The Enforcement of International Arbitral Awards in the Kingdom of Saudi Arabia: Concepts and Practices

Document Type

Dissertation

Publication Date

2020

Abstract

Arbitration loses its value if awards are neither recognized nor enforced. It has been two decades since the Kingdom of Saudi Arabia (KSA) signed and ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC). Nonetheless, major international corporations resist entering into arbitration agreements with Saudi parties or reject Saudi Arabia as the seat of arbitration. Due to the absence of clear laws and unpredictable practices in Saudi courts, the enforcement of international arbitral awards (IAAs) faces obstacles that limit their effectiveness. Saudi laws and procedures in enforcing international judgments and arbitral awards have undergone some improvements and modernization. Yet, Saudi persistence and consistency remains an open concern. This thesis addresses and examines the IAA enforcement-related concepts and explores the practice in Saudi courts to better understand and harmonize IAA enforcement.

According to article V of the NYC, an IAA may not be enforced if it is contrary to the public policy of the contracting state. Many believe that public policy and Sharia have a negative influence on the enforcement of IAAs in the KSA; however, I argue that conflicting norms between the KSA and international practice hold the most influence over IAA enforcement in the KSA. Indeed, the inconsistencies in the application of public policy and Sharia for IAAs contribute to enforcement complexities. The Saudi courts mistakenly equate public policy and Sharia notions as the same. While a substantial difference exists between the two notions, Saudi courts do not distinguish between public policy and Sharia — it is not recognized whether Sharia or public policy is the primary condition to enforce IAAs.

One of the objectives of international law is proper application and interpretation of international standards and practices by national courts. Saudi legal principles are in conflict with the norms of international jurisdiction. For the enforcement of IAAs to become clearer and more effective, it is critical that the KSA amend its public policy definition and develop more coherent distinctions between public policy and Sharia. In this thesis, I propose twelve policy recommendations to mitigate problems with the enforcement of IAAs. If the Saudi lawmaker applies these recommendations, the KSA will be a more predictable and arbitration-friendly state, increasing the confidence of the international community and leading to more commercial transactions with Saudi counterparts. It will also lead to a more grounded future for arbitration in the KSA that caters to local needs and global conditions.

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