With the growth of commercial activities and the increasing number of contracts between individuals and entities within the Kingdom of Saudi Arabia, the minute details in contracts have become of great interest, and one of the most prominent of these is the issue of determining the court with territorial jurisdiction in the event of a dispute between the two parties. This issue opens an important door for legal discussion: Is it legally permissible for the two parties to agree on determining the court with territorial jurisdiction? That is, to stipulate in the contract that the court shall be in a specific region or city – even if it is not initially competent according to the law
The Saudi system has clearly regulated this case through the executive regulations of the Sharia Law of Procedures, specifically Article (36), Paragraph (3), which stipulates the following: (If there is a condition between the two parties regarding the location of the lawsuit, it shall be considered in the specified country unless they agree otherwise). This means that the will of the parties has considerable weight, as long as there is a clear written agreement that does not conflict with the type of lawsuit and fulfills the rest of the regulatory requirements
In the field of arbitration, the Saudi arbitration system has provided a wider margin of flexibility, as it explicitly allows the parties to choose the place of arbitration, whether inside or outside the Kingdom, as stipulated in Article (25) of the system. This is consistent with international standards, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and gives the contracting parties greater confidence in the Saudi business environment
This regulation reflects the development of the judicial systems in the Kingdom and their orientation towards greater facilitation and flexibility, in order to achieve the interest of the contracting parties and enhance the stability of the contractual relationship, provided that these conditions are written clearly and based on the explicit will of the parties, without ambiguity or confusion
