Introduction
Those who operate in the Middle East may have experience of the Dubai International Arbitration Centre’s (DIAC) new Arbitration Rules, which were introduced last year following the abolition of the DIFC-LCIA Arbitration Centre. However, just over a year from the new DIAC rules coming into effect, the Saudi Centre for Commercial Arbitration (SCCA) has also announced the publication of its own revised rules, which came into effect and apply to all arbitrations filed on or after 1 May 2023 (New Rules).
The New Rules aim to put the SCCA in line with global best practice in arbitration much in the same way that the DIAC updated arbitration rules have done. The New Rules instil useful procedural and case management changes to enable arbitrations to be conducted more efficiently and effectively, which will make the SCCA a more attractive centre for arbitration as a whole. Whilst much will depend on the application of the New Rules, they reflect best practice and seek to improve time/cost efficiencies whilst ensuring the quality and enforceability of awards.
Background to the SCCA
- The SCCA and arbitration in the KSA
The SCCA was first established in 2014 to offer alternative dispute resolution (ADR) services, including arbitration and mediation, for commercial disputes both in English and Arabic. Its vision is to become the preferred ADR service provider in the region by 2030.
The high economic growth in the KSA (which is heralded as having the fastest growing economy) means that there is significant potential for the SCCA to serve as a, even the, key centre for the resolution of disputes arising in the region; the establishment of the SCCA Court and the New Rules are significant steps towards making this a reality.
- The SCCA Court
The SCCA announced the creation of an independent SCCA Court in November 2022 to make key administrative and procedural decisions relating to SCCA administered arbitrations. The Court is comprised of 15 members with an impressive array of arbitration experience between them. They have been selected from a range of backgrounds including international arbitrators, former leaders of arbitral institutions, academics and high-profile practitioners from a range of both KSA-based and international firms.
The President of the SCCA Court is the much-acclaimed Jan Paulsson who was a former president of the London Court of International Arbitration (LCIA) and vice-president of the ICC International Court of Arbitration. The introduction of the SCCA Court has brought the SCCA in line with other international arbitration institutions such as the LCIA and ICC who each have their own designated supervisory courts.
Key Innovations in the New Rules
- Technology
The New Rules place a new-found importance on the use of technology to optimise efficiency in arbitrations whilst reflecting the importance of the parties, the arbitrators and the SCCA adopting reasonable information security measures to protect against cybersecurity and data protection risks and protect privacy (Article 46).
For example:
|
Service
|
Article 4.1 provides that a notice of arbitration can now be served by email or “other electronic means” as long as it provides a record of its transmission, which brings the New Rules into line with other arbitral institutions e.g. the LCIA Rules.
|
|
Case Management
|
Article 25.2 now provides that the Arbitral Tribunal and the parties are actively encouraged to consider how technology can be used in arbitrations. Progressively, this is in order to help reduce the environmental impact of arbitrations as well as to assist with case management and presentation of evidence. Ultimately the Arbitral Tribunal has the discretion to determine the extent to which technology will be used.
|
|
Electronic Signing of Awards
|
Article 36 provides a new default for all awards to be signed electronically.
|
|
Online Dispute Resolution (ODR)
|
Appendix IV of the New Rules enables parties involved in lower value disputes (not exceeding SAR 200,000 / circa $53k) to opt to use ODR to resolve their dispute, which uses the latest technologies in a virtual format to ensure smaller scale commercial disputes are dealt with in a cost-efficient manner.
|
- Early Disposition of Claims or Defences (Article 26)
The New Rules provide that any party may request that the Arbitral Tribunal summarily dispose of issues of jurisdiction, admissibility or legal merit raised in a claim or defence. This is a significant development and mirrors provisions for ‘early determination’ under the LCIA Rules and ‘expeditious determination’ under the ICC Rules. Article 26 may potentially truncate proceedings (and consequently reduce costs) where a claim or defence is manifestly without merit, no award can be issued under the applicable law or where, for other reasons, the case should be disposed of early.
- Increased case management and widened discretion
The New Rules empower the SCCA Court, the Arbitral Tribunal and the parties to be able to actively engage in case management and provides a greater degree of discretion to the Arbitral Tribunal and SCCA Court to make decisions in this regard. For example:
|
Expedited proceedings
|
The New Rules now importantly provide for an expedited procedure for determining claims (Article 1 of Appendix II), mirroring the provisions of other arbitral institutions such as the ICC. The expedited procedure will apply if the parties agree or where the amount in dispute does not exceed SAR 4m (circa $1m). This is a significant change which will help ensure claims can be dealt with quickly where desired by the parties.
|
|
Emergency arbitrator
|
The New Rules have also developed the provisions for emergency relief in cases of urgency (Article 7). An Emergency Arbitrator, if appointed, will now order or award any interim, provisional or precautionary measures no later than 15 days from when the case file was transmitted to him/her, albeit this timeframe can be extended if necessary.
|
|
Consolidation / Coordination
|
The New Rules provide that parties have the option to file a single request for arbitration at the outset for all claims arising out of or in connection with multiple contracts or arbitration agreements, subject to certain conditions (Article 11).
Article 13 also provides that the parties or Arbitral Tribunal can request that two or more existing arbitrations be consolidated into a single arbitration in certain circumstances (Article 13). However, for a request to be made the parties to all arbitrations must agree to consolidation or there must be the same members in each Arbitral Tribunal and they respectively request consolidation.
Article 14 further provides the Arbitral Tribunal with the discretion to coordinate parallel arbitrations.
|
|
CMC
|
Article 25.2 tightens the timeframe for conducting the initial case management conference and provides that the Arbitral Tribunal must convene the conference within 30 days from the date of constitution.
|
|
Review of Awards
|
The New Rules provide (Article 36(4)) that the SCCA Court shall review and approve all draft awards and suggest modifications if necessary. This is a significant development and will be key in ensuring the quality and enforceability of SCCA awards.
|
|
Settlement
|
Article 25(7) now provides a renewed emphasis on settlement and that the Arbitral Tribunal may encourage parties to consider settlement of all or part of a dispute by any form of ADR such as mediation.
|
Costs
As the New Rules place an emphasis on greater efficiency, it is useful to consider the reality of the cost implications. The SCCA has a helpful fee calculator (Saudi Center for Commercial Arbitration | Arbitrators (sadr.org)) for estimating administrative fees and the arbitral tribunal’s fees.
We have conducted a comparison of administrative and arbitration tribunal fees across the SCCA, DIAC and ICC and have found that whilst DIAC has a marginally lower registration fee, the SCCA has substantially the lowest administrative and arbitral tribunal fees, followed by DIAC; the ICC proves the most expensive. For example, based on a $10m claim with a sole arbitrator the SCCA’s fees are 31% less than those of DIAC and 37% less than those of the ICC. The lower administrative and arbitral tribunal fees will undoubtedly serve as another attractive feature for taking disputes to the SCCA.
Conclusion
The New Rules provide for greater certainty and clarity and brings the SCCA in line with international best practice alongside other leading international arbitration institutions. They are a significant step forward to demonstrate the KSA’s commitment to becoming a leading arbitration institution in the region and provide a solid framework for ensuring claims are dealt with consistently, and notably more cost effectively.
