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Saudi Center for Commercial Arbitration publishes a draft of its new Arbitration Rules

The Saudi Center for Commercial Arbitration has published a draft of its 2023 Arbitration Rules.

The 2023 draft Arbitration Rules contain significant amendments to SCCA’s 2018 Arbitration Rules, with a view to updating them to (in the Center’s words) “reflect international best practices in commercial arbitration”.

Key points from the draft Arbitration Rules include the following changes (all references to Articles are those proposed in the draft):

  • Articles 1 and 2 now refer to the Court of the Saudi Center of Commercial Arbitration (the SCCA Court) which is independent of the SCCA and will have a number of responsibilities including appointment of arbitrators under Article 17 and scrutiny/approval of the form of arbitral awards under Article 38.
  • There is additional language added to Article 4(2) on default notification provisions which provides that in the absence of a designated email address, a notice shall be deemed to have been received if delivered to the party or the authorised representative at the email address or facsimile number which the addressee holds out to the world at the time the notice is sent.
  • Article 7 (Emergency Measures of Protection) will require an Emergency Arbitrator to issue an interim award no later than 15 days from the date on which the file was transmitted to them, subject to extension if necessary. No period was indicated in Article 6 of the existing 2018 Rules.
  • Amendments to Article 8 (Amendments to the Claim or Defence) aims to clear up ambiguity in the existing Rules and grants an arbitrator authority to order a party seeking to amend or supplement its claims to pay security. This follows the practice of the Saudi Courts which often makes similar orders in cases where a party requests precautionary measures to be taken prior to final determination of any claim. It is unclear whether the security payment described in the new Rules would be intended to cover the tribunal’s costs or is intended to offer some wider protection to the other party. The SCCA will consider and offer some guidance in the practice notes.
  • Article 9(3) covers changes of legal representation by the parties, which will be subject to approval by the tribunal to ensure proceedings are protected in the event of potential conflicts arising with any newly appointed representatives and appointed arbitrators. The tribunal may refuse to allow a proposed change in representation if it considers it necessary to safeguard the composition of the tribunal or the finality of the award, considering the stage of the arbitration and likely impact of the proposed change in representation.
  • Article 11 (Multiple Contracts) allows for claims arising in connection with more than one contract to be advanced in a single arbitration, even if the claims are made under more than one arbitration agreement. This is subject to Article 8 (Amendments to Claim or Defence) and Article 14 (Objection to Jurisdiction).
  • Article 13(4) (Consolidation) provides that where the SCCA Court decides to consolidate two or more arbitrations, each party in those arbitrations shall be deemed to have waived its right to nominate an arbitrator. Appointment of the arbitrator(s) shall be completed by the SCCA Court who may revoke the confirmation or appointment of any arbitrators, appoint additional arbitrators or select one of the previously appointed arbitrators to serve in the consolidated arbitration.
  • Article 35 (Time Limit for Award) provides that arbitral awards must be issued within 90 days from the date of closing of proceedings. Article 30 of the existing rules provides for 60 days.
  • Article 38(3) provides that awards may be published either completely or in redacted form. The reference to redacted awards is not found in the existing Rules. The parties may object to the publication of an award but such objection must be made before the arbitration has concluded.
  • Any reference to substantive laws is removed from the new rules including reference to Shariah law applicable in Saudi Arabia. This is not to say that Shariah law will not apply to the enforcement of awards within KSA, but the SCCA felt is appropriate to ensure the news rules only refer to procedural laws.
  • Article 27 allows for the early disposition of unmeritorious claims and defences. This is a new provision still under review whose intention is to protect parties from guerrilla tactics adopted as defence tactics, usually by parties with deeper pockets than their counterparts.

These proposed amendments appear logical and thought-out, and if enacted will be welcomed by the arbitral community as another positive development to the SCCA Rules.

The consultation will end on 19 March and comments may be submitted to the SCCA by email (info@sadr.org) until then.

After the consultation period ends, the new Rules are expected to come into effect in the second quarter of 2023, possibly as early as the end of April.

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