Scope of the Arbitration Award and its Enforcement Mechanisms under the Saudi Arbitration Law

Within the framework of the Saudi Arbitration Law, this research addresses the scope of the arbitration award and the mechanisms followed to enforce it. The research focuses on understanding the procedures required to enforce the arbitration award in Saudi Arabia, including its recognition and application. The legal and procedural mechanisms that contribute to facilitating this process and ensuring the integrity of the procedures in the Saudi Arbitration Law shall be explored.

The provisions of the Saudi Arbitration Law are based on two main foundations:

1. The Law applies to all matters related to arbitration, regardless of their nature or form.
2. Some issues are excluded from the scope of arbitration, such as those related to personal status and criminal incidents in which reconciliation is not permitted.

• Arbitration is based primarily on the will of the parties who have chosen it and granted it the authority to resolve their disputes. Accordingly, arbitration is held when the parties agree to it, and the common will is the primary determinant of the scope and conditions of arbitration, with the state intervening only within narrow limitations to maintain public order.
• Saudi laws emphasize the independence of arbitration, as the arbitration agreement is considered an independent clause to the contract; i.e. the invalidity of the contract does not affect the validity of the arbitration clause, and vice versa. This principle is supported by related legislation that imposes the independence of the arbitration clause, distinguishing the Saudi Arbitration Law over some other Arab laws.

History of the Saudi Arbitration Law

• The first manifestation of arbitration in the Kingdom of Saudi Arabia appeared in the old Saudi Law system, issued by Royal Decree No. 32, which devoted Articles 493 to 497 to set out arbitration provisions, which was initially limited to commercial transactions. Later, the Arbitration Law in the Kingdom of Saudi Arabia was issued by Royal Decree No. R/43, to replace the previous provisions related to arbitration.

Types of Arbitration

The Saudi Arbitration Law is an effective mechanism for resolving disputes quickly and effectively. Arbitration is divided into several types: including optional arbitration, compulsory arbitration, judicial arbitration, conciliation arbitration, institutional arbitration and free arbitration. These types differ in terms of the way in which arbitration is conducted, how the arbitration body is chosen, how the arbitral tribunal is chosen, and the procedures for resolving disputes.

Optional Arbitration and Compulsory Arbitration 

As for the types of arbitration, there is optional arbitration and compulsory arbitration. Arbitration is optional when the parties resort to it voluntarily, as an alternative means to the judiciary to resolve their disputes; while compulsory arbitration is when it required by law resorting to resort to arbitration in order to resolve disputes in specific cases. Compulsory arbitration is excluded from the scope of application of national legislation.

Judicial Arbitration and conciliation arbitration 

In the Judicial Arbitration the arbitrator issues his award based on the facts and evidences presented, without considering the opinions of the disputing parties; while in Conciliation Arbitration, the arbitrator makes efforts to bring the disputing parties' opinions together and seek a suitable solution for them before issuing the arbitration award.

Institutional Arbitration and Free Arbitration

Finally, Institutional Arbitration is based on the agreement of the two parties via a permanent arbitration institution, while Free Arbitration is executed outside the framework of such institutions, where the disputing parties choose the arbitral tribunal based on their direct agreement. After learning about the history of the Arbitration Law in the Kingdom of Saudi Arabia and the aspects of its application, we are pleased to present a comprehensive review of the scope of the arbitration award and the mechanisms for its implementation under the Saudi Arbitration Law.

Scope of the Arbitration Award and the extent to which is considered international

Article (2) of the Saudi Arbitration Law issued by Royal Decree No. R/39 dated 24/05/1433 AH stipulates that: 

• Without prejudice to the provisions of Islamic Shariah and international conventions to which the Kingdom is party, the provisions of this Law shall apply to any arbitration regardless of the nature of the legal relationship subject of the dispute, if this arbitration takes place in the Kingdom or is an international commercial arbitration takes place abroad and the parties thereof agree that the arbitration shall be subject to the provisions of this Law. 
• The provisions of this Law shall not apply to personal status disputes or to matters not subject to reconciliation.

When can Arbitration be International?

Arbitration is international if it is related to international trade, as in the following cases:

1. If the arbitration center is located in more than one country at the time of concluding the arbitration agreement, and if one of the disputing parties has several business headquarters, then one associated with the subject of dispute shall be the arbitration center. If the disputing parties do not have a specific business branch, the usual headquarters of the indicated party shall be the arbitration center.
2. If the business headquarters of the disputing parties is in the same country at the time of concluding the arbitration agreement, while the following places were outside that country:

• The Seat of Arbitration as stated in the arbitration agreement, or indicated how to designate it.
• The place of executing the essential aspect of the obligations arising from the business relationship between the two parties.
• The place most closely related to the subject of dispute.

3. If the disputing parties agree to resort to a permanent arbitration institution or an arbitration center located outside the Kingdom of Saudi Arabia.
4. If the subject of the dispute related to the arbitration agreement is associated with more than one country.

The Commitment of the Disputing Parties to the Provisions of the Saudi Law

First:

The disputing parties are entitled to choose the procedure to be followed in certain issues; this includes their right to authorize a third party to choose said procedure. A third party in this respect includes any individual, tribunal, organization, or arbitration center within the Kingdom or abroad.

Second:

If the disputing parties agree to subject the relationship between them to the provisions of any document; e.g. international convention, contract, or any other document, the provisions of such document, including those related to arbitration, shall apply, provided that they do not contradict the provisions of Islamic Shariah.

Third:

Unless otherwise agreed upon by the parties to arbitration regarding notifications, a written notice shall be delivered to the addressee personally, or to his designee, or to the mailing address specified in the contract subject of the dispute, in the arbitration agreement, or the document governing the relationship addressed by the arbitration. If the written notice cannot be delivered to the addressee, it shall be deemed to have been received if it is sent by registered mail to the addressee’s last-known place of business, habitual residence, or known mailing address. This also applies to notification via electronic means. These provisions shall not apply to judicial notifications relating to court proceedings with regard to nullification of the arbitration award.

Finally:

Suppose a disputing party proceeds with arbitration procedures knowing that a violation of a provision of the Saudi Law; which may be agreed to be violated or for fulfilling a term in the arbitration clause, and fails to object to such violation within the agreed upon period or within 30 days from his knowledge of the violation in the absence of an agreement. In that case, this shall be deemed a waiver of said party’s right to object.

Conclusion

 In conclusion of this article, we confirm the vitality of the Saudi Arbitration Law as an effective mechanism for settling disputes quickly and effectively, while securing adequate legal protection for the rights of the parties. The Saudi Arbitration Law demonstrates its flexibility in the diversity of types of arbitration and flexibility of application at the national and international levels, thus becoming a model to be emulated in resorting to arbitration as a means of resolving disputes. In addition, adherence to the provisions of Law and providing the opportunity for disputing parties to choose and negotiate enhances the credibility and acceptance of arbitration as a primary means of resolving disputes in the Kingdom of Saudi Arabia.

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