A recent decision in the Second Commercial Circuit of the Board of Grievances in Riyadh brings into sharp focus the interpretation by the Saudi Arabian judiciary of the New York Convention. It is a well-known fact that arbitral awards in Saudi Arabia are not simply rubber-stamped at the enforcement stage, but are analysed for compliance with Shari’a. In practice this means that the merits of the claim are re-examined. In Jadawel v Emaar, the Court reviewed the merits of the award to ensure compliance with Shari’a and decided to overturn the ICC award.

Jadawel issued arbitration proceedings in 2006 arguing that Emaar had formed a partnership with another company, in breach of a construction joint venture agreement signed by the two companies in 2003. The ICC tribunal rejected Jadawel’s US$1.2 billion claim against Emaar and awarded Emaar US$12 million in compensation and legal fees to reflect the cost of the arbitration.

While the reasoning of the Saudi Court has not yet been released and it is believed that it will be made public shortly, Emaar has already announced that it will appeal the decision.