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The new Judicial Fees Law of the Kingdom of Saudi Arabia (the “KSA”) - an extraordinary development

News / / Middle East

Introduction

As an exceptional development to the KSA Court and Legal system, the Judicial Fees Law (the “New Law”) issued by the Council of Ministries by Royal Decree No. M/16 on 30/1/1443 H (corresponding to 7 September 2021 G) came into force on 11/8/1443 H (corresponding to 14 March 2022 G) which is 180 days from when the New Law was published.

This is an unprecedented law introducing for the first time case filing and other judicial fees in the KSA. The New Law provides that the Ministry of Justice will issue Executive Regulations to the New Law within sixty days from the date of it coming into effect, which shall provide further clarifications, procedures and rules. At the time of publishing this article, the Executive Regulations have yet to be issued although a draft has been published for public consultation.

In this article, we look at the New Law, its provisions, application, mechanisms, and exemptions under it.

Scope

The New Law applies to all cases and applications filed before the KSA Courts but it does not apply to certain cases and applications, which are as follows:

  1. General criminal cases and disciplinary cases;
  2. Claims falling under the Personal Status Courts except for applications to the Supreme Court and reconsideration;
  3. Claims and Motions before the Board of Grievances;
  4. Claims relating to the allocation of inheritance except for applications to the Supreme Court and reconsideration  
  5. Claims under the bankruptcy law; and
  6. Applications on unilateral evidentiary certificates (Inha’at).

Exemptions

The New Law takes into consideration international laws and exempts fees in respect of three categories, which are as follows:

  1. Claims commenced by Ministries and Government entities;
  2. Claims filed by employees relating to their employment contracts; and
  3. Claims related to imprisoned and detained persons.

Despite the introduction of court fees, the law also provides that a Court should not reject the registration of case before the Court of First Instance for the non-payment of the fees. Additionally, a Claimant has the right to object on the estimated fees within 15 days from when the Court informs the Claimant of the fees to be paid.

To encourage the parties to resolve matters amicably, the New Law provides a mechanism for waiving part of the fee if a settlement is reached after the end of the first hearing and before the Court decides further on the case. The reduction of the fees is up to one quarter of the fee paid. Further, litigants that reach an amicable settlement share the reduced fees equally unless they agree otherwise.

The fees

The fees in respect of Claims and Applications differ but generally fees for filing Claims  have been set at a  maximum of 5% of the claim amount with the maximum fee being SAR 1 Million. Further, the Court will conduct a recalculation of the fees if a judgement affects the value of the initial estimated cost.

The fee is borne by the Claimant in the first instance and if there are multiple Claimants, they bear the costs pro-rata to their respective Claims. However, if the Claimant is successful in its claim, the Court will order the losing party to pay the fee.

An additional fee of 25% of the fee is payable if the Court rejects to register the claim in the event the Claimant request a reconsideration of the Court’s decision to reject the registration of the Claim. The additional fees shall be for the Claimant’s account even if the Claimant receives a judgement in its favour.

If the Court decides that it lacks jurisdiction to hear a Claim, no new fees are payable to file the Claim in the correct competent Court.

In respect of challenging arbitral awards, the fee is 1% of the awarded amount up to a maximum fee of SAR 1 Million.

The New Law also defines costs of filing an appeal with the Court of Appeal or the Supreme Court, which is set at a maximum of SAR 10,000. The same fees are applicable to other filings, such as applications for rectification, application to recuse and other applications that may be set out by  the Executive Regulations.

The fees will be payable after 30 days of filing an appeal with the Court of Appel and Supreme Court. Failure to pay the fees will result in the appeal being rejected.

Further, administrative fees have also been included in the  New Law. The Courts are required to keep records and files (in hard or electronic form) of all Claims, which can be made available to the parties and others at a cost not exceeding SAR 1,000.

Once the, Executive Regulations are issued they will provide further details and the scope of the fees.

Draft Executive Regulations

The Ministry of Justice has published the draft Executive Regulations for public consultation  to collect the opinions of the public on the draft. The draft includes an introduction discussing the background on the New Law and its objectives. It provides that a comparative analysis was conducted in the process of drafting the New Law. The analysis included seventeen countries from different regions such as Germany, UK, Canada, Singapore, Egypt, Kuwait, UAE. 

The draft Executive Regulations specify the percentage of fees based on the claim amount as follows:

  1. 5% of claims not less than SAR 100,000;
  2. 4% of claims between SAR 100,000 and 500,000;
  3. 3% of claims between SAR 500,000 and 1,000,000; and
  4. 2% of claims above SAR 1,000,000.

The judges will still have the discretion to decide the fees of some lawsuits when taking into factors like the estimated litigation period, access to alternative dispute resolution and the operational fees.  

The introduction of execution fees of not more than SAR 10,000 seems to have raised controversial opinions and has been viewed as a repetition of the fees for the Claimant.

If a Defendant settles the due amount within five days from the execution judgement, the execution fees are waived by the Court.

The draft Executive Regulations also specify two other situations for waiving court fees. The first situation is when a case is filed to prove insolvency. Secondly, additional fees are waived when a Claimant provides legitimate reasons to reconsider a case at least one day after the case is struck out for the first time.

It remains to be seen if the current draft of the Executive Regulations will be adopted in full or there will be changes made to it after the public consultation.

Conclusion

One of the reasons behind the introduction of the fees is to help reduce the number of cases filed to reduce the abuse of the previous position of free access to litigation access.

The introduction of fees should also enhance the KSA Court system and brings the KSA Court system more in line with the Courts systems of the other GCC States as well Courts systems globally.

Parties are also encouraged to look into alternative dispute resolution mechanisms and it is hoped that this will cut the costs of lengthy and repetitive litigation.

The New Law and these unprecedented changes are part of and in line with KSA’s Vision 2030.

For further information, please contact Khurram Ali:

KhurramAli@incegd.com
(KSA):+966 54 031 3408
(UAE) +971 56 681 050

Khurram Ali

Khurram Ali Partner

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