SAUDI ARABIA Law and Practice Contributed by: Andreas Haberbeck, Derayah LLPC
11. Costs 11.1 Responsibility for Paying the Costs of Litigation Until 2022, there were no charges for using the courts. This was changed with the Court Fees Regulation, Royal Decree No M/16 of 30 Muharram 1443 Hejra, corresponding to 7 September 2021, which entered into force on 16 March 2022. Court fees are calculated on a sliding scale, as follows. • 2% for claims above USD266,666, with an upper limit for the fees of USD266,666. Accordingly, once the claim value reaches USD13,333,333, the court fees remain at USD266,666, regardless of the claim amount. It is within the court’s discretion to award legal costs to a successful litigant. In the past, this discretion was rarely exercised and, when it was, the sums were modest and well below the cost of engaging a commercial law firm. More recently, the Commercial Courts have been more willing to award costs to suc- cessful claimants. 11.2 Factors Considered When Awarding Costs Given that the awarding of costs is discretionary, there are no clear parameters that dictate how awards of costs are calculated. 11.3 Interest Awarded on Costs Saudi Arabian courts do not award interest. • 5% for claims up to USD26,667. • 4% for claims up to USD133,333. • 3% for claims up to USD266,667. 12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country Islamic law prescribes that settlement is preferable to litigation and the courts are under a duty to exhort the parties to seek mediation or conciliation, if possible. The Saudi Centre for Commercial Arbitration offers alternative dispute resolution (ADR) facilities.
12.2 ADR Within the Legal System Under the Implementing Rules of the Commercial Courts Regulation, 2020, conciliation and mediation are mandatory in: • disputes among partners in a mudaraba company; • disputes between merchants or claims against merchants under commercial contracts with a claim value below SAR1 million (USD266,000); • commercial disputes between spouses or close relatives; and • where the contract provides that disputes must be mediated. In family disputes and labour disputes, the court will first refer the parties to official mediation before the case is heard. 12.3 ADR Institutions ADR in family and labour disputes, and before the Saudi Centre for Commercial Arbitration, is well estab- lished. 13. Arbitration 13.1 Laws Regarding the Conduct of Arbitration Saudi Arabian Courts and Changes in Law The law governing arbitrations in Saudi Arabia under- went radical change with the enactment of the new Arbitration Regulation, Royal Decree No M/34 of 25 Jumada Awwal 1433 Hejra, corresponding to 16 April 2012. Under the old legislation, arbitrations had to be conducted under the close supervision of the com- petent court or judicial tribunal. In particular, once an award was issued, either party had an automatic right to raise objections on substantive and procedur- al grounds to the competent court. Such objections were common, with the courts often hearing all or part of the case anew and substituting their own ruling for that of the arbitrators, so that most commercial arbi- trations in Saudi Arabia merely added a further layer to the dispute-resolution process. The appointment of non-Muslim arbitrators The new legislation is based on the UNCITRAL model and removes much of the courts’ control. Further-
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