The Kingdom of Saudi Arabia (the “Kingdom”) has taken great steps to modernise the country’s arbitration law. A year has passed since the enactment of the partly UNCITRAL-inspired Royal Decree Number M/34 dated 24 May 1433H, corresponding to 16 April 2012G (the “Arbitration Law”). The Arbitration Law reflects the Kingdom’s recognition of the importance of investor protection and represents a positive step towards bringing the Kingdom’s arbitration regime in line with international standards.
Significant amendments to the old arbitration regime have been made. In particular:
a) The freedom of the parties to choose a foreign law to govern their arbitration agreement;
b) The allowance of arbitrations to be conducted in a language other than Arabic where one party is not a native speaker;
c) A specialised supervising court circuit shall have exclusive jurisdiction to review an award; and
d) Limiting the Court’s power to review arbitral awards only to ensure:
i. compliance with Sharia law, public policy and the arbitration agreement; and
ii. that it does not contradict any other award or judgment properly served on the opposing
party.
The Arbitration Law has been supplemented by the less publicised Royal Decree Number M/53 dated 13 August 1433H, corresponding to 14 July 2012G (the “Execution Law”). The Execution Law represents a significant step in Kingdom’s commitment to provide a more predictable legal regime. It creates a specialised circuit for the review and enforcement of local and international judgments and awards and is hoped to bring needed expertise of, and adherence to, related international principles to the Kingdom’s judiciary.
As the new Arbitration Law and Execution Law are still largely untested, their effect will need to be observed and assessed over time but both should be welcomed as a positive step in creating a more certain legal landscape and help to encourage additional foreign investment in the Kingdom.