As the Kingdom of Saudi Arabia continues to pave the way towards Vision 2030, the country continues to reshape its policies and legislation to align with global best practice, whilst attracting foreign direct investment.
In recent years a series of legislations have taken effect, and the codifying of Sharia Law now makes it agile for international entities to pursue legal recourse in Saudi courts.
One of the most important regulations to be applied was the Enforcement Law in 2013 through Royal Decree Number M53. This law guarantees that local and international decisions concerning commercial disputes can be enforced within the Saudi legal system.
The new law provides a different means of litigating and arbitrating cases of commercial disputes in a far different manner to the 1989 Rules of Civil Procedure, which previously determined cases through hearing before a Board of Grievances.
The Perspective of The Enforcement Law
Sharia law allows parties in a dispute to solve their issues out of court and agree on a settlement. If one party fails to reach its end of the settlement agreement, it becomes necessary to seek legal recourse through enforcing a judgment. Another way is by any other legal right executable through an application to an appropriate Saudi court to obtain an execution order.
How the issue goes in front of a judge is dependent on a claim. The claimant must produce written evidence in front of the court that states they have attempted to obtain a voluntary settlement from the other party in the matter. This is where the Enforcement Law comes into play.
Under Articles 7 and 9, the Enforcement Judge is empowered to decide on a broad scope of enforcement disputes, regardless of the value. It will be per provisions that govern summary proceedings. The judge has the power to involve either the police or other law enforcement agencies, and is also capable of;
- Imposing or lifting travel bans
- Ordering imprisonment or release
- Issuing decrees on the disclosure of assets
- Notifying licensed credit agencies
- Reviewing insolvency claims
- Freezing bank accounts
However, parties to a claim should note that the Enforcement Judge is bound under Article 2 to follow the principles established under Sharia Law only if the Enforcement Law has not stated otherwise.
In addition, the debtor is notified of the enforcement judgment and must comply within five days. Article 46 applies if the debtor fails to comply and can face the aforementioned penalties.
Instituting Proceedings Under the Enforcement Law
For a party to obtain an execution order from the Execution Court, the application must comply with Article 34 outlining the Execution Regulations. The application is dependent on these main conditions and procedures.
- The application made must be concerning an execution document, which can be a type stated in Article 9 of the law. These documents include;
- Orders, decisions, and judgments made by Saudi courts
- Awards made by arbitrators and approved for execution in line with Saudi Arbitration Law
- Reconciliation minutes issued by departments or those authorized by Saudi courts
- Commercial documentation that includes promissory notes, bills of exchange, and checks
- Other documents verifiably issued by the debtor as a constitution and a declaration of the debtors’ validity are acceptable to the judge. They will view them as execution documents unless an objection is raised. In case of a protestation, the judge requires the debtor to append their signature on a document declaring the reasons for their objection.
- The execution documents before the court must list a specific amount that’s due and payable. The document must be in line with Sharia Law and comply with the requirements stated in Execution Regulations, Article 9.
- Suppose a debtor objects to a commercial paper such as a promissory note or a check, the required written objection document must be provided to the court in tandem with the concerned commercial paper.
- When the applicant presents their case to the Execution Court, they should also submit an original copy of any power of attorney.
- The execution judge must be competent enough to understand the application and should also be within the jurisdiction in which the claimant applies to determine the matter.
- In case of an appeal, a judgment stays. The exception is if the decision is by summary execution.
For a company seeking to obtain or recover payments assured to it via a check or other similar commercial paper, or where there are acknowledged settlement or debt agreements, it would be viable to
enforce them via the execution court. This process is quicker than obtaining a judgment via a commercial court.
To discuss the enforcement law further or to explore further insights which may impact your legal position, contact us.