Saudi Courts in Enforcing Foreign Arbitral Awards - Essay Example

In the time of the Arabs before Islam, arbitration was the only way to settle disputes. The concept of Suhl was practiced in pre-Islamic Arab societies and it is on record that before his calling, the Prophet of Islam worked as an  Arbitrator. At that time, the award was not binding and its implementation depended on the will of the parties. However, after Islam and the emergence of Islamic civilization, the judiciary became the official authority for settling disputes. Arbitration was no longer viewed as the only road to resolution.

There are many pitfalls to the arbitration process in the international context. Most of these problems relate to the lack of a unified system in dealing with matters consistently along with different legal systems. The Kingdom of Saudi Arabia has faced a lot of challenges in balancing its unique Islamic judicial system with international arbitration systems.

Contrary to other legal systems, the Saudi judiciary is run by Islamic laws which are significantly different from modern legal systems. Islamic law (or Shari’a law, as it is popularly known) derives its legal competence from three sources: the Quran, Hadith, and legislation (or individual opinion of Islamic scholars based on the first two sources).

Arbitration can make a difference in the governance of the international system. It can make it work better, reduce conflicts, and foster closer relationships and international understanding. However, the only way to demonstrate that an alternative dispute resolution system works is by examining the enforcement rate of decisions taken by that system. It must be determined whether states respect and enforce arbitral awards. This determines how effective that legal system is.

This logic can be applied to international dispute resolution. One may ascertain the enforcement rate of an international arbitral system to determine its effectiveness. Without an acceptable rate of successful enforcement, the claim that arbitration can help the global system work to achieve some semblance of order and harmony in interstate business relations is not realistic. A low enforcement rate means that the legal framework governing international arbitration is not strong enough or is not accepted as legitimate. States and entities raising disputes for arbitration will not be confident about the entire proceeding. This casts doubt on the very essence of international arbitration in general.

Saudi Arabia has a booming economy supported by its oil revenue. The Kingdom is run by an absolute monarchy that runs the country according to Islamic Sharia Law and Sunnah or traditions and rulings that are connected to the Prophet of Islam. Due to the expansive oil reserves in the Kingdom, it attracts a significant of foreign companies and individuals who are used to laws other than Islamic laws. There is a general trend of duality in international laws which affects the consistency of international agreements.

Nonetheless, Saudi Arabia features prominently in the issue of arbitration enforcement. It does not have domestic statutes that address the issue of arbitration. Instead, the arbitration of disputes is governed by the Arbitration Law passed in 1983 wherein foreign arbitral awards have to be re-examined and evaluated according to the Shari’a law to be implemented. There is a question about the enforceability of international arbitration in Saudi Arabia's Islamic legal system. This issue is steeped in the unique Saudi legal position and how it reacts to the inevitable clashes that international arbitration brings to its systems.

The approach to this study will involve the examination of critical rules and regulations that guide the courts in Saudi Arabia in the bid to solve important cases in international arbitration. In doing this, there is the need to assess the significance of the Saudi Islamic courts in enforcing foreign arbitration rulings. This can give a broad understanding of the existing system as well as the relative position of Saudi Arabia's approach to international arbitration awards and other legal systems in the Middle East and North Africa (MENA). In doing, this, the base legal system for examining international arbitration rules will be the New York Convention which provides a definitive framework for international arbitration

This research is in partial fulfillment of my LLM degree. It complements the studies I undertook in the taught course. It will allow me to apply the knowledge I have acquired in this program. The research will be a primary study of a unique topic that has been traditionally left unhandled. This research will provide a formal inquiry into the topic at hand and give the impetus for future research into the topic.