Issuance of Arbitration Law Decree: Establishes Integrated National System to Save Time and Protect Public Funds
The Arbitration Law Decree has been issued in Kuwait, establishing an integrated system that saves time and protects public funds.
Translated by Qiyas from الأنباء — Original source
Decree-Law No. 120 of 2026 concerning the issuance of the Arbitration Law has been promulgated. This law establishes an integrated national arbitration system that expedites proceedings through fixed timelines and simplified procedural orders, safeguards public funds by imposing strict controls on the arbitration of contracts concluded by state entities, and provides arbitrators with limited liability while offering investors restricted grounds for appeal and swift resolution. It also regulates arbitration institutions under prudent oversight, ensuring that arbitration in the State of Kuwait serves as a specialized, efficient, and reliable judicial mechanism, contributing to the country’s economic development.
The explanatory memorandum for the aforementioned decree-law, which comprises 108 articles distributed across 15 chapters, stated that the state’s continued implementation of its developmental policies aimed at transforming Kuwait into an attractive financial and commercial investment hub requires a modern arbitration environment that inspires confidence among market participants. It added that this law was drafted as a comprehensive, standalone arbitration legislation that draws upon the best stable international systems while preserving the distinctiveness of the Kuwaiti legal system.
The memorandum highlighted that recent contracts have witnessed profound transformations in arbitration systems and their applications, with countries successively enacting modern, independent arbitration laws. Arbitration centers have emerged, attracting major disputes and associated legal and financial services, whereas the Kuwaiti system remained governed by provisions no longer adequate to meet contemporary demands.
It noted that the accompanying law was built on several foundations, including subjecting arbitration in contracts concluded by state entities to controls that safeguard public funds without closing the door to arbitration for them. It also introduced a system for interim and conservatory measures with a title aligned with national procedural terminology, subjected arbitration centers to a licensing and oversight system managed by a specialized department within the Ministry of Justice (which maintains registers for arbitrators and centers), and incorporated judicial arbitration into this law, having previously been governed by separate legislation, thereby unifying the reference framework for arbitration in the state and keeping pace with modern technological means in all arbitration proceedings.
According to the explanatory memorandum, the law included necessary definitions to ensure consistent application and distinguished between free arbitration, which is organized by the parties themselves without the supervision of an arbitration institution, and institutional arbitration, which is administered by arbitration centers according to their rules. This distinction carries specific legal effects in several provisions.
Furthermore, the law defined the scope of its application based on a dual criterion: a territorial criterion, under which all arbitrations seated in the State of Kuwait are subject to its provisions, and a consensual criterion, which allows parties to an arbitration conducted abroad to agree to be bound by its provisions. This is without prejudice to effective international conventions in the state and mandatory legal provisions. One article addressed a highly significant issue: arbitration in disputes arising from contracts concluded by state entities, establishing a graduated system that balances the encouragement of investment with the protection of public funds.
Chapter Four of the law addressed arbitration procedures in Articles 22 to 40. Article 22 obliged the arbitral tribunal to respect fundamental principles of litigation, adhere to public order, and manage proceedings efficiently without delay or unnecessary costs, while treating parties equally. Article 23 granted parties the freedom to choose procedures, including referral to the rules of any arbitration center within or outside Kuwait; in the absence of agreement, the tribunal would select what it deemed appropriate within the framework of the law’s provisions.
The memorandum indicated that Article 14 of the Law stipulates penalties in Articles 100 to 105, making this Law one of the earliest arbitration laws in the region to include a comprehensive penal chapter. This chapter is based on a clear premise: criminal protection is established solely to safeguard the regulatory framework of arbitration, public confidence in it, and the confidentiality of its proceedings, without extending in any way to the judicial work of arbitrators, whose liability remains purely civil in cases of fraud or gross negligence. This approach avoids undermining the standing of the host state as an arbitration venue, as comparative experience has demonstrated that criminalizing arbitrators’ work can harm that standing.
The Law concluded with Article 15, which contained the final provisions in Articles 106 to 108. It assigned the competent administration for arbitration at the Ministry of Justice the responsibility for overseeing both free and institutional arbitration, specifically charging it with establishing registers for arbitrators and registers for arbitration centers, as well as carrying out other duties assigned by the Law and implementing decisions issued by the Minister of Justice. A ministerial decision shall be issued to regulate these registers, specifying the rules, conditions, and fees for registration and deletion. Thus, the State’s tools for supervising the arbitration system are fully established, ensuring oversight that regulates rather than restricts, and controls rather than obstructs.
