Author: Shaheer Tarin*
Published: July 2015
In recent decades, commercial transactions and business dealings between parties belonging to different cultures, societies, political systems and faiths have become commonplace. Saudi Arabia and other Muslim societies are no exception. In 2012, the United Nations’ GDP and its Breakdown at Current Prices in US Dollars ranked the three predominantly Muslim countries of Republic of Turkey, Republic of Indonesia and the Kingdom of Saudi Arabia in the top 20 largest world economies. In the same year, exports from the United States to Saudi Arabia amounted to $19 billion; European Union exports to Saudi Arabia amounted to €33 billion; and Australian exports to Saudi Arabia surpassed $2 billion Australian.
In a globalized age where world economies are becoming increasingly intertwined, it is ever more necessary to have an appreciation of various facets affecting each party to a business dealing, including the financial, social, cultural, political and legal. During business transactions, it has become widely accepted that differences are likely to emerge from business dealings and it is therefore essential to have an understanding of the opposing party’s approach to dispute resolution and the factors that influence its decision making and perception.
This article, with a focus on construction arbitration, seeks to provide an analysis of the effect Islamic law – or Shari’a – has had on the Saudi Arabian arbitration and dispute resolution practices. In its discourse, the article will discuss themes and mechanisms of dispute resolution prevalent in Islamic law as the cornerstone for this overarching influence. An analysis of the Saudi Arabian Arbitration Laws of 1983 and 2012 will be provided. The author will proceed to investigate how Saudi Arabia’s arbitration experience with foreign economic powers in recent modern history has rendered Saudi Arabia as an unappealing destination to arbitrate and what the contemporary challenges facing the Saudi Arabian arbitration landscape are.
*MCIArb, MConstrLaw (Melbourne), ProfCertArb (Adelaide), Grad Dip Leg Prac, LLB (W. Aust). Barrister and Solicitor Supreme Court of Western Australia, High Court of Australia. This article is based upon research undertaken during the Melbourne Law Masters coursework. The author thanks Professor Doug Jones AO for his guidance.