LAW 7155 Introduction to Arbitration : Law and Practice in Saudi Arabi

Explain the nature, significance and main features of the legal principle according to which an arbitral tribunal is entitled to rule on its own jurisdiction.

Answer:

In Saudi Arabia, arbitration has not been commonly used method to resolve disputes. The parties to a dispute did not trust the arbitral methods of dispute resolution. However, with the enforcement of the New Law of Arbitration in 2012, people have regained their confidence on arbitration law as a method of resolving disputes. The new Arbitration Law is based on the UNCITRAL Model law on International Commercial Arbitration (the ‘Model Law’). The Model Law was adopted by the United Nations Commission on International Trade Law (UNCITRAL), which formed the basis for law of arbitration of almost 70 countries. The new Arbitration Law is a more comprehensive rule than the former arbitration law. The new law aims at providing the ‘arbitration-friendly’ principles that exists in the modern arbitration laws that are applicable worldwide. The principles include the ability of the arbitral tribunal to regulate on its own jurisdictions and determine party autonomy.

The Model Law has been designed in a manner to enable the states to modernize and reform their arbitration laws by taking into consideration the requirement of the international commercial arbitration. It encompasses every stages of arbitration process from the jurisdiction, composition and the preparing of the arbitration agreement. Although the Model Law has been designed, harmonize and modernize the arbitration process of a state, UNCITRAL persuades the states to undergo fewer changes while including the Model Law into their statutory framework. The Kingdom of Saudi Arabia has applied the Model Law to make substantial changes while addressing the concerned issues related to the violation of the Shariah law, which is in practice, in the kingdom.

The New Law on Arbitration demonstrates substantial improvement as compared to the Old Arbitration law. The former Arbitration Law required the parties to a dispute to present an arbitration agreement before a competent authority or a court to proceed with the legal proceedings. Article 26 of the New Arbitration Law stipulates that arbitration procedures shall commence on the date on which either parties to arbitration shall receive request for arbitration from the other party.

The old Arbitration law included statutory provisions where the court was required to supervise the conduct of the arbitration proceedings. In case the parties to arbitration failed to come to an agreement upon the arbitrators, the courts are required to appoint arbitral tribunal or replace the same if necessary. However, the new Arbitration Law, which follows the Model Law, enables the parties to arbitration without court’s intervention.

The new Arbitration law lays down detail procedure regarding the selection of an arbitral tribunal in case the parties have not selected one in their agreement. It requires the arbitrators to be neutral, unbiased, and independent. It also lays down procedures to challenge the appointment of the arbitrators. Moreover, the new law of arbitration has incorporated provisions, which entitles the arbitral tribunals to determine their own jurisdictions applying the principle of ‘Kompetenz- Kompetenz’.

The new law of arbitration has entitled the arbitral courts to rule on its own decision based on the doctrine of ‘Competence-Competence’ or the principle of ‘Kompetenz-Kompetenz’. The principle is significant as it essentially provides the arbitral courts to decide on its own whether it has a competent jurisdiction to decide a dispute that has been brought before it. The principle implies that there is no need for the courts to intervene in a decision given by an arbitral tribunal ion its own competence. In other words, the arbitral tribunals do not require the courts to rule whether the tribunals have the competent authority to continue with an arbitration procedures.

The doctrine of ‘competence –competence’ or the principle of ‘kompetenz –kompetenz’ has derived from international commercial arbitration, which empowers an arbitral tribunal to determine whether it has competent jurisdictions to deal with the disputes claimed before it. However, the fact that a tribunal can rule its own jurisdiction does not prohibit a court, which is not at the arbitration seat from reviewing the jurisdiction of the tribunal. The Arbitrators cannot solely judge their jurisdiction as it would not be logical and neither acceptable. The rationale of the principle of ‘kompetenz-competenz’ is not to let the arbitrators solely determine their jurisdiction, their jurisdictions must be re-examined by the courts in case of an enforcement of award or an action to set aside an action. If a national court determines that an arbitral tribunal does not have competent jurisdiction then the court shall re-examine and any award passed by the court shall become unenforceable.

The concept of ‘Kompetenz-Kompetenz’ is essential as in the absence of the principle; it would become very difficult for the arbitrators to rule on their own jurisdiction whenever an issue arises before the arbitral tribunal. Now this would enable the party, who does not wish to resolve the dispute before an arbitral tribunal, to approach the national courts for resolution of the dispute. The principle has two aspects: the first aspect is concerned with the competency of the arbitrators to determine their own jurisdictions and the second aspect is related to the fact that the courts are entitled to determine the jurisdiction of the arbitral tribunal only after the arbitrators have determined their own jurisdictions.

The principle is recognized under Article 21 (1) of eth UNCITRAL Arbitration Rules, Artticle 6(2) of the ICC Arbitration Rules and Article 16 of the Model Law which is termed as ‘competence of Arbitral Tribunal to determine its own jurisdiction’. The article stipulates that the tribunals be entitled to determine its own jurisdiction, which shall include any doubt related to the validity and continuation of the arbitration agreement. Therefore, an arbitration clause in a contract must be considered as as agreement which is different from the other terms of the contract.

To conclude, the New Arbitration law has improved the arbitration laws in Saudi Arabia. By applying the Model Law in its legal system, the new laws have implemented the modern international arbitration practices to the arbitration practices in the country. The new laws incorporated the universally accepted International Arbitration principle of ‘Kompetenz-Kompetenz’. The improved arbitration law aims at reducing the burden of the parties to arbitral dispute by providing effective resolution to their disputes.

Reference:

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