Several new laws have taken effect in recent months in the Kingdom of Saudi Arabia from arbitration to the establishment of a centre for registration of lien and the long awaited mortgage law. As part of the restructuring underway in the Saudi Arabian judiciary system, long standing regulations for the resolution of banking disputes in the Kingdom of Saudi Arabia also have been revised. These new reforms represent a welcome step toward achieving greater certainty and predictability in the resolution of banking disputes in the Kingdom of Saudi Arabia.
The various reforms include the following:
- The Banking Disputes Resolution Committee of the Saudi Arabian Monetary Agency will be renamed the Banking Disputes Committee (the “Committee”). The Committee will adopt decisions by majority vote and decisions will be subject to appeal within thirty (30) days.
- A Banking Disputes and Violations Committee (the “Appeal Committee”) has been created to hear appeals from the decisions of the Committee and the Banks Supervision Dispute Resolution Committee. The decisions of the Appeal Committee are final and are not subject to further appeals.
- The creation of one or more Committee and Appeal Committee circuits comprised of four members each, three standing members and one standby member. Members are required to have expertise in the field of finance, with at least one member being specialized in Shari’ah.
- The introduction of a five-year statute of limitation on banking disputes. The five years start to run from the date of knowing the incident that gave rise to the dispute or from the date the amount in dispute falls due.
- Increased avenues for enforcement, as the Committee and Appeal Committee may now (i) sequester debtor’s accounts, (ii) prohibit a debtor’s dealings with governmental authorities, and (iii) ban debtors from leaving the Kingdom of Saudi Arabia.
- An enhancement of the binding effect of decisions of the Committee and Appeal Committee, as other governmental authorities now must recognize and enforce decisions made by them.