With Revamped Rules, the Saudi Center for Commercial Arbitration Announces Not Only Its Commitment to Vision 2030 but Also Its Commitment to Aligning Itself with International Best Practices for Administering Institutions

INTRODUCTION

On 1 May 2023, a decade after the Kingdom of Saudi Arabia (the “Kingdom” or “KSA”) passed its new arbitration law,^[1] and since the enforcement law was enacted, the Saudi Center for Commercial Arbitration (hereinafter “SCCA”) published the revised SCCA Arbitration Rules (the “2023 SCCA Rules”). These SCCA Rules replace the 2018 version (the “2018 SCCA Rules”) and will apply to all arbitrations filed on or after the date of their publication. The 2023 SCCA Rules were launched after a substantive consultation process in which feedback from users on the draft amendments to the 2018 SCCA Rules was sought out.

The publication of the 2023 SCCA Rules follows three (3) key events for the SCCA: first, the SCCA’s announcement in November 2022 of the formation of the SCCA Court, thereby replacing the SCCA Committee for Administrative Decisions, second, the establishment of an SCCA branch in the Dubai International Financial Centre, and finally, the SCCA’s focus on best practices which have enabled it to significantly increase its registered cases in recent years. These three events, of course, have not occurred in a vacuum. They are perfectly in line with the three pillars of the Kingdom’s Vision 2030,^[2] namely, fostering the creation of: (i) a vibrant society; (ii) a thriving economy; and (iii) an ambitious nation.

More specifically, since its inception ten years ago, the SCCA has expressed its intention to focus on integrating the best practices followed by eminent arbitral institutions, to allow for a more user-friendly experience for both parties and practitioners alike. In particular, the introduction of the SCCA Court brings the SCCA in line with other prestigious international arbitration institutions, such as the ICC, the LCIA and the Swiss Arbitration Centre, all of which have a supervisory court. This preference for the establishment of a supervisory court can be seen even in the SCCA’s main regional competitor, the DIAC, which established its own DIAC Arbitration Court through the DIAC Arbitration Rules, 2022. Finally, the SCCA has registered 220 cases, involving parties from over 20 different countries.^[3]

In consideration of the Kingdom’s Vision 2030 plans, the 2023 SCCA Rules show the steps that the SCCA has taken to ensure that it is included among the list of leading dispute resolution centres in the world as it aims to become the Middle East’s preferred alternative dispute resolution provider. In doing so, the SCCA has addressed many criticisms of the 2018 SCCA Rules. For example, one of the recurrent causes for concern in relation to the 2018 SCCA Rules was the mandatory application of Sharia principles in all SCCA arbitrations, irrespective of the applicable law chosen by the parties. The 2023 SCCA Rules have not reiterated this blanket applicability of Sharia principles, thereby no longer compulsorily imposing them when the applicable law does not warrant it.^[4]

Since the publication of the 2023 SCCA Rules and the growing interest internationally in the SCCA more generally, attorneys from the International Arbitration team of Orrick, Herrington & Sutcliffe recently visited the Riyadh office of the SCCA. After having observed the SCCA’s state-of-the-art facilities, where one of the hearing rooms includes hidden displays embedded in the witness stands and soundproof break-out rooms, and discussed with the staff the new changes implemented through the 2023 SCCA Rules, we conclude that the significant amendments announced in the 2023 SCCA Rules, the key features of which are briefly discussed below, and the seriousness of the SCCA facilities signal the SCCA’s intent to become a significant global player in the administration of international arbitrations.

1. Empowerment of the SCCA Court

   Defined and empowered by Articles 1 and 3 of the 2023 SCCA Rules, the SCCA Court is comprised of 15 retired judges and high-profile arbitral practitioners with decades of arbitration experience, and a wide diversity of profiles. Notably led by Jan Paulsson (Consultant and Independent Arbitrator) as president, and Ziad Al-Sudairy (International Arbitrator and Principal, the Law Office of Ziad A. Al-Sudairy) and James Hosking (Founding Partner, Chaffetz Lindsey LLP) as vice-presidents,^[5] the SCCA Court is tasked with making key administrative decisions relating to SCCA-administered proceedings.

   The SCCA Court’s powers include, without being limited to, the appointment of emergency arbitrators (Article 7), determining disputes on arbitrator challenges (Article 18), determining disputes relating to jurisdictional objections (Article 22), and the review and approval of awards (Article 36).

2. Efficiency of the arbitration process

   Albeit partly born out of dire circumstances and necessity, the digitalization of arbitration proceedings has proven to be invaluable for both parties and practitioners alike. With its 2023 SCCA Rules, the SCCA introduced the Online Dispute Resolution Procedure Rules (the “ODR Procedure Rules”) as the default rules for small value disputes, with the possibility to opt-out, i.e., the ODR Procedure Rules automatically apply where the sum in dispute does not exceed SAR 200,000 (USD 53,327), unless otherwise agreed in writing by the parties. Notably, in the event of a conflict between the 2023 SCCA Rules and the ODR Procedure Rules, the latter shall prevail.

   The ODR Procedure Rules represent an important step towards more environmentally friendly proceedings by adopting modern technology to file documents and manage proceedings at all stages of the arbitration, i.e., from the filing of the Request for Arbitration until the issuance of the award. Additionally, under the 2023 SCCA Rules, the arbitral tribunal holds, inter alia, discretionary powers to determine the format of the hearing, i.e., in-person or remote hearing, and can sign their awards electronically, which are issued within 30 days from the sole arbitrator’s appointment.   

   The 2023 SCCA Rules also address the issue of claims arising out of multi-contract and multiparty arbitrations, for example, by permitting the registration of claims which cover multi-contract disputes between the same parties (Article 11), in addition to facilitating the joinder of parties (Article 12), providing for the consolidation of cases (Article 13), and guiding the coordination of two or more proceedings (Article 14).

   In terms of streamlining arbitral proceedings, the 2023 SCCA Rules allow for the early disposition of issues of jurisdiction, as well as issues of admissibility or legal merit (Article 26). However, it is important to note that an order rejecting an application for early disposition is not res judicata. Consequently, if the application for early disposition is rejected, the arbitral tribunal may rule on the same issue (whether on jurisdiction or merit) in its award.

   The new provisions in the 2023 SCCA Rules for an early disposition of issues of jurisdiction, admissibility, and legal issues, as well as the provisions introduced in response to increasingly complex and multi-party arbitrations, truly underline the growing interest in flexibility and efficiency in arbitration.

3. Integrity of the arbitration proceedings

   Several modifications have been made to the 2018 SCCA Rules in the interest of ensuring the transparency and integrity of arbitral proceedings.

   Under the 2023 SCCA Rules, for example, parties may now challenge arbitrators for failure to perform their duties or manifestly not possessing the qualifications agreed to by the parties (Article 18). In addition, arbitrators may also be challenged based on their lack of impartiality or independence (Article 18). Notably, the grounds to challenge arbitrators under the 2023 SCCA Rules are inspired by the SCCA Code of Ethics for Arbitrators.

   The disclosure of the name of a third-party funder is now promptly required, in addition to any other party which has an economic interest in the outcome of the proceedings (Article 17(6)).

   Finally, the arbitral tribunal is expressly empowered to encourage settlement discussions, at any point during the proceedings, between the parties, including resorting to mediation should it be appropriate (Article 25), which can serve to reduce instances of unnecessary or abusive proceedings and the costs incurred by the parties in the proceedings through early resolutions of disputes.  

CONCLUSION

The 2023 SCCA Rules are a significant modernisation and a welcome improvement on the 2018 SCCA Rules. The revision sought to integrate the best international practices and standards with innovative and forward-looking approaches, while bringing the 2023 SCCA Rules in line with the rules followed by most other global arbitral institutions. The resulting changes, and their underlying vision, should only further improve the Kingdom’s reputation as an arbitration friendly jurisdiction and help promote itself as the preferred centre for alternative dispute resolution in the Middle East.