Lawyer Monthly - August 2022

In short, what are the main regulations and legislation that determine how arbitration is conducted in the Kingdom? Since the issuance of the new arbitration law in the Kingdom in 2012, the government’s efforts have accelerated with regard to moving towards alternatives to settling various disputes other than the judiciary, including arbitration. Among those laws and procedures are the following: a. The new arbitration law issued by Royal Decree No. (M / 34) in 2012. b. The executive regulations of the arbitration law issued by Council of Ministers Resolution No. 541 of 2017. c. The implementation law issued by Royal Decree No. (M / 53) in 2012, which is one of the most important judicial laws recently issued in the Kingdom. Although it is primarily concerned with the implementation of judicial rulings, it was exposed to the arbitral process in one of its most important stages, which is the stage of implementation of the ruling, as Article 9 of the law contains the executive bonds necessitating the compulsory execution, including the arbitration provisions, whether national ones appended to the executive form or foreign ones. d. The Executive Regulations of the Execution law issued pursuant to Minister of Justice Resolution No. (256) of 2017. e. The Saudi Center for Commercial Arbitration, which is a non-profit organisation established by Council of Ministers Resolution No. 257, dated April 14, 2014, headquartered in the city of Riyadh. It supervises the procedures for settling commercial disputes through arbitration and mediation that the parties agree to settle under the management of the Center. f. Qualitative steps taken by the Kingdom in 2019 in order to lay solid foundations for the arbitration industry, which included a lofty order directing government agencies and state-owned companies, when they wish to settle their disputes with a foreign investor through arbitration, by working to ensure that arbitration takes place within the Kingdom in the Saudi Center for Commercial Arbitration or in one of the authorised arbitration centers. g. The issuance of the “commercial franchise” and “government competitions and procurement” regulations, which stipulate the possibility of resorting to alternatives to settling disputes, such as arbitration and mediation before government agencies and businesses based on commercial concessions. h. The Minister of Finance’s approval of 14 government contract models that included activating the option of resorting to arbitration to settle disputes, as the model arbitration clause prepared by the Saudi Center for Commercial Arbitration was included in these contracts. i. Adoption of the “commercial court” and “judicial costs” systems, which enhanced the role of amicable alternatives for settling commercial disputes, such as mediation and conciliation. The law of “judicial costs” supports resorting to alternatives to dispute settlement (such as arbitration, mediation and conciliation) by reducing the attractiveness of the litigation option compared to the arbitration option. This is because the plaintiff has to pay fees for litigation, which motivates the parties to the dispute to settle their disputes by methods of alternative dispute resolution other than the judiciary. j. The Ministry of Justice’s establishment of a reconciliation centre in the ministry, which is directly linked to the deputy minister. The ministry issued a decision according to which the heads of the courts were granted the authority to direct cases to the reconciliation offices before referring them to the judicial departments. The Ministry has granted the reconciliation minutes the status of executive bonds and launched a conciliation platform to provide the reconciliation service between the parties to the dispute electronically at all stages, starting from filing the case until reaching a result without the need to attend the court. The total cases referred to the platform amounted to 375,000 case, and the number of reconciliation documents reached 58,000. k. The Kingdom’s advancement in the Judicial Independence Index to 16th place according to the Global Competitiveness Report for the year 2019, and its advancement by eight international centres after it was in 24th place. According to the same report, the Kingdom also advanced to 17th place in the framework efficiency index. The legal settlement of disputes is ahead of this by four international centres, where it was in the 21st position. l. The increased pace of implementation of arbitration rulings as a result of this acceleration in the enactment of laws and procedures. In 2021, the execution courts in the Kingdom began implementing 204 national and foreign arbitration rulings issued in the Kingdom and 12 other countries, with a total value of 2.15 billion SR, while the average execution period has reached 13 days. Since the issuance of the arbitration and enforcement systems in 2012, the execution courts have begun to implement 35,000 requests to implement an arbitral award with a total amount of 23.1 billion SR for applications made between 2013 and 2018. What risks do organisations bear when they agree to arbitration? There are several risks surrounding the process that must be taken into account when agreeing to arbitration, including: a. The risk of not paying attention to the drafting of the arbitration agreement, whether it was an arbitration clause in a contract concluded before the dispute occurred or an arbitration agreement concluded after the dispute occurred. b. The risk of choosing an arbitral tribunal that is not specialised in the subject matter of the dispute. c. The risk of not paying attention to the law applicable to the subject of the dispute and not differentiating between it and the law applicable to arbitration procedures. d. The risk of choosing arbitration centres whose costs may outweigh the disputed amounts. WWW.LAWYER-MONTHLY.COM | AUG 2022 MY LEGAL LIFE - ABDULAZIZ ALDOMAIJI 20

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