree No. M/53 of 30 August 2012 concerning the Execution Law, which came into force on 27 February 2013 (the Enforcement Law). The Enforcement Law was complemented by a set of executive regulations issued pursuant to the Minister of Justice Circular No. 13/C/4892 on 28 February 2013. The Enforcement Law aims to provide the enforcing party a more certain method and quicker mechanism of enforcing its arbitral award in the KSA. Subject to any hearing and under normal circumstances, the enforcement judge should be able to issue the execution order within one month of the application and, if necessary, order seizure of assets and freezing of bank accounts within another one to two months depending on the circumstances of the case.

According to publicly available statistics, between October 2014 and September 2018, the year-on-year growth in applications for enforcement of foreign arbitral awards at the KSA’s enforcement courts averaged 35 per cent and exceeded 600 applications.

The pro-arbitration provisions of the Enforcement Law, the unprecedented growth in the number of the foreign enforcement application, and the limited positive anecdotal evidence of successful enforcement of arbitral awards, and the opening of the SCCA, a modern arbitration centre in KSA, provide a reason for cautious optimism that the trend for increasingly favouring arbitration as an effective method of dispute resolution and efficient and effective enforcement of arbitral awards in the KSA will continue.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Saudi Arabia

Article 10(2) of the Arbitration Law, expressly prohibits KSA state entities from entering into arbitration agreements without the approval of the KSA Prime Minister, unless such authority exists pursuant to a specific legislation.

In practice, the KSA Royal Court will be the competent authority to decide on enforcement of arbitral awards rendered against KSA state entities.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Saudi Arabia

Pursuant to article 39(1) of the Arbitration Law, deliberations of the arbitral tribunal are confidential. Arbitral awards cannot be published in whole or in part, except with the consent of the parties in writing in accordance with article 43(2) of the Arbitration Law. Otherwise, the Arbitration Law does not specifically provide for overall confidentiality of the arbitral proceedings. Though it would not be unreasonable for the parties to presume arbitral proceedings in KSA to be confidential, it is advisable for the parties to agree on the confidentiality of the arbitral proceedings in the arbitration agreement and, in any case, before the commencement of the arbitration.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Saudi Arabia

Considering the current unclear legislative and regulatory framework regarding confidentiality of evidence and pleadings, and the absence of any dedicated provisions in the Arbitration Law, it is advisable for the parties to agree on the confidentiality of the arbitral proceedings, including the evidence produced and pleadings filed, in the arbitration agreement and, in any case, before the commencement of the arbitration.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Saudi Arabia

An arbitrator must be impartial and independent as regards the parties and the matter in dispute in accordance with article 16 of the Arbitration Law and shall remain so throughout the proceedings.

In accordance with article 14 of the Arbitration Law, an arbitrator must have the necessary legal capacity, be of good conduct and reputation, and hold a university degree in law or Sharia. In a three-member arbitral tribunal, it will suffice for the presiding arbitrator to be a holder of a university degree in law or Sharia.

The arbitrators and counsel conducting arbitral proceedings in the KSA have to comply with the relevant principles of Sharia. KSA counsel is also expected to comply with KSA Royal Decree No. M/38 of 1422 (14 October 2001) concerning the Code of Law Practice in KSA.

The SCCA has published a Code of Ethics for Arbitrators, which serves as a guidance for the conduct of arbitrators and the parties.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Saudi Arabia

While historically arbitration has not been a popular method of dispute resolution in the KSA, the recently enacted arbitration-related legislation, the overhaul of the imperative mechanism of recognition and enforcement of arbitral awards, and the opening of the SCCA, a modern arbitration centre, provides a reason for cautious optimism that the trend for increasingly favouring arbitration as an effective method of dispute resolution in the KSA will continue.

Nevertheless, counsel and arbitrators participating in international arbitration proceedings seated in the KSA should be cognisant of the fact that the prevailing method of dispute resolution in the KSA remains court litigations. Counsel should be prepared, upon request of an arbitral tribunal, to present a power of attorney to demonstrate its authority to represent its client in the arbitration. In addition, counsel should make enquiries regarding any mandatory registration to represent its client in arbitration in the KSA. The arbitral tribunal and counsel should also resolve any ambiguities relating to administration of oaths or affirmations of witnesses in the arbitral proceedings.

Counsel and arbitrators should also acquaint themselves with the principles of Sharia, KSA laws, regulations, traditions, observance of religious holidays, and the public policy of the KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Saudi Arabia

There are no provisions under the Arbitration Law, the Executive Regulations, or other legislation or established practice for third-party funding in the KSA.

Furthermore, while there is no express provision for third-party funding in the principles of Sharia, it is possible that the principles of Sharia do not prohibit it. Third-party funding does not necessarily violate the prohibition of Riba (excessive interest), Gharar (excessive speculation) and Maysir (gambling). It is generally not interest that is awarded to the funder in a successful case; rather it is a share of awarded damages in a pre-agreed ratio. Importantly, excessive speculation and gambling are also likely to be absent in light of the extensive due diligence and research that often goes into a potential case before funding is granted. However, Sharia law will likely prohibit investments in (or receiving funds from) businesses or ventures that are considered Haram (sinful) and funders will need to consider the principles of Sharia when funding disputes in the KSA.

Answer contributed by Thomas Snider, Sara Koleilat-Aranjo, Meteb AlGhashayan, Sergejs Dilevka and Meteb AlGhashayan 

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