The Enforcement of Foreign Judgements and Arbitral Awards in Saudi Arabia
Saudi Arabia’s is governed by Sharia law which is its fundamental law. Now, Saudi Arabian companies are entering various cross- border commercial agreements with foreign entities, both Saudi and foreign parties are in dilemma in choosing governing law and jurisdiction in their contracts. The international community feels that enforcement of any judgment or award issued in foreign jurisdictions based on foreign laws might not be enforced in Saudi Arabia.
After various requests and appeals from the international community, KSA finally became a party to international arbitration treaties and conventions. The international arbitration treaties and conventions were specifically signed to bring changes in enforcing foreign judgements and awards in Saudi Arabia. Some of them are:
- 1952 Arab League Convention,
- 1958 New York Convention, and
- 1983 Riyadh Convention.
It should be noted that Saudi Arabia acceded to the New York Convention for recognition and enforcement of foreign judgements and awards on a condition that it would implement a judgment or award on principle of reciprocity i.e. awards rendered in the territory of another country or state must, in turn, accept the recognition and enforcement of Saudi awards in their territory.
However, one cannot be sure if foreign judgments or awards would be enforced smoothly. Saudi Arabia enacted the Enforcement Law (EN Law) in 2013to implement trade instruments and judgments. This grants vast power to the enforcement Judge to take all precautionary measures and impose penal actions on the defendant. In its Article 11 the law talks of enforcement of judgments or arbitration awards issued in foreign countries. Further, while enforcement of any award or judgment the following preconditions of the EN-Law shall be complied:
- The country in which the award was rendered would reciprocate in enforcing awards issued in KSA.
- The award was not inconsistent with a judgment or order issued regarding the same subject by a judicial authority of competent jurisdiction in KSA.
- The KSA courts are not competent and did not have jurisdiction to hear the underlying dispute in regard to passing of court judgment/award.
- The award was in final form according to the law of the seat of the arbitration.
- Awards or judge dements carrying interest payments or indirect losses will not be enforced.
The award did not contain anything that contradicts Saudi public policy (i.e. Shariah)