The Saudi Centre for Commercial Arbitration’s New Arbitration Rules
The Saudi Centre for Commercial Arbitration’s New Arbitration Rules
Background
The Saudi Centre for Commercial Arbitration (“SCCA”) was established in 2014 and became operational in late 2016 when it opened its first location in Riyadh. The SCCA published its first set of Arbitration Rules in 2016. Although the Rules were amended twice in 2018 and 2021, the latest version, dating from 2023 (“New Rules), which apply to arbitrations filed on or after 1 May 2023, bring wholesale changes that modernise the entire architecture of the SCCA. In the words of the SCCA’s Vice-Chairman, the New Rules constitute “a first class, state-of-the-art framework for international arbitration”[i].
The New Rules do not revise the SCCA Mediation Rules, which were last amended in 2018.
Key provisions
The main novel features introduced by the New Rules include the establishment of the SCCA Court, the addition of new grounds for arbitrator challenges, removal of references to Sharia law, express provisions dealing with the law applicable to the arbitration agreement, a new mechanism for summary disposition of claims and defences, representation by foreign counsel, and a new online dispute resolution mechanism.
These changes are discussed briefly below.
The SCCA Court
The New Rules launch a new SCCA Court – an independent body the formation of which was revealed in November 2022 to replace the Committee for Administrative Decisions.
Under the New Rules, the SCCA Court, composed of 15 arbitration experts from a variety of jurisdictions, is tasked with making important administrative decisions in arbitrations conducted under the SCCA Rules. The SCCA Court is also to serve as a supervisory body similarly to courts of other prominent institutions such as the ICC, LCIA, DIAC and SIAC.
The SCCA Court’s powers include, inter alia, the appointment of emergency arbitrators[ii]; the appointment of arbitrators and potential challenges thereto[iii]; determining the place of arbitration[iv]; reviewing and approving awards[v].
New grounds for challenging arbitrators
The New Rules introduce two new grounds for challenging arbitrators. The first is where the arbitrator has failed to perform his or her duties. The second is where the arbitrator manifestly does not possess the qualifications agreed to by the parties[vi]. Both are aimed at strengthening the credibility of arbitral tribunals constituted under the SCCA Rules.
Default law applicable to the arbitration agreement
The New Rules set out a default rule for determining the law applicable to the arbitration agreement. Article 37(4) of the New Rules provides that the “law applicable at the place of arbitration” shall be the default law applicable to the arbitration agreement unless the parties agree otherwise[vii].
Online dispute resolution (“ODR”)
The SCCA has incorporated the third edition of its ODR Procedural Rules under Appendix IV of the Rules. The ODR Procedural Rules will apply provided that the parties have agreed to it in writing and the disputed amount is below SAR 200,000 (USD 53,221), excluding arbitration costs.
Should any conflict arise between the Rules and the ODR Procedural Rules, the latter will take precedence[viii].
This ensures that the ODR process maintains consistency and reliability in resolving disputes.
To ensure a prompt resolution of the dispute, the appointed arbitrator must issue the final award within 30 days of his/her appointment, unless extended by the SCCA Court under exceptional circumstances[ix]. The award should primarily be issued based on written submissions[x], unless the parties agree otherwise, or the arbitrator deems a remote hearing to be necessary[xi].
Summary disposition of claims and defences
Under the New Rules and for time efficiency purposes, tribunals can now deal with jurisdictional objections, issues of admissibility, or legal merits of a claim or defence without having to follow the common or regular procedural steps of an arbitration[xii]. For instance, tribunals are permitted under the New Rules to dismiss a claim based on an allegation of fact or of law that is deemed manifestly meritless; to dismiss a claim for which no award can be rendered in the applicant’s favor under the applicable law; or to deal with any question of fact or of law that can be dealt via early determination.
Representation by foreign counsel
Parties can under the New Rules choose any person to represent them in the arbitration proceedings[xiii]. This wide permission indicates that parties are free to retain foreign legal representation or even non-lawyers. This freedom echoes the latest amendments made to the Saudi Code of Law Practice in furtherance to which foreign law firms can have offices in Saudi Arabia.
The most fundamental change for last: Sharia rules limited to Saudi-seated arbitrations
Article 31 of the 2016 Rules provided that: “Without prejudice of the rules of Sharia, the Tribunal shall apply the rules of law designated by the parties as applicable to the substance of the dispute”. In other words, the old rules made the compliance with the Sharia rules mandatory irrespective of the applicable law chosen by the parties.
Article 37 of the New Rules took out the reference to Sharia rules, therefore clarifying that arbitral tribunals will now solely apply the law designated by the parties, or absent such designation, the law it determines to be appropriate.
That said, Sharia rules remains fundamental to Saudi law and continues to apply to enforcement of awards in Saudi Arabia part of mandatory public policy rules.
Conclusion
In recent years, the SCCA has experienced significant changes aimed at enhancing its reputation and position as a premier arbitration centre, both locally and internationally.
Notably, the SCCA established SCCA Dubai in 2022, a branch office located in the Dubai International Financial Centre (“DIFC”), enabling parties to select the SCCA Arbitration Rules along with a DIFC seat. Similarly, and in the same year, the SCCA became a member of the International Federation of Commercia Arbitration Institutions, along with the world’s top 52 international arbitration centres[xiv].
With the publication of the New Rules, the SCCA is clearly sending a strong message to the arbitration community that it is on track to occupy a dominant position. Time will tell.
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[i] Revised SCCA Arbitration Rules Empower SCCA Court The official Saudi Press Agency (spa.gov.sa).
[ii] Article 7 of the New Rules.
[iii] Articles 16 and 18 of the New Rules.
[iv] Article 22 of the New Rules.
[v] Article 36 of the New Rules.
[vi] Article 18(1)(b) and (c) of the New Rules.
[vii] Article 37(4) of the New Rules.
[viii] Article 1(2) of the ODR Procedural Rules.
[ix] Article 11(1) of the ODR Procedural Rules.
[x] Article 10(1) of the ODR Procedural Rules.
[xi] Article 10(2) of the ODR Procedural Rules.
[xii] Article 26 of the New Rules.
[xiii] Article 9 of the New Rules.
