Towards Having a Specialized Economic and Financial Court in the Kingdom of Saudi Arabia in Lieu of the Extra-Judicial Committees Approach: A Critical Study on the Mechanisms for Dealing with Banking-Related Disputes

Abstract

The jurisdiction to adjudicate various disputes that arise in the Kingdom of Saudi Arabia ("KSA") is not limited to judicial bodies within the framework of the Judicial Branch. Rather than a few committees or other bodies that have a relatively narrow jurisdiction over some special issues, many committees with "judicial power” extra-judicial committees, settle specific types of commercial, criminal and civil disputes. Specifically banking disputes and some other issues that have an economic or financial nature are determined outside the jurisdiction of the Judicial Branch. The current committees approach of the KSA proves it is hard to work effectively as an “independent" and reliable dispute resolution mechanism. In effect, the multiplicity and dissimilarity of bodies that have the jurisdiction to deal with financial and economic related issues in the Saudi system may have an overall negative impact on the economic sector of the KSA. Instead, the judicial environment to resolve these disputes may best be concentrated away from the dispersion of jurisdiction. The different issues, including financial or commercial disputes, might better be considered before a specialized independent economic/financial court.

In fact, even if the extra-judicial committees worked adequately, they still are marred by numerous procedural and structural dilemmas, and more importantly, a lack of meaningful independence. As a model for these committees, the Committee of Banking Disputes is one of the most important committees. It practices a judicial function over banking disputes in the Kingdom. As with other extra-judicial committees, this body currently is not part of the Judicial Branch. This body was created within the Saudi Arabian Monetary Authority (SAMA). In that respect, the Committee of Banking Disputes is subject to the Executive Branch; and, as such, not an independent court and its members are not independent judges.

Due to these deficiencies, as well as to a will of the Saudi government to develop and to unify the Judiciary's tasks, the Saudi regulator has made repeated recent attempts to try resolve this situation. These efforts have a common goal, which is to end these extra-judicial committees and to transfer their jurisdictions under the umbrella of the Judicial Branch, where the law expressly provides independence for the courts and their judges. The 2007 Implementation Mechanism of the new Judiciary Law and of the Board of Grievances Law is an important effort to transfer the jurisdiction of committees to the Judiciary's ordinary courts. The transferring of these committees' jurisdictions is still under process and is not yet completed. Lack of urgency as to implementation is not the only issue, as the Implementation Mechanism specifically excludes a number of committees from the transferring process, which are the Committee of Banking Disputes, Customs Committee and the Committee for the Resolution of Securities Disputes. This exception may be extended to other committees, which were formed or reformed after 2007. This means continuation of the committees' approach, at least for these important issues related to the economic and financial sector.

After a general introduction in Chapter One, Chapter Two highlights the overall Saudi courts system, as well as the location of the extra-judicial committees in relation to the formal Saudi judicial system. Then, this Chapter concludes by reviewing commercial activities and relevant dispute resolution in the judicial system. Chapter Three examines the banking sector in the Kingdom, and the Committee of Banking Disputes as one of the important extra-judicial committees. Also, Chapter Three highlights some advantages and disadvantages of this Committee to clarify why it might be better for an "independent" judicial body to have jurisdiction over such disputes. Then, Chapter Four more specifically addresses why independent judicial bodies would be superior to the extra-judicial committees, specifically with regard to banking disputes and other economic and financial related issues. Through comparatively highlighting some judicial models of selected Arab countries and their dealings with these kinds of issues, Chapter Four provides some suggestions toward ending the extra-judicial committees approach, which is embodied in the Banking Committee and the two other excluded committees that handle these kinds of cases, through establishing a new Saudi economic and financial court. Based on the author's research in this volume, such a move should strengthen the legal environment and should support the independence of the Judicial Branch. Then, Chapter Five illustrates the importance of the principle of judicial independence, its impact on the effectiveness of the judicial framework, and the extra-judicial committees' inconsistencies with such concept.

This study should contribute to a better understanding of the importance of transferring the Committee of Banking Disputes, and the other committees which decide cases related to economic and financial activities, to a new economic and financial court. This step should help unify the jurisdiction for such disputes, and should increase the effectiveness, transparency and trustworthiness of the Saudi dispute resolution mechanism. The multiplicity of extra-judicial committees and their jurisdictions, and their subordination to governmental bodies, increases the possibility of confusion and misunderstanding when it comes to dealing with different issues. That end may decrease litigants' confidence in the system. This new court may be a new specialized court under the Judiciary Law. Or, an even better approach might be to make this court as a new component of the Judicial Branch alongside the Judiciary's courts and the Board of Grievances' courts. Also, this new independent court could be an independent court parallel to the Judicial Branch. Such a court could improve the economic and financial dispute resolution process within the three excluded committees' jurisdiction, including the Banking Committee, and might also embrace other committees' jurisdiction which currently decide cases that have an economic or financial nature, such as the Committee for Financial Disputes and Violation. A new economic and financial court should lessen the procedural complexities inherent in the committees' system while upholding confidence in judicial proceedings. This initiative would also support the specialization and independence of the dispute resolution system, since this new court would not be a part of the Executive Authority.

Through addressing the status of the Committee of Banking Disputes, this study should provide insight into the reasons for abandoning the extra-judicial committees approach. In contrast to a dispute resolution system that prominently features bodies outside the judicial system, if a country has a strong, independent, and integrated judicial system, the people will be confident that their rights will be protected, whether they are citizens or noncitizens. The judicial system is one of the main factors in the standard of measuring the progress of developing countries. Indeed, an efficient judicial system is a key to a positive business climate. Judicial development in the Kingdom is a pillar of economic and financial development in Saudi Arabia. Therefore, it is important to address the status of the committees which decide matters that are related to these important sectors. This step also may play an important role to encourage investment and to attract domestic and foreign capital to diversify the country's income sources, which the Kingdom seeks to achieve through its “2030 Vision.” Such a move, conceivably, could effectively transform the Kingdom into a regional economic and financial hub.

Subject Area

Law

Degree Date

2018

Document Type

Dissertation

Degree Name

S.J.D.

Department

Dedman School of Law

Advisor

Joseph J. Norton

Second Advisor

Jerry Olson

Third Advisor

Ahmed Dahshan

Number of Pages

xiii, 246

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