International arbitration in Kuwait is still developing. Kuwait does not have a standalone comprehensive procedural arbitration law based on the UNCITRAL Model Law, nor adequate English-friendly arbitration facilities. Instead, arbitration provisions are spread around various laws – Islamic law, international law and institutional regulations. Arbitration in Kuwait is primarily governed by the Code of Civil and Commercial Procedure, Law No. 38 of 1980 (Chapter 12, Articles 173 to 188) (“Procedures Law”) and the Judicial Arbitration in Civil and Commercial Matter Law, Law No. 11 of 1995 as amended by Law No. 12 of 2013 (“Judicial Arbitration Law”). Neither law is based on the UNCITRAL Model Law, however, and both fail to make a clear distinction between international and domestic arbitration.
The legal framework related to arbitration in Kuwait is therefore in need of reform. This is somewhat surprising, considering a general trend followed by other States in the Gulf region, which have adopted pro-arbitration policies and have been continuously working on modernizing their arbitration laws and establishing new arbitration centers (see International Construction Arbitration in the Middle East). This is also surprising in light of Kuwait’s significant construction and infrastructure industry, especially considering “Kuwait Vision 2035”, a program announced by the Kuwaiti Government with the vision of transforming Kuwait into a financial and trade hub, regionally and internationally, and becoming more attractive to foreign investors. As Kuwait’s development accelerates and the construction market continues to grow, there is general consensus among practitioners and commentators that the Kuwaiti Government needs to take proactive measures to promote effective dispute resolution mechanisms in order to enhance the trust of foreign investors in Kuwait.
No Clear Distinction Between International and Domestic Arbitration
Article 182(4) of the Procedures Law merely provides that the “Arbitrator’s award shall be rendered in Kuwait, otherwise the prescribed rules applicable to the arbitrators’ awards in a foreign country shall be applied in that respect.”
Unfortunately, Kuwaiti law does not appear to make a clear distinction between domestic and international arbitration, neither under the Procedures Law nor under the Judicial Arbitration Act. It is considered, however, that any arbitration held outside of Kuwait is “foreign“, even if the applicable law is Kuwaiti law and the dispute is between Kuwaiti parties. This “foreign” arbitration is thus governed by the provisions relating to the enforcement of foreign judgments, as clarified below.
Arbitration Agreements and the Arbitrability of Disputes in Kuwait
Article 173(1) and (2) of the Procedures Law provides that the parties are free to submit their dispute to arbitration, provided that the contracting parties agree to do so in writing:
“Agreement may be made on arbitration in a specific dispute and on arbitration in all disputes arising from the implementation of a certain contract.
Arbitration may not be established, save in writing.”
The Procedures Law therefore distinguishes between “arbitration clauses” and “arbitration submission agreements”, recognizing the validity of arbitration clauses covering future disputes and granting such clauses the same effect as arbitration submission agreements. In case the parties fail to stipulate in their contract their choice of any other system of arbitration, the Judicial Arbitration Law applies by default and the parties are subject to the jurisdiction of the Arbitration Panel of the Court of Appeal, as explained below.
Article 173(3) of the Procedures Law further stipulates:
“Arbitration may not be held in the matters where a compromising conciliation may not be reached. Arbitration is deemed to be valid only when made by a competent person who shall have the capacity to dispose of the right under dispute.”
Commentators note that this provision must be construed in light of the general rule laid down by the Kuwaiti Civil Code that “[i]f the subject-matter of an obligation is contrary to the law, public policy or good morals, the contract is deemed void.” Commentators further note that this provision is complemented by another provision from Article 172 of the Civil Code stating that “[i]t is not possible to compromise in any matter relating to public policy, but one may compromise on the patrimonial rights issued therefrom”. There is also a general consensus that certain commercial matters are not arbitrable under Kuwaiti law, which include, primarily, (1) bankruptcy disputes; (2) trademark disputes; and (3) commercial representation matters.
In recent years, there were certain doubts as to the arbitrability of disputes arising out of distribution agreements under Kuwaiti law. These have now been settled by a landmark decision of the Kuwait Court of Cassation, in which the Court upheld an arbitration clause in distribution agreement as valid, excluding the jurisdiction of Kuwaiti courts (see Kuwait’s Court of Cassation Upholds Arbitration Clause in Distribution Agreement).
Arbitral Tribunals in Kuwait
Article 174(1) of the Procedures Law provides that the arbitrator may not be minor, “under attachment” or “deprived of his civil rights by the reason of any criminal punishment” or declared bankrupt. The Procedures Law does not determine any specific number of arbitrators, but does provide that their number must be odd in all cases (Article 174(2) Procedures Law). Article 174(2) also provides that the arbitrator shall be specified either in the arbitration agreement or later, in a separate agreement. If a party fails to make such an appointment or where both parties fail to agree on the appointment of the referee, domestic Kuwaiti courts have the power to appoint arbitrators where either party fails to make such appointment (Article 175, Procedures Law).
Under Kuwaiti law, an arbitrator must accept his or her appointment in writing, after which he or she may not resign without good cause or can be liable to the parties for damages (Article 178, Procedures Law), which may make certain practitioners think twice before agreeing to serve as an arbitrator with its seat in Kuwait.
The grounds for challenging an arbitrator are the same as the grounds for the disqualification of a judge under Kuwaiti law. The party seeking to challenge an arbitrator must file an application to that effect with the court which is seized of original jurisdiction over the dispute, within five days of his notification of the appointment or of obtaining knowledge of the reasons for a challenge, if these have become known only after the appointment (Article 178, Procedure Laws).
Arbitral Award in Kuwait
In Kuwait, in line with the Procedures Law and established court practice, the arbitral award shall be made in writing and must contain the following:
- A copy of the arbitration agreement (Article 183 of the Procedures Law);
- A summary of the parties allegations and supporting documents;
- The reasons for the award;
- The date of the award;
- The place of the award;
- The signature of all or a majority of arbitrators (if one arbitrator refuses to sign, the award is nevertheless considered valid if such refusal is mentioned in the award).
Pursuant to Article 183(2) of the Procedures Law, the arbitral award shall be made in Arabic unless otherwise agreed by the Parties, in which case an official translation shall be attached at the time of depositing it.
Judicial Arbitration Law
The Judicial Arbitration Law of 1995 (as amended in 2013 by Law No. 12) is another instrument governing arbitration in Kuwait. The Judicial Arbitration Law replaced Article 177 of the Procedures Law, which provided for the constitution by the Kuwait Ministry of Justice of one or several Arbitration Panels chaired by a judge and two merchants appointed as members. The Judicial Arbitration Law has several distinctive characteristics. First, it provides for a “mixed” arbitration, as the Arbitration Panel is composed of judges appointed by the State and arbitrators appointed by the parties. Second, it provides for mandatory jurisdiction over disputes concluded after the enforcement of the Judicial Arbitration Law, which include provisions concerning the settlement of possible disputes through arbitration, but fails to specify an arbitral body to which such disputes are to be submitted. Another category of disputes over which the Arbitration Panel has mandatory jurisdiction are disputes arising between Governmental entities (e.g. Ministries, public corporations and companies whose capital is fully owned by the State) or between all such institutions.
The Judicial Arbitration Law therefore provides for a specialized jurisdiction for the settlement of disputes between individuals and Kuwaiti Government administrations or ministries. This has been explained by the need to reduce the burden of the Kuwaiti judiciary since these disputes typically concern the issue of public funds. The Arbitration Panel only hears matters whose value does not exceed five hundred thousand Kuwait Dinars (KD 500,000), including financial conflicts arising from administrative contracts. These types of arbitration proceedings are entirely conducted in Arabic and are limited to matters of Kuwaiti law.
The Judicial Arbitration Law has been criticized for being drafted with purely domestic arbitration in mind, as it contains a number of provisions which are not arbitration friendly, and it continues to ignore the usual distinction between domestic and international arbitration.
Arbitration Institutions in Kuwait
Kuwait does not have a leading institutional arbitration body which would satisfy the needs of foreign parties and conduct procedures in an efficient and transparent manner or in the English language. The Kuwaiti Chamber of Commerce and Industry (“KCCI”) has made certain efforts to promote arbitration, for instance, by establishing Kuwaiti Commercial Arbitration Center (“KCAC”) in 1999, with the objective of supporting arbitration for commercial dispute resolution by providing a flexible and efficient arbitration procedure. Since then, the KCCI has played an active role in promoting and raising awareness of arbitration within Kuwait. The KCAC Rules provide that the UNCITRAL Arbitration Rules shall apply in the absence of provisions relating to a specific matter in the KCAC Rules or the Procedures Law (Article 7 of the KCAC Rules). Unfortunately, with limited resources for English parties and little support, the KCAC has been said to fail to adhere to international standards or fulfil the needs of foreign parties.
Recognition and Enforcement of Foreign Arbitral Awards in Kuwait
On the bright side, Kuwait has been a Party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) since 1978. Kuwait has entered into a standard reservation that it would apply the New York Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. If the reciprocity requirement is met, foreign arbitral awards are usually enforced in Kuwait, if the following conditions are met:
- the foreign award is granted in a matter which can be the subject of arbitration and is enforceable within the country where it was awarded;
- the foreign award is granted by a competent adjudicator based on the laws of the country it was awarded in;
- the parties are immediately summoned to appear in court and should be represented;
- the award is on a subject that is not against the laws of the country in which it has been awarded;
- the award should not contradict judgments that have already been made in Kuwaiti courts or violate Kuwaiti morality or public policy.
The relevant domestic legislation for the recognition and enforcement of foreign arbitral awards is, again, the Procedures Law, Article 199, which provides that foreign judgments will be considered valid and enforceable only if the foreign law in question provides for mutual recognition and enforcement.
Kuwait is also a party to several other regional conventions relevant for the recognition and enforcement of foreign arbitral awards, including:
- The Riyadh Convention on Judicial Cooperation 1983 – providing for the recognition and enforcement of foreign arbitral awards without reviewing the subject matter of the underlying dispute, provided that such judgments or arbitral awards do not violate public order, morality or the constitution of the State in which enforcement is being sought, or the overriding principles of Islamic law;
- The Arab League Convention on the Enforcement of Judgments 1952 which deals with the enforcement of judgments and arbitral awards in all Member States of the Arab League which have ratified the Convention, namely Egypt, Iraq, Jordan, Kuwait, Libya, Saudi Arabia, Syria and the United Arab Emirates;
- The Amman Convention on Commercial Arbitration 1987 – a regional agreement with membership open to all Arab States. The Amman Convention has been signed by all Arab countries except Egypt. It does not enjoy much popularity, however, one limitation being in Article 23 that all submissions and pleadings are to be in Arabic.
Investment Arbitration and Kuwait
Kuwait has signed a significant number of Bilateral Investment Treaties (“BIT’s”), some of which are not yet in force and some of which have been terminated (BIT’s with India, Moldova, Turkey, Pakistan, Morocco, Egypt and Iraq have been terminated). Kuwait is also a Party to a number of other international treaties with investment provisions, including several treaties signed by the Gulf Cooperation Council (“GCC”), of which Kuwait is a Member State:
- GCC-Singapore FTA (in force);
- GCC-India Framework Agreement (signed, not in force);
- EC-GCC Cooperation Agreement (in force);
- GCC Economic Agreement (in force);
- GCC-United States Framework Agreement (2012) (signed, not in force);
- Kuwait-US TIFA (signed, not in force);
- OIC Investment Agreement (see “Arbitration under the OIC Investment Agreement”) (in force);
- Arab Investment Agreement (1980);
- Arab League Investment Agreement (1970).
Kuwait is also a Party to the International Centre for Settlement of Investment Disputes (“ICSID”) Convention since 1979. Kuwait is currently defending itself in several ICSID arbitrations and one annulment proceeding, notably:
- Bachar Kiwan v. State of Kuwait (ICSID Case No. ARB 20/53), in a dispute brought under the France-Kuwait BIT, by a French national, related to media services (ARB/20/53) (Aceris Law is currently representing the Claimant in this dispute);
- Ayat Nizar Raja Sumrain and others v. State of Kuwait (ICSID Case No. ARB/19/20);
- Almasryia for Operating & Maintaining Touristic Construction Co. L.L.C (ICSID Case No. ARB/18/2), in which the Arbitral Tribunal rendered the Final Award on 1 November 2019, however, Claimant commenced annulment proceedings, which are currently pending;
- Rizzani de Eccher S.p.A., Obrascón Huarte Lain S.A. and Trevi S.p.A (ICSID Case No. 17/8).
 Dongchuan Luo , Jalal El Ahdab, “Arbitration in Kuwait“, Arbitration with the Arab Countries, (Kluwer International 2011), pp. 305-336.
 Dongchuan Luo , Jalal El Ahdab, “Arbitration in Kuwait“, Arbitration with the Arab Countries, (Kluwer International 2011), pp. 315-316.
 Dongchuan Luo , Jalal El Ahdab, “Arbitration in Kuwait“, Arbitration with the Arab Countries, (Kluwer International 2011), pp. 305-336.
 Dongchuan Luo , Jalal El Ahdab, “Arbitration in Kuwait“, Arbitration with the Arab Countries, (Kluwer International 2011), p. 328.
 See https://www.newyorkconvention.org/countries
 S. A. Badah, “Rules Relevant to the Recognition and Enforcement of Foreign Arbitral Awards in Kuwait”, (Asian International Arbitration Journal, 2015, Volume 11, Issue 2) p. 147.
 See https://investmentpolicy.unctad.org/international-investment-agreements/countries/112/kuwait
 GCC –regional intergovernmental organization – consisting of the states of Persian Gulf (Bahrein, Kuwait, Oman, Qatar, Saudi Arabia and the UAE)