The First Saudi Arbitration Clause

A period of 90 years separates the first arbitration clause from the establishment of the first institutional arbitration center in Saudi Arabia.

The first line in this story bears the signature of Saudi Arabia’s founder, King Abdulaziz Bin Abdulrahman Al Saud, when an arbitration clause was included in an agreement for the first time in Saudi history. The clause was part of the 1932 concession agreement with Frank Holmes to drill for oil in Al-Ahsa. Since then, the Saudi journey in the ADR industry has unfolded in 25 steps, each a new milestone and a further development in the industry. 

The First Governing Text

Provisions on commercial arbitration were scattered among a number of Saudi laws. The first text governing the practice of commercial arbitration was contained in Article 493 of the 1931 Commercial Courts Law, which allowed for the judging of disputes by a neutral party pursuant to a formal, notarized legal instrument.

Since then, the regulation of arbitration in Saudi Arabia has followed the development of commerce and the economy. Legislation governing the industry proliferated, including:

• Labor and Workmen Law (1947):  Provided for the right to resort to arbitration to resolve labor disputes.
• Companies Law (1965): Provided for a company director’s right to resort to arbitration.  
  

The Arbitration Law

A separate Arbitration Law was enacted in 1985, making Saudi Arabia one of the first Arab countries to enact a standalone arbitration law. Consisting of 48 articles, the Arbitration Law replaced the arbitration provisions in the Commercial Courts Law and other Saudi laws.

The Year Saudi Arbitration Came Into Its Own

A new Saudi Arbitration Law was enacted in 2012, based on the UNCITRAL Model Law. The law is distinguished from its predecessor in that it established a legislative foundation for arbitration within judicial institutions and clear principles for institutional arbitration practices. 

The Enforcement Law, enacted the same year, established that an arbitrator’s award, whether accompanied by an enforcement order in accordance with the Arbitration Law or rendered in a foreign country, is considered an enforceable writ subject to the authority of enforcement judges. 

International Conventions

In recent decades, Saudi Arabia has actively engaged in efforts to promote the regional and international development of the ADR industry. The country has signed several conventions, notably:

• Convention on the Settlement of Investment Disputes between States and Nationals of Other States, aka the Washington Convention (1980): Provides for the establishment of an international center for the settlement of investment disputes through arbitration.
• Riyadh Arab Convention for Judicial Cooperation (1983): Provides that arbitrators’ awards must be recognized and enforced by any contracting state, and provides for relevant procedures. 
• Convention on the Recognition and Enforcement of Foreign Arbitral Awards, aka the New York Convention (1993): Provides for the recognition and enforcement of foreign arbitral awards by the signatory states. 
• Convention on International Settlement Agreements Resulting from Mediation, aka the Singapore Convention (2019): Provides for the enforcement of international settlement agreements resulting from mediation.