Failure to Decide an Arbitrator Challenge and the Annulment of an Arbitral Award
A judgment of the Riyadh Court of Appeal confirms that a challenge to an arbitrator is not a procedural matter that an arbitral tribunal may simply ignore. Where a challenge is submitted through the applicable statutory procedure, the tribunal must address it and issue a decision within the prescribed period. Continuing the proceedings and rendering an award without deciding the challenge may constitute a material procedural defect capable of leading to annulment.
The case concerns Judgment No. 4630695739, issued on 1 February 2025 by the Eighth Civil Circuit of the Riyadh Court of Appeal. The Court accepted the annulment action in form and on the merits and annulled an award issued by a sole arbitrator.
Background to the Dispute
According to the published judgment, the parties’ contract contained an arbitration agreement providing for a sole arbitrator. During the first hearing, the claimant submitted a request challenging the arbitrator and later reiterated the request at the following hearing.
The sole arbitrator did not issue a decision accepting or rejecting the challenge and continued with the proceedings.
The arbitrator subsequently dismissed the claimant’s case because the claimant had failed to present and particularise its claim. The claimant was also ordered to pay SAR 70,000 for arbitration and secretariat fees, while the parties’ remaining requests were dismissed.
The claimant commenced annulment proceedings before the Riyadh Court of Appeal. Among the grounds relied upon was the tribunal’s failure to decide the challenge before continuing the proceedings and issuing the award.
The Statutory Procedure for Challenging an Arbitrator
Article 17(1) of the Saudi Arbitration Law regulates the procedure where the parties have not agreed on a separate mechanism for challenging an arbitrator.
Under that provision, a party seeking disqualification must submit a written and reasoned request to the arbitral tribunal within five days of becoming aware of the tribunal’s constitution or of the circumstances justifying the challenge.
If the challenged arbitrator does not withdraw, or the other party does not accept the challenge within five days of its submission, the arbitral tribunal must decide the request within fifteen days of receiving it. If the request is rejected, the challenging party may apply to the competent court within thirty days.
Merely recording the request in the hearing minutes is therefore insufficient. A clear procedural decision is required so that the challenging party can exercise the further remedy made available by the Law.
Why Did the Court Annul the Award?
The Court found that the challenge had been submitted before the tribunal proceeded to determine the case. The sole arbitrator did not issue a decision accepting or rejecting it and instead continued the arbitration and rendered the award.
The Court held that this omission violated Article 17(1) of the Saudi Arbitration Law. It further concluded that the defect fell within Article 50(1)(g), which permits annulment where the tribunal fails to observe requirements affecting the substance of the award or where the award is based on invalid arbitral proceedings that affected it.
The decisive issue was not merely that one party questioned the arbitrator’s impartiality. Nor, in the published reasoning, did the Court determine the substantive validity of the alleged grounds for disqualification.
The central procedural failure was that no decision was issued on the challenge at all, thereby preventing the challenging party from following the statutory route available after rejection.
Does Every Arbitrator Challenge Lead to Annulment?
The judgment should not be read as establishing that the mere submission of any challenge automatically suspends the arbitration or invalidates every subsequent award.
The analysis will ordinarily require consideration of several matters:
Was the challenge submitted within the statutory time limit?
Was it made in writing and supported by reasons?
Was it submitted to the body designated by the applicable law or agreed rules?
Had an earlier challenge based on the same grounds already been decided?
Did the tribunal issue a clear decision on the request?
Did the procedural failure affect the award or the party’s ability to exercise its statutory rights?
In this case, the Court connected annulment to the failure to decide the challenge, the sole arbitrator’s continuation of the proceedings, and the subsequent issuance of the award. It regarded the omission as sufficiently material for the purposes of Article 50(1)(g).
Practical Lessons for Arbitral Tribunals
The judgment demonstrates why a challenge to an arbitrator should be managed as a distinct procedural matter rather than treated as an incidental objection.
Good procedural practice includes:
Recording when and how the challenge was received;
Immediately checking compliance with the applicable deadline and formal requirements;
Allowing the other party and the challenged arbitrator to state their positions within the prescribed period;
Issuing a clear written decision accepting or rejecting the request;
Notifying the parties through a verifiable method;
Identifying the next procedural step and the period for applying to the competent court following rejection; and
Maintaining a complete procedural record showing how the challenge was handled.
The issue becomes particularly sensitive in sole-arbitrator proceedings because the individual being challenged is also responsible for managing the procedure. Strict adherence to the statutory mechanism and careful documentation are therefore especially important.
Practical Lessons for Parties and Counsel
A party that becomes aware of circumstances giving rise to justifiable doubts regarding an arbitrator’s impartiality or independence should not rely on an oral objection or an informal message.
A properly prepared request should identify:
The relevant facts;
When the challenging party became aware of them;
The supporting evidence;
The statutory or procedural basis of the challenge; and
The precise relief requested.
The party should also monitor every subsequent deadline. Silence from the tribunal should be documented and addressed through the remedy available before the competent court within the applicable period.
At the same time, arbitrator challenges should not be used as a tactical device to obstruct proceedings or repeat grounds already decided. The right to seek disqualification is governed by procedural requirements and strict time limits; it is not an unrestricted mechanism for delaying the arbitration.
Was the Court of Appeal Judgment Final?
The published decision states that the judgment annulling the award was open to appeal before the Saudi Supreme Court within thirty days of notification.
It is therefore more accurate to describe it as an important Court of Appeal judgment concerning the procedural consequences of failing to decide an arbitrator challenge, rather than asserting that it represents a final and universally settled rule without first confirming the outcome of any subsequent appeal.
Conclusion
The judgment’s central message is clear: the impartiality and independence of arbitrators are protected not only through substantive standards but also through mandatory procedural safeguards.
Where a challenge is submitted through the applicable statutory process, ignoring it and proceeding to issue an award may transform a procedural omission into a ground for annulment.
Precision remains essential. Annulment does not arise merely because a challenge was submitted. The validity and timing of the request, the tribunal’s response, and the effect of any procedural failure on the proceedings and the award must all be considered.
This article is provided for general informational purposes and does not constitute legal advice. Each arbitrator challenge and annulment action must be assessed in light of its facts, the applicable procedural rules, statutory deadlines, and any subsequent judicial developments.
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