Enforcement of Foreign Judgements and Arbitral Awards in Saudi Arabia
There are speculations internationally that, enforcement of foreign judgements and arbitral awards in Saudi Arabia are still in dark. Saudi Arabia&s fundamental law is Sharia law the international community feels that enforcement of any judgement or award issued in foreign jurisdictions based on foreign laws might not be enforced in Saudi Arabia.
On the other hand, 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.
Upon various requests and appeals from the international community, KSA became party to international arbitration treaties and conventions such as 1952 Arab League Convention, 1983 Riyadh Convention and 1958 New York Convention. These conventions were specifically signed to bring reformation in enforcing foreign judgements and awards in Saudi Arabia. Especially Saudi Arabia acceded to the New York Convention for recognition and enforcement of foreign judgements and awards on major condition was that it would implement such judgments or awards 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. In spite of these conventions still it was not precise whether foreign judgements or awards would be enforced smoothly.
In 2013, Saudi Arabia enacted the Enforcement Law (EN Law) especially to enforce trade instruments and judgments. The EN law grants vast power to the enforcement Judge to take all precautionary measures and impose penal actions on the defendant. It is noteworthy that EN law very clearly states in Article 11 that it would enforce judgments or arbitration awards issued in foreign countries provided that the award or judgment must comply with the following preconditions of the EN-Law:
-- The country in which the award was rendered would reciprocate in enforcing awards issued in KSA,
--The KSA courts are not competent and did not have jurisdiction to hear the underlying dispute in respect of which the court judgment/award was passed,
--The award was rendered with due process i.e. the parties were duly summoned, properly represented and could represent themselves legally,
--The award was in final form according to the law of the seat of the arbitration,
--The award was not inconsistent with a judgment or order issued regarding the same subject by a judicial authority of competent jurisdiction in KSA, and
--The award did not contain anything that contradicts Saudi public policy (i.e. Shariah law).
Nevertheless, the EN Law says that it would enforce foreign judgment and awards, the enforcement judge also holds discretionary powers to act according to their own interpretation of Sharia Law based on which the enforcement judge may implement the foreign judgment or award wholly or any part of it. Awards or judge dements carrying interest payments or indirect losses will not be enforced.
AUTHOR: Akhil Reza
Copyright Hazim Al Madani Law Firm
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.