Enforcement of Foreign Arbitral Awards in Saudi Arabia - Dissertation Example

? Provisional and brief summary of proposal The provisional of the paper can be “A Critical overview of the enforcement of foreign arbitral awards in Saudi Arabia”. The aim of the dissertation will be to understand the limitations in enforcement of foreign arbitral awards for settlement of commercial disputes in Saudi Arabia, keeping in mind the conventions and prerequisites for the process involved. In this context, the paper will look essentially into the three required principles for enforcement of foreign arbitral awards – conformity with Islamic Jurisprudence, reciprocity principle and international conventions in agreement with the law of Saudi Arabia1. It will also discuss the procedures involved in enforcement and how these can pose a challenge to the foreign arbitrators. In clear terms, non-conformity with the Islamic Law will lead to rejection of the application for a foreign arbitral award by the Kingdom of Saudi Arabia. Here the paper will attempt to answer the question “What policies should the Kingdom of Saudi Arabia consider taking up in order to address the limitations and difficulties faced in enforcement of foreign arbitral awards?” The proposal here shall outline the rationale or background of the problem specified by the question and after explaining this, it will outline the research method to be taken in order to reach our desired inference. This will be followed by targeted literature review and a provisional chapter outline for the contents. Elaboration of the proposal The proposal outlines the path that will be adopted by the dissertation which will focus on the Saudi Arbitration Law 1983 and the Rules for its Implementation (IR) in 1985 in order to understand and analyze the legal dimensions of the arbitration procedures under the Saudi government. It will take up a study of scholarly books and articles to provide an account of the role of Islamic schools in the Saudi legal framework and the specific articles of the law which pose a challenge to foreign arbitrators. The Code of Commercial Court of 1350H in 1950 made provisions for the conflicting sides to reach a solution to mutual disputes or disagreements. Other authentic articles available online have helped in throwing light on the legal framework and the reason behind the initiation of the need for the presence of a neutral entity or an independent arbitral forum. The renowned dispute between the Arabian American Oil Company (ARAMCO) and the government of Saudi initiated the foreign arbitrators to consider the necessity of reconsidering the Shari’ah as the sufficient framework of law to govern the energy disputes arising form complex issues and therefore the law could not serve as a governing one2. However a delve into the way the religion of Islam influences all decisions of the Saudi government can enable one to understand that the country is sceptical to some extent in enforcing foreign arbitral awards especially when they concern non-Saudi law of governance. Some new policies such as Article 3 of Arbitration Law in 1983 were passed owing to the economic boom of 1970 which brought about foreign companies’ investments in the nation. The Article 3 brought a shift in the position of the government towards international arbitration. Attempts have been taken to regulate the national arbitration law regarding settlement of commercial disputes3. Keeping such proceedings in the backdrop, the proposal attempts to determine the key setbacks and limitations posed during the implementation of foreign arbitral awards in the nation. This will set the ground of justification for addressing the research question framed in the previous section. The process of close scrutiny of the issue present in the doctrines of the law might determine certain sensitive concerns which might deteriorate the effectiveness of commercial arbitration system in the nation. Research Methodology The research will undertake a combination of three specific approaches or methods. The first is the “law in context”4 approach where the law for foreign arbitral award is analyzed with respect to the tenets in the Arbitration Law of 1983 and IR rules of 1985, which cause some limitations in implementation process. This is mainly due to the pre-requisites of satisfaction of the principles mentioned in the first section. Hence a ‘black letter’ doctrinal analysis will be required to evaluate the different articles and tenets of the legal system of enforcement of the foreign arbitration law5. This approach will require the researcher to evaluate the concerned norms and analyse whether these are conducive and rational for the enforcement of the foreign arbitral award concerning foreign parties in commercial dispute cases. The research does not entail any primary research but a comprehensive literature survey of scholarly articles from law journals and the Internet will help in this direction. This will be coupled with further speculation and analysis of the areas where the problems might arise in the award system of foreign arbitration. The qualitative literature survey and analysis shall also answer why the Saudi government needs to take up some policies in the direction of establishing clear specifications on the enforcement of the foreign arbitral award issue and make amendments in the IR rules. Targeted literature review Vogel has observed that the legal framework of Saudi Arabia is in general governed by Shari’a law in all spheres. Any issue of public policy should not lie in conflict with the Shari’a law. Saudi’s adherence to this law on a strict basis has earned the nation a lot of respect since Shari’a contributes and influences areas beyond legal issues, that is, political, religious and personal spheres. However the law might not be a legally sufficient one to be the guiding factor of the governance6. Maslahah is the essential goal of Shari’a which passes judgment in favour of the person7. It is important to note that the impact of the Shari’a on public policy might entail common good but it is difficult to define boundaries for common good. This might be explained with respect to the commercial arbitration law. The main problem concerns restrictions prevalent in the governing law. There are some rules concerning the arbitrators including good conduct and complete legal eligibility. Effectively only a Saudi could be accepted as the arbitrator who should be above 22 years of age. Hameed EL Hadab observes that above everything the arbitral law states that the award from a foreign nation should comply with Islamic Jurisprudence which will accept only those external and internal legislations which would not contradict the general principles. One instance might be mentioned with respect to interest rates and provision of insurance both of which do not comply with the Shari’a8. The limitations and difficulties faced by the foreign arbitrators in the process might be further discussed with respect to the three principles mentioned previously. The first principle ensures the non-enforcement of any judicial or arbitral award in an Islamic nation provided the decision involves a deviation from the general norms of Islamic Law. Hence the applicant will need to prove the fulfilment of the provisions outlined by the foreign award system. Most of the times foreign arbitral cannot meet these requirements and Howard Stovall observes that although Saudi has been a part of the New York Convention in 1994, no foreign arbitration awards were implemented with respect to the convention till date. However in cases of partial contradiction these will lead to partial implementation9. The second principle reveals that applicants need to prove that the decisions made by the Saudi courts will be enforced by the organization which passed the foreign judgment. This can be justified on the ground that without reciprocity a nation has no reason to grant the award. Since the nation has agreed to different foreign conventions this has led to an intersection of many contradictory rules making the process difficult to be in line with the Shari’a law. The contract should itself fulfil the criteria of approval, reason, purpose and competency. Owing to these limitations with respect to the choice of a desired arbitrator and other constraints related to enforcement of foreign arbitral awards related to the very doctrines of the legal system have necessitated the reconsideration of the decision of the government with respect to enforcement of arbitral awards in Saudi10. Keeping the above context in mind care needs to be taken to review the law governing the process of arbitral awards in order to establish trust in the Saudi Arabian legal system. Provisional chapter outline 1. Introduction 1.1 Role of religion in the social and legal system of Saudi Arabia 1.2 Arbitration law in Saudi Arabia 1.3 The changes implemented in the arbitral award law 2. Conditions for implementation of Arbitration and limitations 2. 1 Principles for Commercial Arbitration 2.1.1 Principle of conformity to Shari’a/Islamic Jurisprudence 2.1.2 Principle of reciprocity 2.1.3 General conventions acceded by the country 2.2 Implementation process prescribed by the commercial arbitration law 2.2.1 Background 2.2.2 Approval 2.2.3 Purpose 2.2.4 Reason 2.2.5 Competency 2.3 Conditions to be fulfilled by arbitrators 2.3.4 Muslim nationality 2.3.5 Profession 2.3.6 Knowledge on legal norms and the economy 2.3.7 Absence of personal interest in dispute concerned 2.3.8 Conclusion 2.4 Impact on the arbitrators and reactions 2.4.1 Impact of the principles 2.4.2 Impact of implementation procedures 2.4.3 Difficulties faced by arbitrators 4. Constraints in enforcement of foreign arbitral awards 4.1 Introduction 4.2 Limited elasticity of the enforcement process of foreign arbitral award 4.3 Conclusion 5. Conclusion and Recommendations 5.1 Attempts to enhance the current system of enforcement in Saudi 5.2 Clarification and Amendments of Articles 5.3 Building awareness about the law and its loopholes 5.4 Role of privatisation Expected outcome The research is expected to infer that considering the limitations of the enforcement process of foreign arbitral awards and the restrictions in selection of the governing law which will decisively be the Shari’a, it is important for the country to bring about manifold changes in the system and review some of the Articles or tenets of the law. For instance, attempts might be made to separate the arbitration houses from influences of powerful governing organisations in order to enable autonomous decision-making. This will be important in generating faith of international organisations in the law. References 1. Al Magsudi, A & Alamer, A, Conditions of Executing Arbitral Awards (King Abdulaziz University, College of Economy and Administration, Jeddah 1998). 2. Al-samman, Y, Settlement of Foreign Investment Disputes by Means of Domestic Arbitration in Saudi Arabia, Vol.9 part.3 (Arab law quarterly, Riyadh 1994) 3. Cownie, F, Legal academics (Hart Publishing, Oxford, 2004) 4. Hameed EL Hadab, A, Alt’hkeem ala’mi “International Arbitration” (Dar Almarefh publishing, Mexico City 2001). 5. Hussain, J, Islamic Law and Society, an Introduction (The Federation Press, Sydney 1999) 67 6. Stovall, H, ‘Arbitration and the Arab Middle East: Some Thoughts from a Commercial Practitioner’. [2010] 7. Twining, W L, Law in Context (Oxford University Press, Oxford 1997) 8. Vogel, F, Islamic Law and Legal System, Studies of Saudi Arabia (Brill, Leiden 2000) Read More