Leveling the playing field: An overview of the new SCCA Arbitration Rules in the Kingdom of Saudi Arabia (KSA)
Global | Publikation | Februar 2024
Those who operate in the Middle East may have experience with the Dubai International Arbitration Centre’s (DIAC) new Arbitration Rules which were introduced in 2022 following the abolition of the DIFC-LCIA Arbitration Centre. Just over a year later, the Saudi Centre for Commercial Arbitration (SCCA) has also announced the publication of its own revised rules which came into effect on, and apply to all arbitrations filed on or after, 1 May, 2023 (the SCCA Rules).
The new DIAC and SCCA Rules aim to put both institutions in line with global best practice, including instilling useful procedural and case management changes to enable arbitrations to be conducted more efficiently and effectively. While much will depend on the application of these new rules, they reflect best practice and seek to improve time/cost efficiencies while ensuring the quality and enforceability of awards.
Content
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.
Rapid economic growth in KSA means that there is significant potential for the SCCA to serve as a key center for the resolution of disputes arising in the region. The establishment of the SCCA Court and the SCCA Rules are significant steps towards making this ambition 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 Professor 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 SCCA Rules place a new-found importance on the use of technology to optimize efficiency in arbitrations while reflecting the importance of the parties, the arbitrators and the SCCA adopting reasonable information security measures to protect data privacy, as well as safeguarding against cybersecurity breaches and data protection risks (Article 46).
For example:
| Service | Article 4.1 provides that a notice of arbitration can now be served by email or “other electronic means” if it provides a record of its transmission, which brings the New Rules into line with other arbitral institutions like 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 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 Disputes Resolution (ODR) | Appendix IV of the New Rules enables parties involved in lower value disputes (not exceeding SAR 200,000 / circa US$53,000) to opt to use ODR to resolve their dispute, which uses the latest technologies in a virtual format for smaller scale commercial disputes to be dealt with in a cost-efficient manner. |
Early Disposition of claims or defenses (Article 26
The SCCA 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 defense. 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 defense 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 SCCA Rules provide that both the SCCA Court and the arbitral tribunal should actively engage in case management. They are provided with discretion 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 4 million (circa US$1 million). This is a significant change so 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 who request consolidation individually. 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; 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.
A comparison of administrative and arbitration tribunal fees across the SCCA, DIAC and ICC demonstrate that, whilst DIAC has a marginally lower registration fee, the SCCA has substantially the lowest administrative and arbitral tribunal fees, followed by DIAC; and the ICC proves the most expensive. For example, based on a US$10 million claim with a sole arbitrator, the SCCA’s fees are estimated to be 31 percent less than those of DIAC and 37 percent less than those of the ICC. The relatively modest administrative and arbitral tribunal fees will undoubtedly serve as another attractive feature for taking disputes to the SCCA.
Conclusion
The SCCA Rules provide for greater certainty and clarity and bring 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.
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