Saudi Center for Commercial Arbitration – A Short Guide to the New Rules

The second edition of the SCCA Arbitration Rules (the Rules) came into force on 1 May 2023. This guide is designed for practitioners familiar with the LCIA or DIAC rules but want to know more about arbitration in the Kingdom of Saudi Arabia (KSA).

Legal Representation: The Rules confirm party autonomy in the choice of legal representation. Article 9(1) provides that each “party may be represented or assisted by persons chosen by it. Unless applicable law requires otherwise, any party may be represented or assisted by legal practitioners or any other authorized representatives, including foreign legal practitioners regardless of the jurisdiction in which they are based or licensed to practice.” This means that foreign practitioners will play a greater role in SCCA arbitrations going forward. 

Place and Seat: Many jurisdictions distinguish between “the place” and “the seat” of the arbitration. While the seat provides the legal framework governing the arbitration, the place is simply where the arbitral hearing takes place. In Enka v. Chubb [2020] UKSC 38, Lord Hamblen and Lord Legatt confirmed that “it is perfectly possible to conduct an arbitration with an English seat at any convenient location, anywhere in the world.”

While the Rules make no reference to the arbitral seat, Article 22 of the Rules confirms that in the absence of agreement, “the place of arbitration” will be initially determined by the SCCA with a final determination left to the Tribunal. Taking the Rules as a whole, it is clear that Article 22 is making reference to the arbitral seat. Indeed, Article 22(3) confirms that “the Arbitral Tribunal may meet at any location it considers appropriate, irrespective of the place of arbitration, to conduct hearings and procedural meetings. The Arbitral Tribunal may meet at any location it considers appropriate to deliberate.” It follows that SCCA arbitrations, seated in KSA, may be conducted from any location in the world.  

Finally, it should be noted that when the parties opt for arbitration pursuant to the SCCA’s Online Disputes Resolution Procedure, a form of summary procedure, KSA becomes the default seat.  Article 7 of Appendix IV provides that unless “the parties agree otherwise, the place of Arbitral Tribunal shall be Riyadh, Kingdom of Saudi Arabia.”

Law: Subject to compliance with Islamic Sharia, the Rules confirm party autonomy in the choice of law. Article 37(1) provides that the “Arbitral Tribunal shall apply the rules of law designated by the parties as applicable to the substance of the dispute. Failing such a designation by the parties, the Arbitral Tribunal shall apply the law which it determines to be appropriate.”

Article 37(4) codifies the majority opinion in Enka v. Chubb [2020] UKSC 38 and states that the “law applicable to the arbitration agreement shall be the law applicable at the place of arbitration, unless the parties have agreed in writing on the application of other laws or rules of law.” It follows that parties who opt for an arbitration pursuant to the SCCA Arbitration Rules will most likely have opted for a Saudi seated arbitration with an arbitration clause governed by Saudi law. 

Language: Article 23 provides that if the parties do not agree on the language of the Arbitration by the date established by the SCCA, the SCCA “shall initially determine the language(s) of the arbitration subject to a final determination to be made by the Arbitral Tribunal within 30 days from the date of its constitution.” In determining the applicable language, “the Arbitral Tribunal shall be guided by the language(s) of the arbitration agreement, any contract within which the arbitration agreement is contained, the circumstances of each case, and the convenience of the chosen language(s) to the parties.”

Enforcement: Article 36(2) of the Rules confirms that “[a]ll awards shall be final and binding on the parties, and the parties shall carry out all awards without delay.” This is in line with KSA’s Arbitration Law, which states in Article 52 that arbitral awards “shall have the force of res judicata and shall be enforceable.”

However, if the parties have elected to use a foreign law as the law governing the substantive dispute in the arbitration, then they should be mindful of the risk that the award may be partly or wholly unenforceable within KSA if it conflicts with the provisions of the Islamic Sharia and public order. In this respect, Article 55(2)(b) of the Arbitration Law provides that an arbitral award may not be enforced unless after the competent KSA court has verified that the arbitral award “does not include any matter that is inconsistent with the provisions of the Islamic Sharia and the public order of the Kingdom, and if an award is severable regarding parts in violation, an enforcement of the other remaining valid parts may be ordered.”

For further information please contact William Prasifka and Naser Hashem.

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