Saudi Centre for Commercial Arbitration adopts new rules

The Saudi Centre for Commercial Arbitration (“SCCA”) has published its revised set of Arbitration Rules (the “Rules”) (effective from 1 May 2023) following an extensive review and international consultation process. The aim of the changes is to provide “first-class case administration services while offering the flexibility to meet clients’ evolving needs”. The SCCA has stated that the Rules have been developed in accordance with international best practices to promote the SCCA’s reliability as a venue for those seeking to resolve disputes outside of court.

Saudi Arabia evolving as an arbitration hub

Several countries in the Middle East have developed independent and fully functioning arbitration regimes. Dubai and Bahrain for instance. Nonetheless the SCCA’s changes signal a growing choice for parties in dispute in the region, beyond the historically favoured location of Dubai.
As competition between ADR institutions has increased across the Middle East, the SCCA has revised and improved its arbitration rules three times between 2016 and 2023. These most recent changes have however been the most significant, conforming to the latest international standards in a bid to highlight the SCCA’s consistency with globally eminent arbitral institutions.

Key changes

1. Establishment of the SCCA Court

A significant change in the Rules is the establishment of the SCCA Court, comprising fifteen highly experienced international arbitration practitioners and led by Jan Paulsson as President. The creation of the SCCA Court means that the SCCA has now aligned itself with institutions such as the LCIA and ICC, which all have independent supervisory functions. In previous iterations of the Rules, the SCCA was the sole administrative institution responsible for the structure and running of arbitration proceedings. Whilst functionally acceptable, the lack of an independent body performing a supervisory function departed from accepted international practice. The Court’s role is to oversee key administrative decisions such as the appointment and removal of arbitrators, reviewing and approving draft awards, fixing administrative costs and fees. Notably, the SCCA Court’s decisions are binding on both parties and the tribunal, without any right of appeal or review.

2. Use of technology

Another important feature of the updated Rules is the increased role of technology throughout proceedings, from document filing to case management. The SCCA has clarified that technology will play a larger role for smaller claims in particular, by embedding the Online Dispute Resolution, or ODR, Procedure Rules (Appendix IV to the Rules) as an opt-out system (for disputes not exceeding SAR 200,000)(Approximately USD53,000).

In terms of the day-to-day running of an arbitration, the SCCA now permits the following uses of technology:

• electronic filing of documents (Article 4);
• virtual administrative conferences prior to constitution of the arbitral tribunal (Article 10);
• tribunal powers to determine the extent to which technology shall be used and whether a hearing shall be conducted, in whole or part, by videoconference (Articles 25 and 29); and
• electronic signing of awards, subject to applicable law (Article 36).

3. Expanded scope of tribunal’s discretionary powers

To secure the efficiency and integrity of proceedings, the Rules also expand the Tribunal’s discretionary powers and provide for the following:

• power to reject changes in party representation as a procedural safeguard (Article 9.3);
• determination of the most effective format for hearings (including remote hearings, Article 29);
• encouragement of parties to move to mediation where appropriate (Article 25.7);
• the power of the arbitral tribunal to, upon a party’s application, dispose of issues of jurisdiction, admissibility or legal merit early in proceedings (Article 26); and
• limitation of the length of written statements or requests, document production requests and / or witness evidence (Article 27).

4. Changes to deal with contemporary challenges

The updated Rules contain provisions which are intended to tackle challenges that parties might face in arbitral proceedings and follow similar provisions of other international institutions such as the LCIA, SIAC and HKIAC. These changes are intended to promote efficiency and transparency and they include:

• the ability for parties to deal with multi-contract disputes in a single arbitration (Article 11);
• the power of the SCCA Court to consolidate two or more arbitrations in certain circumstances (Article 13);
• a requirement that parties disclose all third-party funders or other non-parties with an economic interest in the outcome of the arbitration (Article 17.6); and
• the power of the SCCA to make public any award, order, decision or other ruling – subject to necessary anonymization – in the absence of an objection by any party (Article 36.3)

5. Applicable law and removal of Sharia rules

The new Rules expressly provide parties with autonomy to select the law applicable to the dispute, and remove the requirement to comply with Sharia rules.

This brings the Saudi arbitration system much more closely in line with other international arbitration institutions and jurisdictional laws, thereby making the SCCA a potentially global competitor. However, parties must be mindful to approach proceedings in a way that minimises the risk of unenforceability should the award be non-compliant with Sharia rules (for example, if the award makes provision for interest).

Conclusion

Since its relatively recent inception in 2014, the SCCA’s profile has grown steadily. Its caseload is now worth an estimated US$1.3 billion and the updated Rules reveal Saudi Arabia’s intention to align its arbitral system with the leading international arbitration jurisdictions and create a strong arbitral market in “the Middle East’s largest economy” . The emphasis on use of technology and streamlining proceedings seeks to make arbitration in Saudi Arabia more accessible to international parties. However, only time will tell whether the Rules will make Saudi Arabia a more attractive venue for arbitration over longer established jurisdictions like Dubai.