Dispute Resolution In Saudi Arabia Versus The
United Arab Emirates
The Top 5 Things Every
Company Should Know
Now with 2 bonus things!
Dr. Saud Al-Ammari, Chair, Saudi Arabia and Gulf Region, Blakes
Al Khobar, Saudi Arabia
Sara Biro, Former Senior European Counsel, Fitch Ratings
London, England
Ghada Qaisi Audi, Head of Legal, Ahmed Seddiqi & Sons LLC
Dubai, UAE
Shahram Safai, Partner, Dubai Office, Afridi & Angell
Dubai, UAE
Monica J. Palko, Deputy Chief Counsel, Platforms & Services, BAE Systems
Arlington, Virginia, USA
1) Which are easier to enforce: Foreign or
domestic awards? Arbitral or court?
UAE
KSA
• UAE ratified the New York Convention in 2006 though
Arbitral ratification may take up to 2 years under current
enforcement regime.
• Saudi Arabia is party to the New York Convention, Riyadh
Agreement, and GCC Convention and therefore
recognizes and enforces foreign arbitral awards.
• UAE is signatory to a number of bi-lateral/multi-lateral
treaties on enforcement of court orders/judgments.
• However, Saudi Arbitration Law requires that the arbitral
award and process do not violate Islamic law (Shari’ah).
• Conditions for enforcement of foreign judgments are set
out in Article 235 of the UAE Civil Procedure Code.
• The enforcement process is the same for both domestic
and foreign arbitral awards.
• Dubai Courts will not enforce a foreign judgment where it
would have had original jurisdiction.
• However, Saudi courts will more readily enforce a
domestic award since the arbitral award is more likely to
be Shari’ah compliant.
• DIFC Courts’ judgments over assets outside DIFC are
readily enforceable by the “competent entity” or via
“deputisation” to a Dubai Court judgment under Art. 221.
of the UAE Civil Procedure Code.
• DIFC Courts supervise DIFC-seated arbitrations
(domestically) and foreign awards where the assets are
within the DIFC.
• DIFC Courts Practice Direction (forthcoming) allows for
conversion of DIFC Courts’ judgments into DIFC-LCIA
arbitral awards.
• Saudi courts will only enforce foreign court judgments if
there is reciprocity between the two jurisdictions, which
is often not the case.
• There must also be reciprocity for foreign arbitral awards,
which is easier to meet because of international
arbitration treaties.
2) What are options for alternative dispute resolution?
UAE
KSA
• Dubai Courts introduced Centre of Amicable Resolution of
Disputes with jurisdictional threshold up to AED 500,000
(USD 136,000); Settlement Agreements are confidential.
• Saudi Courts: Shari’ah encourages mediation and Judges
have a duty to encourage settlement between the
parties.
• Dubai International Arbitration Centre (DIAC), Abu Dhabi
Chamber of Commerce and DIFC –LCIA are established
centres.
• Saudi Arbitration Law: No requirement for mediation
prior to arbitration. However, the arbitration tribunal can
mediate if authorized by the parties.
• DIFC Courts Small Claims Tribunal with jurisdictional
threshold up to AED 500,000 boasts resolution of
disputes within 3 weeks.
• If arbitrators do act as mediators, any decision must be
unanimous and decided in accordance with the rules of
equity and justice.
3) If the company elects formal litigation,
where should it file?
UAE
KSA
• Court heirarchy: Court of First Instance; Court of Appeal;
and Court of Cassation – civil law Arabic language
• Commercial cases in Saudi Arabia are heard in the Board
of Grievances (Diwan al-Mazalem).
• Only 3 Emirates submit to a federal court system; Dubai
and Ras Al Khaimah have independent court systems.
• There are three branches of the Board of Grievances
Courts: Commercial Circuit, and Administrative Circuit.
• DIFC Courts established in 2007 and located within the
Dubai International Financial Centre is a common law,
English language court applying DIFC Law (or parties’
choice of law).
• The Commercial Circuit deals with business disputes
amongst private parties, and is where you would file
litigation in Saudi Arabia.
• Opt-in jurisdiction introduced in 2011 for cases without
contacts with the DIFC.
• Enforceability of judgments through GCC Protocol
(regionally) and Riyadh Protocol (greater Middle East)
may be easier than enforcement of foreign court awards.
• The hierarchy of the courts starts with the Commercial
Courts (which are the trial courts), followed by Courts of
Appeals, and finally the Supreme Court.
• The court in the commercial circuit closest to where the
defendant resides will have jurisdiction.
4) What law will apply?
UAE
• Civil Law : UAE courts recognize the principle of freedom
to contract.
KSA
• Saudi Court: Saudi law will apply.
• An express foreign choice of law clause in a contract will
be recognized.
• Saudi Arbitration Law: Allows parties to choose
governing law for their contract and requires arbitrators
to apply that law.
• UAE courts are reluctant to apply foreign laws due to
issues involving public order or policy; if contrary to
domestic laws.
• However, governing law must be applied without
violating Shari’ah. Otherwise, enforceability in Saudi
courts is impacted.
• Common Law: In DIFC Courts, DIFC Law or parties choice
of law will apply.
• Saudi Arbitration Law, which covers both international
and domestic arbitrations, is modeled after the UNCITRAL
Model Law.
• The Rules of the DIFC Courts govern procedure, including
preliminary hearings, evidentiary rules and case
management.
• It is a big improvement over prior arbitration law and
more closely aligns Saudi law with international
arbitration practice.
• It provides the parties greater flexibility in choosing
arbitrators, arbitral rules, institutions, seat of arbitration,
and language.
5) What are some procedural considerations,
e.g., discovery, privilege?
UAE
• Lawyers are bound by duties of confidentiality, however,
the concept of privilege or “without prejudice” do not
exist per se and no “duty to the court” per se.
• The scope/extent of any discovery process is restricted to
requests for specific documents, which a party believes,
are in its opponent’s possession.
• Arbitration: the parties generally prefer to agree to IBA
Rules on Taking of Evidence.
• There is no DIFC legislation specifically dealing with
privilege though grounds for excluding the production of
documents are available under the RDC.
• Common law discovery applies in DIFC Courts, with ability
to apply for limitations on scope of e-discovery.
• Written witness testimony and witness hearings are
commonplace in DIFC Courts proceedings.
• DIFC Courts cases are public and judgments published online; high threshold to make proceedings private.
KSA
• There is limited discovery provided for in both Saudi
courts and Saudi arbitration.
• However, Saudi Arbitration Law allows parties to select
their procedural rules, which could include broad
discovery rights (if the parties agree to it).
• There are no Saudi statutes or case law governing
attorney-client privilege
• However, the principal-agent relationship (including
attorney-client) has implicit fiduciary and confidentiality
duties under Shari’ah.
6) What are the pros and cons of
being a foreign plaintiff or defendant?
UAE
• Pros:
• Existing civil law courts: follow the principle that all
parties are equal before the law.
• Open to business and resolution of grievances in the
court.
• Special Tribunal Related to Dubai World was created in
2009 to decide disputes related to the settlement of the
financial position of Dubai World and its subsidiaries.
• Cons:
• Proceedings and documents intended to be relied on: in
Dubai Courts must be in Arabic; and in DIFC Courts in
English.
• No doctrine of stare decisis in UAE courts; outcome
prediction can be problematic.
KSA
• Foreign Plaintiff Advantage: A foreign plaintiff that
successfully sues a Saudi entity in Saudi courts can more
easily enforce that court judgment in Saudi Arabia than a
foreign arbitral or court award.
• Foreign Plaintiff Disadvantage: A Saudi party has home
court advantage.
• Foreign Defendant Advantage: Saudis that successfully
sue a foreign defendant in Saudi courts are not able to
enforce the Saudi judgment in defendant’s home
jurisdiction.
• Foreign Defendant Disadvantage: Same disadvantages as
being a foreign plaintiff.
7) What are a company’s appellate rights?
UAE
KSA
• Right to appeal from the Court of First Instance to the
Court of Appeal.
• Under the new Saudi Arbitration Law, arbitral awards are
not subject to appeal.
• The Court of Appeal: appeal in relation to findings of
both fact and law.
• However, parties can apply to the Saudi courts to nullify
an arbitral award under limited public policy
circumstances.
• There is a right of further appeal to the Court of Cassation
on a point of law, which can either give final judgment in
the matter or remit the matter back to the Court of
Appeal for further findings.
• An application to set aside an arbitral award can only be
based on irregularities in the procedures that affected the
validity of the award and not the substantive merits of
the arbitration award.
• DIFC Courts provides 1 level of appeal from the court of
first instance before a 3-judge appeal’s panel; Small
Claims Tribunal matters are appealable to the court of
first instance before 1 judge.
• As supervisory court in DIFC-seated arbitrations, the DIFC
Arbitration law mirrors UNCITRAL presumption of “nonintervention;” grounds for setting aside or refusing
recognition and enforcement of an arbitral award mirror
Art. 5 of NY Convention.
• A complaining party must submit its application within 60
days of being notified of the award.
• If the competent court rules that the arbitration award is
valid and enforceable, there is no appeal allowed.
• If it rules the award is invalid, that ruling is appealable
within 30 days of notification.
If further questions, contact:
Dr. Saud Al-Ammari, Chair, Saudi Arabia and Gulf Region, Blakes
saud.ammari@blakes.com, +966-13-847-5050
Sara Biro, Former Senior European Counsel, Fitch Ratings
s.biro@btinternet.com
Ghada Qaisi Audi, Head of Legal, Ahmed Seddiqi & Sons LLC
ghada@seddiqi.com, +971 4 511 4439
Shahram Safai, Partner, Dubai Office, Afridi & Angell
ssafai@afridi-angell.com, +9714-330-3900
Monica J. Palko, Deputy Chief Counsel, Platform & Services, BAE Systems
monica.palko@baesystems.com, +703-907-8329