Court judgments and arbitral awards are enforced in Saudi Arabia in accordance with the new Enforcement Law issued by Royal Decree No. M/53, dated 13 Shaban 1433H (corresponding to 3 July 2012) (the Enforcement Law); and the Implementing Regulations for the Enforcement Law issued by Ministerial Resolution No. 9892 dated 17 Rabi Thani 1434H (corresponding to 27 February 2013). The new Enforcement Law should be a welcome development to litigants as it aims to streamline the enforcement process and reduce its cost and duration by minimising the judiciary’s role in it. The Enforcement Law prohibits the enforcement judge from examining the underlying merits of the dispute, which is a significant improvement over the old regime.
The enforcement process
The Enforcement Law has created a specialised court, the enforcement court, headed by enforcement judges.
The first step in initiating the process would be for the judgment creditor to file an online enforcement application with the enforcement court. The judge would review the judgment to ensure that requirements of the Enforcement Law are satisfied and, if so, proceed to stamp the judgment as an ‘enforceable instrument’ and issue an enforcement order. Upon notice, if the debtor fails to either comply with the order or disclose sufficient funds to discharge the judgment within five days from the date of the notification of the writ of enforcement, or from the date of publication in a daily newspaper, the debtor would be deemed to be a ‘procrastinator’ and the enforcement judge would immediately impose sanctions.
The decision of the judge to impose any sanction permitted under the Enforcement Law is non-appealable. However, the judge’s decision to abstain from enforcement or to proceed with enforcement (if disputed by the debtor), to halt the process once begun, to postpone enforcement, to give the debtor time to pay, or to permit the debtor to pay in instalments, is appealable. Appeals are made to the appellate division of the Sharia (General) Court. Judgments of the appellate court are non-appealable.
Mandatory sanctions
Pursuant to Article 46 of the Enforcement Law, if the defendant is deemed to be a procrastinator, the enforcement judge shall immediately order mandatory sanctions, to include banning the debtor from traveling, freezing his government services, freezing his bank accounts, and informing credit bureaus of the enforcement action.
Discretionary sanctions
If the mandatory sanctions fail to compel the debtor to comply with the order, the enforcement judge may also impose additional sanctions, such as ordering government authorities not to deal with the debtor and attach the debtor’s monetary entitlements from such authorities; ordering financial institutions in the Kingdom not to conduct any business with the debtor in whatever capacity; and attaching the debtor’s non-cash property, including real estate and movable property. Importantly, if the amount of the judgment exceeds one million Saudi Riyals (approximately $250,000), or the number of creditors exceeds five, or if the debt has resulted from investment activity, the enforcement judge may also order the imprisonment of the defendant. Imprisonment shall continue until the judgment is satisfied or sufficient assets are disclosed. Imprisonment of the debtor does not relieve him from his financial obligations toward the creditor. Imprisonment may also be applied to the legal representative of a company, or any of its employees, who impede the enforcement.
Consequences of enforcement
The enforcement judge has very broad authority to compel compliance with the judgment or arbitral award. The enforcement judge is empowered to order a disclosure of the judgment debtor’s assets, and to seize the debtor’s monetary and non-cash property to satisfy the judgment against him, including real estate, movable property, bank accounts, investment accounts, contents of trust safes, insurance compensation, shares of unlisted and listed companies, cheques, promissory notes, funds which are payable in the future, and intellectual property. All competent authorities are required to disclose the defendant’s assets, following the enforcement judge’s order, within ten days from the date of notification. The enforcement judge may interrogate relevant personnel or appoint an expert for the purpose of tracing the defendant’s funds.
Timing of the enforcement process
If the judgment debtor has assets in Saudi Arabia, the enforcement process can be swift. The timing for these various measures of enforcement inevitably vary from one enforcement judge to another, as a function of the judge’s caseload, and would also depend on whether or not the judgment debtor appears before the enforcement court and contests the enforcement.
Enforcement of foreign court judgments and arbitral awards
The Enforcement Law sets out various requirements for foreign judgments and arbitral awards to be enforced in Saudi Arabia. These include: determining whether the judgment contravenes Islamic law or public order (for example, an award of interest is generally unenforceable), establishment of reciprocity (that the issuing country enforces Saudi judgments), that the judgment/award debtor was properly notified of the proceeding in the issuing country and was afforded an opportunity to defend himself, and that the judgment is final/non-appealable.
Saudi Arabia is a party to the New York Convention for the enforcement of arbitral awards and is thus bound to enforce foreign arbitration awards rendered in signatory states. Hence, reciprocity in these cases is presumed to have been established and enforcement of such awards in the Kingdom is, in principle, unproblematic.
Saudi Arabia is not a party to any treaties for the reciprocal enforcement of court judgments apart from one among the Gulf Co-operation Council States and one among various members of the Arab League. Historically, the reciprocity requirement in such cases has been the most difficult to establish. The Enforcement Law contemplates that reciprocity in such instances will be established based on a written confirmation from the Ministry of Justice, which can be a protracted process, or other compelling evidence. Past attempts to enforce foreign judgments from countries with which Saudi Arabia does not have a treaty have, so far as we are aware, generally been unsuccessful.