Article 38 of the Saudi Arbitration Law
المادة 38 من نظام التحكيم · الفصل: في الدعوى التحكيمية
The article sets the rules the tribunal applies to the subject of the dispute, without contravening Islamic Sharia or public order, and allows an award by conciliation if it is expressly authorized.
Official text (Arabic)
This article has not been amended since the law was issued.
1- مع مراعاة عدم مخالفة أحكام الشريعة الإسلامية والنظام العام بالمملكة، على هيئة التحكيم أثناء نظر النزاع الآتي:
أ - تطبيق القواعد التي يتفق عليها طرفا التحكيم على موضوع النزاع، وإذا اتفقا على تطبيق نظام دولة معينة اتبعت القواعد الموضوعية فيه دون القواعد الخاصة بتنازع القوانين، ما لم يتفق على غير ذلك.
ب - إذا لم يتفق طرفا التحكيم على القواعد النظامية واجبة التطبيق على موضوع النزاع طبقت هيئة التحكيم القواعد الموضوعية في النظام الذي ترى أنه الأكثر اتصالاً بموضوع النزاع.
ج - يجب أن تراعي هيئة التحكيم عند الفصل في موضوع النزاع شروط العقد محل النزاع، وتأخذ في الاعتبار الأعراف الجارية في نوع المعاملة، والعادات المتبعة، وما جرى عليه التعامل بين الطرفين.
2 - إذا اتفق طرفا التحكيم صراحة على تفويض هيئة التحكيم بالصلح جاز لها أن تحكم به وفق مقتضى قواعد العدالة والإنصاف.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 38 explained in plain English
This article answers an important question: by what rules does the arbitral tribunal decide the subject of the dispute? The general framework for all of it is not contravening the provisions of Islamic Sharia and public order in the Kingdom.
- The parties' agreement first: The tribunal applies the rules the parties agreed on. If they agreed to apply the law of a particular country, it applies that law's substantive rules without its rules on conflict of laws, unless otherwise agreed. That is, the tribunal does not move through the rules of that law to the law of a third country.
- Where there is no agreement: The tribunal applies the substantive rules of the law that it considers most closely connected to the subject of the dispute.
- In all cases: The tribunal takes into account the terms of the contract in dispute, and considers the customs prevailing in the type of transaction, the established practices, and the dealings between the parties.
Deciding by conciliation: If the parties expressly agree to authorize the tribunal to decide by conciliation, it may decide according to the rules of justice and fairness. Article 39 requires that an award by conciliation be issued unanimously if the tribunal is so authorized.
The article matters when drafting an arbitration clause in contracts, especially international contracts, where it is advisable to state the governing law clearly. For drafting such a clause, you can consult a lawyer who specializes in arbitration and commercial cases.
Practical example
A Saudi company entered into a supply contract with a European company, and they agreed to apply the law of a particular European country. If a dispute arises, the arbitral tribunal applies the substantive rules of that law without its conflict-of-laws rules, provided it does not contravene Islamic Sharia and public order in the Kingdom, and it takes into account the contract's terms and the customs prevailing in the supply trade.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 38 of the Saudi Arbitration Law
Can we agree to apply foreign law in Saudi arbitration?
Yes. The tribunal applies the rules the parties agree on, provided they do not contravene the provisions of Islamic Sharia and public order in the Kingdom.
What law applies if the parties have not agreed on one?
The tribunal applies the substantive rules of the law that it considers most closely connected to the subject of the dispute.
What does authorizing the tribunal to decide by conciliation mean?
If the parties expressly agree to it, the tribunal may decide according to the rules of justice and fairness.
More articles on Arbitration Procedures
- Article 4
The article allows the parties, where they may choose a procedure, to authorize others, such as an individual or an arbitration center, to choose it.
في الأحوال التي يجيز فيها هذا النظام لطرفي التحكيم اختيار الإجراء الواجب الاتباع في مسألة معينة، فإن ذلك يضمن حقهما في الترخيص للغير في اختيار هذا الإجراء، ويعد
- Article 6
The article regulates how notices between the parties to arbitration are delivered when they have no special agreement, and excludes judicial notices concerning annulment of an arbitral award.
1 - إذا لم يكن هناك اتفاق خاص بين طرفي التحكيم في شأن الإبلاغات فيتم تسليم الإبلاغ إلى المرسل إليه شخصيًّا - أو من ينوب عنه - أو إرساله إلى عنوانه البريدي المحد
- Article 7
The article treats a party's continuing with arbitration while aware of a violation, without objecting within the agreed time or within 30 days, as a waiver of his right to object.
إذا استمر أحد طرفي التحكيم في إجراءات التحكيم ـ مع علمه بوقوع مخالفة لحكم من أحكام هذا النظام مما يجوز الاتفاق على مخالفته أو لشرط في اتفاق التحكيم ـ ولم يقدم ا
- Article 22
The article allows the competent court to order interim or precautionary measures and judicial delegation, and lets the arbitral tribunal ask the relevant body to help with the arbitration proceedings.
1- للمحكمة المختصة أن تأمر باتخاذ تدابير مؤقتة أو تحفظية بناءً على طلب أحد طرفي التحكيم قبل البدء في إجراءات التحكيم أو بناءً على طلب هيئة التحكيم أثناء سير إجر
- Article 23
The article allows the parties to agree to let the arbitral tribunal order interim or precautionary measures, with a possible financial guarantee, and regulates what happens if an order is not complied with.
1- يجوز لطرفي التحكيم الاتفاق على أن يكون لهيئة التحكيم - بناءً على طلب أحدهما - أن تأمر أيًّا منهما باتخاذ ما تراه من تدابير مؤقتة أو تحفظية تقتضيها طبيعة النز
- Article 25
The article gives the parties to arbitration the right to agree on its procedures, including the rules of any arbitration center, failing which the arbitral tribunal chooses suitable procedures.
1- لطرفي التحكيم الاتفاق على الإجراءات التي تتبعها هيئة التحكيم، بما في ذلك حقهما في إخضاع هذه الإجراءات للقواعد النافذة في أي منظمة، أو هيئة، أو مركز تحكيم في
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.