The legal and economic system in the Kingdom of Saudi Arabia has witnessed remarkable development in recent years, particularly in the field of commercial dispute resolution, where arbitration has become one of the main tools for resolving disputes quickly and effectively.
In this context, institutional arbitration plays a fundamental role in enhancing the business environment and attracting domestic and foreign investments to the Kingdom. Accordingly, Council of Ministers’ Decision No. 851, issued on 29/11/1446H, was adopted to regulate institutional arbitration in the Kingdom.
The Impact of the Council of Ministers’ Decision on the Arbitration System in the Kingdom:
The decision aims to regulate the institutional arbitration sector in the Kingdom by providing that no new arbitration centers may be established in the Kingdom while maintaining the validity of the existing licenses of arbitration centers not affiliated with the Federation of Saudi Chambers, with the suspension of issuing new licenses for such centers pursuant to Council of Ministers’ Decision No. (68) dated 21/1/1445H establishing the Permanent Committee for Saudi Arbitration Centers.
As for arbitration centers affiliated with the Federation of Saudi Chambers, they shall continue carrying out their activities and issuing licenses, unless their activity is suspended by the Permanent Committee for Saudi Arbitration Centers. (1)
Provided that the above does not prejudice the initiative to establish arbitration centers in special economic cities and zones, which is one of the initiatives of the National Investment Strategy, approved by Council of Ministers’ Decision No. (134) dated 28/2/1443H. (2)
Features of Licensing Arbitration Centers Affiliated with the Federation of Saudi Chambers:
The Licensing Rules Bylaw for Arbitration Centers Affiliated with Saudi Chambers regulates the procedures and provisions for licensing such centers, beginning with applying for a preliminary license, then procedures related to the final license and its financial fees, passing through the license duration and renewal procedures, and finally license cancellation, as follows:
1- Submitting the Preliminary License Application:
It is required to obtain the preliminary approval of the Permanent Committee for Saudi Arbitration Centers – established by Council of Ministers’ Decision No. (68) dated 21/1/1445H – to establish an arbitration center affiliated with the Federation of Saudi Chambers by submitting an application in the form prepared by the stated Committee along with the required documents, in addition to payment of a non-refundable financial amount equal to 25% of the license fee in return for reviewing the application. The Committee shall study the application and decide thereon within sixty business days from the date the requirements are completed. (3)
2- Requirements for the Center’s Premises:
The premises must include at least one arbitration hall equipped with appropriate furniture and all necessary modern technology, in addition to an office for the Center Director, an office for working staff, and a dedicated room for keeping dispute files. (4)
3- License and Renewal Fees:
Category One: 100,000 Saudi Riyals for licensing the center affiliated with a chamber whose Board of Directors has eight members or fewer.
Category Two: 200,000 Saudi Riyals for licensing the center affiliated with a chamber whose Board of Directors has more than eight members and not more than twelve members.
Category Three: 350,000 Saudi Riyals for licensing the center affiliated with a chamber whose Board of Directors has more than twelve members and not more than fifteen members.
Category Four: 500,000 Saudi Riyals for licensing the center affiliated with a chamber whose Board of Directors has more than fifteen members. (5)
4- Final License to Establish the Center:
The applicant must – upon obtaining the Committee’s preliminary approval – review the relevant authorities to complete the statutory procedures in this regard and apply to the Committee for the final license to establish the center within a period not exceeding ninety business days from the date of issuance of the preliminary approval; otherwise, the application and preliminary approval shall be deemed void. (6)
5- License Duration and Renewal Procedures:
The license duration shall be four Hijri years, renewable if an application to renew the license is submitted to the Committee at least ninety business days prior to the end of its validity period, provided the Committee verifies the continued fulfillment of the licensing requirements and conditions. (7)
6- License Cancellation:
The Permanent Committee for Saudi Arbitration Centers has the authority to cancel the license of any licensed center in case it violates the Licensing Rules Bylaw or submits incorrect data or information to the Committee or provides forged documents. (8)
In case a final decision is issued by the Committee approving the cancellation of the license, the licensee shall remain subject to the Committee’s jurisdiction and liable before it for a period of one year from the date of the final cancellation decision for any violations or acts committed by the licensee that create rights for others. (9)
Sources:
(1) Paragraph (First) of Council of Ministers’ Decision No. 851 issued on 29/11/1446H.
(2) Paragraph (Second) of Council of Ministers’ Decision No. 851 issued on 29/11/1446H.
(3) Article (5) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers, issued by the Federation of Saudi Chambers.
(4) Article (6) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
(5) Article (7) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
(6) Article (8) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
(7) Article (9) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
(8) Paragraph (1) of Article (10) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
(9) Paragraph (4) of Article (10) of the Licensing Rules Bylaw for Arbitration Centers Affiliated with the Saudi Chambers.
