Saudi Arabia Approves New Law on Court Fees | K&L Gates LLP
As part of its continued efforts to improve the justice system and achieve its Vision 2030 goals, Saudi Arabia approved another new law, Royal Decree No. M16 on Court Fees (Court Fees Law), which was promulgated on September 8, 2021 and published in the Official Journal on September 17, 2021. The Law on Court Fees will enter into force 180 days after its publication in the Official Journal and the Cabinet will promulgate the implementing regulations within 60 days of the date promulgation of the law.
Although administration fees are charged in most countries in the Middle East, this is a new concept in Saudi Arabia. Since the establishment of civil courts in Saudi Arabia, filing a case is free.
Although the absence of a case fee may be superficially appealing and seen as allowing for universal access to justice, the justice system has struggled with the volume of cases and, as a result, court proceedings in Saudi Arabia have always been long and inefficient. Saudi Arabia also suffers from a significant number of malicious lawsuits brought by parties who abuse the opportunity to access free litigation without any genuine desire for justice.
The introduction of application fees aims to reduce the financial burden on the state, improve efficiency and reduce the number of malicious cases.
Summary of the law
The law on legal costs establishes a mechanism for collecting specific costs from litigants when filing lawsuits and requests. These fees apply to all lawsuits, petitions and petitions filed in court, with the exception of a few limited categories of claims and litigants.
In civil cases, costs are calculated at 5% of the value of the claim, capped at SAR 1 million.
In the event of a settlement after the first hearing and before the judgment, the fees will be reduced to 25 percent of the court fees and the balance will be refunded (if paid). All costs are reimbursed in the event of: a decision or judgment rendered in favor of the applicant, appellant or applicant; the applicant withdraws their application in accordance with the applicable rules before the first hearing; the parties settling the dispute before the end of the first hearing; and the settlement of civil claims raised in parallel with criminal proceedings, regardless of the stage of the case. In the event of partial success in appeal, the costs will be reimbursed on a pro rata basis.
The fees for requesting the annulment of an arbitral award represent 1% of the amounts awarded by the arbitral tribunal, still capped at SAR 1 million. These amounts are lost if the request is unsuccessful.
In accordance with Article 2 of the Law on Judicial Costs, costs are not due for: criminal and disciplinary cases and related requests; bankruptcy lawsuits and claims; actions and requests falling within the jurisdiction of personal status jurisdictions (marriage, divorce, custody, etc.) with the exception of appeal and review requests; prosecutions and applications relating to the division and distribution of probate, except for appeal and reconsideration requests; declarations and related requests; and prosecutions and claims within the jurisdiction of the Grievances Committee.
The following natural and legal persons are also exempt from the payment of legal costs: (i) natural persons detained or imprisoned on the due date for the payment of non-criminal proceedings instituted by them or against them; (ii) employees who are covered by Saudi labor law with respect to legal actions relating to rights arising from their employment contract; and (iii) government ministries and entities. However, in the event that a judgment is rendered in favor of one of the exempted persons or entities, the losing party will be required to pay the applicable fees.
In addition to improving the efficiency of the justice system, by making litigation more expensive and therefore less attractive, this law is expected to support Saudi Arabia’s broader goal of increasing the use of alternative dispute resolution methods.
Saudi Arabia has recently taken a number of steps to improve the legal framework required to support arbitration and mediation as viable means of resolving trade disputes. The Arbitration Law of 2012 and the Enforcement Law of 2012 (and the corresponding executive regulations for these laws), as well as the opening of the Saudi Center for Commercial Arbitration in 2016, are well-known measures that have already been implemented. been taken to achieve this goal. However, more recently, Saudi Arabia ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation – a mechanism for enforcing mediated settlement agreements in signatory states – and enacted the law. on commercial courts, which introduced several new measures to improve the efficiency of the judicial system, in particular by submitting certain claims to conciliation or court-ordered mediation.
Each of these developments brings Saudi Arabia closer to its goal of reforming its justice system and attracting more international investment to the country.