DRAFTING EFFECTIVE INTERNATIONAL COMMERCIAL ARBITRATION CLAUSES FOR THE SAUDI LEGAL SYSTEM

Abstract

Given Saudi Arabia's aim to become a hub of arbitration by 2030, the mechanism for resolving international commercial disputes through arbitration has never been more crucial in Saudi Arabia. However, the literature indicates that arbitration clauses in the Arab world are often poorly drafted, which can undermine the benefits of arbitration and, at times, invalidate the entire process. This thesis aims to provide a framework for drafting effective clauses for international commercial arbitration contracts governed by Saudi law. The collectivist culture of Saudi Arabia presents unique challenges and opportunities in the drafting process that differ significantly from those experienced in Western individualistic cultures. Both cultural factors and the law of Saudi Arabia are investigated to identify the cause of cause behind various defects in drafted arbitration clauses. This is achieved by adopting a qualitative approach that includes both a doctrinal analysis primarily of Saudi law and partially of English law, as well as an empirical study consisting of two stages. The first stage involves reviewing arbitration clauses from international commercial contracts to identify common textual defects. The second stage involves conducting semi-structured interviews with lawyers and arbitrators to determine the social causes behind these defective clauses. The findings reveal that 42% of the reviewed arbitration clauses in Saudi Arabia contained defects that risk the enforcement of the clauses or, at the very least, prevent parties from achieving the optimal benefits of arbitration. This thesis also confirms that Saudi cultural dimensions significantly influence the drafting of defective arbitration clauses. A novel framework has been developed for drafting effective arbitration clauses that are not only legally sound but also culturally appropriate, aligning with Saudi cultural values and dimensions. The proposed framework is consistent with Saudi Vision 2030, aiming to enhance the Saudi business environment by attracting more foreign investment through the implementation of enforceable and effective arbitration agreements. This thesis contributes to the broader discourse on international commercial arbitration by offering practical guidance for legal professionals operating in Saudi Arabia and providing insights into the intersection of legal and cultural factors in the drafting process.