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Legal Focus
OCTOBER 2013
Arbitration –
Widely seen as a preferable alternative method of dispute resolution, Arbitration is the process by which parties involved in a dispute allow an impartial third party to determine the solution. Arbitration is an integral tool in relationship maintenance within business across the world. To find out about the legal implications that can come with arbitration, Lawyer Monthly speaks to Dr Majed Garoub from the Law Firm of Majed Garoub in Saudi Arabia.
What are the common causes of disputes between businesses in your country, and across borders?
With regard the Saudi market, the most key important cause of disputes is the emphasis on trust and personal relationships when establishing new business bonds where there is a heavy reliance on trust and a greater focus on expectations that are sometimes different from reality.
At that very moment of reality check, differences become legal disputes and in the absence of professionally written contracts and proper feasibility studies, matters can get very complex so easily.
Finally, not adopting FIDIC rules of adjudication has been a contributing factor in increasing both the legal and practical difficulties in solving construction disputes in Saudi Arabia.
What, in your opinion, are the advantages of arbitration as a dispute resolution method as opposed to court action?
Arbitration advantages are well known, and on top of them come speedy justice, confidentiality and maintaining professional and friendly relations between the parties to the dispute.
Moreover, having a jury of specialists in the nature of the dispute to look at the case and give their verdict in a commercially-driven atmosphere is probably the most important advantage of arbitration and mediation
especially when we are referring to legally and technically sophisticated cases where specialism is a maker or breaker of a good and accepted dispute resolution.
The final point to add here is that businesses do give a high value to these advantages because time is money, not just to the companies involved but also to the different stake holders such as third party contractors and subcontractors, suppliers, shareholders… etc and we must understand that those people are the ones who look at these advantage as a matter of life or death, not as luxurious privileges to which they aspire.
How do you assist clients involved in arbitration? Is there any general advice you could offer clients to prevent the situation from escalating?
Yes of course, I always prefer to have a quick, peaceful and amicable settlement secured for my client and thus I first try to find win-win solutions for both parties in order that they feel they have not had suffered either economically or morally.
However, such an ideal situation cannot be created in all cases because, as I mentioned earlier, my work plan strategy depends on the legal position of my client and the economic and factual details of the case. The strategy is also going to be affected by the applicable law, the place of arbitration and also the jurisdiction in which the arbitral award is going to be executed.