New Commercial Courts Law

The new Commercial Courts Law has created a clearer and more transparent commercial litigation regime on a range of aspects relevant to commercial transactions, aimed at delivering wider economic impetus.

The Ministry of Justice is now focusing on creating the culture of excellence and raising the standards of
the judges and practitioners implementing these new laws, to fully realise the value of these legal developments.

The highest impact changes of the new Commercial Courts Law and its Regulations include:

• Deadline of 5 years to bring claims

A new limitation period is set, meaning claimants have a deadline of five years to bring claims (unless the claimant can show reasonable excuse, or the defendant has already conceded the relevant right from which the claim arises) is imposed, meaning a much lower risk of claims arising many years after the relevant event.

• Mandatory pre-claim conciliation or notification

Mandatory pre-claim conciliation and pre-claim notification for certain types of claim, including
disputes for a value of between SAR100,000 and SAR1million arising out of commercial contracts,
and for all disputes to which contractually agreed pre-claim conciliation provisions are applicable.

• Faster debt recovery

A new debt-recovery mechanism allows claimants in straightforward debt actions to obtain a Performance Order within 10 days of application, subject to certain evidential conditions being met, including that the claimant has issued to the defendant a demand to pay at least five days prior to applying for a Performance Order.

• Wider range of urgent interim actions

The law provides for new urgent applications, including protective seizure, injunctions, and
permission to act, to be heard and dealt with in three business days. The court may require applicants
to submit a guarantee to compensate the defendant in the event it transpires that the claimant was not entitled to the urgent application, to ensure equitable balance between the claimant’s need for urgent
protection, and the defendant’s risk of harm.

• Penalties for breach of court procedures

The new Court power to impose fines up to SAR10,000 for breach of procedural requirements means a lower likelihood that counter-parties (whether claimant or defendant) will waste time in failing to turn up to hearings or file submissions as ordered.

• More streamlined litigation

The law raises the standard in terms of streamlining litigation, and introduces a number of new measures as outlined below. A key aspect is the new right to request disclosure of all relevant documents, which may mark a shift away from prolonged and uncertain litigation arising from drip-fed disclosure of documents at intervals.

New measures include:

1. the use of electronic procedures
2. the ability to use private-sector providers for some procedural services
3. the setting of specified hearing numbers and timings for different types of claim, with most claims intended to reach first instance judgment within 180 days
4. provision for subject-matter jurisdiction disputes to be heard within 20 days of such jurisdiction defence being raised
5. simpler service on overseas parties.

Commercial parties may also agree their own procedural rules (although it remains to be tested how far this can be taken to depart from the rules set by the law and regulations) and can agree to shift the
default burden of proof.

Dispute-resolution clauses in commercial contracts should, from now on, take this flexibility into
account.

• Public access to case documents and judgments

The law provides for:

• • court judgments to be published, a requirement that had not previously existed. This may ultimately enable the development of a system of precedent, enabling litigating parties to
    have a greater degree of certainty in terms of the eventual likely outcome of a judgment.
  • public access to case documents, subject to payment of a fee, allowing greater transparency of
    judicial processes.

Key actions for commercial parties to take now include:

• Consider imposing pre-claim conciliation provisions within existing or new commercial contracts.
• Consider the need to contractually agree adjusted rules of procedure for court proceedings that may arise from commercial disputes, including relating to matters such as:
  • Number of written submissions and timings to submit
  • Notification procedures
  • Expert appointment procedures
  • Case management procedures

To explore the brief in PDF please click here.