On 1 May 2023, the Saudi Center for Commercial Arbitration (SCCA) announced the publication of its revised SCCA Arbitration Rules (the 2023 SCCA Rules).

The 2023 SCCA Rules represent another important milestone in the rapid evolution of the SCCA and reaffirm the commitment of the SCCA to pursuing its ambitious vision of becoming “the preferred ADR choice in the region by 2030”. This follows the opening of the SCCA’s first regional office in the Dubai International Financial Center (DIFC) in February 2023 and the SCCA’s active promotion of the SCCA Arbitration Rules for DIFC-seated arbitrations. One important change that will assist adoption outside the Kingdom is that the 2023 SCCA Rules now require the Arbitral Tribunal to unconditionally apply the parties’ choice of law, with the qualification in the previous Rules that they must do so “without prejudice to the rules of Sharia” being removed.

The 2023 SCCA Rules also clearly signal an intention by the SCCA to continue reviewing and updating the rules to address practical and commercial concerns identified by arbitration users and practitioners at a pace that few, if any, other arbitral institutions have matched in recent years. In doing so, the SCCA is positioning itself as a forward-thinking, innovative and modern institution.

The context

The Kingdom of Saudi Arabia introduced a new Arbitration Law in 2012.¹ Shortly afterwards, the SCCA was established pursuant to a Ministerial Decree in 2014 ² and became operational at the end of 2016 when its first Arbitration Rules were published. These rules were largely based on the UNCITRAL Arbitration Rules and, like the Arbitration Law, were generally received favourably (if somewhat cautiously) by both local and foreign investors.

The 2016 SCCA Rules were then amended in 2018 through the introduction (among other things) of an expedited procedure for disputes under SAR4 million and provisions for the appointment of an emergency arbitrator with the power to award provisional or precautionary measures such as injunctive relief and measures for the protection or conservation of property.

The 2016 SCCA Rules were then further updated in September 2021 with a number of changes to the fees and costs aimed at making arbitrations under the SCCA Rules more cost-effective for parties and considering the need for online accessibility for parts of the arbitration process, post Covid-19.

Concurrently with publishing the 2021 updates, the SCCA commenced a process to consider 28 further potential areas for improvement. This was managed in consultation with the SCCA Rules Advisory Committee, which includes 16 international subject-matter experts from various countries and culminated in publication of the 2023 SCCA Rules.

Increased speed and efficiency

A frequent complaint from arbitration users and practitioners is that the efficiency and cost-effectiveness of arbitration can be undermined by a party submitting unfocused, repetitive or unnecessarily lengthy pleadings or by pursuing claims or defences that have no realistic prospect of succeeding.

It is clear that many of the changes introduced in the 2023 SCCA Rules are aimed at empowering and encouraging Arbitral Tribunals to be more proactive in addressing these concerns. The President of the new SCCA Court, Professor Jan Paulsson, has confirmed that the 2023 SCCA Rules “are designed for optimal efficiency while compromising no feature of due process in international arbitration”.

One of the most notable changes in this regard is new Article 26 in relation to the early disposition of claims and defences. This allows a party to make an application within 30 days of receipt of the relevant pleading, requesting the Tribunal to deal with any issues of jurisdiction, admissibility or legal merit in advance of the remaining issues in dispute. Specific examples of where an application could be made under this Article include where a material legal or factual allegation is manifestly without merit, or where no award could be made in a party’s favour even if the factual allegations it relies upon are assumed to be true.

In addition, the 2023 SCCA Rules empower the Arbitral Tribunal to make procedural orders limiting the length of content of written submissions or witness evidence, limiting requests for document production and requiring a party to permit inspection of premises or objects. While Arbitral Tribunals could arguably take all of these steps under the previous Rules given their broad general discretion to “conduct the Arbitration in whatever manner it considers appropriate”, it is hoped that they will be more willing to take these steps now that they have been explicitly set out in the 2023 SCCA Rules.

Arbitral Tribunal composition and SCCA Court

One of the welcome features of the 2016 SCCA Rules was the mechanism for seeking party input on administrator-appointed arbitrators. This mechanism, whereby each party is provided with an identical list of candidates and can strike off names objected to and rank the remaining candidates before an appointment is made, allows parties a meaningful opportunity to provide input into the appointment process for non-party-nominated arbitrators.

This mechanism has been retained, but it is now administered by the newly introduced SCCA Court which consists of 15 international arbitrators, academics, former leaders of arbitral institutions, retired appeal court judges and high-profile practitioners from 12 countries. The SCCA Court will make key administrative decisions in relation to arbitrations conducted under the SCCA Rules and brings the SCCA in line with other international institutions including the ICC, LCIA, DIAC and SIAC. This is another positive development because it ensures that the appointment of arbitrators and other key decisions that impact the arbitration are being made by the experienced individuals who sit on the SCCA Court (which is an independent body from the SCCA). This will enable international entities to be reassured of the robust and transparent nature of an SCCA-administered arbitration.

Additional changes introduced in the 2023 SCCA Rules include a clearer delineation between the nomination of arbitrators and their appointment by the SCCA Court, and providing the SCCA Court with the power, in exceptional cases, to disregard an agreed nomination process and directly appoint arbitrator(s) where doing so would avoid unfairness or unequal treatment that could undermine the validity and enforceability of an award.

Arbitrators are now expressly required to act in accordance with the SCCA Code of Ethics for Arbitrators which sets out seven ethical canons, each with a number of subsidiary rules. This should provide additional comfort to parties by ensuring clarity of expectation and consistency of approach between arbitrators.

Environmental impact

There has been a growing awareness in the industry over recent years of the environmental impact of arbitrations, which traditionally have involved large volumes of physical documents and extensive travel by parties, lawyers, witnesses and tribunal members. It is therefore encouraging to see that the 2023 SCCA Rules expressly encourage the Arbitral Tribunal and parties to consider how the use of technology and electronic evidence could be used to reduce the environmental impact of the arbitration.

Conclusion

The 2023 SCCA Rules are a welcome revision, particularly insofar as they empower and encourage Arbitral Tribunals to take a more proactive role in managing disputes and disposing of preliminary issues or unmeritorious claims or defences at an early stage. The 2023 SCCA Rules may be found here.

For further information, please contact the Dentons team.

This article is also available in Arabic, click here to download.

1. (Royal Decree M/34 on 24/5/1433H), which came into force on 17/8/1433H (corresponding to 7 July 2012)
2. Council of Ministers Decree No. 257 dated 14/6/1435H, as amended by Council of Ministers Decree No. 107 dated 8/4/1437H (corresponding to 11 May 2016)