The Saudi Arbitration Law 2012 assessed against the core principles of modern international commercial arbitration: a comparative study with the model law and Scots law

Abstract

Following the Aramco arbitration in 1963, Saudi Arabia’s approach to international arbitration resulted in a reputation for being an arbitration unfriendly country. This was addressed to some extent by the Arbitration Law of 1983. However, arbitration under the 1983 law remained dependent on the approval of the national courts. With too much scope for judicial intervention, the legal framework undermined the final and binding nature of the award, constrained party autonomy and created inefficient delays. In 2012, a new Law of Arbitration was passed to replace the 1983 law with a legal framework intending to meet the needs of international commercial parties. The question addressed by this thesis is whether the Arbitration Law of 2012 (SAL 2012) succeeds in creating a legal framework that is consistent with the three core principles that provide the foundations for modern international commercial arbitration. These core principles of party autonomy, procedural justice and cost-effectiveness were used as normative tools for assessing the provisions of the SAL 2012, which were based on the UNCITRAL Model Law. Relying on those principles, the SAL 2012 was subjected to a comparative legal analysis, using the Model Law and the Arbitration (Scotland) Act 2010 as comparators. Although hampered by a lack of available case law involving the SAL 2012, the analysis concluded that the SAL 2012 is a very significant development, providing a legal framework that facilitates arbitration, encourages a pro-arbitration culture and achieves a balance between the three core principles that should meet the needs of international commercial parties. Despite this, the law could be further reformed to make Saudi Arabia even more attractive as a location for arbitration. While acknowledging that future reform should be guided by empirical research on arbitration in Saudi Arabia, proposals were made for the further development of a pro-arbitration legal framework.