The Enforcement of Foreign Arbitral Awards in Saudi Arabia - Dissertation Example

Critical overview of the enforcement of foreign arbitral awards in Saudi Arabia 0 This is a proposal to investigate and outline foreign arbitration in Saudi Arabia, with particular emphasis to the success or efficacy of enforcement. This proposal includes an introduction to the topic, the targeted literature of the dissertation, the methods of inquiry and the provisional outline of the proposed dissertation. A Gantt chart detailing the Work Plan is also included. 2.0 Statement of the Problem Foreign arbitration or the foreign arbitral awards is critical in the effective governance of the global system. It is crucial in the international legal system since it provides international bodies the legitimacy and authority to enforce rules and mechanisms that effectively resolve inter-state differences. The onset of globalization, which is characterized by the drastic integration of international trade into one single market, further underscored this as trade disputes and disagreements between countries emerge with the increase in international commerce. According to Lu, Verheyen and Perera, arbitration has been the most common dispute resolution mechanism today both in the international market and among parties that conduct business with sovereign states that the enforceability of awards has become increasingly important and practical.1 (p. 163-164) According to FINRA, parties may even prefer arbitration than a juridical process because the process is faster and more effective.2 Currently, the multilateral arbitration mechanism that most states are subjected to is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 otherwise known as the New York Convention. As of 2009, 142 out of the 192 members of the United Nations signed the convention. The majority of global trading organizations such as the World Trade Organization (WTO) and the North American Free Trade Association (NAFTA) also accede to this convention. It mandates all courts of the ratifying states to enforce and recognize private agreements and “arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal.”3 Saudi Arabia has been receptive of foreign arbitration awards in the past and rarely elevated disputes to international fora but its courts do not automatically endorse foreign judgments.4 In April 19, 1994, the country signed the convention. Some changes have been effected with regards to enforcement of arbitration awards. When Saudi signed the convention, a royal decree (No. M/11 of 16/7/1414) was released, which provided that recognition and enforcement of foreign awards should be limited to those made in the territory of States, which have also acceded thereto.5 This among other factors such as the persistence of Islamic law and the effects it entail in doing business in the country has made the situation complicated and at times problematic particularly in terms of the enforcement of arbitral awards. This problem would be investigated by this research, with the initial expectation that there are numerous variables that hinder and limit such enforcement particularly in the religious and bureaucratic spheres. 3.0 Scope of the Study In pursuing the research objective, this research would focus on two important conventions that Saudi is party to: the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 and the Riyadh Convention. These mechanisms would be used as the standards by which arbitration awards enforcement are either successful or a failure exclusively in the Saudi experience. 4.0. Methodology Since this is a descriptive and analytical research, this study will not use models for empirical inquiries. Instead, this researcher will use a combination of ‘black-letter' doctrinal analysis and ‘law in context' approaches. The idea is to capture the complexity of having to discuss the general subject of international arbitration and the specific experience of Saudi Arabia for a comprehensive critical outline of the topic. The ‘black-letter’ model aims to systematise, rectify and clarify the law on any particular topic by a distinctive mode of analysis to authoritative texts that consist of primary and secondary research.6 It is, hence, the most appropriate model to explain the international arbitration system, statutes and rulings. Moreover, it can provide the correct depiction or the representation of some universal standards and/or rules that are acceptable in the international community by clearly and authoritatively establishing the framework in which disputes are resolved through arbitration across the globe. In this respect, the strategy is clearly understood as crucial in identifying legitimate solutions to problems, say, of enforcement. Furthermore, the ‘black-letter’ model can also enable this study to gain deeper insight on the Sharia law. Meanwhile, ‘law in context' approaches will be utilized in order to understand the case of the Saudi experience when it comes to arbitration. According to Slapper and Kelly, this contextualist model treats the law as a social phenomenon and, hence, operates within a social context.7 (p.11) This researcher believes that this model can explain and depict with more fidelity the reasons behind the issue of arbitration enforcement. For example, the problems of enforcement compliance can be better understood as the issue is explained in the domestic context, with its own unique variables. Say, the refusal of arbitration decisions can better be understood and explained. The research will mainly use secondary data, which will often be sourced in order to outline specific cases and important statutes that govern arbitration. These sources can be consisted of academic journals as well as other texts published on the subject (i.e. published dissertations and news reports), Internet sources as well as data from corporate websites among other documents released and published by organizations, individuals and documents from the Saudi government. In an effort to be scientific in the method of research, this study would follow the linear progression of the academic research model. As has been outlined and demonstrated in this proposal, a problem or an issue is identified, research is initiated, and then, a thesis is formulated. Afterwards, the research would finally commence, which would be followed by the analysis and the requisite recommendations/conclusion. 5.0 Limitations of the Study As previously stated, this is a descriptive critical analysis research and, therefore, not an empirical investigation. No quantitative method of inquiry, hence, will be utilized that is why quantified evidences – those statistics and figures gained through primary sources – will not be present. This may become problematic when the reliability of second-hand data becomes suspect. In addition, it can also lead to an inability to depict, examine, with precision, the causes of several issues or in failing to accurately measure and quantify the cause-and-effect relationships among several variables. This dilemma may also prove true when it comes to evaluating enforcement performance. This limitation, however, can be addressed by using several sources in order to corroborate a specific claim, point or argument and present an authoritative finding and description of certain issues. 6.0. Outline Chapter I: International Arbitration The section that contains background information of the research subject, which is mainly about international arbitration. This will be defined along with other key concepts and elements such as international commerce, trade disputes, settlements, and relevant international jurisprudence, among others. In addition, this chapter will provide a brief background of arbitration in Saudi Arabia. Chapter II: Arbitration in Saudi Arabia This contains the arbitration in Saudi Arabia, which includes the attitude towards arbitration from policy perspective, the existing process of commercial and foreign arbitration, their enforcement and other related issues. Here, several case studies will be presented that hopefully would depict the correct arbitration environment domestically. Chapter III: Limitations, Impediments and Prohibitions This chapter outlines several obstacles to commercial arbitration and their enforcement. A fundamental variable here are the lack of domestic statutes on arbitration, laws that prohibit arbitration, the challenges on the part of arbitrators. An important section will devoted to the role played by Islam in policymaking and decision-making in the context arbitration in the country. Chapter IV: Effectiveness of Enforcement A critical analysis of the arbitral awards enforcement in Saudi Arabia. This mainly contains an evaluation of previous enforcement performance in an effort to identify patterns and trends that can hopefully characterize a unique Saudi Arabian experience. An important part of this section involves a comparative analysis between Saudi arbitration compliance with other countries. Chapter V: Conclusion The concluding section that summarizes the research findings and the recommendations. The expected conclusion will confirm the assumption that arbitral awards enforcement in Saudi Arabia is still problematic due to Islam and the domestic policy structure. This will also include several recommendations on what areas to improve and so forth. VI: References 7.0 Sample Bibliography Books: G Alvarez and WM Reisman, The reasons requirement in international investment arbitration: critical case studies (BRILL, Leiden 2008). KP Berger, Private dispute resolution in international business: negotiation, mediation, arbitration, Volume 1 (Kluwer Law International, Leiden 2006). C Buhring-Uhle, L Kirchhoff and G Scherer, Arbitration and mediation in international business (Kluwer Law International, The Netherlands 2006). E Cotran and C Mallat, Yearbook of Islamic and Middle Eastern law (Kluwer Law International, London 1995) Y Dezalay and B Garth, Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order (University of Chicago Press, Chicago 1998). F El Rahman and A El Sheikh, The legal regime of foreign private investment in Sudan and Saudi Arabia (Cambridge University Press, Cambridge 2003) M Fontaine and F De Ly, Drafting International Contracts (BRILL, Leiden 2009. K Lu, G Verheyen, and S Perera, Investing with confidence: understanding political risk management in the 21st century. (World Bank Publications, Washington, D.C. 2009) U Magnus, and United Nations Commission on International Trade Law. Global trade law: international business law of the United Nations and UNIDROIT ; collection of UNCITRAL's and UNIDROIT's conventions, model acts, guides and principles (Sellier, Munchen 2004) E Marshall, and W. Gill: The Law of Arbitration (Sweet & Maxwell, 2001). M McConville and W Chui, Research methods for law (Edinburgh University Press, Edinburgh 2007). G Oduntan, The law and practice of the International Court of Justice (1945-1996): a critique of the contentious and advisory jurisdictions (Fourth Dimension, Michigan 1999). A Shoult, Doing business with Saudi Arabia (GMB Publishing, Ltd., New York 2006) G Slapper and D Kelly, The English Legal System: 2009-2010 (Taylor & Francis, New York 2009) Website: FINRA, “FINRA Dispute Resolution Arbitrator’s Guide’ (2011) < http://www.finra.org/web/groups/arbitrationmediation/@arbmed/@neutrl/documents/arbmed/p009424.pdf> accessed 10 Jun 2011. Read More