Electronic Arbitration Perspectives in Saudi Arabia Research Paper

Introduction

For centuries, humanity has been trying to create a great number of different remedies and institutions which will be able to make the life of people easier and more coordinated. The whole history of the development of humanity can be taken as the chain of appearances of different institutions which were created under certain conditions and according to existing beliefs and rules. Though, a complication of society, development of human thought, and technologies led to the evolution of these institutions, and their progress.

Moving hand in hand with humanity, they helped people to achieve great success in different issues and regulated their lives. That is why it is possible to say that they became an integral part of society and one of its main characteristics. The Justice system is one of these institutions. It is one of the oldest among them as its grounds could be seen even in prehistoric society when one person could kill another because of the piece of meat taken without a permit.

Being rather primitive, these manifestations of social institutions though became the basis for the modern justice system. In the course of development, it had a great number of significant phases such as the appearance of Roman law, which is used by all civilized countries in the world, and the creation of the modern justice system. All these changes appeared as the answer to the development of society and nowadays technical revolution and widespread digital technologies also lead to the introduction of significant changes to this very system. The appearance of electronic arbitration can be taken as a result of these processes. Being rather a convenient issue it still has its advantages and disadvantages which should be analyzed for a better understanding of the efficiency of new mechanisms of the justice system.

Electronic Arbitration. Definition

First of all, a clear definition of the term electronic arbitration should be given. As it is known, arbitration is the process with the help of which opponents present their points of view on some problematic issue to a third person who has no interest in this very issue¹.Being rather an old remedy, it proved its efficiency and helped a great number of people to solve their problems.

However, nowadays, in the age of technologies, arbitration does not have to be direct and immediate as modern means of communication allow people to exchange their thoughts being in different countries. With this in mind, it is possible to conclude that electronic arbitration is the process of debates between opponents who have claims, and the third side which is carried out using communication.

The given definition can be taken as very general as it suggests just the main idea of what electronic arbitration is. Though, at the same time, it is possible to say that the main sense of this new remedy lies exactly in the fact that people do not have to sit in the same place. Technologies allow them to organize virtual meeting which could be not less efficient than the real one. Being taken as part of the traditional justice system, it, though, at the same time shows perspectives that are introduced by the blistering development of technologies.

History of the development of the instrument

Nevertheless, it is possible to assume that the given procedure is just at the beginning of its development, while the whole issue of arbitration has a very ancient history. Legendary tsar Solomon can be taken as the first arbitrator as he listened to the problems of his people and tried to solve them. Since that time the issue remained almost unchanged as all sides of the conflict had to gather together and try to persuade the arbitrator, suggesting their arguments.

Thus, the development of digital technologies allowed the issue of arbitration to obtain new features. It should be said that there are two significant facts in the history of the appearance and development of electronic arbitration. The first one is the creation of the Internet and development of this remedy and all other technologies to the level which will be enough to guarantee the stable and secure connection between different sides of the conflict even if they reside in different countries.

The needed level has been achieved at the beginning of the 21st century and this period could be taken as the beginning of electronic arbitration as attempts to align the mechanism of distant problem solutions are closely connected with the progress of means of communication and technologies. However, there is one more important fact which influences the development of electronic arbitration. Taking into account the idea that this issue allows people and states to solve their problems on the international level, it should be said that the creation of various international agreements, which regulate arbitration, should also be mentioned as the important point of the history of electronic arbitration.

The most important document which regulates international arbitration law is the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards². That is why it should be said that the history of the development of electronic arbitration is closely connected with these two issues.

Introduction of electronic arbitration to Saudi Arabia

However, it should also be said that not all countries recognized the advantages of the implementation of this procedure into their justice systems at once. Several countries still do not use this remedy because of a great number of different reasons. However, the majority of developed and civilized states accept the great efficiency of this new remedy and try to use it to increase the efficiency of their justice system. Saudi Arabia is not an exception.

Being one of the richest countries in the world with high showings of the wealth of its population, this country tries to use the newest technologies and approaches to become one of the most developed countries in the world and satisfy its citizens. That is why electronic arbitration is recognized in this very country and is now widely implemented into the justice system of the country. Saudi Arabia was one of the first countries of the East who accepted the decision to use this remedy³. It should be said that in general, the issue of arbitration is given great attention in Saudi Arabia.

The new arbitration law, which was accepted in 2013, can be taken as evidence of this statement. According to Royal Decree 34/M, the functioning of arbitration should be organized by the main international standards⁴ (“New Arbitration Law in Saudi Arabia” para. 1). Especial attention should be given to the quality of the process and its efficiency. It should also be said that online or electronic arbitration is taken by this Decree as an integral part of the whole system.

Main goals of Electronic arbitration

Nevertheless, the process of arbitration is Saudi Arabia aims at human satisfaction with the law and its efficiency. This purpose coincides with the same procedures in a great number of other countries and, that is why it is possible to speak about some general aim of the issue of electronic arbitration. The first obvious goal of the discussed procedure is to increase the level of efficiency of the whole system by the implementation of new technologies to its functioning.

It has already been mentioned that this very issue can be taken as the supposition of further spread of technologies in this sphere. That is why one more important goal of the given system is to persuade people that it could be trusted and it could satisfy their needs at least not worse than the traditional one. Another important goal is to help to create specialists who will be able to work with online systems and promote the development of the issue of electronic arbitration.

Moreover, take into account the fact that even international disputes can be solved with the help of online arbitration, it is possible to say that the interests of the country could be protected with the help of this issue and its image on the international level could also be improved. There are also a great number of other goals of electronic arbitration thus, these could be the most important and topical.

Weaknesses of electronic arbitration in Saudi Arabia

However, it should be said that sometimes these goals could hardly be achieved because of a great number of different reasons which the process of implementation of electronic arbitration could face in a certain country. These problems could influence the efficiency of the whole system and lead to the appearance of different weaknesses. A great number of countries, which try to use this remedy, can suffer from this problem and Saudi Arabia is not an exception.

There are several important drawbacks in electronic arbitration which obviously should be taken into account as they influence the whole sphere. First of all, it should be said that the main weakness of electronic arbitration in Saudi Arabia is its potential inaccessibility for a certain group of people. Being connected with digital technologies, electronic arbitration remains a thing that could hardly be understood by people. Nowadays, Saudi Arabia is one of the richest countries in the world, though its prosperity came due to the blistering development of the oil industry which gave a country a great stimulus for its development.

Though, the mentality of a great number of people remains unchanged and, that is why they take electronic arbitration as something strange. Another great weakness of this remedy, and justice system of Saudi Arabia in general, is its great dependence on the ancient institution of judges who adhere to the Sharia Islamic Laws⁵. Very often their decisions do not coincide with the law of the state and it is difficult to resist this traditional approach.

Strengths of Electronic arbitration in Saudi Arabia

Thus, it should also be said that despite all weaknesses which electronic arbitration is Saudi Arabia has, it still functions and provides its services for people. That is why it is possible to assume that this very remedy also has its advantages which guarantee its further development and functioning. The first obvious strength of the given system is its convenience. Like in all other countries, in Saudi Arabia people, who use this system, admit that it helps to save time and money. Traditional arbitration demands the personal presence of all participants in the process. People spend their time and money to compensate for expenses.

Electronic arbitration allows people to remain at their place and do not spend money and time. Another important advantage results from the fact that the population of Saudi Arabia tries to avoid the usage of complicated jurisdiction issues and papers in the process⁶. Electronic arbitration allows participants of the issue to make a compromise without a great number of documents that are needed in traditional arbitration. That is why, trying to avoid bureaucracy, people prefer to use this very remedy.

Finally, the last strength of electronic arbitration in Saudi Arabia lies in the fact that it is now promoted and guided by the king of the state who wants to improve the image of Saudi Arabia on the international level. That is why, it is possible to assume that being controlled by the ruler of the state, the given remedy can have a great number of resources for its development.

An international agreement with Saudi Arabia

Speaking about the implementation of the issue of electronic arbitration it should be said that it is impossible without close cooperation with some other states. As it has already been mentioned, the issue of arbitration means discussion of different problems not only on the state level, though, a country should be ready to respond to claims on the international level. That is why the participation of Saudi Arabia in different negotiations connected with the issue and its readiness to accept and legalize various points mentioned in different international pacts that regulate the functioning of the issue of arbitration are vital.

Trying to make Saudi Arabia the active participants of all important processes in the world, king Salman accepted several important documents that should organize arbitration according to international standards. First of all, it is already mentioned the New York Convention 1958, which became the basis for international arbitration. Moreover, the UNCITRAL Model Law became the ground for a great number of decisions and procedures according to which the justice system of Saudi Arabia should be organized. Additionally, the latest amendments to the law added by Royal Decree in 2013 outline the necessity of adherence to the main principles of international arbitration system⁷.

That is why, it is possible to say that nowadays, Saudi Arabia is the active member of international agreements that regulate the functioning of the arbitration system and provide standards according to which it should be organized.

Islamic Jurisprudence and electronic arbitration

Besides, speaking about the issue of arbitration and judicial system of Saudi Arabia, it is impossible not to mention another important institution which has a great influence on the life of people in the country and regulates a great number of different processes. This institution is religion and certain principles which come from it. The thing is that being an Islamic state, Saudi Arabia adheres to the main principles which are written in Koran. Moreover, there is such a phenomenon as Islamic Law and principles of Islamic Jurisprudence which also have an outstanding influence on the life of people and their conscience.

These principles have been topical for people for centuries and, that is why could not be ignored while trying to implement a modern arbitration system to Saudi Arabia. King Salman, trying to improve the image of the country, still understands that confrontation with judges who act according to these principles can have a pernicious influence on society and the mentality of people. Moreover, his power rests on these principles, that is why he is now not able to declare priority of the principles of arbitration law. Yet, he does not leave his attempts to implement these principles that is why the process of gradual implementation is started and the ground for it has already been created.

Functioning of Electronic arbitration under conditions of Muslim culture

However, it should be said that it is a rather complicated process. The thing is that the peculiarities of Muslim culture make the process of development of the given issue more complicated. For centuries people have been solving their problems with the help of judges who used the main principles of Islam as the main determiner whether a person is guilty or not⁸. Moreover, the new generation was also raised under the strong influence of these principles. That is why it should be said that the process of development of electronic arbitration in Saudi Arabia is unique. Being more European procedure, it now spreads to Arab states and tries to become traditional for people.

That is why there are several important points connected with the functioning of this issue in the Muslim state under the strong influence of its culture. First of all, it should be said that a great number of people have distrust towards online arbitration as it neglects traditional ways to solve conflicts with the participation of a judge in the process. Moreover, being part of European culture, it also meets resistance from people who want to preserve their style of living and traditional values.

Additionally, recognition of importance and convenience of the given issue still has not come for a great number of people and, that is why they prefer to use traditional ways to solve their problems. Finally, not everyone appreciates the process of integration of Saudi Arabia in Europe and its values. That is why. it is possible to say that online arbitration still faces some resistance as it destroys the traditional image of the justice system.

Efficiency and first results of usage of the given issue

According to the latest statistics, more and more people use online arbitration to solve their problem and people who used this remedy at least once in their life, would choose it again in case of some new conflicts ⁹.These facts can be taken as evidence of some local success of electronic arbitration. Moreover, one more goal is achieved. Attempts of the state to use electronic arbitration in its justice system lead to the appearance of tendencies towards new and more significant changes in the whole system. That is why it is possible to state the successful development of electronic arbitration.

Old and new Arbitration Laws

Thus, it should also be said that Saudi Arabia is one of the most orthodox Muslim countries in which society is organized by the main principles of Islamic law. The main statements of this law were created several centuries ago, that is why, under modern conditions, it could be described as rather cruel and old-fashioned. Still, only a few changes were added to these principles during the XX century. However, the tendency towards the humanization of society could not but influence the state. That is why some indulgence could be observed in the sphere of laws in Saudi Arabia. It also refers to arbitration and the rules which coordinate its functioning.

It should be said that on April 16, 2012, the new arbitration law was adopted by Royal Decree¹⁰. This law replaced the old one, which was adopted in 1983. This fact means that the ruler of the state underlines his desire to develop the democratic and humanistic image of Saudi Arabia. In general, it is possible to say that the new law gives more independence to arbitration courts and tribunals and establishes arbitration-friendly principles that should serve as the basis for the functioning of the whole system¹¹.

The thing is that the new amendments provide additional procedural powers to courts and helps them to make their functioning clearer, fairer, and efficient. Nevertheless, it should be said that the main and the most important amendment is the limitation of the power and influence of local Saudi courts, which means that arbitration becomes less dependent on the traditional Islamic Law. Additionally, the new law provides more independence for parties for them to be able to solve their problems without any significant influence from some other institutions.

For example, according to Article 15 of the new arbitration law, the court of competent jurisdiction can appoint the arbitrator, however, only in case if parties were not able to do it by themselves¹². Moreover. according to the new law, participants of the trial can choose the applicable law (Article 28), the procedure (Article 4), venue (Article 28), and a great number of other important things that have a great impact on the process¹³. With this in mind, resting on these changes, it is possible to conclude that the new arbitration law of Saudi Arabia introduces significant changes that could be taken as the attempt to shift the priority from the traditional Islamic Law towards a more modern and.humanistic approach accepted at the international level.

Moreover, there are also some changes connected with the international commercial arbitrations. Being dependent on its international partners, Saudi Arabia also tries to create a remedy that could help to establish better relations with them and protect the interests of the state at the same time. That is why the new law also introduces some changes to this aspect of the arbitration and makes it more independent. The final results of the arbitration could hardly be changed without some serious reasons…

With this in mind, it is possible to say that as compared to the arbitration law of 1983, the new one is more democratic and tolerant as it provides more independence and power to courts and tribunals, which could be taken as the evidence of changes in the judicial system of Saudi Arabia.

The way electronic arbitration law works

It should also be admitted that the implementation of the new electronic arbitration law in Saudi Arabia has already introduced a great number of changes in the functioning of the given sphere. First of all, it should be said that it makes the work of various kinds of tribunals more efficient and clear. Moreover, according to the numerous feedbacks from people who had to use arbitration to solve their problems, nowadays it became much easier to organize and control the process¹⁴. Besides, the positive shift from the Shariah or Islamic law towards the state law was also admitted by citizens of the state. With this in mind, it is possible to say that how now electronic arbitration law works in Saudi Arabia can be taken as rather tolerant and modern.

Application of the new law

One should also remember that the laws created by the Royal Family and accepted by the government are obligatory for everyone in the state. That is why, nowadays, the state with the most strong influence of the traditional Islamic Law tries to implement some changes to improve its image and attach itself to the world elite. That is why the new arbitration law is nowadays applied in all regions of a state and regulates the functioning of various arbitration courts. Moreover, the new law should be the norm even for some small local courts where the influence of some Shariah laws was traditionally strong.

Differences between various forms of arbitration

Nevertheless, talking about the issue of arbitration and the influence which new laws have on it, such remedy as electronic arbitration should also be touched. The thing is that it is organized by the same laws as the traditional arbitration courts. The only difference lies in the fact that electronic arbitration is the medicated process which is performed with the help of modern technologies and various means of media. The thing is that during the traditional arbitral process in Saudi Arabia all participants should sit in the same room to hear the arguments of each other, discuss them, and make a conclusion.

Thus, electronic or online arbitration allows people not to go to a certain place to discuss some disruptive issues. They should use the internet to be online at a certain period and be ready to present claims and communicate with all other participants. That is why two sides of the conflict and arbitrator could align mediated contact with each other and solve their problems. All documents which are needed could be sent using the Internet, while originals could be obtained with the help of the post.

Rules which control the functioning of the procedure

That is why it is possible to say that electronic arbitration differs from the traditional one in the greater mobility and possibilities to save time for participants. The rules and laws, which are used to control the functioning of electronic arbitration, do not differ from the rules and laws that control the traditional one. The process should be organized by the new arbitration law. It means that there should be a plaintiff, defendant, and arbitrator. All these persons should be present both at traditional and electronic arbitration. Moreover, the process of the discussion and finding a solution is the same, though in electronic arbitration it is performed with the help of various means of media and digital devices.

Procedure in Saudi Arabia

It should also be said that in Saudi Arabia the process of electronic arbitration does not differ from its traditional image and consists of online and offline stages. The parties make an arrangement, determining the date and the time of the process, and who will be the arbitrator. At this stage, some offline means such as fax or post could be used to deliver the needed documents. Then the online stage comes, which means the usage of video conferencing, various digital devices, and web-based communications. Having solved the problem, parties use the post or some other means to deliver the award. Usually, the process is not complicated and takes far less time than the traditional one.

Cases

Thus, it is possible to say that nowadays a great number of various organizations or companies try to sue arbitration courts to find a solution to their problems. The case of In re Armaco Services Co or the Emaar case is known as the processes that were heard based on the new arbitration laws and through the arbitration court¹⁵.

Lesson Learned

With this in mind, it is possible to say that information obtained from the analysis of the main peculiarities of the development of the issue of electronic arbitration in Saudi Arabia allows a researcher to conclude that the tendency towards the further evolution of this issue could be observed. Moreover, the new arbitration law also makes the functioning of arbitration courts more efficient and independent from the traditional influence of Islamic law.

Conclusion

Resting on these facts, it is possible to make a certain conclusion. First of all, it should be said that being a rather convenient and innovative remedy, online arbitration could help to increase the level of peoples satisfaction with the existing justice system of Saudi Arabia. Moreover, it could make people believe in the useful character of innovations in this sphere. With this in mind, it is possible to assume that despite all problems connected with traditional culture and principles of Islamic justice which electronic arbitration faces, it still has good perspectives and continues its development.

Reference List

Farzaneh Badiei. Online Arbitration Definition and Its Distinctive Features. Ceur Workshop Proceedings (2015). Web.

George Sayen. Arbitration. Conciliation, and the Islamic Legal Tradition in Saudi Arabia. PennLaw (2015). Web.

Jean-Pierre Harb et al. The New Saudi Arbitration Law. Jones Day Publications. (2012). Web.

Ministry of Commerce and Industry. Arbitration Law. (2015). Web.

Mohammed Al-Ghamdi & John Boehm. New Saudi Arbitration Law: A Positive Step, but Practical Questions Remain. Morton Rose Fullbright (2012). Web.

New Arbitration Law in Saudi Arabia. Freshfields Bruckhaus Deringer, (2015).

On-Line Arbitration. Wipo (2015). Web.

Raza Mithani. Saudi Arabia: the emerging Arbitration Landscape, Corporate Disputes (2014). Web.

Footnotes

1. Farzaneh Badiei. Online Arbitration Definition and Its Distinctive Features. Ceur workshop proceedings. Web.
2. On-Line Arbitration. WIPO. Web.
3. George Sayen. Arbitration. Conciliation, and the Islamic Legal Tradition in Saudi Arabia. PennLaw. Web.
4. New Arbitration Law in Saudi Arabia. Freshfields Bruckhaus Deringer. Web.
5. Sayen, supra note 3.
6. of Raza Mithani. Saudi Arabia: the emerging Arbitration Landscape, Corporate Disputes. Web.
7. New Arbitration Law in Saudi Arabia, supra note 4.
8. Sayen, supra note 3.
9. Mohammed Al-Ghamdi & John Boehm. New Saudi Arbitration Law: A Positive Step, but Practical Questions Remain. Morton Rose Fulbright. Web.
10. New Arbitration Law in Saudi Arabia, supra note 4.
11. Jean-Pierre Harb et al. The new Saudi Arbitration Law. Jones Day Publications. Web.
12. Harb et al., supra note 11.
13. Ministry of Commerce and Industry. Arbitration Law. Web.
14. New Arbitration Law in Saudi Arabia, supra note 4.
15. On-Line Arbitration, supra note 2.