Commercial litigation
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, which will not take place before 2010 at the earliest. Our further comments set out the present system.

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:
01. Disputes between banks and their customers are adjudicated by the Banking Disputes Commission of the Saudi Arabian Monetary Agency.
02. 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.
03. 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.
04. Insurance disputes and claims to which insurers have become subrogated are adjudicated by the Committee for the Settlement of Insurance Disputes. There is an automatic right of appeal from the Committee for the Settlement of Insurance Disputes to the Board of Grievances.
05. 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.

Procedures
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).

There is no system of judicial precedent under Saudi Arabian law, nor are the courts’ judgments reported. Therefore, a lawyer’s ability to predict the likely outcome of legal proceedings depends primarily on the practical experience of the lawyer or his partners before the Saudi Arabian courts.

Arbitration
Most disputes arising in Saudi Arabia can be submitted to arbitration in accordance with the Arbitration Regulation of 1983 and the Rules for the Implementation of the Arbitration Regulation of 1985, which form a reasonably comprehensive code derived largely from Islamic Law principles. Under these statutes, the “authority which has original jurisdiction to hear the dispute” retains extensive control over and involvement in the conduct of an arbitration. In most commercial disputes this is the Board of Grievances. Broadly, only the conduct of the hearings and the decision-making is the arbitrators’ responsibility, whilst all pre-hearing and post-hearing procedures, and other ancillary matters, are the responsibility of the Board of Grievances. In particular, the arbitral tribunal is not properly constituted until the Board of Grievances approves an arbitration instrument which must be executed and signed by the parties and the arbitrators. Nor is an award final and enforceable until it is approved by the Board of Grievances. The losing party in an arbitration has an automatic right of appeal to the Board of Grievances on points of law or procedure, opening the door to yet further appeals on points of law or procedure to the Board of Grievances Review Panel. Such appeals are so common that commercial arbitrations in Saudi Arabia often just add a further layer to the dispute resolution process.

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.

Pursuant to Article 13 (g) of the Board of Grievances Regulation of 2007, the Board of Grievances is the competent Saudi Arabian authority for the recognition and enforcement of foreign judgments and arbitral awards. Under Article 6 of the Civil Procedure Rules of the Board of Grievances of 1989, the Board of Grievances must give effect to foreign judgments on the basis of reciprocity, and provided that the foreign judgment is not contrary to Islamic Law.

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 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. Although this reservation is not elaborated further in the Royal Decree which announced the accession of Saudi Arabia to the New York Convention, it is generally understood 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 judges of the Board of Grievances, 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 could 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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