Over the last decade, the Kingdom of Saudi Arabia (the “KSA”) has made significant strides to create a robust arbitration regime. This is due in part to new arbitration and enforcement laws, an increase in support of the arbitration process from the KSA’s judiciary and, significantly, to the work of a dynamic and innovative arbitration institution – the Saudi Center for Commercial Arbitration (the “SCCA”).
The SCCA was established pursuant to Ministerial Resolution No. 257 of 14/6/1435H and became operational in late 2016 when it opened its headquarters in Riyadh. Its mission is to provide “professional, transparent and efficient ADR services”. The SCCA also has offices in Jeddah as well as Dubai.
As part of its Vision 2030 Initiative, unveiled in 2016, the KSA articulated its desire to encourage global investment within the Kingdom and diversify is sources of revenue. The SCCA was established as part of KSA’s plan and one of the SCCA’s goals is to “create a safe environment that attracts both foreign and domestic investment to the [KSA]…. by eliminating obstacles and difficulties related to ADR between investing parties.” The SCCA administers arbitration and mediation proceedings in both Arabic and English and is dedicated to providing professional, transparent and efficient ADR services, inspired by Sharia law. An arbitration may take the form of a standard arbitration, an expedited arbitration, an emergency arbitration or an online arbitration.
In 2021 the SCCA updated its Arbitration Rules to incorporate its Online Dispute Resolution (“ODR”) service and its ODR platform. The SCCA’s ODR service arbitrates commercial disputes up to SAR 200,000 (currently approx. USD 53,322 or GBP 42,693). Use of SCCA’s ODR service costs SAR 9,000 (currently approx. USD 2,400 or GBP 1,921), which covers the SCCA’s filing, administration and arbitrator fees. The ODR platform supporting this service provides for a sole arbitrator, a Riyadh seat and Arabic language (subject to party agreement otherwise) and a final award within 30-days of the arbitrator’s appointment.
In addition to offering arbitration and mediation services, and providing model alternative dispute resolution clauses, the SCCA offers what it calls “A la Carte Services,” specifically (1) assisting with the selection and appointment of arbitrators or mediators in cases that are not administered by SCCA; and (2) through its Committee for Administrative Decisions, providing parties in cases that may or may not be administered by SCCA access to neutral decision making authority to determine certain issues that may arise in an arbitration proceeding.
In September of 2022, the SCCA joined the International Federation of Commercial Arbitration Institutions, which includes the world’s top 52 international arbitration centers. In November of 2022, the SCCA established a branch in the Dubai International Financial Centre (“DIFC”), which means that parties may choose to apply the SCCA’s arbitration rules in conjunction with a DIFC seat.
In March of this year, the SCCA published a draft of its new Arbitration Rules (the “Draft Rules”). The Draft Rules contain significant amendments to the SCCA current rules, enacted in 2018 (the “2018 Rules”), with a view of reflecting “the best international standards and practices … and enhance the efficiency, flexibility, and transparency of arbitration case management, thus helping make SCCA more attractive to business sectors and firms and facilitating parties’ access to justice.”
Some key points from the Draft Rules include: (1) the establishment of a new Court of the Saudi Center of Commercial Arbitration (the “SCCA Court”), which would be independent of the SCCA and have a number of responsibilities including appointment of arbitrators and scrutiny/approval of the form of arbitral awards; (2) appointing an Emergency Arbitrator to issue an interim award no later than 15-days from the date on which the file was transmitted to them, subject to extension if necessary (the 2018 Rules do not provide for an interim award period); (3) an attempt to clear up ambiguity in the 2018 Rules by granting an arbitrator the authority to order a party seeking to amend or supplement its claims to pay security, which follows the practice of the KSA courts in making similar orders in cases where a party requests precautionary measures to be taken prior to final determination of any claim; (4) allowing claims that arise in connection with more than one contract to be advanced in a single arbitration, even if the claims are made under more than one arbitration agreement; (5) providing that where the SCCA Court decides to consolidate two or more arbitrations, each party in those arbitrations shall be deemed to have waived its right to nominate an arbitrator. Appointment of the arbitrator(s) shall be completed by the SCCA Court who may revoke the confirmation or appointment of any arbitrators, appoint additional arbitrators or select one of the previously appointed arbitrators to serve in the consolidated arbitration; and (6) allowing for the early disposition of unmeritorious claims and defenses in an attempt to protect parties from guerrilla tactics disguised as defense tactics, typically utilized by parties with deeper pockets than their counterparts.
The SCCA strives to offer modern and user-friendly arbitration services that comply with the KSA’s established arbitration laws as well as Sharia law. Importantly, the institution is demonstrating a strong willingness to evolve and adapt to meet the demands of modern commercial dispute resolution in the Middle East and globally. The SCCA’s caseload is certain to accelerate given its expansion into Dubai and the increasing use of arbitration clauses in governmental and commercial contracts. It is likely that the SCCA should play an important and pivotal role in helping to develop the KSA into a leading destination for arbitration in the Middle East.
N. Gordon Knox is a U.S.-based attorney with extensive experience in the Middle East, including a Master’s in Political Science from The American University in Cairo. His focus was on private sector bureaucratic behavior in Egypt. He lived in the region for four years and is proficient in Arabic.