Creation Of New ADR System In Saudi Arabia

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Creation of New ADR System in Saudi Arabia

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Table of Contents

Abstract: ........................................................................................................................................... 4

Introduction ..................................................................................................................................... 5

Methodology .................................................................................................................................... 6

Participants .................................................................................................................................. 6

Measures...................................................................................................................................... 6

Procedure ..................................................................................................................................... 6

Alternative Dispute Resolution Legal System in USA ....................................................................... 7

Advantages of Alternative Dispute Resolution (ADR) Structures .................................................... 8

Fast Resolution ............................................................................................................................. 8

Win-Win Resolution ..................................................................................................................... 8

Cheaper Resolution Process ........................................................................................................ 8

Maintains Peace ........................................................................................................................... 9

Legal History of the Judiciary and Dispute Resolution in Saudi Arabia: ........................................ 10

Mediation ....................................................................................................................................... 12

Mediation Stages ....................................................................................................................... 12

Convening Mediation ............................................................................................................. 12

Statement of the Problem by the Parties. ............................................................................. 12

The communication stage ...................................................................................................... 13

Negotiation Stage .................................................................................................................. 13

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Closure and Implementation ................................................................................................. 13

Conclusion ...................................................................................................................................... 13

Reference List................................................................................................................................. 15

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Abstract:

The effects of industrialization are both positive and negative at some points. The negative effects

have led to various trade-related disputes. Some judicial systems exhibit weaknesses hence the call

for Alternative Dispute Resolution structures. ADR is a guarantee to earn the confidence of foreign

investments from the risks of the incompetence of some local laws and local litigation procedures.

Mediation is one of the ADRs and is based on sharing interest which saves time, money, and

maintaining the good relationship of the commercial relations. Saudi Arabia is keen to develop its

judiciary and adjust some laws to diversify its production, to attract foreign investors, and to

increase government revenue collection. Thus the creation of a legal program for mediation has

become imperative to achieve Saudi Arabian vision 2030.

Keywords; Saudi vision for 2030, Alternative Dispute Resolution (ADR), mediation,

arbitration, legal risk, the implementation of the mediation agreement, negotiation.

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Introduction

Industrialization has impacted human life both positively and negatively. Its negative

effects include depletion of natural resources and pollution of the environment through emissions

from factories. On the other hand, industrialization has many positive impacts on human life,

ranging from the creation of employment, improved living standards and enhanced international

trade among countries. Industrialization has promoted specialization as most countries tend to

concentrate on production of some specific products, hence surplus production. It is the surplus

production that has prompted exportation and imports the products they cannot produce to cater

for deficit; international trade

International trade has shed light on the development ambitions of various developing

countries, like the Saudi Arabian Vision 2030. The vision is intended to help the country

diversify her production and to reduce overdependence on the exportation of oil and gas. Saudi

Arabia aims at being a tourism destination and participates in other sectors like agriculture. The

country has signed several financial trade agreements worth several millions of dollars with

various developed countries like USA, Europe, and China in a bid to achieve their development

ambitions. According to World Trade Organization, such global trade treaties create a lot of

coordination and competition among nations. Countries that produce complementary goods and

services tend to cooperate. On the other hand, countries that produce substitute products tend to

compete among themselves. Some developing countries complain of some biases in the trade.

Such biases and complaints in the trading industry negatively affect trade relations between

nations and end up scaring away potential investors who would otherwise pump the much need

capital in developing economies. Given that developing economies rely much on these

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international investors to achieve their development agenda like Saudi Arabian Vision 2030, they

try to resolve such disputes as fast as possible.

Research Question;

‘Are Alternative Dispute Resolution structures able to improve investors’ confidence?”

This is the reason that makes countries like Saudi Arabia to come up with strong judicial

systems and Anti-Corruption facilities to help in resolving trade-related disputes. However,

judicial systems of many developing countries exhibit weaknesses that in the long run work

against the achievement of the intended goal. Some international rights bodies like Amnesty

International have raised the alarm on several occasions accusing judicial structures of various

developing countries of several weaknesses.

Methodology

Participants

Participants were international investors interested in investing in Saudi Arabia but their

business deals delayed by some trade-related court cases.

Measures

The number of investors who ended up not investing in Saudi Arabia due to frustrations from

the local legal systems.

Procedure

The participants were asked how they felt about the Saudi judicial system regarding trade-

related cases and how the speed of resolution affected their decision to invest in the country.

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Alternative Dispute Resolution Legal System in the USA

The United States and other countries like Australia, United Kingdom, and Canada operate in the

common law system have made steps in reviving, developing and improving the ADR as

supplements to litigation.

The American society started appreciating other forms of dispute resolution as early as late

1960's. From then, several gradual progress has been made to set up a formal Alternative Dispute

Resolution structures in the country. Some of these improvements are as follows. Congress set

up the Community Relation Services, in the 1964 Civil Rights Act, to help courts in resolving

social disputes like racial and community conflicts. In 1976, renowned advocates and jurists, at

Pound Conference, complained of crowding of the judicial system that resulted in delayed justice

and high court expenses to disputing parties. From this Professor Frank sander's vision guided

the formation of dispute resolution centers where some specific types of cases would be handled.

From that step, ADR structures have developed from just factors procedural enhancement into a

complementary part of the American legal system. Several different ADR proceedings have been

set, but the main ones include Negotiation, Arbitration, and Mediation. Various optimal

combinations of the elements of these ADR structures have led to many different "hybrid"

mechanisms of dispute resolution in the US like the ombudsman, Rent-a-judge, and mini-trial.

In the US and other countries with well-developed ADR structures, the application of ADR

structures cover both private sector and public justice system. The use of such ADR has gained

trust among people and even attracted legal support, a view that was clear in 1998, the Congress

enacted the Alternative Dispute Resolution Act that directed all district Courts to formulate at

least one ADR and establish its scope.

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From the developed ADR structures and their application in the US and other developed

countries, Saudi Arabia can set up such systems. The ADR structures come with several benefits

as illustrated bellow.

Advantages of Alternative Dispute Resolution (ADR) Structures

Fast Resolution

ADR structures like negotiation are faster in settling disputes as compared to court cases

that may take longer time during court hearings. The process does not require a lot of

investigations and inquiries as in the case of court hearings. In the cases of trade-related disputes,

time wasted during court processes delay subsequent transactions that may depend on the

outcome of the court case.

Win-Win Resolution

These non-judicial Alternative Dispute Resolution structures mostly settle conflicts on a

win-win basis where both the aggrieved parties feel satisfied. A grievance settled through

negotiations, for example, leave the aggrieved parties convinced that they are both winners as

there is no loser like in court case where one party wins while the other losses

Cheaper Resolution Process

Most ADR processes do not require a legal representative for the disputing parties. It

makes it cheaper for the parties as they do not incur such expenses as those of acquiring lawyers,

other legal charges, and fines. The self-representation also leads to some level of satisfaction and

confidence on the outcome as the parties are given opportunity explain their cases on their own.

Junseopshim, 2015. "The Effects Of Alternative Dispute Resolution(ADR) On The Length Of Mediation." Dispute Resolution

Studies Review 13 (1): 33-62. doi:10.16958/drsr.2015.13.1.33.

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Maintains Peace

Out of court dispute resolutions has a win-win result that helps in maintaining a

harmonious coexistence between the disputing parties as opposed to court cases where the losing

party holds grudge against the side that won the case.

Specific ADR structure has specific procedures. For example, Negotiation is a five-step

process that involves the disputing parties holding discussions aimed at reaching a common point

of agreement where each party feels satisfied. The five steps include; preparations for discussion,

exchange of information among the players, bargaining, conclusion, and execution of the

agreements.

Arbitration is another method of dispute resolution out of court. It is a process characterized by

the disputing parties coming up with an independent third party, an arbitrator, who finally makes

the decision and whose decision the parties agree to abide with. The steps of arbitration process

include; parties applying for arbitration, selection, and appointment of arbitrator, preliminary

hearing, exchange of information and preparations, hearing, post-hearing submissions, and

finally awarding

Mediation is a formal process of a neutral third party, mediator, assisting two or more disputing

parties to settle their dispute out of court. The main responsibility of a mediator is encouraging

the aggrieved parties to talk to one another about their disputes and try reaching some level of

agreement.

Lovenheim, Peter, and Lisa Guerin. 2014. Mediate, don't litigate: [strategies for successful mediation]. Berkeley, Calif: Nolo.

http://public.eblib.com/choice/publicfullrecord.aspx?p=198090.

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In the case of Saudi Arabia, the establishment of formal mediation facilities would be a

great step towards the achievement of Vision 2030. It is due to the numerous advances the

country had made in trying to improve her legal structure as compared to the 1960s when the

country did not have any recognized legal structure as briefly illustrated below

Legal History of the Judiciary and Dispute Resolution in Saudi Arabia:

Saudi Arabia did not have any formal judicial system in the 1960s as in the modern country

now. The people lived in tribal groups in the desert, and when they faced a problem, they would

choose someone to mediate between the parties in dispute. The chosen mediator had to be a wise

man renowned for conflict resolution expatriate. The procedure started with a conversation, and

then the mediator gives proposals aimed at reducing tension and trying to reach some level of

agreement that satisfies both parties. However, in cases where a binding agreement is not reached,

he gave a binding judgment which had to be respected by both parties

However, after the discovery of oil and gas, the Ministry of Justice began to establish its

judicial system. Expectedly, people continued the use of mediation as a tool of dispute and conflict

resolution mechanism as they argued that it maintains the relationship between tribesmen; the

aggrieved parties felt safer in the hands of mediators than judges and the process mostly ended in

a win-win settlement

. This idea is very similar to the concept applied by modern companies’

reputation. Moreover, Sharia, as it is in the Saudi Constitution, promotes the principle of "Al-

Salleh Kheer" which means "The Peace is better."

This option has become useful in the Saudi

Junseopshim, 2015. "The Effects Of Alternative Dispute Resolution(ADR) On The Length Of Mediation". Dispute Resolution

Studies Review 13 (1)

Nolan-Haley, Jacqueline M. 2013. Alternative dispute resolution in a nutshell. St. Paul, MN: Thomson/West.

Alshahrani, Saad. 2017. "Dispute Resolution Methods In The Construction Industry Sector In The Kingdom Of Saudi

Arabia". MATEC Web Of Conferences 138: 02015. doi:10.1051/matecconf/201713802015.

Alshahrani, Saad. 2017. "Dispute Resolution Methods In The Construction Industry Sector In The Kingdom Of Saudi Arabia"

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judiciary; as a result, they have created some tools for settling disputes, as in the case of family

law and labor law. Judges in family lawsuits are expected to promote and initiate an out of court

resolution process and only proceed to court processes and hearing in the events that the alternative

dispute resolution mechanism has not resulted into an agreement. Similarly, in the Labor Code,

any dispute between the employee and the employer shall be brought before the Dispute Settlement

Committee at the Ministry of Labor and, in the absence of a solution, shall go to court.

Saudi Arabia has invested a lot of resources in trying to improve their legal system. For

example, King Abdullah allocated $ 2 billion to improve the judiciary system in the year 2000

after being assured that the development of the judicial system was imperative. The Saudi

legislature has done several amendments to make Alternative Dispute Resolution structures

compatible with local laws. Moreover, many chambers of commerce and dispute settlement

committees believe in ADR like mediations and the reconciliation. In 2017, The Saudi Ministry

of Justice separated the commercial courts from the Administrative Tribunal and worked to set

and control the maximum period for a case to be settled and other many more new criterions.

The manner in which mediation and other ADR structures have been handled in Saudi

Arabia has lacked professionalism, a fact that has led to overcrowding in courts and ADR facilities.

The challenges are possible results of two facts; the first, because there is no legally structured

ADR program and the second, is free of litigation.

It is for this reason that the government should develop formal mediation structures with

formally and globally recognized procedures to reduce the challenges currently experienced like

overcrowding and lack of professionalism.

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Mediation

It refers to a flexible process of solving disputes involving an independent party, herein

referred to as Mediator, assisting disputing parties to reach their agreement

. The mediator,

through separate caucuses and some joint sessions, encourages the disputants to define their

grievances clearly, understand one another and move closer to reaching their agreement

. The

process involves some distinct stages as illustrated below.

Mediation Stages

Convening Mediation

Once the disputants have agreed to mediation as an attempt to solve their dispute, the

mediator and the participants come together for a meeting. In this meeting, the mediator

introduces himself or herself, introduces the parties and explains the rules and intended goals of

the process

. He or she also takes time to encourage the disputants to cooperate towards the

realization of the intended achievements.

Statement of the Problem by the Parties.

At this stage, the conflicting parties are given a chance to explain what they feel is the

problem in their own words. The mediator assures and encourages them to explain in details their

points of grievances and to keenly listen and understand their counterpart's part as well views on

the situation at hand.

Domenici, Kathy, and Stephen W. Littlejohn. 2012. Mediation: empowerment in conflict management. Prospect Heights, Ill:

Waveland Press.

Crocker, Chester A, Fen Osler Hampson, and Pamela R Aall. 2015. Taming Intractable Conflicts. Washington, D.C.: United

States Institute of Peace Press.

Lipsky, David B. 2016. Managing and Resolving Workplace Conflict. Emerald Group Publishing Limited.

http://public.eblib.com/choice/publicfullrecord.aspx?p=4635196.

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The communication stage

Two main events take place at this stage; the mediator meets the aggrieved parties

separately and later meet them together. Private caucus gives the mediator to obtain the party's

detailed explanations of the problem and their suggestions on a possible resolution

. It should be

noted that the parties may not feel comfortable mentioning some details in the presence of their

disputing partner.

Negotiation Stage

At this stage, the disputants are brought together, given a chance to argue their points out

with one another. It is the stage where the participants try to achieve their individual goals

through negotiations, and it is the stage where an agreement is either reached or not

. The

agreement should be such that both parties are satisfied and willing to abide by and

acknowledge.

Closure and Implementation

The terms of the agreement are implemented at this stage. In cases where no agreement is

reached through mediation, the parties are advised to move to court for a verdict.

Conclusion

From the above, a proper application of Alternative Dispute Resolution structures like

mediation would improve the professionalism of the judicial, enhance the productivity of the

legal system, and promote international trade and help Saudi Arabia in achieving the Vision

2030.

Crocker, Chester A, Fen Osler Hampson, and Pamela R Aall. 2015. Taming Intractable Conflicts.

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Reference List

Abukhalil, As'Ad. 2014. The battle for Saudi Arabia: royalty, fundamentalism, and global

power. New York: Seven Stories Press.

http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&A

N=731244.

Alshahrani, Saad. 2017. "Dispute Resolution Methods In The Construction Industry Sector In

The Kingdom Of Saudi Arabia". MATEC Web Of Conferences 138: 02015.

doi:10.1051/matecconf/201713802015.

Crocker, Chester A, Fen Osler Hampson, and Pamela R Aall. 2015. Taming Intractable

Conflicts. Washington, D.C.: United States Institute of Peace Press.

Domenici, Kathy, and Stephen W. Littlejohn. 2012. Mediation: empowerment in conflict

management. Prospect Heights, Ill: Waveland Press.

Junseopshim, 2015. "The Effects Of Alternative Dispute Resolution(ADR) On The Length Of

Mediation". Dispute Resolution Studies Review 13 (1): 33-62.

doi:10.16958/drsr.2015.13.1.33.

Lipsky, David B. 2016. Managing and Resolving Workplace Conflict. Emerald Group Publishing

Limited. http://public.eblib.com/choice/publicfullrecord.aspx?p=4635196.

Lovenheim, Peter, and Lisa Guerin. 2014. Mediate, don't litigate: [strategies for successful

mediation]. Berkeley, Calif: Nolo.

http://public.eblib.com/choice/publicfullrecord.aspx?p=198090.

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Nolan-Haley, Jacqueline M. 2013. Alternative dispute resolution in a nutshell. St. Paul, MN:

Thomson/West.

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