The Saudi Arabian courts system is currently going through major reforms under a new Judiciary Regulation and a new Board of Grievances Regulation, which were both enacted under Royal Decree No. M/78 of 19th Ramadan 1428 Hejra corresponding to 1st October 2007 Gregorian. However, it has taken time for these reforms to be implemented, and there is not at present a clear date when the Board of Grievances will lose its commercial jurisdiction.
The Saudi Arabian courts system is divided into the Shari'a (Islamic Law) Courts on the one hand, and specialized statutory tribunals on the other hand. The Shari'a Courts are courts of general jurisdiction, and they are mainly concerned with matters relating to land, family disputes, personal injury claims, and criminal cases.
Of the statutory tribunals, the most important by far is the Board of Grievances. Its jurisdiction includes disputes involving the Saudi Arabian government and government agencies (judicial review of administrative action and government contract disputes), most types of commercial cases, the enforcement of foreign judgments and arbitral awards. The President of the Board of Grievances holds the rank of a government minister. It is a superior court in all but name. Under the judicial reforms, the commercial jurisdiction of the Board of Grievances will be transferred to commercial courts within the Shari'a Courts structure.
Other types of disputes falling under the jurisdiction of specialized committees are the following:
- Disputes between banks and their customers are adjudicated by the Banking Disputes Commission of the Saudi Arabian Monetary Agency.
- Cases involving cheques, promissory notes and bills of exchange are adjudicated by the Commission for the Settlement of Negotiable Instruments Disputes, which operates as part of the Ministry of Commerce and Industry structure.
- Employment disputes come under the jurisdiction of the Commission for the Settlement of Labour Disputes, which operates under the auspices of the Ministry of Labour. Under the judicial reforms, the jurisdiction of the Commission for the Settlement of Labour Disputes will be transferred to labour courts within the Shari'a Courts structure.
- Insurance disputes and claims to which insurers have become subrogated are adjudicated by the Committee for Adjudication of Insurance-Related Disputes and Violations of the Saudi Arabian Monetary Agency.
- Environmental claims come under the jurisdiction of a committee operating under the Presidency of Meteorology and Environmental Protection. There is an automatic right of appeal from this committee to the Board of Grievances.
Litigation before all Saudi Arabian courts and tribunals takes place in a series of short hearings. There is no trial preceded by pleadings and other pre-trial procedures. Rather, the claimant commences the action by filing a complaint, and the parties are summoned to a hearing. At this and subsequent hearings the parties file written submissions, oral argument is heard, and evidence is produced. In between hearings there normally are intervals of several weeks, and sometimes months, depending on the judges' caseload. The courts and tribunals do not follow strict timetables, and there is no real limit on the number of hearings which may take place before a case is set down for judgment.
Once a judgment is issued by the Board of Grievances, the judges ask both parties whether they agree with the ruling. If the losing party disagrees, which is quite common, it has thirty days from receipt of the written judgment to lodge a written appeal to the Board of Grievances Review Panel. The Review Panel reviews the case on the basis of the lower tribunal's record and the case file, without the parties being present. If the Review Panel agrees with the decision, the judgment is stamped "final and enforceable" without giving reasons, and returned to the tribunal at first instance. If the Review Panel disagrees with the decision on a point of law or procedure, it may either issue its own judgment after having heard further arguments from both parties (which is rare at this stage of the proceedings), or remit the case for re-consideration to the tribunal at first instance (which is the normal procedure).
The new Saudi Arabian Arbitration Regulation, Royal Decree No. M/34 of 25th Jumada Awwal 1433 Hejra corresponding to 16th April 2012 Gregorian, has introduced radical changes to the law governing arbitrations in Saudi Arabia and the status of arbitrations conducted abroad, by reducing the involvement of the courts in arbitrations and granting extensive freedom to the parties to structure the procedures governing an arbitration.
A written agreement to arbitrate is binding, even if the remainder of the contract is invalid. References to international arbitration organisations and their procedural rules are binding. The Saudi Arabian courts must decline to hear cases which are subject to an agreement to arbitrate, provided the motion for dismissal is filed before other substantive or procedural arguments are raised before the court.
The new Regulations permits commercial arbitrations to be conducted abroad, in a language other than Arabic, and under substantive or procedural laws other than Saudi Arabian law, while having same effect as a domestic arbitration, provided that the parties have agreed that the arbitration is subject to the new Regulation. The Regulation provides that arbitral awards which are made in accordance with its rules may not be appealed in any form. However, an application for nullity of an award may be lodged with the competent court, for example because of procedural defects or failure to apply the rules of law governing the arbitration. The courts may also strike down an award if it is contrary to Islamic Law.
Enforcement of foreign judgments and foreign arbitral awards
Saudi Arabia ratified in 1999 the Arab Convention on Judicial Cooperation of 1983. Prior thereto, Saudi Arabia was a party to the Arab League Treaty on the Enforcement of Judgments of 1952, which was superseded by the 1983 Convention.
Until 14th February 2013 applications for the executions of foreign judgments and arbitration awards had to go before the Board of Grievances. Under the new Execution Regulation, Royal Decree No. M/53 of 13th Sha'ban 1433 Hejra corresponding to 14th July 2012 Gregorian, applications for the execution of foreign judgments and arbitration awards must be lodged with an Execution Judge. The office of Execution Judge is relatively new, having been created by the Judiciary Regulation, Royal Decree No. M/78 of 19th Ramadan 1428 Hejra corresponding to 1st October 2007 Gregorian.
In Judgment No. 4/D/F/20 of 1992 the Board of Grievances ruled that a judgment of the English High Court of Justice was not enforceable on the basis of reciprocity in the Kingdom of Saudi Arabia, and that the only judgments which are enforceable in the Kingdom of Saudi Arabia on the basis of reciprocity are judgments of countries who (a) are party to a treaty or convention for the reciprocal enforcement of judgments to which Saudi Arabia is also a party, or (b) whose authorities will give executive force to judgments of the courts of Saudi Arabia without the requirement of instituting an action on the judgment. Although there is no system of judicial precedent in Saudi Arabia, it is doubtful whether the Board of Grievances would reach today a different conclusion on similar facts, particularly because the judgment in question was made following a ruling of the Board of Grievances Review Panel.
In Judgment 78/D/F/20 of 2007, the Board of Grievances ruled that a judgment of the US District Court for the District of Columbia in the USA is enforceable in Saudi Arabia. In the course of the proceedings the applicant had filed, among other things, a sworn statement by an American judge to the effect that the District of Columbia enforces judgments of the Saudi Arabian courts. Accordingly, the key distinction between the two judgments is that the applicant in Judgment No. 4/D/F/20 of 1992 could not prove that the English authorities will give executive force to judgments of the courts of Saudi Arabia without the requirement of instituting an action on the judgment, whereas the applicant in Judgment 78/D/F/20 of 2007 was able to prove that the authorities of the District of Columbia will give effect to a Saudi Arabian judgment.
In 1993 Saudi Arabia ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), with effect from 18th July 1994, subject to a special reservation that no foreign arbitral award will be enforced in Saudi Arabia if it is deemed contrary to the public policy of Saudi Arabia. The Implementing Rules of the Execution Regulation provide this to mean that no award will be recognized and enforced in Saudi Arabia if it conflicts with Islamic Law. For example, any part of an award which is for interest will be disregarded by the Execution Judges because of the strict prohibition of interest under Islamic Law. Apart from this clear example, there are numerous "grey areas", where arguments that a foreign arbitral award may conflict with Islamic Law can be raised.
*This Saudi Arabian Law Overview is not intended to be legal advice, and cannot be relied on as a substitute for legal advice. We make no representation that the contents of this Saudi Arabian Law Overview are or will remain accurate or current.
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