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Enforcement of Foreign Judgements and Arbitral Awards in Saudi Arabia

There is speculation internationally that the enforcement of foreign judgments and arbitral awards in Saudi Arabia remains in the dark. Since the basic law in the Kingdom of Saudi Arabia is the Sharia law, the international community considers that the implementation of any judgment or decision issued in foreign states based on foreign laws may not be implemented in the Kingdom of Saudi Arabia. On the other hand, Saudi companies enter into cross-border trade agreements with foreign parties, while Saudi and foreign parties face a dilemma in choosing the governing law and jurisdiction in their contracts.

Upon various requests from the international community, the Kingdom of Saudi Arabia has become a party to international arbitration treaties and agreements such as the 1952 Arab League Convention, the 1983 Riyadh Agreement, and the 1958 New York Convention. These agreements were specifically signed as a good practice in enforcing judgments as well as foreign judgments in the Kingdom of Saudi Arabia. In particular, the Kingdom of Saudi Arabia acceded to the New York Convention on the Recognition and Enforcement of Foreign Judgments and Awards on the main condition that it would enforce such judgments or awards on the basis of the principle of reciprocity, i.e. compensation made in the territory of another country or state, accepting the recognition and enforcement of Saudi decisions in its territory. Despite these agreements, it remains inaccurate whether foreign judgments or awards will be implemented smoothly.
In 2013, Saudi Arabia enacted the Enforcement Law (Enforcement Law) especially for the enforcement of commercial instruments and provisions. The Enforcement law grants broad power to the enforcement judge to take all preventive measures and impose punitive measures on the defendant. It is worth noting that the Enforcement Law clearly states in Article 11 that it will enforce arbitral awards or decisions issued in foreign countries provided that the award fulfils the following prerequisites from domestic law:
  1. As for the country in which the decision was issued, it will be mutual in implementing the decisions issued in the Kingdom of Saudi Arabia. The country in which the award was rendered would reciprocate in enforcing awards issued in KSA,
  2. The KSA courts are not competent and do not have jurisdiction to hear the underlying dispute in respect of which the court judgment/award was passed,
  3. The award was rendered with due process i.e. the parties were duly summoned, properly represented and could represent themselves legally,
  4. The award was in final form according to the law of the seat of the arbitration,
  5. 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
  6. 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 judgement 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 judgement or award wholly or partially. Awards or judge divisions that carry interest payments or indirect losses will not be executed.

By: Aqil Reda

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