Commercial Arbitration Lawyer — Clauses, Tribunals, Mediation and Award Enforcement

Commercial arbitration is a way of resolving a dispute outside the courts by agreement of the parties, with the award issued by an arbitrator or tribunal they choose. In Saudi Arabia it is governed by the Arbitration Law, and it rests entirely on a written arbitration agreement, whether a clause in the contract before any dispute or a separate agreement after one arises.

Companies usually choose it for practical reasons: confidential proceedings, the ability to appoint arbitrators who know a particular sector such as construction, supply or energy, flexibility over timetable and language, and an award that can be enforced in countries party to the New York Convention. On the other hand, arbitrators’ fees and centre costs can exceed the cost of going to court, and the award cannot be appealed, so there is no second tier reviewing the merits.

If you are sued in court despite an arbitration clause, the clause must be invoked before any request or defence on the merits; otherwise silence is treated as a waiver of arbitration. Many parties overlook this and lose the forum they chose in their own contract.

The Arbitration Law requires the arbitration agreement to be in writing, or it is void. That requirement is met by a document issued by both parties, by written or electronic correspondence exchanged between them, or by a clear reference in the contract to a document containing an arbitration clause.

Writing alone, though, does not produce a clause that works when a dispute arises. A bare sentence such as “any dispute shall be referred to arbitration” invites a side dispute over how to arbitrate before the real dispute is even reached, and may end with a court appointing the arbitrators. So we draft or review the clause to settle the points below, and if a dispute has already started, these are exactly the terms we read first in your contract:

In institutional arbitration the dispute is administered under the rules of an arbitration centre, locally most prominently the Saudi Center for Commercial Arbitration (SCCA). The centre receives the request for arbitration, appoints the arbitrator if the parties cannot, sets costs and arbitrators’ fees according to its published schedules, and its rules provide for an emergency arbitrator and expedited procedures for suitable disputes.

In ad hoc arbitration the parties and the tribunal organise the proceedings themselves within the limits of the Arbitration Law. It can suit simpler disputes or parties who trust a particular arbitrator, but any obstruction by one side, such as refusing to appoint its arbitrator, means going to the competent court, which delays the start.

When drafting the contract we help you choose based on the expected contract values and the nature of the counterparty. If the dispute already exists, we work with what the contract chose: filing under the agreed rules and tracking procedural time limits whose expiry could affect your right to appoint an arbitrator or raise objections.

Mediation is a negotiated process led by a neutral mediator who imposes no decision but helps the parties reach an agreement that preserves the business relationship and reduces cost. The Saudi Center for Commercial Arbitration offers mediation under its own rules, and the Ministry of Justice, through its Reconciliation Centre and the Taradhi platform, allows many disputes to be settled electronically before a lawsuit is filed or while it is pending.

The value of mediation lies in the text signed at the end. A settlement documented through Taradhi is an enforceable instrument that can be taken to the Enforcement Court if either party breaches it, so its terms need careful drafting: the amounts and their due dates, the consequence of late payment, and exactly what each party gives up.

We represent you in mediation sessions, prepare a position paper and the negotiating limits acceptable to you, and review the settlement wording before signature. If your contract makes mediation a precondition to arbitration, we make sure it is completed and documented so the request for arbitration cannot later be challenged as premature.

An award issued under the Arbitration Law has res judicata effect and is binding, but it can only be enforced by compulsion once the competent court issues an enforcement order. An application for that order is not accepted until the time limit for an annulment action has passed, and before granting it the court checks that the award does not contravene Sharia or public order, does not conflict with an earlier judgment on the same subject, and was properly notified to the losing party. Enforcement then proceeds before the enforcement judge.

Arbitral awards cannot be appealed. The legal route to attack one is an annulment action before the competent Court of Appeal, on grounds the law lists exhaustively, including: no arbitration agreement, or one that is void or has expired; a party unable to present its case because it was not properly notified; a tribunal constituted contrary to the agreement; an award deciding matters outside the arbitration agreement; and an award contrary to Sharia or public order.

The annulment action must be brought within sixty days of the date the losing party is notified of the award. That deadline matters to both sides: to the losing party because it is the only chance to attack the award, and to the winning party because the enforcement application waits for it to expire. Foreign arbitral awards follow a different route based on the New York Convention and the Enforcement Law.