SCCA highlights the efforts of the Saudi judiciary in transforming KSA into an ADR friendly jurisdiction

Published Date: 21/11/2022

At its 2nd Symposium in Dubai in partnership with 10 global law firms

• SCCA further expands its Saudi Case Law Study on arbitration-related matters in 2022, which now covers 720 judgements issued by the Courts of Appeals and 38 judgements issued by the Supreme Court
• The study fosters confidence in the stability and consistency of Saudi courts on the enforcement of arbitral awards
• Only 8% annulment rate regarding arbitral awards in Saudi
• "No judicial precedents have been found relating to the refusal to enforce a foreign arbitral award associated with the violation of public policy." In the first 9 months of 2022

In partnership with 10 leading international law firms and in the presence of high-level arbitration leaders, business executives, legal advisers, and lawyers, SCCA concluded its 2nd annual Symposium as part of the "Dubai Arbitration Week 2022". SCCA highlighted the development of arbitration in Saudi and the GCC region. It also underscored SCCA's role in facilitating business and creatively resolving commercial disputes.

The 2nd Symposium entitled “Making the Case for ADR in the GCC – Key Factors & Successes” was supported by its diamond sponsor Saudi Aramco, in partnership with 10 renowned international law firms, namely Al Tamimi & Co., Ashurst, Clifford Chance, Clyde & Co., Quinn Emanuel, DLA Piper (in collaboration with Alshahrani Almansour), Freshfields, Herbert Smith Freehills, Norton Rose Fulbright, and Squire Patton Boggs, alongside HKA as coffee break sponsor. 

The first session featured leading General Counsels discussing their experience and current strategy for ADR in the GCC and the role of corporate GC’s in activating ADR in their contracts.  The second and third sessions featured 6 international lawyers each from preeminent international law firms; with the second evaluating the ADR friendliness of states, relative competitiveness of ADR institutions and the appeal of legal seats for arbitration in the GCC; and the third discussing challenges for arbitration in the GCC and opportunities to improve the arbitration landscape.

During the Symposium, SCCA shared further findings related to an ongoing case law study SCCA started last year. It included a batch of 180 judgements from the Court of Appeals from 2021, bring up the total of reviewed arbitration-related judgments to 720.

The new findings confirmed last year’s trend that the Saudi judiciary is complying with international best practices, thereby strengthening Saudi as a safe seat of arbitration. In particular, strict and consistent application of the annulment grounds codified in Article 50(1) of the Saudi Arbitration Law and consistent dismissal of party attempts to have the arbitral award reviewed regarding the facts and subject matter (Article 50(4)). The findings of the overall study show that the percentage of successful annulments of arbitral award remains below 8%, a performance that is equal if not better when compared to the average rate of other leading jurisdictions. The Saudi courts also apply a strict and narrow interpretation of what violates of Sharia and public policy. Of the 131 annulment actions found in the study, only 3.8% succeeded based on grounds that were found to violate of Sharia and public policy, giving reassurance and stability that arbitral awards are not arbitrarily annulled in Saudi. 

This finding is reinforced by data shared by the Saudi Ministry of Justice with SCCA, which indicates that 522 domestic and foreign arbitral awards with a total amount of SAR 871 million (approximately US $232 million) were enforced. The 12 foreign awards (or 2%) accounted for nearly 15% of the total amount awarded and were rendered in Lebanon (2), Morocco (2), South Korea (2), Switzerland (2), UAE (2), and the United Kingdom (2). Notably, the Deputy Minister for Enforcement confirmed that “[n]o judicial precedents have been found relating to the refusal to enforce a foreign arbitral award associated with the violation of public policy." In the period from January to September 2022.

For the first time, the SCCA study also included arbitration-related judgments from the Supreme Court. The study showed that of the 38 judgements reviewed, 29 (or 76%) related to annulment/enforcement issues with only one appeal having been successful. This gives renewed confidence in the Saudi judiciary and the consistency of its judgments with the Supreme Court being the ultimate safeguard in the process.

Highlights of the SCCA study included a caselaw that cemented an earlier press release by SCCA in which it found that the Saudi legislation protects the parties’ autonomy to choose any representative, including foreign legal counsel, before arbitral tribunals with no conditions to be a lawyer or a Saudi national. In that case, the Court of Appeals refused to annul an arbitral award based, among other things, on the fact that the claimant was represented by a foreign lawyer. The Circuit clearly established that it did not consider this to be a valid ground to annul an arbitral award under Article 50. 

Commenting at the conclusion of the Symposium and the findings of the SCCA case law study, Dr. Walid bin Sulaiman Abanumay, Chairman of the SCCA Board of Directors, noted: "The financial and business environment depends on the support of the judiciary to enforce the arbitral awards and turn them into reality. Findings of the SCCA caselaw study revealed the qualitative performance of the Saudi courts in enhancing the Kingdom's position as a supportive and friendly jurisdiction for arbitration."

Dr. Abanumay added that "SCCA plays a leading role in enhancing the reputation of its judicial environment, by organizing international Symposia to inform the regional and international arbitration community of the progress achieved by Saudi in facilitating business and attracting investments, and to enhance SCCA’s international position in providing ADR as part of its ongoing work to be the preferred ADR choice in the region by 2030."