The Current Arbitration Law Scene in Kuwait

Kuwait should reconsider its arbitration laws in order to fall in line with the rest of the initiatives adopted by its neighbouring GCC member states. This will enhance Kuwait’s attractiveness for foreign direct investment.

The Current Arbitration Law Scene in Kuwait

Article 173 of the Procedures Law confers the parties the power to submit their dispute to any arbitral procedure, provided that the contracting parties agree to it in writing. If parties fail to express in their contract their choice of any other system of arbitration, the Judicial Arbitration Law shall apply by default and the contracting parties will be subject to the jurisdiction of the arbitration board of the Court of Appeal

The Judicial Arbitration Law applies to three distinct procedures. First, it allows an arbitral tribunal to exercise jurisdiction over disputes referred to it by the free will of the parties. The consent of the parties may be either in the form of a clause or subsequent agreement, to submit such disputes to the tribunal’s jurisdiction.

The second category mandatorily enforces jurisdiction over disputes concluded after the enforcement of the Judicial Arbitration Law, which includes provisions concerning the settlement of possible disputes through arbitration, but neglected to stipulate an arbitral body to which such disputes are to be submitted.

The appointment of the members of a tribunal under ‘Optional Arbitration’ enables parties to exercise the greatest level of autonomy.

The third category, falling under mandatory arbitral jurisdiction, are disputes arising between Governmental bodies such as Ministries, Public Corporations and the Companies whose capital is fully owned by the State-Government or between all such institutions. This has been rationalised by the need to reduce the burden on the judiciary since these disputes typically concern the issue of public funds. In addition, the arbitration board will only hear matters whose value does not exceed five hundred thousand Kuwait Dinars (KD 500,000), including those financial conflicts arising from administrative contracts.

The appointment of the members of a tribunal under ‘Optional Arbitration’ enables parties to exercise the greatest level of autonomy. A tribunal can be constituted in three ways: a) by direct nomination, b) by referring such a nomination to a third designated person such as an arbitral institution, c) the parties can also agree to refer their dispute to the arbitration board established in Kuwaiti courts in accordance with the Judicial Arbitration Law. In the event that the international parties subject themselves before the arbitration board of Kuwait, the parties should first have knowledge of the relevant provisions existing under Procedures Law.

Providing for a fixed number of arbitrators not only produces an unbalanced formation of the arbitral panel but it also fails to account for multi-party disputes.

In the case that the parties refer the dispute to the arbitration board, the construction of the arbitral panel under Judicial Arbitration Law comprises of three male judges appointed by the Supreme Judiciary Council and two arbitrators, one of whom is selected by each of the litigants. Although some commentators argue that this hybrid system saves the parties the effort of having to go through the normal troubles usually encountered when selecting a third arbitrator, it also ensures that the judicial element of this formation will always hold the majority.

In fact, the position of the presiding arbitrator belongs to a judge.

Although the Judicial Arbitration Law prohibits the publication of an arbitral award, there is no express statutory provision for confidentiality.

Providing for a fixed number of arbitrators not only produces an unbalanced formation of the arbitral panel but it also fails to account for multi-party disputes. For instance, if one party were to consist of several individuals (e.g. a group of companies), the restriction imposed on the nomination of a single arbitrator per side wrongly assumes that persons forming one party of the dispute all share the same interest. What is more, the Judicial Arbitration Law stipulates that the administrative secretary must be a staff member of the Court of Appeal and the hearing should take place at the Court of Appeal, unless the presiding arbitrator (a member of the judiciary) decides otherwise. Also, the Judicial Arbitration Law restrains the parties to opt for a procedure other than that applied before state courts; to refer the dispute to arbitrators chosen by the parties, and to decide on a place of arbitration isolated geographically from the local courts.

Although the Judicial Arbitration Law prohibits the publication of an arbitral award, there is no express statutory provision for confidentiality. According to the Judicial Arbitration provisions, the arbitral award (in whole or in part) shall not be published without securing the consent of the two disputing parties (Article 7). The Explanatory Memorandum of the Judicial Arbitration Law clarified that this is to be done in appreciation of the disputants’ privacy. However, this provision challenges the wording of the first paragraph of the same article, which provides that the award shall be pronounced in an open session.

Areej Abdel Rahman Hamada

Kuwait – Kuwait – ALsanee Tower – Sharq- Area 8 – st. 154 – 11th floor

0096599650888

areejhamadah.law@gmail.com

Areej is a Kuwaiti Lawyer with 20 years of experience in the field of commercial, civil, administrative labour law. She has many voluntary social activities on record. She seeks to break the glass ceiling in the male-dominated legal profession and enhance the legal role of women by changing the culture of the legal society.

After working as a lawyer for the Ahli United Bank for 13 years, receiving high appreciation from the leadership of the bank where she was selected as the ideal employee in the bank and was honoured several times, Areej decided to move towards the government sector for a full year, but her passion for the legal profession compelled her to change profession. She received her legal training in four law offices over four years and in 2017, she established her own office under the name of Legal Challenges Group. In 2019, the Legal Challenges Magazine was established to be a part of the Law Office, an international magazine specialising in the legal and economic field.

With an impressive background and zealous nature, Areej was able to win many court rulings as the first precedent before Kuwaiti Courts. Aspiring to conquer the international trade, cross-border investment and international contract law, Areej has provided many solutions, especially on a pro-bono basis and by conducting several studies on economic law, in addition to many initiatives that contributed to the development and progress in this area.

She was honoured by the Jahra Governorate in Kuwait with a group of Kuwaiti women lawyers as the first honouring of legal women in the history of the State of Kuwait.