Undoubtedly, the recent economic and technological developments worldwide have created greater openness in the world of finance and business, leading to the emergence of new commercial transactions characterized by complexity and branching. Naturally, disputes have arisen, prompting the necessity of finding amicable solutions and methods to resolve them quickly and flexibly. This is essential to provide a favorable environment that encourages trade and investment and promotes a culture of negotiation to address the challenges of economic globalization (1).
The Saudi regulator The Saudi regulator has taken care to establish legal rules and procedures that ensure the trader can reach a swift resolution, securing their rights without waiting for a judicial decision on the matter. Accordingly, the executive regulations of the Commercial Courts Law, issued under Minister of Justice Decision No. 8344 dated 26/10/1441 AH, dedicate Chapter Eleven (Articles 57 to 64) to clarifying the procedures for reconciliation and mediation. These procedures aim to achieve prompt justice, reduce the burden on judicial authorities and litigants, serve as a tool to balance the rights of parties and economic interests, and contribute to economic development, aligning with the objectives of Saudi Arabia’s Vision 2030.
Definition of Reconciliation
The Saudi regulator did not define reconciliation in the Commercial Courts Law issued under Royal Decree No. 93 dated 15/8/1441 AH or its executive regulations. However, the definition of reconciliation appears in Article 1 of the Rules for Operations in Reconciliation Offices and Their Procedures, issued under Ministerial Decision No. 53792 dated 27/7/1435 AH, where it is defined as:
“A consensual method for resolving disputes undertaken by reconciliation offices either fully or partially.”
Accordingly, reconciliation can be defined as “a consensual method for resolving disputes, whether through the court, reconciliation offices, or the parties themselves, and whether the settlement is partial or complete.”
Procedures for Reconciliation before Filing a Lawsuit
Initially, the Executive Regulations of the Commercial Courts Law referred, in the absence of a specific provision in the Commercial Courts Law or its executive regulations, and unless the parties agree on special procedures regarding reconciliation and mediation in a commercial dispute, to the Rules for Operations in Reconciliation Offices and Their Procedures (2) .
Reconciliation may take place before filing a lawsuit by agreement of the parties. In this case, the parties must apply to the Reconciliation Center established under Council of Ministers Decision No. 103 dated 8/4/1434 AH, affiliated with the Ministry of Justice. They submit a reconciliation request according to the approved form. The request is registered on the day of submission and is assigned a unique reference number.
The Director of the competent reconciliation office, or a delegate, then refers the reconciliation request to conciliators from among the Ministry’s staff or registered conciliators, taking into account the interest of the parties and the instructions issued by the Center in this regard. The preference of the parties is also considered whenever possible (3).
Subsequently, the dates of the reconciliation sessions are scheduled, and attendance and the procedures for the reconciliation session are conducted as set out in Articles 14, 15, and 16 of the Rules for Operations in Reconciliation Offices and Their Procedures. If reconciliation ends in a full settlement, the conciliator prepares a conciliation report in accordance with the provisions of Chapter Five of the Rules.
The question arises: Is it mandatory to attempt reconciliation before filing a lawsuit in all cases, or does the regulation require it only in some cases or under certain conditions?
The answer is as follows:
Lawsuits and Situations Requiring Prior Reconciliation and Mediation
The regulator requires prior reconciliation and mediation before filing a lawsuit in the following cases:
- a) Disputes arising from partnership contracts stipulated in the Civil Transactions Law (4).
- b) Disputes between merchants arising from their principal or ancillary commercial activities, if the value of the original claim does not exceed one million Saudi Riyals.
- c) Lawsuits filed against a merchant in commercial contract disputes, whenever the value of the original claim in the lawsuit does not exceed one million Saudi Riyals.
- d) Lawsuits between spouses or between parties related by kinship up to the fourth degree.
- e) Lawsuits related to contracts that include a written agreement to resort to reconciliation, mediation, and amicable settlement before approaching the judiciary.
How to Prove Prior Reconciliation before Filing a Lawsuit
Article 59/1 of the Executive Regulations of the Commercial Courts Law addresses the method for proving prior reconciliation before filing a lawsuit. It stipulates that:
“Prior recourse to reconciliation is verified by presenting a document showing that the reconciliation ended either without a settlement or with a partial settlement of some disputes, or by presenting proof of the initiation of reconciliation procedures; provided that the duration of these procedures does not exceed thirty (30) days from the date of initiation, unless the parties agree on a longer period. The filing of the lawsuit does not prevent the continuation of the reconciliation and mediation process.”*
If prior reconciliation before filing the lawsuit is not proven, the administration shall refuse to register the lawsuit due to non-compliance. The applicant must complete the missing requirements within fifteen (15) days from the date of notification. If the lawsuit is registered after compliance, it is considered registered from the date of submission of the application. If the applicant fails to comply within this period, the application is deemed null and void. In all cases, the administration must record the date of filing the application (9).
Procedures for Reconciliation after Filing a Lawsuit
The parties may agree to reconciliation after filing the lawsuit, at any stage of the proceedings. In this case, the court refers the parties to the Reconciliation and Mediation Center, and the judge must record this in the session minutes (10).
More than one reconciliation session may be held, provided that the number of sessions does not exceed three, and the total duration of procedures from initiation does not exceed thirty (30) days, except in the following cases:
- Disputes for which the Reconciliation Office specifies longer durations.
- Other disputes with the approval of the Director of the Reconciliation Office, based on a reason stated by the conciliator (11).
If the parties reach reconciliation or settlement after filing the lawsuit, the agreed terms are documented in a conciliation record, signed by the parties and the competent official, and it is endorsed with an executive formula (12). The approved session minutes are considered an enforceable instrument, and a copy is delivered according to the procedures for delivering judgments. The lawsuit is considered terminated accordingly (13).
Reconciliation may also be executed through an enforceable instrument, in which case the parties must provide the court with a copy, and the lawsuit is deemed terminated upon submission (14).
Reconciliation may further occur through a settlement offer made by one party, either for a fixed period or without a deadline, to the other party. The offering party may withdraw the offer at any time. If the other party accepts the offer before it is withdrawn, the approved session minutes of this reconciliation are considered an enforceable instrument, and a copy is delivered according to the procedures for delivering judgments, thereby terminating the lawsuit (15).
How is reconciliation defined within the legal framework of Saudi Arabia’s commercial disputes?
In the legal framework of Saudi Arabia’s commercial disputes, reconciliation is not explicitly defined within the Commercial Courts Law (Royal Decree No. 93) or its executive regulations. Instead, the formal definition is established in Article 1 of the Rules for Operations in Reconciliation Offices and Their Procedures (Ministerial Decision No. 53792), which defines it as:
“A consensual method for resolving disputes undertaken by reconciliation offices either fully or partially”.
More broadly, based on the application of these rules, reconciliation is understood as a consensual method for resolving disputes whether it occurs through the court, reconciliation offices, or the parties themselves, and whether the resulting settlement is partial or complete.
The primary purpose of these procedures is to provide a swift resolution to disputes, securing the rights of traders without the need for a judicial decision. This approach aims to reduce the burden on judicial authorities, balance the interests of the parties, and support economic development in line with Saudi Arabia’s Vision 2030
Which specific types of lawsuits require mandatory prior reconciliation before they can be filed in court?
According to the sources, the Saudi regulator mandates prior reconciliation and mediation before a lawsuit can be officially filed in the following specific cases:
- Disputes arising from partnership contracts as defined in the Civil Transactions Law.
- Disputes between merchants concerning their principal or ancillary commercial activities, provided the original claim value is one million Saudi Riyals or less.
- Lawsuits against a merchant involving commercial contract disputes, if the original claim value does not exceed one million Saudi Riyals.
- Lawsuits involving family members, specifically between spouses or parties related by kinship up to the fourth degree.
- Contractual disputes where the parties have a written agreement to seek reconciliation, mediation, or an amicable settlement before going to court.
Failure to prove that prior reconciliation was attempted in these cases can result in the administration refusing to register the lawsuit.
Overview of How Reconciliation is Applied in Commercial Transactions in Kingdom of Saudi Arabia
The text details the legal framework and procedures for reconciliation within Saudi Arabia’s commercial sector, highlighting its role in fostering an efficient investment environment. It emphasizes that amicable dispute resolution is a key component of Vision 2030, designed to reduce the burden on the judiciary through consensual settlements. The regulations mandate prior mediation for specific cases, such as those involving kinship or claims under one million riyals, and require proof of these efforts before a lawsuit can be registered. Parties may also pursue reconciliation after litigation has begun, with formal agreements serving as legally enforceable instruments that terminate the court proceedings. Ultimately, these rules ensure that commercial rights are secured through flexible, time-sensitive processes managed by specialized reconciliation offices.
Sources:
1- Labna Awin and Ahmed Hussein: Reconciliation in Commercial Disputes According to Law 22-13 Amending and Supplementing the Algerian Civil and Administrative Procedure Code, a study published in the Journal of Law, Society and Authority, Volume (13), Issue (2), September 2024, and published on the website Reconciliation in Commercial Disputes According to Law 22-13 Amending and Supplementing the Algerian Civil and Administrative Procedure Code (5) pdf, accessed on 19/04/2025 at 6:00 PM.
2- Article (57) of the Executive Regulations of the Commercial Courts System issued by Decision of the Minister of Justice No. 8344 dated 26/10/1441AH. 3- Article (13) Paragraphs (2, 3, 4) of the Rules of Procedure and Procedures for Reconciliation Offices issued by Ministerial Resolution No. 53792 dated 27/07/1435 AH.
4- Article (16/3) of the Commercial Courts System issued by Royal Decree No. 93 dated 15/08/1441 AH, as amended by the Commercial Courts System issued by Royal Decree No. 93 dated 05/08/1441 AH.
5- Article (11/A) of the Executive Regulations of the Commercial Courts System issued by Minister of Justice Decision No. 8344 dated 26/10/1441AH
6- Article (58/C) of the Executive Regulations of the Commercial Courts System issued by Minister of Justice Decision No. 8344 dated 26/10/1441AH
7- Article (58/D) of the Executive Regulations of the Commercial Courts System issued by Minister of Justice Decision No. 8344 dated 26/10/1441AH
8- Article (58/H) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441AH
9- Article (59/2) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441AH
10- Article (60) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441 AH
11- Article (7) of the Rules of Work and Procedures in Reconciliation Offices issued by Ministerial Decision No. 53792 dated 27/07/1435 AH
12- Article (61) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441 AH
13- Article (29/2) of the Commercial Courts Law issued by Royal Decree No. 93 dated 15/08/1441 AH, as amended by the Commercial Courts Law issued by Royal Decree No. 93 dated 15/08/1441 AH.
14- Article (62) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441 AH.
15- Article (64) of the Executive Regulations of the Commercial Courts Law issued by Minister of Justice Decision No. 8344 dated 26/10/1441 AH.
