Because oil prices dropped to all-time lows in 2014, the Kingdom of Saudi Arabia, which is the biggest oil exporter in the world, has realised that it has to lessen its reliance on oil and diversify its economy. To get ready for the day when renewable energy is the norm, when alternative energy effectively replaces fossil fuels, and when oil revenues no longer sustain state spending, Saudi Arabia has taken steps as part of a series of reforms known as Vision 2030. These steps are designed to prepare the country for the day when oil revenues no longer sustain state spending. Saudi Arabia has recognised the need to cultivate an environment that is attractive to foreign investors as part of its effort to diversify both its human capital and its economy. The Kingdom views foreign investors as essential partners in the process of transferring know-how and expertise to Saudi Arabia’s local workforce.

To attract foreign investment, in turn, involves creating an atmosphere that reassures investor confidence in legal institutions, judges, and the rule of law. This may be accomplished by creating an investor-friendly climate. A setting like this one has to ensure that choices won’t be made at random but rather in accordance with clear-cut guidelines in order to be considered successful. Saudi Arabia has recently implemented a plethora of reforms in the area of dispute resolution, including international and domestic arbitration as well as commercial litigation. This is in response to the country’s recognition of the need to create an environment in which disputes involving foreign investors can be resolved in a fair and expedient manner. Recent developments include the issuance of decisions in which Saudi courts deferred to foreign choice of forum and arbitration clauses, the launch of the Saudi Center for Commercial Arbitration, and the establishment of the Commercial Courts as a forum for dispute resolution independent of the Board of Grievances. All of these events took place in Saudi Arabia.

Changing circumstances in the field of litigation

The process of resolving legal disagreements in Saudi Arabia has, historically speaking, been criticised for being fraught with ambiguity and inefficient, with some cases taking as long as two to three years or even longer to be resolved. In October of 2017, the Ministry of Justice launched the opening of the Commercial Courts in Jeddah, Damam, and Corporate Litigation Attorney Riyadh as independent institutions directly under the Ministry of Justice rather than as a branch of the Board of Grievances, as was historically the case. This was done in an effort to increase judicial efficiency and enhance investor confidence. Historically, the Commercial Courts were a branch of the Board of Grievances. During the day of the launch, the Minister of Justice noted that the move was part of the project known as Vision 2030, which aimed to revive the business environment, drive investment, and accelerate economic growth inside the Kingdom. The first day of Muharram 1439 coinciding to September 21, 2017 saw the opening of the Commercial Courts.

In only their second month of existence, the brand-new Commercial Courts handed down more than 1,181 judgements, according to an announcement made by the Ministry of Justice. This judicial reform indicates a shift in the practise of the Saudi courts, which have historically been criticised for their slow pace in meting out judgments and their inefficiency in judicial resolution. This reform is an indication that the practises of the Saudi courts are shifting as a result of this reform.

It has been hailed as signalling a change of direction for Saudi Arabia, which has historically been seen as hostile to the enforcement of foreign judgments and arbitral awards. The establishment of the SCCA, along with recent case law upholding arbitral clauses, the establishment of the Commercial Courts as an independent legal institution, and the issuance of the new Arbitration Law have all been hailed as contributing to this change. The establishment of autonomous Commercial Courts would further improve investor confidence by guaranteeing that international businesses have access to an effective venue in which to address any issues that may arise between them. When taken as a whole, these recent events point to a good trend for international investors who are interested in investing in the constantly diversified economy of Saudi Arabia.