SAUDI ARABIA: An Introduction to Dispute Resolution
The Evolving Judicial Landscape
Saudi Arabia has been witnessing a quick-paced transformation, which has effected different sectors of the economy. The core aim and objective of these changes revolve around enhancement of clarity, uniformity and ease of doing business in the country.
The breadth of this transformation has also impacted the judicial system, and the dispute resolution regime has seen massive reforms in the past decade, with the pace of acceleration during the last five years being quite conspicuous. Changes in the courts’ procedural laws, issuance of ancillary laws and continuous improvements in the mechanism of delivering justice has increased transparency, uniformity and efficiency. In addition, the developments and changes have resulted in speedy completion of trial and conclusion of cases in a timely manner.
These changes have impacted different areas and arenas of the judiciary, and several new laws and regulations have created a cascading effect in improving efficiency and efficacy.
The Commercial Courts Procedural Law, 2020 (CCPL)
Although separate commercial courts have been set up in different cities and towns since 2017 to hear disputes related to commercial transactions, commercial contracts and disputes surrounding bankruptcies, financial restructuring and violations of commercial regulations; these disputes have been governed by the Sharia Courts Procedural Law. However, in June 2020, the Commercial Courts Procedural Law (CCPL) came into effect, which clearly demarcated the subject matter and provided the commercial courts with an exclusive jurisdiction, in addition to setting a full-fledged process and procedure for handling commercial disputes.
One of the key features of the CCPL is clear prescription of timelines for conducting trial at different stages, which ensures swift and timely resolution of disputes. The CCPL enables parties to settle their disputes amicably through the commercial court’s “Taradhi” portal which allows merchants to agree on specific litigation procedures including the number of memos to be submitted, notification process, schedule of submissions, and appointment of experts, albeit with certain restrictions related to public policy, non-violation with other provisions of the CCPL, etc.
The CCPL provides a simplified mechanism for filing petitions against debtors under “Writ of Debt” process, as long as the debt is clearly defined, evidenced in writing and due for payment.
The Law of Evidence, 2022
The Law of Evidence, which became effective on 7 July 2022, is a comprehensive law codifying the entire process and procedures related to evidentiary issues. While the Law of Evidence has maintained a few provisions available under various courts’ procedural laws, it brought in sweeping changes to the means and mechanism to deal with evidence in light of continual development in the civil and commercial arenas. While it entitles a court to reject fully or partially any evidence, it requires the court to narrate its reasons for rejection in the judgment.
Besides reiterating the premise that the plaintiff carries the obligation prove their right, the Law of Evidence has placed a restriction that evidence related to issues of the subject of the lawsuit should only be admissible, and specifically disallows judges to rule on cases on the basis of their personal knowledge. Borrowing the principle of parties’ autonomy from arbitration principles, the Law of Evidence obliges courts to accommodate any agreement between the parties vis-à-vis evidentiary issues, provided the agreement is in writing, a provision which was hitherto not available in the courts’ procedural laws. Similarly, it requires courts to apply the conclusions and findings of experts in full if the parties had agreed on such an arrangement before the commencement of litigation.
Elaborated definitions, conditions and criteria of admissibility of different types of evidence, including electronic and digital evidence, have provided a greater clarity on admissibility and non-admissibility, which enable litigants and legal practitioners to determine the evidence that could be presented to the court and the defence available to them in light of the evidence.
Judicial Fee Law, 2022
Coming into effect on 17 March 2022, the primary objectives of the Judicial Fee Law revolve around (i) eliminating or restricting malicious or fictitious lawsuits and (ii) urging litigants to take the route of compromise or amicable settlement to settle their disputes.
The judicial fee involved in raising lawsuits ensures that only litigants with genuine and indisputable claims will raise them, thereby reducing the burden on courts and judges. As the judicial fee is linked to the value of claims, litigants can no longer afford to exaggerate the values of their claims. Moreover, as the losing party carries the burden of paying the judicial fee, defendants tend to settle genuine claims with the plaintiff before the trial to avoid payment of the fee.
Civil Transactions Law (CTL), 2023
Since 18 June 2023, when it became effective, the Civil Transactions Law has created a huge impact and it will continue to cause a cascading effect on the administration of justice. Essentially, one of the objectives of the law is to ensure uniformity and consistency in determination of issues and disputes. The extent, expanse and applicability of this law in general is quite vast and it also obliges courts to apply in full the principles, premises and basis for determining different issues and subjects.
The CTL defines in greater detail issues related to capacity of persons, principles for validating and invalidating a contract, interpretation of a contract, ascertaining compensation, compensation in lieu of performance, rights and obligations of contracting parties, rights and obligations related to movable and immovable properties, leasing, usufruct, crop sharing, easement of rights, guarantees, sureties, securities, claims of damages, unjust enrichment, insolvency, sale purchase arrangements, and principal agent relationship, etc. The definitions, basis and conditions related to different subjects as provided in the CTL enable litigants to invoke the relevant provisions for substantiating their claims or raising defences before the courts.
For instance, although, the courts were cautious in denying claims that were not raised within a reasonable time, with the issuance of CTL, they are now obliged to apply limitations related to lapse of time, albeit only if a litigant party or a party having interest in the matter invokes it. Similarly, prior to the issuance of the CTL, the courts did not readily entertain claims for damages covering loss of profits. The CTL now requires courts to determine compensation in proportion to the losses sustained and/or profits lost due to any wrongful act which the aggrieved party was unable to avoid by making reasonable efforts. The CTL specifically allows compensation for moral damages against psychological stress or libel, and courts are required to assess damage and award compensation.
As the CTL enables legal practitioners to invoke the relevant provisions to claim, deny or make a counterclaim, it provides them with a clear insight not only for tackling an issue but also predicting the outcome.
Conclusion
Apart from the laws covered in this overview, other changes to different laws and regulations covering the dispute resolution regime have enhanced the efficiency and efficacy of judiciary enormously. One other noteworthy development relates to serving of summons upon defendants through the court’s portal and mandating that hearings be held as if all of the litigants were present, as long as they were duly summoned through the required means by the court. This has eased the burden upon plaintiffs in locating defendants, serving summons upon them and obtaining their acknowledgment. Similarly, the process of enforcement of judgments through the digital portal and the enforcement courts handling the request in a sequential manner, which includes ordering disclosure of movable and immovable assets, seizure of assets and other measures, has simplified the execution of judgments.