It is a form of alternative dispute resolution
(ADR), has emerged as a primary mechanism for resolving commercial disputes in the Kingdom of Saudi Arabia. The Kingdom has witnessed significant progress in its arbitration structure in recent years, bringing it in line with international standards and increasing its attractiveness as an investment and business center. In this article, we address the role of arbitration in Saudi Arabia and explore the evolution of its arbitration environment.
The importance of arbitration
Arbitration is a process that requires parties involved in a dispute to agree to submit their case to a neutral third party, known as an arbitrator or arbitration panel. This neutral judge, who is often an expert in the relevant field, reviews the evidence, hears arguments and issues a binding decision known as an arbitral award. Arbitration offers several advantages, making it an attractive option for resolving commercial disputes:
Efficiency: Arbitration procedures are typically faster than traditional litigation, allowing for faster resolution of disputes.
CONFIDENTIALITY: Arbitration proceedings are private, ensuring that sensitive business information remains confidential.
Jurisdiction: Parties can choose arbitrators who have expertise in the subject matter of the dispute, ensuring informed decisions are made.
Enforceability: Arbitral awards can be enforced both nationally and internationally under the New York Convention, providing global recognition.
Flexibility: It gives parties the flexibility to customize the arbitration proceedings according to their specific needs, simplifying the process.
The arbitration scene in the Kingdom of Saudi Arabia
Saudi Arabia's commitment to strengthening its arbitration framework is demonstrated by the establishment of the Saudi Center for Commercial Arbitration (SCCA) in 2014. The SCCA plays a vital role in the management of arbitration cases, offering modern facilities and a panel of experienced arbitrators. It has quickly become a central point for arbitration in the region.
The main developments and features of arbitration in the Kingdom of Saudi Arabia include:
Legislation: Saudi Arabia passed the Arbitration Law in 2012, drawing closely from the UN model of laws relating to arbitration in international commercial matters. This law regulates national and international arbitration and keeps pace with Saudi arbitration practices in accordance with international standards.
SCCA: As the leading arbitral institution in the Kingdom of Saudi Arabia, SCCA administers arbitration cases, appoints arbitrators, and provides hearing facilities
. It also offers conciliation services, enhancing ADR.
International Conventions: Saudi Arabia is a party to a set of international conventions related to arbitration, including the New York Convention, which facilitates the enforcement of arbitration awards.
Judicial Support: The judiciary in Saudi Arabia is generally encouraging of arbitration, as it respects the independence of arbitration agreements and enforces arbitration awards in accordance with the law.
Arbitration in practice
Arbitration in Saudi Arabia has been increasingly used to resolve various types of commercial disputes, including those relating to construction contracts, joint ventures and international trade. Its effectiveness is especially noted in conflicts that cross geographical borders.
Parties wishing to initiate arbitration in the Kingdom of Saudi Arabia usually follow the following steps:
Arbitration Agreement: The parties must have a valid arbitration agreement, whether a standalone contract or as part of a broader agreement.
Institution of Arbitration: Parties can choose to have their arbitration administered by the SCCA or resort to informal arbitration.
Selection of arbitrators: The parties select arbitrators, often selecting a panel of experts with relevant knowledge.
Arbitration Procedures: The arbitration process begins with hearings and a presentation of evidence similar to court proceedings.
Arbitration Award: The arbitrators issue a final and ultimately binding award known as the arbitration award.
Enforcement: The winning party can resort to the Saudi court to enforce the arbitration award if necessary.
The future of arbitration in the Kingdom of Saudi Arabia
Arbitration in the Kingdom of Saudi Arabia is ready for continuous growth and development. The Kingdom's commitment to strengthening the legal and commercial infrastructure, coupled with its strategic geographical location, makes it a preferred destination for arbitration in the Middle East region.
As the advantages of arbitration in resolving commercial disputes become increasingly recognized by businesses and investors, the arbitration environment in Saudi Arabia is expected to flourish. Alignment with international best practices, in addition to the supporting legal framework, ensures that...
Kim will remain a pillar of resolving trade disputes in the Kingdom over the years