Saudi Arabia

Saudi Arabia acceded to the New York Convention on April 19, 1994, stating that “on the basis of reciprocity, the Kingdom declares that it shall restrict the application of the Convention to the recognition and enforcement of arbitral awards made in the territory of a Contracting State.”
Most recently, in 2012 the Kingdom of Saudi Arabia adopted a new Arbitration Law generally based on the UNCITRAL Model Law. The law recognizes international arbitration proceedings in line with international customary practice, provides rules to govern arbitration proceedings, and deals with the enforcement of foreign arbitral awards. It demonstrates the region’s predominant involvement and commitment to international arbitration.
According to Article 2 of the Arbitration Law in Saudi Arabia, issued by Royal Decree No M/34, dated 24/5/1433 AH (corresponding to 16/4/2012 AD), “the provisions of this law are not valid for the disputes of the personal status or the matters that cannot be reconciled.
Article 2 of the Arbitration Law prescribes that disputes pertaining to personal status or disputes that cannot go to conciliation are non-arbitrable. Such disputes include criminal law, administrative law, and public policy matters.
According to Article 10.2 of the Arbitration Law, “it is not permissible for governmental authorities to agree on arbitration only after the approval of the Prime Minister, unless there is a text of the special laws that allows it.”
Article 20 recognises Kompetenz-kompetenz principle and confirms that “the arbitral tribunal shall judge the defenses of its non-competence, including the defenses based on the absence of an arbitration agreement, or its fall, or its annulment, or its lack of coverage of the subject of the dispute.”
The arbitral agreement is separate from the contract and according to Article 21 of the Arbitration Law, “the arbitration condition contained in a contract is considered a separate agreement from the other conditions of the contract. The invalidity of the contract - which includes the arbitration condition - or its revocation or termination shall not result in the invalidity of the arbitration condition which is included in the contract if this condition is true in itself.”
Provisions of the Sharia law must be observed by the arbitral tribunals, and Article 25 clarifies that “the parties of the arbitration may agree on the actions adopted by the arbitral tribunal, including their right to subject these actions to the valid rules in any organization, or authority, or arbitration center in the Kingdom or abroad, provided they do not violate the provisions of the Islamic Sharia.”
According to Article 29.1 the Arabic language is the language of the arbitral proceedings.
Pursuant to Article 39.3 “awards of penal matters may be issued by the arbitrator, who heads the tribunal, if the parties of the arbitration made remarks in writing, or being authorized by all the members of the arbitral tribunal, unless the parties of the arbitration agree otherwise.”
The confirmation of the award required by the competent court, and Article 51.2 confirms that “if the competent court delivers an award that supports the arbitration award, it shall order it to be executed, and this award is not subject to appealing in any way of appeal. But if it delivered an award with the invalidity of the arbitration award, this award may be appealed against within thirty days from the day following the notification.”
The establishment of Saudi Center for Commercial Arbitration increases the familiarity of the Saudi courts with the proceedings. Pursuant to Article 38.1 (a) of the Arbitration Law, the arbitral tribunal applies the substantive law chosen by the parties, subject to compliance with the principles of Sharia and the public policy of the Saudi Arabia.
In accordance with Article 22 of the Arbitration Law, prior to establishment of an arbitral tribunal, the competent Court of Appeal may order interim or conservatory measures, if requested by a party before the constitution of the arbitral tribunal or if requested by the arbitral tribunal during the course of the arbitration. The arbitral tribunal’s requests for support of the Court of Appeal may include an order for attendance of a witness or an expert and an order to produce a document or its copy.
In accordance with Article 23 of the Arbitration Law, the parties may agree to authorise an arbitral tribunal to have the power to order interim or conservatory measures as it sees appropriate.
In addition, Article 29 of the KSA Royal Decree No. M/1 dated 22/01/1435 AH (26 November 2013) concerning the Law of Procedure Before Sharia Courts provides for jurisdiction of KSA courts over the precautionary and provisional measures enforced in the KSA, even if such KSA courts have no jurisdiction over the case.
The Arbitration Law and the Executive Regulations do not specify the types of relief or remedies that an arbitral tribunal may or may not grant. An award of interest on any sum will probably violate the principles of Sharia and, therefore, is likely to be unenforceable (in whole or in part) and/or challenged in accordance with Article 50 of the Arbitration Law.
In applying the principles of Sharia and public policy of the KSA, the Court of Appeal may, if it is able to isolate the part of the award related to interest, enforce the award in part or, if it is unable to delineate the interest component from the awarded damages, declare the whole award invalid and unenforceable.
Article 50.2 of the Arbitration Law states that an arbitral award may be annulled by the Court of Appeal on its own initiative, if the arbitral award is contrary to the principles of Sharia and the public policy of the Kingdom of Saudi Arabia.