“Saudi Arabia’s mandatory mediation initiative signifies a cultural shift, integrating traditional amicable settlement values with modern legal practice to create a fair, efficient, and amicable commercial dispute resolution system aligned with Vision 2030 and global standards.”
Introduction
Mandatory mediation has emerged as a pivotal development in Saudi Arabia’s ongoing legal reforms, reflecting a broader global shift toward integrating alternative dispute resolution (ADR) into judicial processes. In many jurisdictions – from England and Wales to Singapore and in GCC countries such as the United Arab Emirates, the courts increasingly require parties to attempt mediation at the initial stage before proceeding with full litigation.
Saudi Arabia has now joined this trend by introducing mandatory mediation under the Commercial Courts Law (CCL) of 2020 and its Implementing Regulations. Enacted by Royal Decree No. M/93 on 8 April 2020 and effective as of June 2020, the CCL mandates that certain commercial disputes undergo mediation or conciliation before a lawsuit can proceed in court. This development represents a forward-thinking shift in the Kingdom’s dispute resolution landscape, aiming to harness mediation’s advantages – such as cost-effectiveness, confidentiality, and party autonomy – within the commercial justice system.
The significance of Saudi Arabia’s mandatory mediation mandate is best understood in the context of the country’s ambitious Vision 2030 and related legal modernization efforts. Vision 2030 emphasizes improving the business climate and judiciary efficiency as key to diversifying the economy. By embedding mediation as a compulsory first step for many commercial cases, Saudi policymakers seek to streamline dispute resolution, reduce court dockets, and encourage amicable settlements in line with international best practices.
This initiative also aligns with the National Transformation Program goals to enhance judicial efficiency and ease of doing business. For international legal professionals and companies, Saudi Arabia’s adoption of mandatory mediation signals a progressive, business-friendly approach to resolving disputes – one that blends the Kingdom’s legal traditions with global ADR trends.
This blog is a part of our UAE Mainland Litigation Services.
Background: Saudi Legal Reforms and the CCL’s Objectives
Over the past decade, Saudi Arabia has undertaken extensive legal reforms to modernize its judiciary and attract global business. Traditionally grounded in Shari’a law with general and specialized courts, the Kingdom recognized the need for a more efficient commercial dispute framework. In 2012, it introduced a new Arbitration Law aligned with international standards, enhancing arbitration enforcement. The establishment of the Saudi Centre for Commercial Arbitration (SCCA) in 2016 further reinforced this shift towards alternative dispute resolution (ADR), aligning with Vision 2030’s aim to diversify the economy and foster competitiveness.
A landmark development was the Commercial Courts Law (CCL) in 2020, enacted by Royal Decree No. M/93, which created specialized Commercial Courts with streamlined procedures. The CCL covers a broad range of commercial disputes, including merchant conflicts, high-value contract claims, partnership issues, and cases under commercial statutes such as the Companies and Bankruptcy Laws. Its objectives are to expedite case resolution through digital filing, strict timelines, a five-year limitation period, and mandatory pre-action protocols. Importantly, the CCL actively promotes ADR by enabling courts to engage private mediation services and encouraging early settlement efforts. These reforms aim to reduce court congestion, enhance commercial justice efficiency, and balance traditional litigation with modern dispute resolution to benefit both domestic and international stakeholders.
Pre-CCL Dispute Resolution Landscape in Saudi Arabia
Before the CCL, Saudi Arabia’s commercial dispute resolution was largely litigation-focused, conducted primarily in Shari’a courts or the Board of Grievances, often criticized for lengthy and unpredictable processes. Although the framework for Arbitration and mediation existed, it was largely underutilized.
The 2012 Arbitration Law modernized arbitration by granting parties greater autonomy, including the choice of foreign governing law, leading to increased arbitration use and improved enforcement of awards by Saudi courts. The 2016 establishment of the Saudi Centre for Commercial Arbitration (SCCA) further institutionalized arbitration and mediation aligned with international standards.
Mediation and conciliation were largely voluntary and informal pre-2020. While amicable settlement (Sulh) is culturally encouraged in Shari’a, commercial mediation was rarely the primary dispute resolution method in the Gulf, with litigation dominating.
This began to shift in the late 2010s as the government pursued ADR targets, launching the Taradhi electronic conciliation platform to facilitate remote mediation. By 2023, over 7,700 commercial disputes were resolved via Taradhi without court intervention, reflecting growing acceptance. However, mediation remained voluntary, dependent on parties’ consent or contracts, with no legal obligation to attempt settlement prior to litigation. The CCL has since transformed this dynamic by introducing mandatory mediation protocols, signalling a strategic shift toward embedding ADR within commercial justice.
Legal Framework of Mandatory Mediation under the CCL
Saudi Arabia’s shift to mandatory mediation in commercial disputes is grounded in the Commercial Courts Law (CCL) and its 2020 Implementing Regulations. Article 8 of the CCL empowers regulators to define mediation procedures, including cases requiring mediation before proceeding to the court for litigation, with a maximum mediation period of 30 days unless extended by the parties. Ministerial Decision No. 8344 (18 June 2020) specifies these details, establishing mediation as a prerequisite for certain dispute categories.
The Implementing Regulations mandates mediation prior to filing in four key scenarios:
- Monetary claims between businesses up to SAR 1,000,000
- Commercial contract disputes up to SAR 1,000,000
- Disputes between partners in Mudarabah or similar Islamic financing ventures
- Contractual disputes containing prior ADR clauses requiring mediation
This framework aims to divert routine, small-to-mid value commercial cases toward early settlement, reducing court burdens. Cases exceeding SAR 1,000,000 or outside these categories may proceed directly to court, though judges may still encourage ADR.
The mediation process is designed to be efficient, typically limited to 30 days with practical implementations like a 15-day period for small claims. Mediation follows the procedural rules of certified platforms such as the court-affiliated Taradhi system or the SCCA’s mediation rules. Cabinet Decree No. 103 further institutionalized mediation by establishing a national Conciliation Centre for court-related cases.
Settlement agreements reached through mediation are enforceable as executory deeds, while unsuccessful mediation allows claimants to file in Commercial Courts. Overall, this mandatory pre-litigation mediation framework represents a transformative step in Saudi civil procedure, embedding amicable dispute resolution within the commercial justice system.
Analysis and Practical Considerations in Implementation
The mandatory mediation framework under the CCL is reshaping commercial dispute resolution in Saudi Arabia. When filing a covered case via the Najiz online portal, parties are required to initiate mediation through the Ministry of Justice’s Taradhi platform. This user-friendly, confidential process facilitates remote sessions with assigned conciliators, guiding parties toward settlement. Agreements reached are formalized as executory instruments, enforceable like court judgments, providing binding outcomes without litigation. If mediation fails or times out, claimants proceed to court, with judges verifying compliance.
For lawyers and legal practitioners, mandatory mediation demands some strategic adjustments. Lawyers and legal practitioners must assess mediation applicability early and prepare clients, accordingly, emphasizing negotiation and settlement advocacy. Some firms are training attorneys in mediation skills and certification. International firms must also ensure adherence to these procedural steps to avoid dismissal risks. The 15–30-day mediation window minimally impacts timelines but often clarifies issues, sometimes leading to early settlements even post-mediation.
From a business standpoint, mandatory mediation offers a cost-effective, timely alternative to litigation, preserving commercial relationships in Saudi Arabia’s relationship-focused culture. Early Ministry data confirms thousands of mediated settlements, easing court caseloads and reducing costs for unresolved disputes.
Challenges remain, including fragmented legal texts governing mediation, interchangeable use of “conciliation” and “mediation,” and limited detailed outcome data, complicating comprehensive evaluation. Nonetheless, qualitative trends are positive, with comparisons to jurisdictions like Singapore and the UK suggesting substantial potential benefits.
Internationally, Saudi Arabia’s accession to the 2019 Singapore Convention on Mediation (effective domestically since November 2020) enhances enforcement of international mediated settlements, increasing investor confidence. Collectively, these developments and growing practitioner expertise are embedding mediation as a mainstream dispute resolution mechanism in the Kingdom’s commercial legal landscape.
Benefits and Strategic Implications
Saudi Arabia’s shift to mandatory mediation delivers significant advantages across efficiency, cost, relationship management, and alignment with national objectives:
- Enhanced Efficiency: By channelling many disputes into mediation early, cases are resolved faster than through traditional litigation. Quick mediation sessions prevent lengthy trials and appeals, while unresolved cases benefit from clearer issues and partial settlements. This supports the Commercial Courts Law’s goal of expediting proceedings, improving the investment climate with faster dispute resolution.
- Cost Reduction: Mediation substantially lowers expenses related to court fees, legal representation, and business disruption. Public mediation platforms like Taradhi offer low-cost or free services, while private alternatives remain cheaper than protracted litigation. Reducing court caseloads also optimizes judicial resources, potentially lowering systemic costs and expediting judgments for complex cases.
- Preservation of Business Relationships: Mediation encourages cooperative, win-win outcomes, critical in Saudi Arabia’s trust-based commercial culture. It enables confidential, less adversarial dispute resolution, protecting reputations and maintaining valuable partnerships—an advantage particularly appreciated by international firms sensitive to public exposure.
- Alignment with Vision 2030 and Global Standards: Mandatory mediation advances Saudi Arabia’s Vision 2030 by strengthening legal infrastructure to attract foreign investment. It enhances the Kingdom’s global competitiveness in contract enforcement and aligns with international practices such as the Singapore Convention on Mediation. This harmonization facilitates adaptation by global legal professionals and encourages proactive contract drafting incorporating mediation clauses.
Our view is that this mandatory mediation promotes faster, more cost-effective dispute resolution that safeguards business ties and aligns Saudi Arabia with the present global commercial norms. While not eliminating litigation for complex matters, it marks a clear strategic commitment to fostering a culture of amicable dispute settlement, benefiting all economic stakeholders.
Conclusion and Our Perspective
The introduction of mandatory mediation under the Commercial Courts Law represents a pivotal transformation in Saudi Arabia’s dispute resolution landscape. This shift from a litigation-focused system to one prioritizing negotiation and settlement is gradual but promising. Success depends on ongoing efforts to train mediators, educate legal professionals and parties, and refine procedural frameworks to ensure fairness and efficiency. Early results are positive, with thousands of disputes resolved through mediation and growing acceptance of this approach within the justice system. Continued momentum is expected to reduce judicial caseloads, accelerate resolutions, and foster a cooperative commercial environment.
For international practitioners and businesses, engaging proactively with Saudi Arabia’s mediation framework is essential. Familiarity with the CCL’s mediation procedures, updating dispute resolution strategies, incorporating mediation clauses, and utilizing platforms like Taradhi or institutions such as the SCCA will enhance dispute management and preserve business relationships.
Ultimately, Saudi Arabia’s mandatory mediation initiative signifies a cultural shift, integrating traditional amicable settlement values with modern legal practice. As this system matures, it will enhance the Kingdom’s attractiveness as a fair, efficient, and amicable venue for commercial dispute resolution, inviting international stakeholders to actively participate in this evolving ADR environment.
