The Kingdom of Saudi Arabia is poised to transform its arbitration landscape with the recently draft Arbitration Law (“Draft Law”), published by the National Competitiveness Center for public consultations.
The Draft Law presents significant opportunity for the Kingdom to take a huge step forward towards modernizing the dispute-resolution framework and aligning more closely with international standards, such as the UNCITRAL Model Law on International Commercial Arbitration.
While the Draft Law represents a clear departure from the old law, with the changes it proposes, we have highlighted some of the key enhancements below:
- Governing Law of the Arbitration Agreement
The Draft Law introduces an express rule that the law governing an arbitration agreement will be either the law chosen by the parties or, in the absence of such choice, the law of the seat of arbitration. This change brings greater clarity and predictability for parties and reflects best practice drafting in jurisdictions such as England and Wales. - Arbitrator Eligibility and Immunity
The Draft Law introduces an express rule that the law governing an arbitration agreement will be either the law chosen by the parties or, in the absence of such choice, the law of the seat of arbitration. This change brings greater clarity and predictability for parties and reflects best practice drafting in jurisdictions such as England and Wales. - Joinder and Consolidation Mechanisms
The Draft Law introduces clear provisions for joinder and consolidation in multi-party or multi-contract disputes: an intervening party may be joined if it is a party to the arbitration agreement, and the parties may agree to the consolidation of proceedings. These features enhance procedural flexibility, particularly for complex arbitrations (for example in construction or infrastructure sectors). - Interim Measures: Enforcement and Recognition
A comprehensive chapter on interim relief is included in the Draft Law. The tribunal is empowered to order interim measures under a regime modelled on the UNCITRAL standard, and local courts may enforce such interim orders within a statutory period of 15 days. This enhances the speed and enforceability of urgent relief in arbitration proceedings. - Emergency, Partial and Interim Awards, and Technological Modernization
The Draft Law expressly recognizes emergency awards, partial awards and interim awards as binding decisions of the arbitral tribunal. It also allows for electronic signing of awards (including by arbitrators sitting outside the Kingdom), treats awards as rendered at the seat of arbitration, permits virtual hearings and electronic communications (email/mobile notifications), and allows service by electronic means. These provisions reflect a modern, technology-friendly arbitration regime. - Annulment and Enforcement: Res Judicata Effect
The Draft Law refines the annulment (set-aside) and enforcement regime by introducing a 60-day period during which the tribunal may remedy formal defects in an award (without altering its substance), prior to set-aside proceedings. On enforcement, the Draft Law allows appeal of enforcement orders up to the Supreme Court and creates a res judicata effect for awards irrespective of the country of issuance. These changes aim to reduce procedural risk, enhance finality and strengthen predictability for parties seeking enforcement in or from Saudi Arabia.
In a nutshell,
The Draft Law – if enacted post consultation – will play a major role in reducing risks, increasing efficiency, and strengthening the Kingdom’s credentials as an arbitration-friendly jurisdiction. Such reforms underscore the Kingdom’s ambition to position itself as a regional hub for international dispute resolution.
Our team at Habib Al Mulla and Partners will continue to monitor developments and provide updates on the final text, implementation timing, and associated procedural guidance.
Seek Legal Guidance
For further information concerning arbitration and general commercial disputes, please reach out to Rabih Tabbara, Partner, Arbitration, on: rabih.tabbara@habibalmulla.com