LITIGATION PROCEDURES IN THE KINGDOM OF SAUDI ARABIA. Legal Newsletter. January 2017 COURT AUTHORITY FOR ENFORCEMENT OF PENALTY CLAUSES

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1 January 2017 Legal Newsletter VOLUME 4, ISSUE 1 LITIGATION PROCEDURES IN THE KINGDOM OF SAUDI ARABIA COURT AUTHORITY FOR ENFORCEMENT OF PENALTY CLAUSES ENFORCEMENT OF FOREIGN JUDGMENTS AND JUDICIAL ORDERS DISPUTE OVER COURTS COMPETENCE AND JURISDICTION APPOINTING AN EXPERT UNDER SAUDI LAWS SPECIAL REPORT: LITIGATION PROCEDURES AND REQUIREMENTS IN THE KINGDOM OF SAUDI ARABIA Dr. Saud Al-Ammari Law Firm in association with

2 CONTENTS 2 Court Authority for Enforcement of Penalty Clauses 5 Enforcement of Foreign Judgments and Judicial Orders 6 Dispute Over Courts Competence and Jurisdiction 8 Appointing an Expert Under Saudi Laws Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia Blakes periodically provides materials on our services and developments in the law to interested persons. This Legal Newsletter is intended for informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired. For permission to reprint articles, please contact the Blakes Client Relations & Marketing department at hugh.christopher@blakes.com. LEGAL NEWSLETTER VOLUME 4, ISSUE 1

3 FOREWORD Dr. Saud Al-Ammari Dear readers, In this special issue, we are pleased to provide a concise and insightful review of the principles and procedures of resolving disputes in the Kingdom of Saudi Arabia. Litigation procedures in the Saudi courts are derived from Shari ah (Islamic law). Saudi court regulations clarify and codify such litigation procedures, both in terms of the legislation and the jurisprudence. As a result of the Kingdom continuously developing its legal system, it enacted in 2013G (1434H), the Law of Procedure Before Shari ah Courts and the Law of Criminal Procedure, which supersede earlier versions of these laws that were enacted in 2000G (1421H) and 2001G (1422H), respectively. The Kingdom has also provided alternative dispute resolution procedures for parties by enacting the Saudi Arbitration Law in 2012G (1435H). It also supported the establishment of the Saudi Center for Commercial Arbitration in October 2016G (Muharram 1438H), which is advancing the practice of arbitration in the Kingdom. The Center has entered into a cooperation agreement with the American Arbitration Association (AAA) in order to benefit from AAA s long and established expertise in the field. This is a testament to the commitment of the Kingdom to develop and improve arbitration and the judiciary system in Saudi Arabia. This issue of the newsletter also looks at a research study recently launched by the International Association of Defense Counsel (IADC) on litigation procedures and requirements to identify best court practices from various jurisdictions. The IADC aims to create a valuable reference tool for its members, as well as for law firms around the world, through this study. Our Firm was chosen by the IADC to participate in this project for the Kingdom of Saudi Arabia. The IADC research study is not limited to a review of the Law of Procedure Before Shari ah Courts and the Law of Criminal Procedure, it also touches on the Saudi Law of the Judiciary that deals with the selection of a judge, and the extent of his judicial authority. Other aspects of Saudi laws and regulations covered include: the Code of Legal Practice in terms of attorney privileges at the court; the Arbitration Law; the role of experts in the court (and how and when their assistance is sought); and the rules governing witness cross examination. We hope you find this issue useful. As always, we welcome your comments and questions on all topics covered. Sincerely, Dr. Saud Abdullah Al-Ammari Chair, Saudi Arabia & Gulf Region Dr. Saud Al-Ammari Law Firm in association with Blake, Cassels & Graydon LLP LEGAL NEWSLETTER VOLUME 4, ISSUE 1 1

4 Court Authority for Enforcement of Penalty Clauses Dr. Saud Al-Ammari The penalty clause, which stems from the will of two parties in a contract, is deemed a successful means to ensure the implementation of contracts and the fulfilment of mutual commitments of two parties. The clause could apply to the execution of an original commitment, as well as the execution being complete, free of any defect and/or on time. Failure to comply with this clause results in claims for compensation. The International Islamic Fiqh Academy (the Academy) defines the penalty clause as: An agreement between the contracting parties to estimate the compensation entitled for the party entitled to it against the damage sustained by him if the other party fails to fulfil his commitments or was late in fulfilling them. This indicates that the value of the warranty and the penalty clause represents a pre-estimated consensual compensation by the agreement s two parties. According to the Academy, it is a condition that the validity of this clause shall stand on the condition that it serves as reparation to the damage sustained by any of the two parties for failing to discharge the commitments, or for delaying the execution of the commitments. The parties may see that their interests require them to estimate, by themselves, the compensation entitled for each of them when the other party violates their contractual obligations in any way. There are several other names that are used to refer to the penalty clause including: consensual compensation, designation by agreement and the penalty article. Goals and Objectives There are many goals and objectives that drive contract parties to list and estimate the value of penalty clauses, including avoiding judicial interference in estimating the compensation due upon the breach of, or delay in, executing the commitments agreed upon. The penalty clause may also be used to threaten the party that is responsible for complying with and honouring their commitments on the agreed deadline without any delay or slackness (in addition to other reasons and goals which may lead to inclusion of such clauses). From a Shari ah viewpoint, the Council of Senior Scholars, which is the highest edicts (fatwa) issuing 2 LEGAL NEWSLETTER VOLUME 4, ISSUE 1

5 Application of a penalty clause is not compulsory in the case where the committed party is incapable of discharging his commitments due to force majeure. authority in the Kingdom of Saudi Arabia, stated in its decision regarding penalty clauses issued by Royal Decree No. 25, dated 21/08/1394H (corresponding to 08/09/1974) that such clauses in contracts are deemed valid and applicable unless plausible reasons that justify their rejection are presented. The decision also stated that the amounts agreed upon in the penalty clauses should be fair and inexpensive compared to sustained damages and suffered losses. Moreover, as mentioned before, the Council of the International Islamic Fiqh Academy, which is an affiliate of the Organization of Islamic Cooperation (OIC), passed its decision allowing penalty clauses issued by Royal Decree No. 109 (12/3), dated 29/06/1421H (corresponding to 28/09/2000) and issued a number of decisions concerning such clauses, derived from Shari ah-compliant principles. The Council reaffirmed in its aforementioned decision that penalty clauses are acceptable so long as they do not relate to debts (or financial commitments) as they are considered, in such cases, as interests or usury (Reba) which is prohibited according to Shari ah. The Council also explained that application of a penalty clause is not compulsory in the case where the committed party is incapable of discharging their commitments due to force majeure (exposure to reasons beyond their control) or if it is proven that the claiming party did not sustain any losses or damages in reality. Enforcing Execution To enforce the execution of a penalty clause, all four general elements of responsibility must be available. Namely, the element of error on the part of the party who is responsible for the commitment; the element of damage, the proof of which falls on the affected party; and the element of causal relation that links the error with the damage in a manner where the damage is a direct result of the error, without any foreign reason separating them (and, as such, refutes the responsibility of the erring party for the damage that was inflicted upon the affected party). The binding power of any contract is not stronger than the binding power of Shari ah provisions. This is over and above the element e thaar (i.e., notifying the party who has to fulfill a commitment of their commitment or their shortcoming in fulfilling it). This element should take in consideration the exceptional cases where the claimer is relieved, by law or agreement, from the duty of notifying their counterpart. LEGAL NEWSLETTER VOLUME 4, ISSUE 1 3

6 The Role of the Judiciary When any dispute over the value of a penalty clause listed in a contract is brought before the judiciary for settlement, the fundamental rule in such case is for the judge to rule for the value of the penalty clause agreed upon and included in the contract, because such agreement represents the will and discretion of the two parties. Hence, the judge shall, as a general rule, respect the will of the two parties and rule with the value of the penalty clause, without any increase or decrease, if the eligibility conditions exist. In an exception to the above rule, and given the fact that, to those concerned, the binding power of any contract is not stronger than the binding power of Shari ah provisions, and in line with the teaching of Prophet Muhammad, peace be upon him, that there shall be neither harm nor harm inflecting, the judge has the authority to amend a contract if certain conditions that necessitate such amendment exist. Since the judge has the authority to terminate a contract concluded between two contracting parties, if the purpose of such termination is to fend off overbearing damage away from one of the contracting parties or to prevent the level of difficulty from exceeding the natural limits of ordinary hardship the judge should have the authority to amend a contract to achieve the same purpose, which is to remove the burden of hardship away from one of the contracting parties. In this regard, increasing or decreasing the value and amount of a penalty clause shall be done in accordance with controls set by the Shari ah and the law. However, the authority of the judge in amending penalty clauses is not absolute or unlimited. Certain clearly defined conditions should exist to cause such amendment; for instance, if it is proven to the judge that the party responsible for a commitment has partially completed their commitments or has wholly completed them, but in a way different from what is agreed upon in the contract. In this case, the judge shall interfere, applying discretion to reduce the value of the penalty clause. Undoubtedly, such a decrease agrees with the intent of the mutual will of the contracting parties, as it is fair that the judge does not rule for the claimant with the full value of the penalty clause if the party who is responsible for the commitment did complete part of their commitments. This means part of the penalty clause will be applied to equalize what the party who is responsible for the commitment has breached. Since the value of compensation shall be equal to the damage that occurs, and the party who is responsible for the commitment has completed part of his original commitment, then the damage becomes less than when he would have completed his commitment wholly. The authority of the judge in amending penalty clauses is not absolute or unlimited. Moreover, the penalty clause may also stipulate compensation in case there is a defect in the execution or if the execution is not handled properly. In this case, and according to the will of the two parties, the claimant deserves full compensation if there is a defect in the final execution. However, if the trial judge finds that the damage is insignificant or not grave and, as such, is not compatible with the size of compensation, the judge then has the authority to modify and reduce the value of this clause as he determines suitable. As the judge has the authority to minimize penalty clauses, he also has the power to increase the amount of compensation if he determines that the compensation, as stipulated in the contract, is not equal to the actual damage. It is a given that it is not permissible to agree on relief from contractual responsibility or reducing it; and as such, this situation presents an exception from the common practice that the contract is the binding law of the contracting parties. However, it should not be overused or set as a precedent. The will of the two parties must be respected, and the increase of the compensation amount should not be exaggerated. In addition, the judge also has the authority to negate an agreement if it is proven to him that the violation of the obligation was due to fraud, or that the error and the damage were grave to the extent that it became clear the party who is responsible for the commitment and who violated the commitment has used this agreed upon condition as a pre-cover to evade responsibility. With this, we realize that despite the fact that penalty clauses are generally accepted and honoured, the judiciary has an effective discretion authority when reviewing penalty clauses, as it seeks to balance the principle of honouring contracts and agreements with the notion of justice and the fairness of contracts. This is to achieve the ideal objective: serving justice to the litigants. 4 LEGAL NEWSLETTER VOLUME 4, ISSUE 1

7 Enforcement of Foreign Judgments and Judicial Orders in the Kingdom of Saudi Arabia Dr. Abdullah Al-Ghamdi Enforcing judicial decisions is considered the most important stage of litigation, as a judicial decision is of no value if it cannot be enforced. Therefore, laws in most countries assign enforcing judicial decisions to the judicial authority, whether such decisions are issued by the country itself or by a foreign country. The Government of the Kingdom of Saudi Arabia has given the country s judicial system a high level of care and attention and, in this context, has assigned enforcing judicial decisions to enforcement circuits within the general courts. The Saudi Enforcement Law, issued by Royal Decree No. 53 dated 13/8/1433H. (3 July, 2012), transferred the authority of enforcing foreign judicial decisions from the Board of Grievances (Diwan Al-Madhalem, or the Administrative Court as it is known today) to the Enforcement Circuit within the General Courts. Article 96 of the same law cancelled clause (g) of Article 13 of the Board of Grievances Law, which gave the Board of Grievances jurisdiction over enforcing foreign judicial decisions. In addition, Article 14 of the aforementioned Enforcement Law stipulated that judicial decisions and orders, arbitration awards, and documents authenticated and issued at a foreign country shall be submitted to the competent enforcement judge. This judge is assigned to enforcing foreign judicial decisions to make sure that the subject document fulfills enforcing requirements, and can stamp it with the enforcement seal. The authority of enforcing foreign judicial decisions is transferred from the Board of Grievances to the Enforcement Circuit within the General Courts. There are certain requirements that must be fulfilled in order to enforce foreign judicial decisions. The most important of these is that the enforcement judge can only enforce foreign judicial decisions on the basis of reciprocity. This means that local courts within the Kingdom shall only enforce foreign judicial decisions if the foreign court accepts enforcing judicial decisions issued by Saudi courts within the same level and limits. The burden of proving reciprocity is on the plaintiff as they are the party applying for the enforcement of the judicial decision. Providing testimony is not sufficient to prove reciprocity as it is not conclusive evidence, nor is it an acknowledgement statement submitted by a law firm. The applicant must submit an official document and evidence that is deemed satisfactory by the court. Additionally, the Saudi Enforcement Law lists other requirements in order to enforce foreign judicial decisions. It stipulates that it is required to ensure LEGAL NEWSLETTER VOLUME 4, ISSUE 1 5

8 The enforcement judge can only enforce foreign judicial decisions on the basis of reciprocity. that the Kingdom s courts have no jurisdiction to hear the dispute for which the judicial decision or order was issued. It also states that the foreign courts which issued the judicial decision (or order) are duly competent in accordance with the international judiciary competence rules applicable within their countries judicial systems. Moreover, judicial decisions cannot be enforced in absentia as the litigation parties must be notified to be in attendance. It is also necessary to make sure that: the judicial decision is final as per the regulations applicable within the issuing court; it does not contradict a judicial decision or order issued regarding the same subject by a competent judicial authority in the Kingdom; and the judicial decision or order does not include what may violate the Shari ah or the provisions of Saudi law. On the other hand, the enforcement circuit may, wholly or partially, refuse enforcing a foreign judicial decision or order based on the provisions of The GCC Convention for the Enforcement of Judicial Decision, Delegations and Judicial Notifications of 1418H (1997). This convention clarifies the cases in which the enforcement of a foreign judicial decision may be refused, fully or partially. In addition to the lack of fulfillment of the requirements stipulated in the Saudi Enforcement Law, a circuit may refuse to enforce a foreign judicial decision if: it is in contradiction with Islamic Shari ah or with Saudi law; the judicial decision is issued against the government (the State) or any of its employees for an action that they had carried out while in office or because of official position; or if the enforcement of the judicial decision contradicts applicable international agreements and conventions. The same agreement also stipulates that the party requesting the enforcement must submit to the court several documents. These include an official copy of the judicial decision, authenticated by the relevant competent authority, and a statement confirming that the judicial decision is final and has reached the status and the force of res judicata (a matter that has been adjudicated by a competent court and may not be pursued further by the same parties). This applies unless a copy of the judicial decision notification (authenticated as being a true copy) or any other document proves the defendant was duly notified in case the judicial decision was issued in absentia. The enforcement court may also refuse to enforce a foreign judgment or Arbitral award, based on The Arab League Convention for the Enforcement of Judgments of 1372H (1952G). In its first article, the convention stated affirmative requirements that must be fulfilled in order to enforce foreign judicial decisions, where in its second article it stipulates negative requirements. If these requirements are not fulfilled, a foreign decision may be refused. The Convention includes the enforcement of final judgments, whether it is a judicial or arbitration award. 1 Moreover, paragraph E of Article 30 (which is the article related to refusal of judicial decision) of the Riyadh Arab Agreement for Judicial Co-operation, signed on 6/4/1983, stipulates that: where the dispute, on which the judgement to be recognized, is heard before a court at the contracting party demanded to enforce same, related to the same right, and the claim was raised before the court of the latter contracting party at a date prior to submitting the dispute before the court of the contracting party by which the judgment referred thereto was issued. There is no doubt that the commitment to the rules of international conventions and treaties is one of the postulates of the Kingdom s practice, due to the fact that Shari ah is considered the country s constitutional foundation. In this respect, Shari ah orders its followers to fulfill promises, covenants and contracts, The Holy Qur an urges Muslims to honour contracts and agreements and not to revoke them. Almighty Allah says: And fulfil the covenant. Verily, (you) will be questioned about the covenant 2. He also says: O you who believe! Fulfill (your) obligations 3. Moreover, the commitment of Prophet Muhammad, may Allah s peace and blessings be upon him, to honour and fulfill his commitments stands as a great and ideal example in this regard. He considered revoking covenants and agreements a sign of hypocrisy. In his teachings (The Hadiths), he stipulates that a hypocrite lies when he speaks, betrays when he enters into a covenant, and falters when he makes a promise. By transferring the authority and jurisdiction of enforcing foreign judicial decisions from the Administrative Court (Diwan Al-Madhalem or the Board of Grievances) to the enforcement circuit, within the general courts, the Saudi legislator unified the authority vested with the responsibility to enforce all judicial decisions in the Kingdom. There is no difference between domestic or foreign judicial decisions and domestic and foreign arbitration awards, as long as they fulfill the above mentioned requirements and do not include violations of the Islamic Shari ah or Saudi law. 1 Enforcement of foreign Judgments in Kingdom of Saudi Arabia, Dr. Abdullah Alkhudri, P The Holy Qur an, Surat Al- Israa (Chapter 17), verse The Holy Qur an, Surat Al-Ma idah (Chapter 5), verse 1. 6 LEGAL NEWSLETTER VOLUME 4, ISSUE 1

9 Dispute Over Courts Competence and Jurisdiction According to laws applicable in the Kingdom of Saudi Arabia Hamad K. Al-Dossary* The right of access to the judiciary system may not be sufficient for realizing justice, as the system itself must be based on principles that guarantee the excellence of its operation. The judiciary system is considered a means to protect rights and achieve justice. The Saudi Law of the Judiciary, enacted by Royal Decree 78/m, dated 19/9/1428 AH (1 October, 2007), has adopted several judiciary principles, such as, the independence of the judiciary system, equality before the judiciary system, and free-of-charge judiciary services. It also adopted a two-level litigation process. Moreover, insuring excellence in justice application and simplification of the litigation process required the establishment of various specialized courts to undertake the judiciary process. As it is well known, certain judicial systems adopt a unified judiciary, where there is only a single judicial authority, as in England and other Anglo-Saxon countries. On the other hand, other countries apply double or multiple systems such as France. The Kingdom of Saudi Arabia adopts the multiple judiciary, where civil, commercial, personal status, labour cases and others are heard before general judiciary, while the administrative judiciary is dedicated to hearing administrative cases in which the state is a party, as well as other similar issues, in accordance with Article 13 of the regulations of the Board of Grievances (Diwan Al-Madhalem or the Administrative Court as it is known today). The Saudi legislature defines the competence of each judicial authority within the Kingdom, as the Law of Procedure before Shar'iah courts had defined the competence of the general jurisdiction, while the Law of the Board of Grievances decided the competence of administrative judiciary. Due to the multiplicity of judicial authorities, it is conceivable to have disputes over the extent and scope of jurisdiction and or competence. In this context, disputes may arise among courts under the same judicial authority over the extent of their A dispute may be positive when the two judicial authorities insist on hearing a claim, or may be negative when both of them disassociate themselves from hearing a claim that was brought before them. jurisdiction, which is known as disputes over jurisdiction. Similarly, disputes may arise among courts under the same judicial authority over the subject matter competence, which is known as disputes over competence. Such disputes are foreseeable due to issues related to the accuracy in defining competence and jurisdiction, and due to the attempts expected to be made by each judicial authority to extend or reduce its jurisdiction. In this article, we will highlight the types of disputes over jurisdiction and competence and the procedures to settle them, in accordance with the regulations applicable in the Kingdom of Saudi Arabia. Dispute Over Jurisdiction The dispute over jurisdiction is reflected in the insistence of two different judicial authorities on hearing or dismissing a dispute. A dispute may be positive when the two judicial authorities insist on hearing a claim, or may be negative when both of them disassociate themselves from hearing a claim that was brought before them. The Saudi legislature decided the rules for settling disputes over jurisdiction among the judicial authorities in the Kingdom. This is to avoid issuing two judgments from two different courts on the same subject, as the case may be in a positive dispute. Rules for settling negative disputes, however, aim to prevent unintended denial of justice * Hamad Al-Dossary obtained his bachelor of law degree from Applied Science Private University in Jordan in 2007, master of law degree from the University of Jordan in 2012 and has been with the firm since LEGAL NEWSLETTER VOLUME 4, ISSUE 1 7

10 The Competence Dispute Settlement Committee decision shall be deemed final and not subject to appeal by any means. by courts, since there is no doubt that the judicial authorities' decision not to review a claim is a form of unintended denial of justice. For a jurisdiction or a competence dispute to take place, a lawsuit must have been raised before two different judicial authorities. If two judicial authorities disassociate themselves from the case and rule for lack of jurisdiction, then this is a negative dispute. On the other hand, if they both decide that the case is within each of their jurisdiction, then we have a positive dispute. The Saudi Law of the Judiciary has set applicable rules to settle disputes over jurisdiction and/or competence as follows: The competent court Article 27 of the Saudi Law of the Judiciary defines the competent authority to which the competent court appointment request should be submitted. It assigns this task to a committee, under Supreme Council of the Judiciary (the Competence Dispute Settlement Committee). The committee consists of three members: a member from the Supreme Court, named by its president; a member from the Board of Grievances named by its president (or another member from the Supreme Court, named by its president); and a member from among the full-time judges who are members of the Supreme Council of the Judiciary, to be nominated by its president. The latter shall be the president of the committee, authorized to hear the dispute on jurisdiction. Procedures for requesting settlement of a dispute A request for appointing the competent judicial authority must be submitted, in writing, to the Secretariat General of the Supreme Council of the Judiciary. It should include all information duly required by law, such as: names; capacities; places or residence of parties; and subject matter of the request. Upon completing the procedures, the request shall be reviewed by the president of the committee to decide a date for a session before the committee for hearing pleas regarding the subject matter. Effect of the request for settling the dispute Article 29 of the Saudi Law of the Judiciary confirmed that putting forth a request for settling a dispute arising between two judicial authorities shall result in ceasing the hearing of the related claim. In case the request is submitted after issuing two judgments in the case, the committee president, concerned with the settlement of dispute on jurisdiction, shall have the right to suspend the enforcement of one or both of the contradicting judgments. Reviewing and deciding on the jurisdiction dispute settlement request The Competence Dispute Settlement Committee shall review the request for appointing a competent judicial authority and issue its resolution by majority of votes in accordance with Article 30 of the Saudi Law of the Judiciary. Its decision shall be deemed final and not subject to appeal by any means. Dispute Over Competence A claim may be brought forward to a competent court, then raised before another non-competent court, under the same judicial authority. Both courts may decide that they are competent to hear the claim, which is a positive dispute on jurisdiction. This may lead to two contradicting judgments issued by these courts. On the other hand, both courts may decide that they are not the competent authority to hear the claim, which is a negative dispute. The Law of Procedure Before Shar'iah Courts differentiates between two types of dispute over competence, as follows: Dispute over similar qualitative competence It is conceivable that a court or circuit may rule that it is not the competent authority to hear a case and that another court or circuit, which has similar qualitative competence, is the competent authority to review the case. In such case, item (c) of Article 78/1 of the executive regulations of the Law of Procedure Before Shar'iah Courts obliges the court or circuit to send a letter to the competent circuit. Should the case return to the same court or circuit while the latter competencies are still not convinced that it is the competent authority, the issue shall be referred to the court of appeals, the resolution of which shall be deemed binding. Dispute over non-similar qualitative jurisdiction A court or circuit may deem itself not competent to hear a claim, and that the claim falls within the competence of another court or circuit with a different qualitative competence. In such case, the court shall decide qualitative noncompetence and order the referral of the claim to the court with qualitative competence after deeming its judgment final. On the other hand, the other court could also decide qualitative noncompetence, and consider its resolution final. In such case, item (b) of Article 78/1 of the executive regulations of the Law of Procedure Before Shar'iah Courts stipulates that, in such case, the issue shall be referred to the Supreme Court and its resolution shall be binding. 8 LEGAL NEWSLETTER VOLUME 4, ISSUE 1

11 Appointing an Expert Under Saudi Laws Dr. Anas AlBhairi* Complex cases often make it necessary for the judge to appoint an expert to aid the court in reaching a judgment. This short article discusses the role of the expert in a court proceeding. Appointing an Expert When faced with complex issues in a case, a court may often appoint one or more qualified experts as consultants to the court. The court will mandate the expert to review the facts, meet and discuss the facts with the parties, and provide his or her expert opinion on a set of factual issues. The outcome is usually presented in the form of a report to the court. The parties in the case will have a chance to review and respond to the contents of the expert s report. Qualified Expert The court considers qualified experts to be those whose names are on the list of approved experts registered with the Ministry of Justice. A court may also decide to appoint an expert that is not on the list of approved experts if it finds that the individual possesses the requisite experience and expertise. Who Appoints the Expert? The court is the appointing authority of experts, though a party may hire and rely on its own expert opinion in its pleadings. An expert s opinion, however, will not be binding on the court. Removal of an Expert A party may request, from the court, the removal of an expert if there is obvious bias or hostility from the expert towards a party in the case, or if it can be shown that the expert cannot give due care to The court may choose to rule on a case despite the existence of contradicting views in the expert s report. the mandated issues. The court decides on expert removal requests in a non-appealable decision. Expert s Interaction with the Parties and Court The expert may meet with the parties of the case and any witness or third party whose statement may be helpful in addressing the expert s mandated issues. The court may request the expert to attend court hearings and answer questions regarding the expert s findings. Expert s Fees The expert s fees are determined upon agreement among the expert and the parties in the case. If an agreement could not be reached or was void, or a disagreement arises as to the fees due to the expert, the presiding judge will then decide the expert s fees upon a request from the expert or the parties. Is the Expert s Report Binding on the Court? The expert s opinion usually provides a persuasive argument. However, it is not binding, yet used as a reference on the court. The court may choose to rule on a case despite the existence of contradicting views in the expert s report. * Dr. Anas Albhairi obtained his Bachelor degree in electrical and computer engineering from California State Polytechnic University in 2006, J.D. from Thomas Jefferson School of Law in 2010 and LL.B. Islamic Law (Shar'iah) from Imam Muhammad bin Saud Islamic University in 2016, and has been with the Firm since LEGAL NEWSLETTER VOLUME 4, ISSUE 1 9

12 Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia A guide from the International Association of Defense Counsel and Dr. Saud Al-Ammari Law Firm, in association with Blake, Cassels and Graydon LLP Dr. Saud Al-Ammari Law Firm in association with

13 Under Shari ah, mediation between adversarial parties is always encouraged by the presiding judge. In fact, such encouragement is viewed as one of the duties of the presiding judge. 1. Would your jurisdiction be described as a common law or civil code jurisdiction? The Saudi legal system is based on Shari ah (the law of Islam), which is derived from the Holy Qur an and the teachings of Prophet Muhammad. Shari`ah, as applied in practice, is determined by scholars or jurists, and it is, therefore, the opinions of past and present jurist-scholars, which is the source of law within the system. Islamic law also allows the state to pass statutes to supplement jurists rulings to serve the public good. In these modern statutes one often sees the influence of civil-law principles, as in other Arab countries, and principles taken from the US or UK as well. As to the jurisprudence of the courts, one finds the courts have evolved certain principles and consider them binding, a practice somewhat similar to judicial precedent in common-law systems. Recently, the courts have begun to publish many of their decisions and these often reflect these accepted principles. 2. What method of adjudication is used )adversarial, inquisitorial, or other or hybrid)? Saudi Arabian courts apply the inquisitorial method of adjudication, where the courts are an essential part in the investigation process. Saudi judges are able to question the witnesses and parties to the case, and gather information about all aspects of the case. It is to be noted that litigation in Saudi Arabia proceeds through a series of hearings, and often by means of written materials, not by means of a single continuous trial where the entire case is presented at once. 3. What are the qualifications of the adjudicator )judge-elected, appointed, jury or other)? The qualifications required for an individual to be appointed as a judge are set forth in Article 31 of the Law of the Judiciary. Initially, a judge must be a Saudi national by descent and of good character and conduct. As for academic qualification, a degree in jurisprudence from one of the Shari ah colleges in the Kingdom or a degree in law is required. Judges must also pass a special examination prepared by the Supreme Judicial Council. 4. Are there any procedures available for specialized courts )i.e., commercial court, employment, environmental)? Yes. Courts operating under the umbrella of the Ministry of Justice include: General courts Penal courts Family courts Commercial courts Labour courts There is also a separate body of the Administrative Court (Board of Grievances). Temporarily the Board also handles the commercial jurisdiction, but this will soon shift to the Ministry of Justice. Moreover, there are specialized quasi-judicial committees, operating independently from the Ministry of Justice and presiding over certain types of disputes. Such quasi-judicial committees include: Securities Disputes Committee Insurance Committee Labor Disputes Committee (this will soon transfer to the Ministry of Justice) Social Insurance Dispute Committee Banking Committee 1 Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia

14 Commercial disputes are either heard by specialized, quasi-judicial committees having jurisdiction over particular subject matters (such as the ones mentioned above) or heard by the Commercial Circuit of the Administrative Court, which has general commercial law jurisdiction. Business disputes involving real estate, torts, and crimes are usually heard by the general courts. 5. Is arbitration an option and when? If so, what rules are typically used? Yes. Arbitration is an option when the parties have entered into an arbitration agreement. Arbitration agreements are governed by the Law of Arbitration, passed by Royal Decree No. M/34, on April 16, Will the courts enforce an arbitration agreement to preclude other forms of litigation? Yes. Under Article 11 of the Law of Arbitration, the court shall dismiss any dispute subject to an arbitration agreement, if the respondent raises the defence that the parties have entered into such agreement before any other defense or claim. The court will also refer the case to arbitration if the parties reach an arbitration agreement while the case is being considered before the court. 7. For court proceedings, is mediation mandatory, either before or after filing of a claim or complaint? No. However, under Shari ah, mediation between adversarial parties is always encouraged by the presiding judge. In fact, such encouragement is viewed as one of the duties of the presiding judge. 8. What is the process for pre-hearing fact discovery )if any)? Since the trial in Saudi Arabia proceeds through a sequence of hearings and not one hearing held at once, The Laws of Procedure, either before the Shari ah courts or the Administrative Court (Board of Grievances), do not provide for any pre-hearing fact discovery. (a) Are there provisions for mandatory document disclosures? No. There is no obligation on either party to disclose any documentation to the opposing party. However, the judge has full discretion to order a party to disclose information that might otherwise be confidential, upon a determination that such information is essential to the administration of justice. (b) Is there provision for oral examinations of the parties or others? Yes, Articles 104 to 107 in Chapter Two of Section Nine of the Law of Procedure cover the provision related to the examination of the parties, where each party can question the attending opposing party, and the response has to be in the same hearing unless the court finds the need for granting the examined party a continuous to response. The court also has the right to question an attending party without the need of opposing party request. Moreover, the court can order a party to attend a hearing for an examination. In the event a party can t attend the hearing for an examination for a reason that is acceptable to the judge, then the judge (or whomever he confidently appoints) can go to where the party is located to examine them. According to the law, any party that refrains from attending to be examined, without acceptable excuse or proof, shall be considered an abstainer. (c) Are there limits on the length of oral examinations? Not applicable. (d) Are witness statements or summaries to be provided before the hearing? No. 9. What is the process for pre-hearing expert disclosure )if any)? There is no pre-hearing expert disclosure. Parties are under no obligation to disclose evidence before the hearing. 10. Are there other notable discovery rules? Not applicable. Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia 2

15 Saudi courts have both personal and subject-matter jurisdiction in all cases over foreign defendants who are domiciles or residents of the Kingdom. 11. Is there a prehearing conference )for trial management, settlement or other purposes)? Who conducts it? How long before the hearing? No. In labour disputes, however, a conference is held with an inspector from the Ministry of Labour to determine if the case has merit to be heard before the court. If the case has merit, the inspector will try to reach a settlement. 12. Can a prehearing motion for judgement be brought? If so, what is the threshold test for judgement? No. Judgments are entered only after one or more hearings have been conducted. 13. Is there a process for obtaining pre-hearing rulings with respect to evidence admissibility including admissibility of expert testimony? What is the process and when does it occur? Not applicable. 14. What is the standard for admissibility of expert evidence? Generally, the parties to Saudi Arabian legal proceedings are free to introduce expert evidence into the proceedings. Where complex technical or financial issues are raised, it is common for the judges to appoint an expert or experts as advisers to the tribunal. It is within the tribunal s discretion to choose whom it appoints as an expert and to accept or disregard all or part of the expert s findings. but, ordinarily, the determination of technical or complex financial issues falls to the expert. 15. Does the court have the power to appoint its own experts? Under what circumstances and what type? Yes. Under Article 128, Section 1 of the Law of Procedure, the court has full discretion to appoint an expert if the judge determines that an expert is needed. The court usually appoints experts listed with the Bureau of Experts at the Ministry of Justice. However, the court may appoint an expert who is not listed with the ministry should the need arise. 16. Does your jurisdiction protect privilege? If so, what privileges are protected from disclosure )attorney client/ legal advice; documents prepared in anticipation of litigation; settlement discussions; other)? Lawyers are barred from disclosing confidential information obtained in the course of practicing their legal profession, even after the attorney-client relationship has been terminated, unless non-disclosure violates a Shari ah requirement (Code of Law Practice, Article 23). Generally, the law does not impose a duty to disclose. The parties may present any information relevant to the case and withhold any information that might be prejudicial. However, the judge has full discretion to order a party to disclose information that might otherwise be confidential, upon a determination that such information is essential to the administration of justice. 17. If privilege is not protected, are there other protections from disclosure )i.e., privacy) that could prevent disclosure of otherwise privileged information, and what is the basis for those protections? Not applicable. 18. Who determines privilege disputes, or disputes with respect to other forms of protection described in 17 above? The Disciplinary Board, a special committee set by the Ministry of Justice. 3 Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia

16 19. Briefly describe the trial process. (a) Are there opening submissions, in what form and of what length? There are no opening submissions. The judge will call on the parties in the case at the specified time and will ask each party to present their pleadings. Pleadings may be submitted either orally or in written form. However, the common practice is that each party will submit the pleadings in written form along with any additional evidentiary documents. In the case of oral pleadings, the judge will ask the claimant to present his/ her complaint and then ask the respondent to give an answer. (b) What is the order of presentation of witnesses? There is no specific order in which witnesses are presented. (c) Who conducts examination and in what order? The examination of witnesses is conducted by the judge who will address his own questions to the witness. Thereafter, the parties may ask the judge to address their respective questions to the witness. (d) What is the process for closing submissions? There are no closing submissions. Before concluding the trial, the judge will ask the parties if there is anything else they wish to submit or say. Thereafter, the judge will rule on the case, or specify a date for the ruling. 20. Please identify any other notable trial procedures. In the event when there is no or not enough evidence, the court, or a party, can request the opposing party to swear an oath. The party who requests an oath must, clearly, state the facts and deeds that they request the oath for. The court will, then, set the legally acceptable oath form. Any individual who is subpoenaed to the court to swear an oath must attend. The party will be considered abstained if they did not attend without a legitimate cause. 21. Who bears the burden of proof of liability? Causation? Damages? What is the standard of proof for each? The party asserting a claim or affirmative defence has the burden of proving all the elements of that claim or defence. The decision to award damages and the amount of damages awarded are at the discretion of the court. Saudi law does not provide for differing specific standards of proof. 22. What heads of damage are recoverable )compensatory, pre-judgment interest, punitive damages, other)? Only actual damages, which a claimant is able to prove, are recoverable. 23. If punitive damages are available, what is the threshold for recovery, and range of awards? Punitive damages are not available. A claimant is only entitled to actual damages that a claimant is able to prove. 24. Are there time limits for bringing claims? Responding to claims? Please describe. Generally, a party s right to claim does not cease by time (statute of limitations) except where the legislature deems otherwise. For example, in labour disputes, a claim has to be brought within a period of 12 months. 25. What are the requirements to establish jurisdiction over a foreign defendant in your court? Can a foreign defendant request that the court decline jurisdiction on the basis that there is a more convenient forum? Saudi courts have both personal and subject-matter jurisdiction in all cases over foreign defendants who are domiciles or residents of the Kingdom. Saudi courts do not have subject matter jurisdiction, however, over domiciled or resident foreign defendants for cases where the subject matter is property located outside the Kingdom. (Law of Procedure, Article 25). Saudi courts also have jurisdiction over foreign defendants who reside outside the Kingdom under following circumstances: If the subject matter was any property located within the Kingdom, obligations arising in the Kingdom or obligations where the Kingdom is the place of performance. If the case was in connection with a bankruptcy filed in the Kingdom. Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia 4

17 32. On average, how long does it take to get trial/final hearing, and what factors can affect that? It is not possible to determine how long it takes to get to trial or reach a final hearing due to certain factors, such as the nature of the case, evidence presented and the court or quasi-judicial tribunal that has jurisdiction over the case. However, it is estimated that it can take seven to 24 months to get to trial or reach a final hearing, depending on the factors mentioned above. 33. Is an appeal process available )distinguish between final and interlocutory/procedural orders as needed)? Who hears the appeal? How are they appointed? What are their qualifications? Some form of appeal is available in almost all types of cases. In the general courts, the appeal is heard by the courts of appeal through circuits that are composed of three judges. However, criminal homicide cases are heard before five judges of the Court of Appeals Criminal Division, and subsequently by the five judges of the High Court. In order for a judge to become a general court appeals judge, the candidate must have spent at least two years as a chief judge, worked in a comparable judicial role for 19 years, or taught the subject of Islamic jurisprudence at a college in KSA for 19 years. 34. Are hearing rooms available for electronic trials or appeals )i.e., where documents and transcripts are presented on computer monitors; witnesses can testify by video conference)? No. Hearing rooms are not available for electronic trials or appeals. All related documents have to be submitted in hard copies. Witnesses should also perform their testimony verbally and be physically present. If a witness is not available in the same city as the trial judge, they may testify in person in a courthouse where the witness is located. The judge who hears the testimony will then transmit the testimony to the presiding judge. 35. What is the practice regarding the use of graphics, computer animation, PowerPoint and the like, in trials? In appeals? A practice for using graphics, PowerPoint, etc., is not available. All the related documents have to be presented to a court in hard copies. However, the judge may make allowances if deemed necessary for the administration of justice. 36. Will the lawyer at trial be the same as the one responsible for pre-trial procedures? Is there a solicitor/ barrister distinction? Yes. A lawyer at trial will be the same as the one responsible for pretrial procedures. There is no solicitor/barrister distinction. 37. What are the contributory negligence laws in your jurisdiction? Is there a comparative fault assessment, joint and several or proportionate liability among tortfeasors? Does a plaintiff s negligence reduce or eliminate liability of defendants named in the litigation? Because of the absence of a statutory law in Saudi tort law, Shari ah principles take the place of the statutes. Consequently, when deciding tort cases, judges need to consider these principles by interpreting them and then apply them to each case individually. Comparative negligence or fault, including that of the plaintiff, is recognized in Shari ah. However, there are no specific guidelines as to how it is applied. Judges will assess the degree of fault for each party on a case-by-case basis. 38. Is service of a complaint issued outside your country permitted in your country by informal means, or must the Hague Convention be allowed? No. Saudi Arabia is not a signatory to the Hague Convention. Thus, a foreign court or jurisdiction is not permitted to serve a complaint to the Kingdom. However, under the new Saudi Arbitration Law, Saudi courts are now required to recognize and enforce arbitral awards from international venues outside of the Kingdom. 39. Do your laws prohibit export of relevant documents from your jurisdiction for the purposes of litigation outside your jurisdiction? )Consider privacy rules) No. Export of documents to other jurisdictions is not prohibited. However, documents and evidence may not be taken outside the jurisdiction of Saudi Arabia without authorization from the relevant authorities. 5 Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia

18 40. Please point out any litigation Best Practices employed by courts in your jurisdiction but not yet referenced in the survey? Under Shari ah, mediation between adversarial parties is always encouraged by and is viewed as one of the duties of the presiding judge. In this regard, the Ministry of Justice is working on institutionalizing this method by creating a settlement department in every court where a judge will ask the parties to appear before this department to explore the possibility of a settlement based on mediation. 41. Are there any significant areas in which you believe the playing field between claimant and defendant is not level that you think need to be addressed? No. Shari ah is an equity-based system where the truth is always sought to achieve justice. 42. Are there legislative efforts under way that address any of the litigation practices in your country? Definitely. The Kingdom is undergoing significant improvements of the judicial system. In this regard, the government, through the King Abdullah Project for the Development of the Judicial System, has allocated nearly US$2 billion with the purpose of: Training and increasing the number of judges Creating additional specialized courts (e.g., the Traffic and Motor Vehicle Court) Moreover, the Kingdom has signed several agreements for judicial cooperation with a number of countries such as the United Kingdom and France. Special Report: Litigation Procedures and Requirements in the Kingdom of Saudi Arabia 6

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