Expert Insight

The Evolution of Arbitration in Saudi Arabia . AREEJ A. BAHASHWAN

Arbitration is one of the most important contemporary legal means of settling disputes. In fact, it has seen rapid national and international growth and parties have increasingly chosen to resort to arbitration as an alternative dispute resolution (“ADR”) mechanism in recent years. The reason behind the increasing preference for arbitration by parties around the globe is that arbitration is a creature of consent, which provides neutrality, flexibility, confidentiality, and most importantly, assurance that the final arbitral award will be binding and enforceable just like court judgments. An additional advantage is that arbitral awards cannot be appealed and can only be challenged on very limited grounds. Hence, arbitration is an effective and favorable form of ADR especially in cases where parties come from different legal, commercial, and cultural backgrounds. Furthermore, policymakers also gain benefit from arbitration. Given the private nature of the arbitral procedures, it reduces the pressure on public judicial bodies, which encourages the legislators to enact and improve arbitration laws. Arbitration regulations have been adopted by most developed legal systems. However, The Kingdom of Saudi Arabia (“The Kingdom” or “Saudi Arabia”) has had a unique journey in developing its arbitration laws.

Although commercial arbitration has not been recognized and wildly used in Saudi Arabia many years ago, Saudi Arabia has kept pace with the rapid developments of the contemporary world, as such, the latter has significantly depended on arbitration in many commercial disputes. Initially, the concept of arbitration has been enshrined in several Saudi laws. The Law of Commercial Court of 1931 and the Saudi Labor Law of 1969 are prime examples. Nevertheless, due to the continuous developments in local and international trade, it became essential to legislating an arbitration law. Thus, the Kingdom issued its (“First Arbitration Law”) in 1983 to become an effective instrument in settling commercial disputes. Thereafter, in 2012, the (“New Arbitration Law” was issued in substitution with the First Arbitration Law in a more elaborative form, rectifying and filling the gaps. Besides, it came in line with the international laws and conventions, which made it applicable on a national and international level. Most importantly, the New Arbitration Law came in conformity with the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL”). The UNCITRAL is an instrument that assists states in reforming and modernizing their laws on the arbitral procedure, taking into account the particular features and needs of international commercial arbitration. Notwithstanding that, the New Arbitration Law came per the principles of Islamic Sharia, which is the foundation of the country as stipulated in the First Article of the Saudi Basic Law of Governance. Moreover, to further harmonize the arbitration regime, the (“New Enforcement Law” came into effect concerning the execution of the arbitral awards.


Upon the enactment of the New Arbitration Law followed by the New Enforcement Law, Saudi Arabia has witnessed a significant positive outcome in its arbitration regime and that is evident by the announcement of the Ministry of Justice (“MOJ”) in the Kingdom of Saudi Arabia. The MOJ reported that in 2017-2018 the enforcement courts had broken records in receiving 257 applications for enforcing arbitral awards rendered outside Saudi Arabia. As a prime step to further enhance and encourage settling disputes through arbitration, as well as to ensure the continued prosperity of local and foreign investment in the Kingdom, the Saudi Centre for Commercial Arbitration (“SCCA”) was established in 2014 and became operational in 2016. SCCA is a non-profit organization that adopts the best practice of international standards in conducting professional services for parties who resort to arbitration. One of the major positive implications of arbitration in Saudi Arabia is women becoming arbitrators, breaking through the glass ceiling of an emerging issue that has been going on for decades. In 2016, a new era was marked in the history of the Saudi women when the first Saudi female arbitrator was appointed in a commercial case, despite all the challenges and objections raised at the time. Women have been leading a successful record during the past years and well-proved their competency. For instance, the Dar Al-Hekma University team (“DAH Team”) from Jeddah, Saudi Arabia who has participated in the 26th Willem C. Vis International Commercial Arbitration Moot (“Vis Moot”). The Vis Moot is one of the world’s largest and prestigious international moot court competitions that is annually held in Vienna since 1994, attracting over 370 teams around the world. The purpose of the Vis Moot is to foster the studies on international commercial arbitration and encourage using arbitration as an ADR mechanism for business disputes and it consists of two phases. First, the written phase which consists of drafting memoranda for both claimant and respondent, and second, the oral phase that aims to examine the understanding and depth of research conducted by the students in oral hearings. In 2019, DAH Team, after years of attempts, was fortunate enough to become the first and only Saudi\GCC team to qualify for the elimination rounds– topping esteemed law schools like Harvard, Yale, and Oxford. Everyone was impressed by the fact that DAH Team was an all-female team from Saudi Arabia, the ultimate accomplishment was to set a record and show the world what a Saudi woman can do. Before having attained such achievement, DAH Team has participated in several regional competitions such as, first, the 9th Middle East Pre-Moot that is held in Bahrain, and won Best Claimant Memorandum with an honorable mention for Respondent Memorandum, and before 2019 has been winning the competition for 4 consecutive years from 2015 till 2018. Second, the 3rd AIAC-ICC Pre-Moot held in Kuala Lumpur, also won the Best Claimant Memorandum. Lastly, the DAH Team qualified to the top 4 teams among 12 teams in the Permanent Court of Arbitration (“PCA”) held in The Hague, providing that such teams were strictly nominated and selected among many applications. Following such outstanding achievements, his Royal Highness, Prince Khalid Al-Faisal, governor of the Makkah province, invited the DAH Team In recognition of their efforts demonstrating how much Saudi Arabia vests in its young generation.


Not only did the DAH Team bring an outstanding achievement to the country, but it also had inspired SCCA to initiate a Saudi version of the Vis Moot. This year, the first Saudi Commercial Arbitration Moot (“Saudi Moot”) was initiated and organized by SCCA with over 200 male and female students from 24 different universities around the Kingdom. Despite all the difficulties faced due to the Covid-19 crises, SCCA successfully managed to challenge all the obstacles and carry on the competition virtually in return for the students’ hard work. The level of professionalism and organization by SCCA was remarkable, even when there was an emergency absence of arbitrators, they managed to solve the matter in a very competent manner. It was incredible witnessing Saudi youth thriving through the competition with their unconditional determination and anticipation. The author has contributed to the Saudi Moot through mentoring and arbitrating the students before and during the course of the competition. Certainly, the level of improvement shown day-by-day was impressive, not to mention the comprehensive level that was advanced, which not only met the expectations but exceeded them, especially that most of the students did not study the subject of arbitration and all was new to them. One of the most motivating stories was a student, who represented 4 roles in the competition on behalf of his colleagues as they were not able to proceed after the postponement caused by the crises. Indeed, the students’ power of will was the trait most salient, and the outcome of the competition has proven that Saudi Arabia has well invested in its youth. As Prince Mohammed Bin Salman Al-Saud said, “Our real wealth lies in the ambition of our people and the potential of our younger generations.


In conclusion, The Kingdom of Saudi Arabia has become proactive in keeping pace with the developments and recently has made a significant shift in the international arbitration, which led to positive implications in diversifying the economy. The Author takes pride in where the Kingdom is heading in its Arbitration regime and the opportunities that were inspired by its concept. Indeed, competitions like the Saudi Commercial Arbitration Moot create future leaders who are able to spearhead not only locally, but also internationally. It is an opportunity to expand one's horizons and improve the needed skills to excel in the practical world. More importantly, it helps in acquiring professional and interpersonal skills and refines one's character. Thus, if you are a student, you are urged to challenge yourself by taking on the opportunity and participate. No one can say that it will be easy but be rest assured it will be worth the hard efforts. Many thanks to all those who have been supportive and involved in any of the aforementioned competitions, you have significantly contributed to the great success, which has always been honorable and outstanding. Congratulations, to all the students who participated in the Saudi Moot, you have demonstrated a strong potential that is a promising solid ground for the future of Saudi Arabia, which indeed, is undoubtedly promising. The Author predicts that, with the continuous developments currently happening, Saudi Arabia will be a model country.  This is the Kingdom of Saudi Arabia today, and the best is surely yet to come.



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