New Arbitration Law... Will it change the rules of corporate dispute resolution in Kuwait?

The efficiency of the legal business environment is no longer measured solely by the quality of legislation governing investment and contracts, but also by its ability to resolve commercial disputes within a reasonable time, through clear procedures, and via enforceable rulings. From this perspective, the importance of Decree-Law No. 120 of 2026, issuing the Arbitration Law, published in the Official Gazette (Kuwait Al-Yawm) on October 18, 2026, becomes evident. This decree reorganized the arbitration system in Kuwait under an independent statute comprising 108 articles, whereas its previous provisions were scattered between the Civil and Commercial Procedures Law and the Judicial Arbitration Law No. 11 of 1995.

However, the significance of the law lies not in the number of its articles, but in its answer to the most critical practical question for companies and investors: Has Kuwait established a faster, clearer, and more effective pathway for resolving commercial disputes?

The answer does not rest on a single provision; rather, it requires a comprehensive reading of the law as a system that begins with the agreement to arbitrate, proceeds through the formation of the tribunal, interim measures, digital procedures, and concludes with the award, annulment, and enforcement.

The new law repealed the previous arbitration provisions contained in the Civil Procedures Law, as well as Law No. 11 of 1995, while maintaining the Civil Procedures Law as general supplementary legislation for matters not addressed by specific provisions in the new law, provided they do not conflict with its provisions.

This transformation is not merely a rearrangement or renumbering of texts; it aims to subject the entire arbitration lifecycle—from the agreement to arbitrate to the enforcement of the award—to a single legislative framework that reduces overlap among various systems and procedures. The update is also reflected in the form of the arbitration agreement itself. Article 5 expanded the concept of "writing" to include electronic correspondence as a means of proving the agreement, while Article 8 affirmed the independence of the arbitration agreement from the main contract, stipulating that the nullity, termination, or rescission of the contract does not, by itself, invalidate the arbitration agreement if it is valid in its own right.

Here, it is necessary to distinguish between creating a new rule and codifying an existing one with greater clarity. While the independence of the arbitration clause and the flexibility in proving it are well-known principles in modern arbitration laws, their importance in the new law lies in their explicit integration into a unified legislative framework.

The question remains: Will arbitration actually become faster? This may be the most important question for the business sector. The law has set specific timeframes for several procedures that could otherwise cause bottlenecks in litigation. For instance, Article 15 regulates the procedures for selecting arbitrators and ruling on appointment requests with fixed deadlines. Furthermore, a request to challenge an arbitrator does not, by itself, suspend the arbitration proceedings, according to the organization outlined in Article 18. Article 39 also permitted holding hearings and deliberations via modern communication means and exchanging memoranda and documents electronically.

Additionally, in the absence of an agreement by the parties to a different timeframe, the law stipulates that the award must be issued within twelve months from the completion of the tribunal’s formation, with the possibility of extension under prescribed conditions. It also set specific deadlines for filing annulment actions and obliged the Court of Appeal to rule on them within a period not exceeding six months. However, these deadlines do not mean that every arbitration dispute will automatically become fast. The actual duration remains linked to the nature and complexity of the dispute, the volume of documents, the required technical expertise, file management efficiency, and the conduct of the parties. Consequently, the law does not guarantee speed in every arbitration, but it provides legislative tools to minimize procedural delays.

Among the most notable innovations of the law are the provisions regulating the appointment of emergency arbitrators in Articles 41 to 45. The importance of this mechanism is evident in disputes where the legal position cannot wait for the full constitution of the arbitral tribunal. In the absence of an agreed-upon mechanism, the law allows for the appointment of such an arbitrator by order on petition within five days, with the arbitrator required to issue a decision within fifteen days, subject to a justified extension not exceeding ten days. Furthermore, the law provides for an appeal against the decision subject to swift judicial review. This regulatory framework addresses a significant practical gap between the need for urgent protection and the completion of the constitution of the tribunal that will rule on the merits of the dispute.

Obtaining an arbitral award does not mark the end of the dispute for the creditor company. The true economic value of the award begins when it becomes enforceable and the awarded right is collected. The law distinguishes between the res judicata effect of the award and the stage of its compulsory enforcement. Article 68 grants arbitral awards the force of res judicata, while subsequent articles regulate the enforcement order and the associated judicial review.

According to Article 70, the controls include verifying that the award does not conflict with a prior judgment on the same subject matter, that it does not violate public policy, and that the requirements for notification and the time limits for filing an annulment action have been met.

Conversely, the law establishes annulment as a specific route for reviewing the award, with defined grounds, controls, and time limits. As a general rule, it stipulates that filing an annulment action does not automatically stay enforcement. This is a point of significant practical importance, as it limits the ability to use the mere filing of an annulment action as a means to delay the effects of the award without justifiable grounds. However, Article 79 is the provision most likely to provoke serious legal debate in application. The law provides that if the Court of Appeal annuls an arbitral award, in whole or in part, it shall, subject to Article 79, address the merits of the dispute and rule on it. This approach has a clear practical justification: it prevents the parties from being returned to square one after expending time and costs in an arbitral proceeding that ended with the annulment of the award. Nevertheless, this provision raises a highly significant legal question:

If the arbitration agreement remains valid and effective despite the annulment of the award, to what extent does the transfer of jurisdiction over the merits of the dispute to the ordinary courts align with the original intent of the parties to choose arbitration? Furthermore, regarding any other related claims arising from the same dispute, should the parties return to the starting point and initiate arbitration proceedings, as that was the basis of their agreement, or should the matter be handled by the court, given that a judicial ruling has been issued by the Court of Appeal?

This leads to the issue of what the parties will claim and the judge’s reasoning and expansion regarding the annulment of the arbitration clause itself, or the annulment of the arbitration proceedings that conferred jurisdiction on the Court of Appeal to hear the dispute. Here, the importance of judicial application will become apparent in achieving a balance between considerations of procedural economy on the one hand, and respect for party autonomy and the contractual nature of arbitration on the other.

In my view, Article 79 will be among the most important provisions through which the judiciary will delineate the boundaries of the new relationship between the independence of arbitration and the supportive jurisdiction of the courts. The new law places Kuwait within the Gulf trend toward building independent arbitration legislation, a approach adopted by the United Arab Emirates in Federal Law No. 6 of 2018 and its amendments, and by Saudi Arabia in the Arbitration Law issued by Royal Decree No. M/34 of 1433 AH (corresponding to 2012). However, consensus on the general framework does not imply identical systems. Comparative analysis reveals important legal differences regarding the scope of judicial intervention and the handling of certain stages of arbitral proceedings.

In terms of urgent measures, the Kuwaiti legislator moved to establish a precise regulatory framework for interim and conservatory measures prior to the formation of the arbitral tribunal, setting specific deadlines for appointment and the issuance of the award. This regulation stands out as one of the distinctive features of the new law. Furthermore, the Kuwaiti law grants broad scope for electronic procedures, including hearings and the exchange of memoranda and documents using modern technical means.

The most nuanced difference emerges regarding the annulment of arbitral awards. Article 79 of the Kuwaiti Law, in conjunction with Article 78, directs the Court of Appeal to address the merits of the dispute when ruling on the annulment, whether in whole or in part. This approach grants the Kuwaiti judiciary a broader substantive role following annulment, contrasting with the trend observed in the Saudi and Emirati systems, where judicial review remains linked to annulment and enforcement without adopting the Kuwaiti formula of mandatory adjudication on the merits.

Another distinct feature appears in contracts with state entities. The Kuwaiti Law establishes a detailed regulatory framework for the necessary approvals required to agree on arbitration, including seeking the opinion of the Fatwa and Legislation Department, and obtaining approvals specified in Article 3 according to the nature of the contract and the relevant entity. This makes verifying compliance with legal approvals an essential part of ensuring the validity of the arbitration clause from the contracting stage, rather than treating it merely as a procedural issue that arises upon the emergence of a dispute.

Consequently, the comparison does not reveal an absolute superiority of one system over another, but rather highlights differences in legislative philosophy regarding the relationship between the parties’ intent and the independence of the arbitral process on one hand, and the role of the state and judiciary in supervision and support on the other. The Kuwaiti Law appears more detailed in certain regulatory and procedural instruments, while the success of this choice remains dependent on the extent to which implementation can preserve the speed and flexibility of arbitration without transforming regulatory or judicial oversight into an additional procedural layer.

For companies dealing with government entities, the law imposes a higher level of contractual diligence. Article 3 mandates, for arbitration related to state entity contracts, seeking the opinion of the Fatwa and Legislation Department. It links certain contracts to the approval of the Council of Ministers, others to the approval of the competent minister according to established rules, and subjects contracts related to the Kuwait Petroleum Corporation and its owned companies to a special regulation concerning the Supreme Petroleum Council.

Therefore, the required approvals should not be viewed as marginal administrative matters that can be addressed upon the occurrence of a dispute, but rather as an integral part of the legal structure of the arbitration clause that must be verified during the negotiation and signing stages. A flaw in the construction of the arbitration clause may be more dangerous than a disagreement over the contract itself, as it may shift the dispute from discussing the merits of the right to an initial conflict regarding the validity of the dispute resolution mechanism.

The law has adopted a clear path toward digitalization in arbitral procedures. Article 39 grants legal effect to procedures conducted via modern technical means equivalent to that of in-person procedures. The law also recognizes electronic communications as proof of the arbitration agreement and addresses electronic signatures on awards.

Conversely, Article 40 mandated the confidentiality of proceedings. The law links the disclosure of arbitration secrets or the publication of the award, when done in violation of its provisions, to specific penalties. This highlights an important legislative equation: the expanded use of technology in managing disputes is accompanied by stricter protection of the confidentiality of information exchanged during the process. Furthermore, Article 30 addresses the disclosure of sources of funding for arbitration costs, thereby incorporating funding issues and related conflict-of-interest considerations into the new regulatory framework.

In summary, the new Arbitration Law is not merely a reorganization of dispute resolution procedures; it reflects a shift toward building a clearer and more flexible legal environment for handling commercial and investment disputes. The law provides important tools ranging from digitalization and interim measures to the regulation of annulment and enforcement procedures. These elements make arbitration a serious option to consider when drafting major contracts and investments. For investors, confidence in the market relies not only on profit opportunities but also on the clarity of the rules governing relationships, knowledge of the path to follow when disputes arise, and the ability to protect rights and obtain enforceable awards.

Thus, the deeper value of the new legislation lies in making dispute management an integral part of investment planning, rather than treating it as a crisis that emerges only after a dispute occurs. This does not mean that arbitration is the best option for every contract, nor does the enactment of the law alone eliminate all implementation challenges. Rather, it means that companies and investors now have a more comprehensive legislative framework that allows them, provided they draft their agreements well and choose appropriate arbitration mechanisms, to build their commercial relationships with greater clarity and predictability. If these provisions are supported by effective judicial application, efficient institutional arbitration centers, and specialized professional practice, the opportunity will be ripe to enhance Kuwait’s reputation as a hub for resolving commercial and investment disputes.

Confident investment begins not only with project feasibility studies but also with trust in the legal system that protects it. The new law opens the door for companies and investors to reconsider arbitration, not merely as an alternative route when a dispute arises, but as an integral part of deal structuring, risk management, and ensuring continuity from day one. When high-quality legislation meets efficient implementation, arbitration transforms from merely a dispute resolution mechanism into one of the key pillars of confidence in the investment environment. Here lies Kuwait’s real opportunity: to make the efficiency of commercial justice an additional reason for investment in the country.

In response to the question of whether arbitration has become less costly, Dr. Fayez Al-Fadli emphasized that the precise professional answer is that it is not necessarily so. Arbitration may involve arbitrators’ fees, expert fees, lawyers’ fees, and institutional arbitration charges. The enactment of a new law, by itself, does not guarantee that arbitration has become less expensive than litigation. However, the economic equation extends beyond direct fees.

If the new timelines, digitalization, urgent measures, and reduced opportunities for delay succeed in shortening the duration of disputes and mitigating their impact on business, this could positively affect the total economic cost borne by companies. Therefore, the more accurate question is not which is cheaper, litigation or arbitration, but which path achieves the best balance between cost, duration, specialized expertise, confidentiality, and enforceability in a specific dispute.

Al-Fadli stated: “The novelty of the law should not lead to the automatic inclusion of an arbitration clause in every contract. Sound legal choice begins with a thorough examination of the transaction itself: its value, the nature of the parties involved, the location of the assets subject to enforcement, the need for confidentiality and technical expertise, the number of parties, the applicable law, the language, and the potential need for urgent interim relief. In major cross-border commercial contracts, drafting an arbitration clause becomes part of transaction risk management, rather than merely a standard boilerplate provision appended at the end. In this context, the role of legal counsel shifts from resolving disputes after they arise to designing an appropriate dispute resolution mechanism from the contracting stage, tailored to the nature of the transaction and the interests of the parties.”