A Research Paper into Whether Arbitration Should be Used without Restrictions in Administrative Contracts in Saudi Arabia

Abstract

Governments may contract with others seeking employment, supplies, and other general procurements in order to fulfil their duty to provide public services and facilities. When they become unable to do that on their own, they are obliged to contract with national or foreign private individuals to meet their obligations. The court is usually responsible for solving disputes arising from these agreements. However, arbitration can be used sometimes. It is one method of alternative dispute resolution (ADR) which is considered to be a friendly way to solve issues instead of traditional court. States usually prefer their national judiciary and many States restrict the use of arbitration to resolve administrative contract disputes, whereas private parties usually prefer arbitration as a neutral method to resolve conflicts. Saudi Arabia has restricted the use of arbitration for its entities by law. It is claimed that these restrictions will affect the State’s economy and make it an unattractive environment for investors. This topic is important and relevant due to the high demand for using administrative contracts to serve public interests and the strong preference for private individuals to use arbitration. paper discusses the potential reasons behind restricting Using a doctrinal methodology, this the use of arbitration for government entities, explaining that reasons could be political, financial, judicial, or based on precedence. Based on these reasons, it then investigates whether the Saudi government entities should have the right to arbitrate without any restrictions, such as approval from the highest authority. This work aims to establish if these grounds are reasonable and whether arbitration should be used without restrictions in administrative contracts. Moreover, it critically evaluates these reasons by investigating the internal legal system and assessing if any improvements can be suggested or recommendations made. Even though some believe that restrictions will reduce investment in the State and that government agencies should have the right to arbitrate without permission, this paper argues that arbitration should remain restricted in order to protect the sovereignty of the State and public interests.