Resorting to out-of-court settlement through reconciliation

Many people are unaware that the out-of-court settlement of some legal disputes is also possible through reconciliation. There are provisions in Saudi law that enable parties to a conflict to settle disputes amicably, not only saving their time and resources, but also those of the judiciary. The parties in dispute, however, always have the legal guarantee for litigation if they choose to do so. The commercial court law enacted this year specified the cases in which it is necessary to try legal alternatives for dispute settlements by reconciliation. In cases that fail to reach an amicable settlement, parties to a conflict are allowed to get their case registered in a commercial court.

Disputes concerning partners in a Mudarabah (sharing the profit and loss with venture capital) company should not be directly referred to a court. Attempts should be made to settle the dispute through reconciliation. In case of failure, the issue may be referred to a circuit court consisting of one judge with jurisdiction over them with the exception of urgent requests and performance orders. In cases that come under the purview of a commercial court, where parties are spouses or related by kinship up to the fourth degree, legal alternatives should be used to ensure the preservation of family bonds and social relations. It is also possible to include a clause in contracts that calls for reconciliation or mediation for an outof-court settlement in case of a dispute. In such a case, the law ensures the implementation of the agreement.

There are several scenarios that may result from reconciliation procedures. In the event where an amicable solution is reached through reconciliation, the settlement is given a legal cover and is considered an executive document.

In cases of partial reconciliation, the document shall be deemed sufficient to register a case with the court. If reconciliation attempts completely fail, parties should wait for 30 days before moving to a court.

All cases within the jurisdiction of commercial courts must fulfill the notification procedure before being registered at a court. However, there are exceptions, such as cases related to penalties, cases in which the administration is a party and cases governed by special statutory provisions like bankruptcy cases.

Efforts for an out-of-court settlement are mandatory through reconciliation in minor cases involving disputes between traders and commercial contract disputes that are established against traders in which the value of the original claim exceeds SR500,000 ($133,327) and is less than SR1 million.

These reconciliation procedures facilitate the work of courts and save them a lot of effort. Therefore, I believe it is necessary to encourage conflicting parties to resort to such legal procedures by following rules and regulations. I always believe that a good lawyer is not the one who takes you to court, but rather the lawyer who actually helps you avoid the trouble of resorting to lengthy legal procedures.