Originally from Arbitration Law and Practice in the Middle East - Second Edition

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I. INTRODUCTION: ARBITRATION IN SAUDI ARABIA –HISTORY AND INFRASTRUCTURE

A. History and Current Legislation on Arbitration

1. Historical evolution of law relating to arbitration

Pre–Islamic literature indicates that Arabs knew about arbitration before the emergence of Islam.  At the time, it was a predominant means of settling disputes between individuals and also between tribes since there was no organized form of justice. After the emergence of Islam the concept of arbitration developed further within the different Islamic eras and schools. 

At the beginning of the newly formed Saudi state, there was the adoption of the Commercial Court law, nezam almahkama al tejareah, which was passed in 1931.  It was taken from the Ottoman Laws which relied heavily on the French Commercial Code of 1807. The related arbitration provisions were articles 493–497; however, it was difficult to assess the practice of arbitration at the time due to lack of reliable documented precedents. The arbitration award in Saudi Arabia v. Arabian American Oil Co. issued in 1958 against the Kingdom of Saudi Arabia and in favor of Aramco had a further negative impact on the development of arbitration. Saudi Arabia accepted the ruling complied with the award fully, but also distanced itself from international arbitration for several decades.  As a result of the disappointment within the Kingdom that arose from the Aramco case, the Saudi Council of Ministers enacted Resolution No. 58, which prevented Saudi government ministries and agencies from participating in arbitration.