Saudi Arabia's Legal Framework for Resolving Commercial Disputes

The resolution of commercial judicial disputes and alternative dispute resolution (ADR) mechanisms in the Kingdom of Saudi Arabia (KSA) is governed by a comprehensive and evolving legal framework. This framework is designed to provide a robust and transparent system for handling various types of commercial disputes, ensuring fairness and efficiency in both judicial and non-judicial settings. The legal landscape in Saudi Arabia encompasses a range of laws and regulations addressing different aspects of dispute resolution, from litigation in specialized commercial courts to arbitration, mediation, and conciliation.

These laws reflect Saudi Arabia's broader efforts to modernize its legal system, align with international standards, and create an attractive environment for both domestic and foreign investors. By establishing clear rules and procedures for dispute resolution, the Kingdom aims to facilitate the resolution of disputes in a manner that is both effective and consistent with the principles of Islamic law (Sharia). This legal framework includes several key pieces of legislation that collectively govern the resolution of disputes, offering multiple pathways for resolving conflicts in commercial contexts.

1. Commercial Courts Law (2020)

• Royal Decree No. M/93 dated 15/08/1441 H. (8 April 2020)
• Governs the establishment and functioning of specialized commercial courts for resolving commercial disputes.
• Covers jurisdiction, procedures, and appeals related to commercial cases.

2. Arbitration Law (2012)

• Royal Decree No. M/34 dated 24/5/1433 H. (16 April 2012)
• Based on the UNCITRAL Model Law, it provides a framework for both domestic and international arbitration.
• Outlines procedures for arbitration agreements, the appointment of arbitrators, and the enforcement of arbitral awards.

3. Mediation Law (2020)

• Royal Decree No. M/96 dated 16 Sha’ban 1441H (09 April 2020)
• Establishes a legal framework for mediation as a form of ADR.
• Sets standards for mediator qualifications, confidentiality, and the enforceability of mediation agreements.

4. Saudi Arabian Civil Transactions Law (2023)

• Royal Decree No. D/191 dated 29/11/1444 H. (18 June 2023)
• Effective from 16 December 2023.
• Provides comprehensive rules on contractual obligations, performance, breach, and remedies.
• Supports the use of arbitration and mediation for resolving disputes arising from civil transactions.

5. Judicial Cost Law (2021)

• Royal Decree No. M/16 dated 30/1/1443 H. (7 September 2021)
• Imposes government fees for initiating litigation cases, with exceptions for claims by ministries, employees related to employment contracts, and claims against imprisoned or detained individuals.

6. Anti-Concealment Law (2020)

• Royal Decree No. M/4 dated 5/2/1441 H. (20 August 2020)
• Aims to prevent foreigners from illegally fronting Saudi-owned enterprises.
• Ensures transparency and legality in business ownership and operations.

7. Law of Civil Procedures (2013)

• Royal Decree No. M/1 dated 22/1/1435 H. (25 November 2013)
• Outlines general procedures for civil litigation, including commercial disputes.
• Defines the jurisdiction of courts, filing procedures, evidence rules, and appeals.

8. Bankruptcy Law (2018)

• Royal Decree No. M/50 dated 28/5/1439 H. (14 February 2018)
• Provides a legal framework for the reorganization and liquidation of financially distressed businesses.
• Governs bankruptcy proceedings, creditor rights, and judicial oversight in commercial insolvency cases.

9. Enforcement Law (2012)

• Royal Decree No. M/53 dated 13/8/1433 H. (3 July 2012)
• Establishes enforcement courts and outlines procedures for enforcing judicial and non-judicial decisions.
• Covers enforcement of foreign judgments, arbitral awards, and mediation settlements.

10. Saudi Center for Commercial Arbitration (SCCA) Rules

• Provides a detailed framework for arbitration and mediation under the auspices of the SCCA.
• Includes rules on the appointment of arbitrators and mediators, conduct of proceedings, and issuance of awards.

11. International Conventions

• New York Convention (1958): Saudi Arabia acceded to this convention in 1994, facilitating the recognition and enforcement of foreign arbitral awards.
• Riyadh Arab Agreement for Judicial Cooperation (1983): Promotes judicial cooperation and mutual enforcement of judgments and arbitral awards among Arab countries.
• United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation) (2018): Saudi Arabia signed the convention in 2020.
• UNCITRAL Model Law on International Commercial Arbitration: While Saudi Arabia is not a signatory, the principles of this model law have significantly influenced the Saudi Arbitration Law (2012).
• UN Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague Judgments Convention) (2019): Saudi Arabia has not yet signed this convention but is observing its development.

Conclusion

Saudi Arabia's legal framework for resolving commercial disputes and ADR is comprehensive and aligned with international standards. The combination of specialized laws for commercial courts, arbitration, mediation, and enforcement ensures that businesses operating in Saudi Arabia have access to efficient and fair dispute resolution mechanisms. These laws are continuously updated to support the Kingdom’s vision of creating a favorable business environment.