The Saudi Arbitration Law 1983 - Essay Example

However, the SAL 1983 was considered inadequate, considering that it is a brief law, containing only 25 Articles. It only addresses some important aspects of arbitration. Therefore, in 1985, the Implementing Regulations (IR1985) was enacted with more comprehensive arbitration provisions. The law had not clearly dealt with international commercial arbitration, which raised a lot of doubts whether it was limited to domestic arbitration or could be applied to international arbitration as well. Its Articles did not mention international arbitration, whether commercial or otherwise.

Only in Article 18, the IR1985 addressed the method of notifying foreign companies which have a branch or agent in the Kingdom. During the practice period, the Law had been widely criticized regarding various aspects of the arbitration process. This chapter will address the most important features of the law analytically. The legal legitimacy of arbitration is derived from the agreement of arbitration between the parties. The SAL 1983 recognized two types of agreeing on arbitration. One of these is the arbitration clause; which means stipulated in the original contract.

This is the between parties includes a provision referring to a part of or all disputes arising between them from this contract to arbitration. The other type is the submission of the agreement which agreement, which is the agreement expresses the desire of both parties to present a standing dispute between them to arbitration.10 In practice, the Saudi court has recognized both two types as legally binding, providing that a defense with the existence of any of the two types should be presented before any other defense or request.

In case No 10/1416,11 between Danish and Saudi companies, it was claimed by the plaintiff that the Saudi company purchased medicines without paying. The case was rejected by the Commercial Department due to the presence of an arbitral agreement. The claimant raised an appeal on the ground that the respondent did not initially request for arbitration in the first hearing. This appeal was rejected by the Examination Committee which approved the judgment of the Commercial Department pursuant to that the first hearing was an exchange of documents and information regarding the case and did not contain any defenses or requests by the respondent.

It is useful to point out that the SAL 1983 and the succeeding Implementing Regulations did not provide for writing as a condition of validity of arbitration or confirmation. Although the provision of Article 5 of the SAL 1983 stated that the arbitration instrument shall be filed to the authority originally competent to hear the dispute, as well as signed by the parties or their representatives.12 With consideration to these two issues, it seems that writing is not a condition of arbitration,13 but a condition of enforcement.

Therefore, the arbitration agreement can be confirmed with various means such as recognition and testimonial or presumption based on the general provisions of Sharia. The Principle of Separability is considered of the most important guarantees of the effectiveness of arbitration clause. It means the independence of the arbitration clause contained within the contract