IN CONVERSATION WITH ADRIAN WINSTANLEY 39
ROOM FOR IMPROVEMENT Whilst elements of the legal framework necessary for arbitration have been put in place, significant drawbacks to arbitrating disputes remain. For example, courts still display a tendency to intervene in arbitration cases, contrary to the 2012 Law: in a recent case under UNCITRAL Arbitration Rules, the DammamCourt of Appeal has required the parties to nominate their arbitrators at scheduled court hearings, rather than allowing them to follow the procedure for appointing arbitrators under the Rules. There is also a degree of uncertainty surrounding how the 2012 Law should be applied, given that Implementing Regulations (commonwith Saudi legislation) have yet to be passed in relation to the 2012 Law. For example, at present, it is not clear whether a sole arbitrator or a tribunal chairmanmust be a Saudi national, or a foreignMuslim, as per the requirements under the 1983 Law. The 2012 Law states only that a sole arbitrator or chairmanmust be ‘of full capacity, of good conduct and reputation and the holder of at least a university degree in legal science’. Accordingly, it is unclear whether an arbitral awardmade on the basis of the 2012 Law could be challenged if the sole arbitrator or chairmanwas not a Saudi national or aMuslim foreigner. Prompt enactment of the Implementing Regulations would resolve this issue, and others, before they develop. DEMONSTRABLE COMMITMENT Another development which should serve to improve the situation is the recent announcement [April 2014] that a newarbitration centre – the Saudi Centre for Commercial Arbitration –will be established in Riyadh, possiblywith branches outside of Saudi Arabia (including the UK). Full details are yet to be released, but the announcement demonstrates the commitment of the Saudi Government to nurturing arbitration as vital to continued foreign investment in KSA. The Centre will have its own set of local arbitration rules, tailored to the requirements of the 2012 Arbitration Law; this will greatly streamline the domestic arbitral process by avoiding the need to rely on international arbitration centres, and their respective rules. Moreover, parties still wishing to arbitrate disputes at centres outside KSA will have recourse to the 2013 Enforcement Lawas a means of recovering sums awarded. IN CONCLUSION Although the enactment of the 2012 Lawhas provided an element of comfort to investors, and greater certainty of outcome should a dispute arise, there remains work to do. Two years on, the trend remains for arbitration concerning Saudi contracts to be seated in foreign centres and there are relatively fewSaudi arbitrations: largely due to the inevitable lead time after parties began writing the 2012 Law into arbitration clauses. Further measures are being put in place to improve the situation (as outlined above), after which KSA will be in a better position to establish a stronger track record of arbitration; giving foreign investors increased confidence that that the Kingdom is a good place to do business. In the meantime, parties should beware of the fault-lines in the existing legal framework. A version of this article was published in Asia-MENA Counsel Magazine, May 2014
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