Introduction
The Commercial Courts Law (“Law”), which consists of (96) articles, was promulgated for the purpose of organizing the work of commercial courts in a manner that serves and balances efficiency and effectiveness in light of the qualitative and quantitative flow of commercial cases. It was published in Umm Al-Qura newspaper under No. (4827) on 27 Shaban 1441 A.H. [20/04/2020 A.D.], and it will go into effect sixty days after its publication date.
The law has been divided into (11) sections, containing a set of general provisions related to litigation before commercial courts specifically, such as subject matter jurisdiction and territorial jurisdiction, case filing procedures, the types of evidence and evidence presented in these cases, and the mechanisms for objecting to judgments.
However, in addition to these general provisions, the law sets out special provisions that can be classified into two phases: Pre- and post-arrival at the commercial court, in order to reduce the length of litigation and adapt to the fast-paced commercial reality. We present the most important of these provisions as follows:
How does this law affect the business sector?
The law will undoubtedly affect the mechanism and drafting of commercial contracts because the law set out a broad area for adding a number of clauses regarding various topics, including the aforementioned. It also designated some clauses and imbued them with legitimacy, such as transferring the burden of proof, etc.
The law may also affect the negotiation process when a dispute occurs, because the law specified mechanisms, set out avenues and imposed mandatory provisions when petitioning the commercial court. We believe they encourage alternative legal options to resolve the dispute before reaching the commercial court.
Finally, the law clearly aims to reduce the duration of a case before the commercial court, because business reality necessarily requires that, and the goal is consistent with the requirements of justice as these cases are related to money and what may happen to it.
*Note: The executive regulations for the law, which are expected to interpret, detail and explain many of its provisions and implementation mechanisms, have not been issued yet.
Overview of the Commercial Courts System
The commercial courts in the Kingdom of Saudi Arabia are a fundamental pillar of the judicial system, playing a pivotal role in resolving commercial disputes and enhancing the investment environment. These courts are dedicated to cases arising between companies and commercial institutions, aiming to facilitate trade and investment by providing swift and effective judicial procedures.
Development of the Commercial Courts System
| Year | Event |
|---|---|
| 1951 | Establishment of the first commercial court in Riyadh, paving the way for the creation of a comprehensive commercial judicial system. |
| 2016 | Launch of a series of radical reforms to modernize judicial procedures and enhance transparency and efficiency. |
| 2020 | Integration of modern technologies in judicial processes to expedite procedures and improve access to justice. |
Organizational Structure of Commercial Courts
Commercial courts in the Kingdom are directly under the Ministry of Justice and are divided into several levels including primary courts and commercial appellate courts. Each court is equipped with specialized judges to handle various commercial cases, ensuring efficient and effective application of the laws.
Key Issues Handled by Commercial Courts
- Trademarks and Intellectual Property Rights: The courts handle disputes related to intellectual property rights and the protection of trademarks.
- Bankruptcy and Restructuring Cases: The courts provide a legal framework for financial restructuring and settlement of company debts.
- Lawsuits Related to Commercial Contracts and Disputes: Facilitating trade by settling disputes arising from commercial contracts.
Challenges and Opportunities
The rapid growth of business activities in the Kingdom is met with challenges requiring updates to the judicial system to keep pace with this growth. Available opportunities include:
- Improving Electronic Systems: Investing in information technology to speed up judicial procedures.
- Judicial Training: Developing programs to enhance judges’ skills in handling complex and international commercial cases.
Key Features of the Commercial Courts System
The commercial courts in Saudi Arabia are distinguished by several characteristics that make them effective and suitable for the modern business environment. These features include:
Judicial Jurisdiction and Specialization
- Judicial Specialization: Judges in commercial courts are specialists in commercial law, enhancing the effectiveness and precision of judgments.
- Broad Jurisdiction: Commercial courts cover a wide range of commercial issues including contracts, bankruptcy, and intellectual property.
Fast and Efficient Procedures
- Streamlined Procedures: Commercial courts use streamlined procedures to speed up the litigation process and reduce costs.
- Modern Technology: Utilizing technology to enhance procedures and provide more transparent and faster judicial services.
Government Support and Reforms
- Ongoing Government Support: Commercial courts receive strong support from the Saudi government, ensuring continuous updates and improvements to the system.
- Judicial Reforms: Implementing judicial reforms to enhance integrity and efficiency in the commercial judicial system.
International Cooperation and Development
- International Cooperation: Commercial courts in the Kingdom cooperate with their international counterparts to exchange experiences and best practices.
- Continuous Development: There is a commitment to continually develop commercial courts to meet global challenges and changes in the commercial market.
Main Challenges
- Updating Challenges: The need for continuous updates to the judicial systems to ensure effectiveness and keep up with technological advancements.
- Training Judicial Staff: The importance of continuous training for judges and staff to ensure they are updated on the latest legal and commercial developments.
Features of the Commercial Courts System
The commercial courts in Saudi Arabia provide numerous advantages that enhance the efficiency of the judicial system and facilitate business operations. Here are some of the prominent aspects:
Efficiency of Judicial Procedures
- Speed of Procedures: Commercial courts are characterized by their speedy procedures, which reduce case delays and accelerate the pace of business.
- Use of Modern Technologies: Reliance on modern technologies for case registration and management enhances transparency and facilitates access to information.
Enhancing Transparency and Fairness
- Integrity and Transparency: The commercial courts system maintains a high level of integrity and transparency, enhancing trust in the judicial system.
- Judicial Scrutiny: Judicial decisions are documented and available to the public, ensuring that decisions are reviewed according to the highest standards of justice.
Supporting the Business and Investment Environment
- Stimulating Investment: Commercial courts enhance the investment environment thanks to their efficiency and ability to protect rights and properties.
- Resolving Commercial Disputes: Courts are equipped to efficiently resolve commercial disputes, helping companies focus on growing their businesses.
Specialization and Continuous Updating
- Judicial Specialization: Specialization of judges in commercial matters enhances the efficiency of judgments and deep understanding of commercial cases.
- Continuous Development: The system is continuously developing to adapt to global changes and market challenges.
Challenges and Opportunities for Improvement
- Technology and Training Challenges: With ongoing technological advancements, the challenge remains in updating systems and training judges and administrative staff.
- Opportunities for Improvement: There are continuous opportunities to improve electronic systems and training to keep up with the best global practices.
Learn how to protect your business interests with the best commercial lawyer at Eyad Reda Law Firm. Consult our experts for reliable legal advice.
Executive Regulation of the Commercial Courts System
The executive regulation of the commercial courts system sets the legal and administrative framework that regulates the operation of commercial courts in Saudi Arabia. This regulation specifies the detailed procedures for the courts, including case filing, session procedures, and handling appeals.
Provisions of the Executive Regulation for the Commercial Courts System
The provisions of the executive regulation include a set of precise rules that guide the operations within the commercial courts. These provisions ensure justice and speed in handling commercial cases. The provisions also include standards related to transparency and clarify the rights and duties of all involved parties.
Objectives of the Executive Regulation for the Commercial Courts System
The main objectives of the executive regulation focus on achieving efficiency and effectiveness within the commercial judicial system. Among these objectives are:
- Enhancing the Speed of Procedures: Reducing litigation time through simplifying procedures.
- Improving Access to Justice: Ensuring easy access to courts and judicial services for all stakeholders.
- Supporting the Investment Environment: Creating a reliable judicial environment that helps attract investments and stimulate economic growth.
Explanation of the Commercial Court System
The commercial courts in Saudi Arabia are an essential part of the judicial system that supports the business and investment environment in the Kingdom. These courts are specifically designed to handle commercial cases efficiently and effectively.
Organizational Structure
The commercial courts fall under the Ministry of Justice and consist of several levels:
- Primary Commercial Courts: These courts look at initial commercial cases.
- Commercial Appellate Courts: These courts review appeals against decisions made by primary courts.
Cases Handled by Commercial Courts
Commercial courts deal with a wide range of commercial issues, such as:
- Contracts and Business Transactions: Includes disputes arising from commercial contracts.
- Bankruptcy Cases: Handles bankruptcy proceedings for companies.
- Intellectual Property: Includes cases of trademarks and intellectual property rights.
Judicial Procedures
- Electronic Case Filing: Parties can file and track cases electronically.
- Quick Hearing Sessions: Reduces the time needed to resolve cases through fast and efficient sessions.
Challenges and Opportunities
- Modernization Challenges: The need to keep up with technological advancements and continuously update the judicial systems.
- Opportunities for Improvement: Enhancing training and professional development for judges to ensure a deep understanding of complex business transactions.
Jurisdiction of Commercial Courts
The commercial courts in Saudi Arabia are tasked with handling a wide range of commercial issues that cover every aspect of business activity. Here is a breakdown of the main areas of jurisdiction for these courts:
Commercial Cases
- Commercial Contracts: Includes all disputes related to contracts between companies or between companies and individuals.
- Commercial Disputes: Looks into disputes between traders or between companies regarding specific commercial matters.
Bankruptcy and Liquidation Cases
- Bankruptcy Procedures: Handles bankruptcy cases and debt restructuring for companies.
- Liquidation Cases: Deals with company liquidation cases and termination of their operations.
Intellectual Property and Trademarks
- Intellectual Property Protection: The courts handle cases of intellectual property rights violations and trademark protection.
- Trademark Disputes: Considers disputes related to trademark registration or use.
Investments and Commercial Competition
- Investment Cases: Deals with disputes related to commercial investments and major projects.
- Competition Law Violations: Looks at cases related to violations of competition laws and monopolistic practices.
Specialized Judicial Procedures
- Specialized Hearing Sessions: Uses sessions specifically designed to handle commercial cases effectively.
- Electronic Filing of Lawsuits: Allows parties to easily file and track lawsuits electronically.
Learn more about commercial Concealment and its impact on businesses in Saudi Arabia in our comprehensive overview available on Eyad Reda Law Firm’s website.
Summary Cases in the Commercial Court System
Summary cases are known as commercial cases that require simplified procedures and are processed faster in Saudi Arabian commercial courts. This system aims to improve efficiency and reduce legal costs for the parties involved.
Characteristics of Summary Cases
- Definition of a Summary Case: Cases involving financial amounts less than a specified limit or that require quick and direct resolutions.
- Simplified Procedures: Procedures in these cases are less complex and take less time compared to major cases.
Importance of Summary Cases
- Reducing the Burden on Courts: These cases help reduce the pressure on courts by settling smaller cases more quickly.
- Cost-Effectiveness for Parties: Reduces legal and time costs for the disputing parties.
Procedures Followed in Summary Cases
- Rapid Hearing Sessions: Time-limited sessions are held to consider cases, speeding up the resolution process.
- Immediate Judgment: The possibility of making a judgment during the first session or the first few sessions.
Challenges and Opportunities
- Effectiveness Challenges: Ensuring that justice is achieved without sacrificing the quality of judicial procedures.
- Opportunities for Improvement: Developing more innovative methods to efficiently handle summary cases.
Conditions for Filing a Commercial Lawsuit Before filing a commercial lawsuit in Saudi Arabian commercial courts, parties must comply with a set of basic conditions to ensure the lawsuit is accepted and proceeds correctly.
Necessary Documents and Evidence
- Commercial Documents: All relevant commercial documents related to the dispute, such as contracts, invoices, and other supporting documents, must be provided.
- Evidence Supporting the Lawsuit: Presentation of evidence that substantiates the claims made within the lawsuit.
Legal Conditions
- Legal Capacity of the Plaintiff: The plaintiff must be legally capable of litigating according to the law.
- Plaintiff’s Standing: Clarification of the basis on which the plaintiff has the right to file the lawsuit.
Pre-Litigation Procedures
- Reconciliation and Arbitration: In some cases, parties are required to undergo reconciliation or arbitration sessions before filing the lawsuit.
- Judicial Fees: Payment of the required judicial fees to file the lawsuit.
Commercial Lawsuits Under 500,000 SAR
The commercial courts in Saudi Arabia handle commercial lawsuits involving amounts less than 500,000 Saudi Riyals in a simplified manner to ensure speed and efficiency in the procedures.
Characteristics of Small Commercial Lawsuits
- Simplified Procedures: Application of simplified and fast judicial procedures to expedite the litigation process.
- Quick Resolution of Cases: The aim of these procedures is to reduce the time needed to issue judgments.
Challenges and Opportunities
- Execution Challenges: Ensuring that judgments are executed fairly and effectively despite the speed of the procedures.
- Opportunities for Improvement: Exploring ways to improve efficiency without compromising the quality of judicial work.
Read also about what commercial franchising is and how it affects businesses in Saudi Arabia, in our comprehensive view available on Eyad Reda Law Firm’s website.