"Economic Circuits".. Specialized Courts to Enhance Investor Confidence and Support the Kuwaiti Economy

In a landmark legislative move embodying the State of Kuwait’s direction toward developing its economic justice system and keeping pace with modern financial and technological developments, the Law on the Establishment of Economic Courts was issued last August, with its implementation set to begin in early October 2027. The law aims to meet the needs of the business sector by establishing a more specialized and expedited judiciary for resolving commercial and financial disputes.

The law targets the creation of a specialized judiciary across all three levels of litigation, accelerating dispute resolution, developing enforcement procedures, and expanding e-litigation, thereby enhancing contract enforcement efficiency and raising confidence in the state’s legal and investment environment.

The law establishes specialized economic courts at the Court of First Instance, the Court of Appeal, and the Court of Cassation, with jurisdiction over the economic, commercial, and investment disputes specified by the law. These courts are supported by a specialized technical office to assist their work.

The law aims to expedite case resolution through a case preparation office responsible for completing documentation before cases are presented to the court, alongside regulating procedural timelines and appeals to minimize the duration of disputes.

The law introduces a mediation and settlement pathway prior to judicial consideration of disputes, granting settlement agreements the force of an executive instrument, thereby enabling faster and less costly resolution of certain disputes.

Digital transformation represents one of the law’s core pillars, through the adoption of an electronic platform for litigation and enforcement procedures, an electronic case file, and a database of published judgments and judicial precedents.

The law places special emphasis on enforcing judgments by establishing a specialized enforcement administration, electronically linking it with relevant entities, developing attachment procedures, and adopting electronic auctions to ensure swift and effective enforcement.

A number of specialists, academics, and economists stated in separate interviews with the Kuwait News Agency (KUNA) on Sunday that this step will enhance confidence in the investment environment, reduce costs and risks, and accelerate the return of idle funds to the economic cycle, thereby supporting the country’s competitiveness and consolidating its status as a regional financial and commercial hub, in line with the objectives of the “New Kuwait 2035” vision.

The Director General of the Kuwait Chamber of Commerce and Industry, Rabah Al-Rabah, told KUNA that developing the economic justice system would contribute to strengthening the business and investment environment in the country, noting that the speed of dispute resolution and the effectiveness of judgment enforcement are key factors in boosting investor confidence.

Al-Rabah explained that prolonged commercial disputes can disrupt projects and contracts, increase burdens on companies, especially small and medium-sized enterprises, and affect their ability to plan and invest.

He highlighted that the law’s significance lies not only in issuing judgments but also in regulating the enforcement phase, leveraging specialized technical expertise, and adopting electronic means, thereby contributing to building a more specialized, organized, and predictable judicial system.

He predicted that the law would help reduce risks and costs associated with commercial disputes and improve the efficiency of handling them, positively impacting economic activity and the business environment. He emphasized the importance of accompanying the law’s implementation with clear and effective executive regulations and procedures to ensure its objectives are achieved.

Al-Rabah noted that developing a supportive legal and judicial environment for business is a key element in enhancing the competitiveness of the national economy and improving Kuwait’s investment attractiveness, consistent with the objectives of the “New Kuwait 2035” vision.

For his part, Muhammad Al-Jou’an, Deputy Chief Executive Officer of the Investment Affairs Company and Secretary-General of the Kuwait Economic Association, told (KUNA) that the development of economic courts would have a significant positive impact on enhancing Kuwait’s status as a commercial and financial hub. He clarified that the importance of this step extends beyond expediting litigation procedures to improving the quality of judgments and strengthening the judiciary’s capacity to understand the nature of modern financial and economic instruments and transactions.

Al-Jou’an added that global financial and economic instruments are undergoing rapid development, while commercial legislation is generally rigid in nature. This makes a thorough understanding of the technical details of modern transactions and financial instruments crucial when addressing economic and commercial disputes.

He noted that some Kuwaiti companies previously resorted to litigation in Gulf countries’ courts, notably the Dubai International Financial Centre (DIFC) courts, due to the presence of specialized judicial bodies capable of grasping the nature of the financial instruments and transactions at issue. He considered that establishing specialized economic courts in Kuwait would enhance the confidence of companies and investors in the local judicial system.

He emphasized the necessity of having a specialized and independent economic court, rather than merely creating a department within existing judicial circuits, so that its judges can devote themselves exclusively to hearing economic and commercial cases.

He stressed the importance of subjecting the judges working in these courts to continuous training and qualification programs to keep pace with developments in financial and commercial instruments, as well as fraud methods and financial crimes such as money laundering. This would contribute to building specialized judicial expertise that is regularly updated.

For his part, Dr. Meshal Jawhar Hayat, Associate Professor in the Private Law Department at the College of Law, Kuwait University, told (KUNA) that the law establishing economic courts represents a significant shift in the mechanism for resolving economic disputes. Previously, such cases were heard within civil or commercial circuits. The new law has created a specialized judicial environment and a faster, more efficient pathway for adjudication.

Hayat explained that the establishment of a “case preparation office” is one of the most prominent tools contributing to shortening litigation duration. This office is responsible for reviewing documents, completing deficiencies, notifying the parties, and facilitating the exchange of memoranda before the case is presented to the judge. This reduces procedural adjournments and allows the judge to receive a complete file ready for adjudication.

He emphasized the importance of employing economic and investment experts within the technical office of the economic courts. This would provide the judge with technical and financial opinions, reduce the time that might be spent referring cases to external experts, and enhance the technical accuracy of judgments.

He pointed out that providing an organized pre-litigation amicable settlement pathway gives parties the opportunity to resolve disputes without engaging in prolonged litigation. This helps preserve commercial relationships, reduces the number of cases, and alleviates pressure on the courts.

Hayat noted that adopting electronic litigation as the standard in procedures would reduce paper transactions and enable parties to file and monitor cases remotely. This would improve system efficiency and save time and costs, while affirming that speed in adjudication does not compromise the right to defense.

He stressed that justice is not complete merely with the issuance of a judgment, but also with its swift enforcement. This necessitates developing enforcement mechanisms and establishing electronic links with relevant authorities to ensure that rights reach their rightful owners.

For his part, Osama Al-Falah, Assistant Dean of the College of Administrative Sciences at the Gulf University for Science and Technology, told KUNA that the establishment of specialized judicial circuits for economic disputes reflects the understanding that the quality of adjudication in commercial cases is a fundamental part of economic infrastructure, not merely a legal procedure.

Al-Falah explained that specialization leads to the accumulation of judicial expertise in the nature of complex financial and commercial transactions, which directly impacts the quality and speed of rulings. He noted that the speed of dispute resolution is one of the most important factors influencing international competitiveness indicators and the business environment.

He pointed out that procedural clarity and the efficiency of commercial courts are among the key criteria examined by foreign investors, often preceding the consideration of tax incentives or exemptions. He added that the absence of legal certainty translates directly into a “risk premium” added by investors to their decisions, potentially leading them to choose a more transparent competing market.

He emphasized that the law places Kuwait on a path aligned with specialized judicial reforms in economic disputes implemented by other regional financial centers, confirming that its effective implementation, coupled with actual efficiency, would enhance Kuwait’s competitiveness as a financial and commercial destination compared to other Gulf countries.

He noted that developing the economic litigation system could go beyond being a judicial reform to become an investment attraction in its own right, provided that economic justice is characterized by speed, clarity, and predictability, thereby becoming one of the advantages of the Kuwaiti market alongside its infrastructure and geographical location.

For his part, Dr. Sadiq Al-Bassam, former Dean of the College of Commerce, Economics, and Political Science at Kuwait University, told KUNA that amending the law represents an infrastructure reform for the market, not merely a development of the judicial system, given the role of specialized economic courts in reducing transaction risks and improving resource allocation efficiency.

Al-Bassam clarified that one of the most significant expected economic effects is the reduction of what he termed “legal friction costs.” A company waiting a long time to collect its dues bears not only the costs of lawyers, experts, and procedures but also loses the opportunity to use its funds for investment, expansion, or operations.

He explained that capital tied up in a legal dispute becomes less productive or unusable until the dispute is resolved and the judgment enforced. He added that shortening the litigation period and accelerating enforcement would return these funds to economic activity in a shorter time, thereby contributing to an increase in the velocity of capital.

He stressed that actual implementation represents the true test of the law’s success, calling for the establishment of clear performance indicators that include the average duration of case resolution, the time required for judgment enforcement, the volume of accumulated cases, settlement rates, and litigant satisfaction.

He indicated that the success of the initiative should not be measured by the number of circuits established, but rather by the time saved for investors and companies, the volume of capital returned to the economic cycle, and the extent to which the cost and risks of entering the Kuwaiti market have decreased.