Arbitration Law

Purpose and scope

• Governs arbitration as an alternative to the courts: the arbitration agreement, the tribunal, procedure, the award, annulment and enforcement.
• It applies to every arbitration held in the Kingdom whatever the relationship, and to international commercial arbitration the parties subject to it; it does not apply to personal status matters or matters that cannot be settled.

Key rules, rights and obligations

• The arbitration agreement must be in writing, whether a clause in the contract or a separate agreement after the dispute arises, or it is void.
• The arbitration clause is independent of the contract and is not void because the contract is void or terminated.
• The tribunal has one or more arbitrators in an odd number; the parties may agree how they are chosen, and an arbitrator may be challenged where there are serious doubts about impartiality.
• The parties are free to agree on procedure, seat and language; the tribunal must treat them equally and let each present its case.
• If a party sues in court over a dispute covered by the arbitration agreement, the court must dismiss the claim if the defendant raises the agreement before any request or defence on the merits.

Violations, penalties and common problems

• A vague or incomplete arbitration clause is among the most common causes of disputes over validity and jurisdiction.
• Raising the arbitration agreement late before the court is treated as a waiver.
• The court does not review the merits of the award; annulment is limited to specific grounds such as an invalid agreement, breach of the right of defence or public order.
• Arbitration costs can be high, so weigh the size of the dispute before choosing it.

Procedures and key deadlines

• If the parties set no deadline for the award, the tribunal must issue it within the period set by the law, which may be extended under its rules.
• An annulment action is filed within the period set by the law from notification of the award, and enforcement is not accepted before that period ends.
• An award becomes an enforcement instrument once the competent court orders its enforcement, after which it goes to the enforcement court.
• A rejected annulment action carries judicial costs of 1% of the amount awarded, up to SAR 1 million (Judicial Costs Law, Article 5).

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.