SAUDI ARABIA Law and Practice Contributed by: Andreas Haberbeck, Derayah LLPC
12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country Islamic law prescribes that settlement is pref- erable 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 Commer- cial 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 con- tracts 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 by the court. 12.3 ADR Institutions ADR in family and labour disputes, and before the Saudi Centre for Commercial Arbitration, is well established.
13. Arbitration 13.1 Laws Regarding the Conduct of Arbitration Saudi Arabian Courts and Changes in Law The law governing arbitrations in Saudi Arabia underwent radical change with the enactment of the new Arbitration Regulation, Royal Decree No M/34 of 25 Jumada Awwal 1433 Hejra, cor- responding to 16 April 2012. Under the old leg- islation, arbitrations had to be conducted under close supervision of the competent court or judi- cial tribunal. In particular, once an award was issued, either party had an automatic right to raise objections on substantive and procedural grounds to the competent court. Such objec- tions were common, with the courts often hear- ing all or part of the case anew and substitut- ing their own ruling for that of the arbitrators, so that most commercial arbitrations in Saudi Arabia just 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’ con- trol. Furthermore, it is now possible to conduct arbitrations in Saudi Arabia in a language other than Arabic and to appoint non-Muslim arbitra- tors. In commercial disputes the parties are free to agree to the procedures of an international arbitration body, such as the Chartered Institute of Arbitrators or the ICC, or to the procedural rules of another country, or to determine their own procedural rules. Failing such an express choice, the procedural rules applicable under Saudi Arabian law govern the arbitration. New procedures Under the new Arbitration Regulation, 2012, no involvement of the courts is necessary in prin- ciple until the award is deposited with the com-
1225 CHAMBERS.COM
Powered by FlippingBook