- The judicial system in the kingdom previously adopted the principle of free litigation. However, with the new Judicial Costs Law (the “Law”) litigation will no longer be entirely free of charge.
- The Law regulates the costs for filing certain lawsuits or requests raised to general judicial courts. The aim of the Law is to reduce frivolous claims and requests.
- The Law depends heavily on and refers often to its implementing regulations, which are yet to be issued.
- The general rule with the judicial costs on lawsuits brought by claimants is that the cost will equal 5% of the value of the dispute, with a-cap of one million Saudi Arabian Riyal (SAR 1,000,000).
- To ensure expedited judicial proceedings and not to delay the issuing of judgments, as a general rule, the court will hear lawsuits requests brought before it, and make its decisions regardless of whether costs have been paid. The implementing regulations will specify the procedures of collecting the costs from the parties.
- However, the following will not be subject to fees:
- Lawsuits brough and requests made under the jurisdiction of the Board of Grievances;
- Criminal and disciplinary lawsuits;
- Lawsuits and requests raised to the Personal Status Courts, except for appeal requests or annulment filings;
- Lawsuits and requests resulting from applying the Bankruptcy Law;
- Lawsuits or requests raised by individuals imprisoned or arrested in non-criminal financial cases;
- Lawsuits or requests raised by employees in claims of entitlements/rights arising out of employment contracts; and
- Lawsuits or requests raised by ministries and governmental entities.
- Additional costs (equalling25% of the initial lawsuit cost) will be imposed on the claimant when a lawsuits filed for a second time, where the first lawsuit was stricken off, dismissed for failure to state a claim, or ruled as to not have any legal effect.
- In lawsuits for annulments of arbitral awards, the costs will equal 1% of the value of the award, with a cap of one million riyal (SAR 1,000,000), borne by the party who requested the annulment if such request is rejected.
- Judicial costs are also imposed on requests made to obtain certain documents of a lawsuit and similar requests. These costs will equal a lump sum that does not exceed one thousand Riyal (SAR 1,000).
- As a general rule, the party who the judgment is issued against bears the judicial costs. Where a party has won parts of the lawsuit and lost on others, the costs could be allocated between the two parties.
The Expected Effect
- Access to the judicial system is no longer free, with certain exceptions.
- A well drafted dispute resolution clause is more important than ever, to serve parties in keeping judicial costs to the minimum.
- Enforcement of arbitral awards is expected to be easier and faster, as the losing party is not expected to file for annulment of the award, in cases where an annulment request is clearly not justifiable (to avoid the potential costs of rejecting the annulment).
- Higher consideration of alternative and amicable dispute resolution mechanisms, such as arbitration and mediation.
- The need to refer to lawyers specialized in dispute resolution, as approaching disputes without experience and knowledge, might be costly.
Link to the Regulation
Publication in the Official Gazette
This was published on the Official Gazette, issue no.4900, dated 10/02/1443H, (corresponding to 17/09/2021G). Please click here to view the issue.
Date of Entry into Force