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Jeddah - Yasmine El Tohamy - RIYADH: Major international law firms have expressed confidence that companies and investors can receive “fair treatment” in disputes in Saudi Arabia, according to an expert.
Speaking to Arab News on the first Riyadh Construction Disputes Seminar, John Quinn, chairman and founding partner at Quinn Emanuel, underscored the dependable rule of law in the Kingdom and its competent judges.
The event was organized by Quinn Emanuel Urquhart & Sullivan LLP to highlight the developments in the Kingdom’s legal system that ensures the protection of the rights of all stakeholders without any bias.
“We have confidence that parties can get a fair treatment in disputes in the Kingdom … that just because you’re a foreigner and you have a claim, a dispute with a Saudi, that the court is not going to have a thumb on the scales for the Saudis,” Quinn stated.
The Civil Transaction Law, which was implemented in December, plays a pivotal role in Saudi Arabia’s legal modernization drive under Vision 2030 and aims to enhance transparency and predictability within the legal framework.
“The civil code is expected to streamline civil transactions and also help courts to decide cases in a consistent way across different disputes and cases,” Nasser Al-Rubayyi, managing partner and co-chair of the Middle East and North Africa Practice at Quinn Emanuel, told Arab News.
Legal reforms
This program is one of four major laws that were announced in 2021 including the code of evidence, the personal status, the civil transactions law, and the criminal or the penal code on sentences.
Al-Rubayyi said: “All of them have been enacted with the exception of the criminal code, and we’re expecting it to be issued very soon.”
He underscored the key modifications brought about by the civil code, particularly emphasizing the standard of recovery. This pertains to the types of claims that can be required and recovered within the Saudi legal system.
He further explained the role of this code by providing an example when it comes to loss of profit as it is not something to be recovered.
For example, a project owner in a construction endeavor commits to a two-year completion timeline with the contractor. Should the contractor fail to meet the deadline and the project owner enters into a lease agreement for the project before the contract concludes, the unfinished state of the project hinders its delivery to the third party, Al-Rubayyi elaborated.
“The code recognizes damages of this nature. So we’re expecting to see more claims with respect to loss of profit ... claims will have to be substantiated and evidence will have to be produced to the court of the tribunal to show that you’ve incurred the damages. But the bottom line is the concept is recognized now under Saudi (laws),” he continued.
Changing economic landscape
The law firm is operating in the Kingdom with 10 Saudi lawyers, overseen by Al-Rubayyi, and Saudi Arabia “seems like the center of the world … there is just so much energy, so much ambition and such vision and leadership in this country. We wanted to be here to be a part of that,” Quinn said.
He added: “We want to offer something on a global class level, both in country appearing in Saudi courts, which we do a lot of, and also outbound disputes where Saudis, you know, the government or private individuals are making investments around the world, and they encounter problems.”
He further went on to explain that disputes concern people who have not done what they agreed to do in one way or another.
Reflecting the Kingdom’s ambitious giga-projects, Quinn discussed the notable legal initiatives undertaken in Saudi Arabia including the creation of new codes such as the mining code, personal law, and civil code.
These ambitious projects, along with efforts to enhance the judiciary through training and education for judges, aim to instill greater confidence among foreign investors and other stakeholders in the quality of the legal system.
“There’ll be greater confidence on the part of foreign investors and others in the quality of the judiciary to upgrade the judges, to give the judges education and training. There’s a lot being done to try to make Saudi Arabia a more comfortable place for foreign investors,” Quinn continued.
Moreover, Al-Rubayyi highlighted that the number of cases that have been litigated is “growing tremendously, with very large projects, and it’s inevitable that you will have disputes and disagreements, especially if these are unique projects.”
The cause of this increase is not because parties are fighting more, but it’s due to the increase in giga-projects in the Kingdom.
“It’s a natural growth when the economy is growing at a fast pace and as you have larger projects, obviously you will have certain disputes, but they’re not in disproportion with the growth of the country,” Al-Rubayyi asserted.
He added: “We’ve seen a trend in terms of an increase in the number of construction disputes.”
However, Al-Rubayyi noted that, in contrast, the growth in the number of cases is “very low, which is a positive thing about how the economy is performing … it’s a healthy litigation market.”
Digital transformation
Additionally, he also underlined the crucial role of digitalization of the court system and the advancements it has made in making dispute resolution more efficient.
“We’re involved in some of the largest competition cases, and then with the digitalization of the court system, it has made resolving disputes more efficient,” he added.
Furthermore, Al-Rubayyi noted that a team of experts has been assigned to work on civil law. They may have consulted other jurisdictions, but it is tailored for the Saudi market in the judicial system and the overall Saudi legal system.
He concluded the interview by suggesting that a significant improvement for the judicial branch would be the increased publication of legal precedents by judicial committees.
This would help investors manage their risks and enable them to have a risk study that’s accurate.
“I’d like to assure international investors that we have a very healthy legal system, and the Saudi government has been investing significantly to improve and reform the system,” he said.
Commercial arbitration
Launched in 2014, the Saudi Centre for Commercial Arbitration is also working to promote the use of adjudication among businesses operating in the Kingdom.
Arbitral tribunals now possess expanded discretionary authority, enabling them to decide on the optimal format for hearings, including the option of remote proceedings.
Additionally, the Kingdom is at the forefront of digital transformation as it digitizes its court system and harnesses technology in court proceedings using “Khibrah,” an electronic portal connected to the court system.
Local legal expertise and experience are essential for effectively structuring agreements and prosecuting disputes.
The key to navigating these opportunities is patience, adherence to agreements, and identifying major risks and mitigation strategies at the tender phase.
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