Saudi Arabia's Draft Arbitration Law: Proposed Changes and Potential Impacts

Against the backdrop of a July 2025 resolution by the Council of Ministers in the Kingdom of Saudi Arabia (the "KSA") to further develop arbitration in the KSA (the "Resolution"), a new draft KSA arbitration law has been announced via the auspices of the National Competitiveness Center. The draft arbitration law ("Draft Law") seeks to modernise the arbitration framework in KSA and is the first initiative to be undertaken pursuant to the Resolution.

The Draft Law is open for consultation until 24 October 2025, following which it may be amended due to consultee feedback. It will then enter into force 30 days after its publication in the KSA Gazette.

In this Legal Update, we summarise the key changes proposed by the Draft Law and what it may mean for arbitration in the region.

BACKGROUND TO THE KSA ARBITRATION LAW

The KSA arbitration law currently in force was introduced in 1983 and then updated in 2012 (Royal Decree M/34) to broadly resemble the UNCITRAL Model Law. It was amended again in 2017 via the Executive Regulations of Arbitration Law (collectively the "2012 Law"). The proposed Draft Law would replace the current legislative framework. You can read more about the history of the reforms to the KSA's arbitration framework in our prior alert.

PROPOSED CHANGES

• Law governing the arbitration agreement: The Draft Law proposes an express rule that the law applicable to the arbitration agreement is that which is expressly chosen by the parties or, in the absence of express agreement, the law of the seat. This would bring the arbitration framework in the KSA in alignment with England, Wales, and Northern Ireland, reflecting the newly inserted Section 6A of the Arbitration Act 1996.
• Provisions regarding arbitrators: The Draft Law supplements the mandatory requirement in the 2012 Law that a tribunal be composed of an odd number of arbitrators by providing for the appointment of an additional arbitrator to 'cure' an arbitration agreement providing for an even number of arbitrators. It also removes previous educational requirements (that a sole arbitrator or presiding arbitrator has a degree in Sharia or law) and introduces arbitrator immunity in relation to arbitral parties (except in cases of fraud or gross professional misconduct).
• Jurisdictional challenges: The 2012 Law only allowed challenges to a tribunal's findings on jurisdiction post-award via set-aside proceedings. The Draft Law would allow immediate challenges of a tribunal's finding of jurisdiction in the competent courts while the arbitration continues.
• Joinder and Consolidation: The Draft Law introduces new provisions allowing joinder where the intervenor is party to the arbitration agreement and consolidation where the parties agree to consolidate, as well as to the terms and procedure for such consolidation.
• Interim Measures: Under the 2012 Law, only the supervisory courts, or tribunals empowered by party agreement, can order interim measures.  By contrast, the Draft Law contains an express UNCITRAL Model Law style regime that is also enforceable by courts within 15 days.
• Awards: Emergency, interim, and partial awards are all expressly recognised in the Draft Law. However, there is no longer a statutory default mandatory timeframe for issuing a final award and courts can extend time beyond what parties may have agreed in their arbitration agreement. Electronically signed awards would also be permitted with all awards considered rendered at the seat.
• Technological advances: Electronic service via email and mobile phone notification are recognised as options under the Draft Law, while virtual hearings are also expressly allowed.
• Costs: Under the Draft Law, parties would be jointly liable for costs and arbitrators may withhold awards if fees are not paid. Once paid, courts could compel arbitrators to deliver awards.
• Annulment: As with the 2012 Law, the Draft Law tracks the UNCITRAL Model Law’s set‑aside framework adding the notable features of a distinct annulment ground for disregarding agreed substantive law and a specific Sharia law ground in addition to public policy grounds. The Draft Law introduces a new 60-day period during which annulment proceedings may be suspended to allow the tribunal to cure defects as to the award's form (without altering its substance) to remove the basis for annulment.
• Enforcement and Res Judicata: Where the 2012 Law did not permit appeals of an enforcement order (other than where such order was refused), the Draft Law would allow appeal of all enforcement orders to the Supreme Court. However, like annulment proceedings, enforcement proceedings may also be suspended (maximum 60 days) for the tribunal to cure enforcement-related defects as to the award's form. The Draft Law also expressly establishes a res judicata effect regardless of the country where awards are issued.

Potential IMPACTs

The Draft Law seeks to modernise the legislative framework for arbitration in the KSA, promoting efficient and flexible arbitrations and offering enhanced procedural safeguards. If enacted as planned, it should also reduce the enforcement risk for KSA-connected awards.

Key potential impacts include:

• The ability to challenge positive jurisdictional rulings in court while an arbitration proceeds gives parties an earlier opportunity to deal with jurisdictional objections and hence may reduce wasted costs.
• The introduction of a default law governing the arbitration agreement (which mirrors the UK's approach) would provide greater certainty and reduce satellite disputes about this issue.
• The reforms around arbitrator immunity and removal of the requirement for the sole (or presiding) arbitrator to hold a degree in Sharia or law will likely materially broaden the pool of arbitrators available for KSA-connected arbitrations.
• The consolidation and joinder provisions offer clearer options for managing multi-party and multi-contract disputes which may particularly benefit ad hoc arbitrations and sectors such as construction where such disputes are common.

Overall, if enacted, parties should revisit their KSA-connected arbitration clauses to align them with the new law, including, for example, expressly providing for (i) the governing law of the arbitration agreement for legal certainty, and (ii) an agreed process for consolidation of related cases (if appropriate).

We will keep you updated in relation to this development as the consultation progresses.  ­Please contact any of the authors or your usual Mayer Brown contact if you would like to discuss this development and how it may affect your business.

**This Legal Update was prepared with assistance from Gen AI.**