The dawn of a new era for arbitration in Saudi Arabia: The draft arbitration law and its key reforms

Introduction 

The Saudi Arbitration Law, enacted by Royal Decree No. M/34 dated 24/05/1433H corresponding to 16 April 2012 (the “Arbitration Law”), marked a watershed moment in the Kingdom’s approach to alternative dispute resolution. Drawing heavily from the UNCITRAL Model Law, the 2012 legislation was designed to modernise arbitration procedures and align Saudi arbitration practice with international standards. Its introduction was widely regarded as a significant step forward, providing parties with a more predictable and transparent framework for resolving commercial disputes.

Since its enactment, the Arbitration Law has undergone further refinement, most notably with the issuance of Executive Regulations of the Arbitration Law by Council of Ministers Decision No. 541 dated 26/08/1438H corresponding to 22 May 2017. In response to the growth of international investment and business in the Kingdom, and the need to continue to develop the existing arbitration framework, the National Competitiveness Center has recently published a draft of a new Arbitration Law (the “Draft Law”) for public consultation, with the consultation period set to conclude on 24 October 2025. The Draft Law introduces substantive and procedural reforms aimed at further aligning Saudi arbitration practice with global best practices and enhancing the Kingdom’s attractiveness as a venue for dispute resolution. Upon enactment, the Draft Law will replace the Arbitration Law and its subsequent regulations. It will come into effect thirty days after publication in the Official Gazette, marking a new chapter in the evolution of arbitration in Saudi Arabia.^[1]

Key Reforms in the Draft Law

Awards

Enforcement of Partial and Interim Awards

Whereas the Arbitration Law does not contain a definition of ‘Award’, the term is now defined under the Draft Law as “the decision taken by the arbitral tribunal ruling on the subject matter of the dispute, or on an interim measure, including interim or partial awards, and does not include decisions relating to the administration of the proceedings.”^[2]  The Draft Law also provides that an award shall have the authority of a final judgment and shall be enforceable,^[3] and sets out the same conditions for the enforcement of awards as under the Arbitration Law,^[4] but no longer requires parties to provide proof of depositing the award with the competent court in order to seek enforcement.^[5] The Draft Law expressly including interim or partial awards under the definition of ‘Award’ confirms the enforceability of interim or partial arbitration decisions in the Saudi courts, such as orders for interim relief. 

Rendering Awards

The Draft Law provides members of the tribunal may sign awards from outside of the place of arbitration and may sign awards electronically, unless otherwise agreed.^[6] This change provides parties with clarity as to whether a valid award has been rendered where it has been signed outside of KSA and/or electronically. In addition, the Draft Law removes the requirement for awards to be rendered within 12 months from the commencement of arbitration proceedings in the absence of the parties agreeing otherwise.^[7] Rather, the Draft Law provides that the time limit for issuing the final award may be extended on request to the competent court where it is specified in the arbitration agreement.^[8]  The extension period will be determined at the discretion of the competent court, and its decision cannot be appealed, unless the parties agree otherwise.^[9]

Annulment of Awards

The Draft Law provides the court requested to set aside an arbitral award may stay proceedings for a maximum of sixty days, in order to allow the tribunal an opportunity to take any action or make any amendment to the award that it finds appropriate to remove the grounds for annulment.^[10] This provision marks a meaningful shift from the Arbitration Law, which does not contemplate any mechanism for the arbitral tribunal to cure defects in the award once annulment proceedings commence. This provides tribunals with a structured opportunity to rectify issues that may otherwise lead to annulment, thereby reducing the risk of disruption or delay to enforcement.

Expanded Interim Measures and Urgent Relief

Emergency Arbitration

The Draft Law also contains a new definition of ‘Arbitral Tribunal’: “the sole arbitrator or panel of arbitrators appointed to decide the dispute, including an emergency arbitrator appointed in accordance with the arbitration rules agreed upon by the parties.”^[11] In expressly recognising emergency arbitrators, the Draft Law now aligns the Rules of the Saudi Center for Commercial Arbitration (“SCCA Rules”), which allows for the use of emergency arbitration in order to enable parties to seek urgent interim relief.^[12]  This also modernises the arbitration law to reflect the wider use of emergency arbitrators globally, as an alternative to having to seek interim relief before local courts.

Expanded Interim Measures

The Draft Law expands on the type of interim or conservatory measures that an arbitral tribunal may order, which include:^[13] (a) maintaining or restoring the status quo; (b) ordering measures to prevent actual or imminent damage to the arbitration proceedings, or ordering the cessation of conduct likely to cause such damage; (c) ordering the preservation of assets that may be necessary for the enforcement of the arbitral award; and (d) ordering the preservation of evidence that may be essential for the determination of the case. Conversely, whilst the Arbitration Law allows for interim or conservatory measures to be ordered, it does not prescribe any specific grounds on which such relief may be ordered.^[14]  The express bases for relief set out in the Draft Law now align with international best practice, closely mirroring Article 15 of the UNCITRAL Model Law.

Arbitrators and Tribunals

Qualification and Nationality of Arbitrators

The Draft Law^[15] removes the requirement under the Arbitration Law for the head of the tribunal or sole arbitrator to hold at least a university degree in Shari’a or regular law.^[16] By broadening the pool of eligible arbitrators, the Draft Law allows parties to appoint arbitrators with the most relevant expertise to the subject matter of the dispute, aligning with international best practice. The Draft Law also permits parties to agree on the nationality of arbitrators, whereas the Arbitration Law contains no such prescription.^[17] Accordingly, parties are free to agree on the nationality of arbitrators that will preside over their arbitration proceedings, where they judge it is in their interests to do so.

Immunity of Arbitrators

The Draft Law introduces a significant safeguard for arbitrators by expressly limiting their personal liability, except in cases involving fraud or gross misconduct.^[18] By codifying this protection, the Draft Law provides arbitrators with greater assurance that they will not be exposed to personal liability. This reform may attract a broader pool of arbitrators to Saudi seated arbitrations and parties arbitrating in the Kingdom may benefit from access to a wider range of qualified arbitrators, improving the quality and credibility of arbitral decision-making.

Constitution of Arbitral Tribunals

Under the current Arbitration Law tribunals composed of an odd number of arbitrators are invalid. This remains the position under the Draft Law, which also provides clarification that an arbitration agreement specifying an even number of arbitrators will not automatically be void as long as the Parties comply with the Arbitration Law by appointing an additional arbitrator to make the number odd.^[19] Where parties do not agree on the constitution of the arbitral tribunal, the Draft Law provides the number of arbitrators shall be one.^[20] In the case of a tribunal being unable to reach a majority decision, the Draft Law empowers the President of the tribunal to issue its award, which will be determinative and supplemented by the dissenting opinions of the other arbitrators, unless otherwise agreed by the parties.^[21] This marks a departure from the Arbitration Law, which prescribes a casting arbitrator will be appointed in such scenarios. Parties should be live to these requirements in negotiating and drafting arbitration agreements following the enactment of the Draft Law.

Kompetenz-kompetenz

The Draft Law provides for the kompetenz-kompetenz principle, allowing a tribunal to rule on objections to its own jurisdiction, including in respect of termination, invalidity, or lack of coverage of the subject matter in dispute.^[22] The introduction of this principle, which was notably absent from the Arbitration Law, is another example of the Draft Law’s alignment with international best practice and allows parties to have jurisdictional objections determined promptly.

Virtual Hearings

The Draft Law specifies that irrespective of the seat of arbitration, the tribunal may meet “virtually through modern technology, unless the parties agree otherwise,”^[23] marking a departure from the Arbitration Law.^[24] This change introduces greater procedural flexibility and efficiency, particularly for cross-border disputes or where logistical constraints exist. Parties can benefit from reduced costs and streamlined scheduling, while still preserving the legal significance of the agreed arbitration seat. Ultimately the enhanced flexibility and reduced costs associated with this change increases the attractiveness of utilising arbitration in the Kingdom, particularly for parties with an international presence or for cross-border disputes.

Arbitration Agreements

Recognition of unwritten terms

Whilst the Draft Law still requires arbitration agreements to be “in writing”,^[25] it now provides that terms agreed orally, through conduct, correspondence, or digital communication may be deemed to be “in writing”. Accordingly, parties must exercise caution during negotiations and informal exchanges, as binding arbitration terms may arise from their actions or communications even if not formally documented. To mitigate the risk of unintended obligations, parties should ensure that any arbitration agreement and its key terms are clearly recorded and confirmed in writing and clearly stipulate that their negotiations or communications in respect of the arbitration agreement are non-binding and subject to final agreement.

Governing law

The Draft Law provides that arbitration agreements are governed by the governing law chosen by the parties in the agreement, or where no governing law is agreed upon, the law applicable to the seat of the arbitration.^[26] This marks a significant change from the Arbitration Law, which provides that where the parties have not agreed on a governing law, the tribunal may adopt any procedures it deems appropriate.^[27]

Joinder and Consolidation of Proceedings

The Draft Law expressly permits the joinder of third-parties to an existing arbitration, provided the arbitration agreement allows for it and all parties are given an opportunity to be heard,^[28] and also enables parties to agree to consolidate related arbitration cases.^[29] These provisions mark a change from the Arbitration Law, which does not expressly provide for joinder or consolidation of proceedings. These developments have important practical implications, particularly for complex, multi-party disputes such as those arising in large-scale construction or infrastructure projects. Parties should proactively consider whether their arbitration agreements should include provisions for joinder and consolidation, as doing so may enhance procedural efficiency, reduce costs, and support a more coordinated resolution of interconnected claims.

Notice Requirements and Deemed Receipt

The Draft Law specifies notifications shall be delivered to parties in person or sent to their postal address and clarifies that “the term ‘postal address’ includes any email address that the parties have previously used in their dealings, or that one of the parties has previously notified the other party of by sending it.”^[30] The Draft Law further provides that notifications shall be deemed to be effected where it is sent by electronic means to the addressee’s mobile phone or email address.^[31] These prescriptions are not contained in the Arbitration Law and grant parties recourse to a more efficient means of effecting notice, particularly in light of requirements such as raising objections to arbitration on the basis of a breach of the Draft Law or arbitration agreement within fifteen days,^[32] which has been reduced from a thirty-day period under the Arbitration Law.^[33] Practically, this change may reduce service disputes and accelerate timelines from progressing the arbitration proceedings.

Conclusion

The Draft Law introduces a series of targeted reforms that modernise and expand the Kingdom’s arbitration framework, offering parties greater procedural flexibility, enhanced enforceability of interim relief, and broader scope in selecting arbitrators. Practically, parties should revisit their arbitration agreements to ensure they reflect the new stipulations provided by the Draft Law, particularly around the rendering of awards, recourse to emergency arbitration, the constitution of arbitral tribunals and the governing law of arbitration. These considerations should also be central to the negotiation and drafting of any arbitration agreements post-enactment of the Draft Law which must comply with the new requirements set out therein.
 

^[1] Draft Law, Article 67 and 68.

^[2] Draft Law, Article 1.

^[3] Draft Law, Article 63.

^[4] Arbitration Law, Article 53.

^[5] Draft Law, Article 64. The requirement to provide proof of depositing the award with the competent court is set out under Article 53.4 of the Arbitration Law.

^[6] Draft Law, Article 52.4.

^[7] As is provided under the Arbitration Law, Article 40.1.

^[8] Draft Law, Article 51.1.

^[9] Draft Law, Article 51.2.

^[10] Draft Law, Article 61.5.

^[11] Draft Law, Article 1.

^[12] The SCCA Rules set out emergency measures for protection at Article 7 and adopted the Emergency Arbitrator Procure Rules at Appendix III in October 2018 (as revised in May 2023).

^[13] Draft Law, Article 29.

^[14] Arbitration Law, Article 22 and 23.

^[15] Draft Law, Article 20.1.

^[16] Arbitration Law, Article 14.3.

^[17] Draft Law, Article 20.2.

^[18] Draft Law, Article 27.

^[19] Draft Law, Article 19.2.

^[20] Draft Law, Article 19.1.

^[21] Draft Law, Article 48.

^[22] Draft Law, Article 28.

^[23] Draft Law, Article 35.2.

^[24] Which does not provide for virtual hearings.

^[25] Draft Law, Article 13.1. This is also required pursuant to the Arbitration Law, Article 9.

^[26] Draft Law, Article 11.

^[27] Arbitration Law, Article 25(2).

^[28] Draft Law, Article 37.

^[29] Draft Law, Article 43.

^[30] Draft Law, Article 8.1.

^[31] Draft Law, Article 8.2.

^[32] Draft Law, Article 9.

^[33] Arbitration Law, Article 7.