New SCCA Arbitration Rules: another positive development for arbitration in the Kingdom of Saudi Arabia
By Leonie Sellers, Senior Associate, and Natalie Mackay, Associate, Fenwick Elliott
On 1 May 2023, the Saudi Center for Commercial Arbitration (“SCCA”) announced the publication of its revised arbitration rules (“New Rules”), demonstrating yet another positive step forward for arbitration in the region.
The New Rules, which apply to all arbitrations filed on or after 1 May 2023, were introduced following a thorough consultation process led by the SCCA and SCCA Rules Advisory Committee, and seek to address various concerns and challenges previously raised by practitioners and stakeholders in the arbitration community.
The New Rules have introduced significant changes, bringing the SCCA in line with other major arbitral institutions and international best practice. The key features are highlighted below.
Of notable importance, the SCCA Court now replaces the SCCA Committee for Administrative Decisions and will effectively assume the administrative role of the SCCA (Article 3). The new court is chaired by Mr Jan Paulsson, a world-renowned arbitrator, and is comprised of fifteen other international arbitration practitioners (including arbitrators, high profile practitioners, former heads of arbitral institutions and retired judges).
In a nutshell, the SCCA Court is in charge of administering matters related to arbitrations and mediations conducted under the auspices of the New Rules. Examples of the SCCA Court’s role include: (i) appointment of arbitrators and emergency arbitrators; (ii) challenges of arbitrators; and (iii) determining the administrative fees and those of the arbitral tribunal.
This is a key improvement which contributes to bringing the SCCA in line with other international arbitration centres (e.g. ICC, LCIA and SIAC).
Reliance of Technology and the Environmental Impact of Arbitration
An overarching and new feature of the New Rules is the promotion of the use of technology to file documents and manage cases. By way of example, the New Rules:
- allow for and encourage the electronic transmission of documents and submissions;
- permit arbitral awards to be signed electronically by the arbitrators (Article 36.1);
- provide that the administrative conference shall be held remotely by video conference, telephone or any other appropriate means of remote communication, unless otherwise agreed, and further acknowledge that hearings may also be conducted remotely, or in a hybrid format (Articles 10 and 29).
Further, the New Rules expressly encourage the use of technology to not only optimise efficiency, but to minimise environmental impact, with arbitrators being encouraged to consider the reduction of the environmental impact of the arbitration when establishing procedures for the arbitration (Article 25.2).
At a time when the environmental impact of arbitrations is of growing concern in the industry, these provisions offer a welcome move in the right direction.
Choice of Law
The New Rules no longer make reference to Sharia principles and only refer to the applicable law chosen by the parties. However, we note that parties should still be mindful that Sharia law will apply as a matter of: (i) law, where arbitrations are seated in the Kingdom of Saudi Arabia; and (ii) public policy, where enforcement is sought in the Kingdom of Saudi Arabia.
Efficiency of the Proceedings
The New Rules place an important emphasis on the efficiency of the arbitration process, with the importance of an efficient and cost-effective arbitration being referenced several times throughout the New Rules. In addition, the New Rules have introduced several provisions that will help to ensure a more efficient arbitral process. The most noteworthy of these inclusions are as follows:
- Emergency arbitrators are required to issue interim awards no later than 15 days from the date on which the case file was transmitted to them (Article 7.8).
- The parties are granted 30 days (or longer, if agreed) from the commencement of the arbitration in which to nominate the arbitral tribunal (Article 16.4), and the timeframe in which to carry out the case management conference is limited to 30 days from the constitution of the arbitral tribunal (Article 25.2).
- In addition to an instance where circumstances give rise to justifiable doubts as to the arbitrator’s impartiality and independence, an arbitrator may now also be challenged where: (i) there is a failure on the part of the arbitrator to perform its duties; and (ii) where the arbitrator manifestly lacks the qualifications as agreed to by the parties (Article 18).
- Arbitral tribunals are granted certain discretionary powers to efficiently conduct the arbitration process, including: (i) limiting the length and content of written submissions (Article 27); (ii) encouraging the parties to settle (including through mediation) (Article 25); and (iii) striking out a claim based on an allegation of fact or law that is manifestly without merit and/or where no award could be issued in the claimant’s favour under the applicable law (Article 26).
- Where claims arise under multiple contracts or arbitration agreements, parties may issue a single request for arbitration, where: (i) the request is related to the same transaction(s); (ii) a common question of law or fact arises under each arbitration agreement giving rise to the arbitration; and (iii) if, where multiple arbitration agreements are involved, they are compatible (Article 11).
- Consolidation of two or more arbitrations is permissible if: (i) consolidation is agreed between the parties; (ii) claims are made under the same arbitration agreement; or (iii) the disputes arise in connection with the same legal relationship (Article 13).
- Unless otherwise agreed by the parties, the Arbitral Tribunal shall issue its award within 75 days from the date of closing of proceedings, which may be extended by another 75 days, if necessary (Article 33).
In line with both the ICC Rules, and the recent introduction of a similar provision in the 2022 version of the Dubai International Arbitration Centre (“DIAC”) Rules, Article 17.6 requires parties relying on litigation funding to disclose the identity of third-party funders to the Administrator, all other parties and the arbitral tribunal.
The recognition of third-party funding in the New Rules is a welcome addition, both in respect of transparency and in protecting the financial interests of the parties, especially where third-party funding is becoming more prominent in the region.
The New Rules are a welcome addition to the rapidly developing arbitration landscape, both in the Kingdom of Saudi Arabia, and the Middle East as a whole. Together with the opening of the SCCA’s first Dubai-based branch, located in the Dubai International Financial Centre (“DIFC”), in February 2023, the strides being taken by the SCCA, specifically in respect of efficiency and environmental impacts, are likely to help make the SCCA a go-to arbitral centre in the region.