The Legislative Background of Banning the Use of Local Agents
A legal analysis clarifying the evolution of Kuwaiti legislation that allowed foreign companies to contract directly and abolished the requirement for a local agent in public tenders.
Translated by Qiyas from القبس — Original source
Continuing from our previous article regarding the latest amendment to Article 31 of the Public Tenders Law, we found that understanding the scope of the newly established ban on the use of a local agent or commission agent requires referring to the legislative amendments previously issued in 2024 and the objectives the legislator sought to achieve through them.
First: Legal Regulation Before the 2024 Amendment
The Kuwaiti Commercial Law previously imposed restrictions on foreign companies conducting business in Kuwait, including a requirement for a local agent. Additionally, Public Tenders Law No. 49 of 2016 generally required that the bidder be Kuwaiti, whether an individual or a company, while allowing foreign companies to participate in accordance with the provisions specified by the law.
Legislative Amendments Issued in 2024
Law No. 1 of 2024 included two interrelated amendments:
1. Amendment to Article 24 of the Commercial Law: It permitted a foreign company to establish a branch in Kuwait and conduct its business without the need for a local agent, as an exception to the restriction set forth in Article 23(1) of the same law, which concerns non-Kuwaitis conducting trade in Kuwait.
2. Amendment to Article 31 of the Public Tenders Law: It abolished the requirement that the bidder be Kuwaiti. Furthermore, it exempted foreign bidders from the requirement to be registered in the Commercial Register and from the provisions of Article 23 of the Commercial Law, in accordance with the rules specified by the Executive Regulation.
The explanatory memorandum for Law No. 1 of 2024 clarified that the previous requirement for foreign companies to have a local agent was based on considerations related to ensuring the proper execution of contracts and protecting the national economy. However, these considerations no longer align with the trend toward opening markets and attracting foreign investment. It also indicated that the amendment to Article 31 of the Public Tenders Law aimed to abolish the requirement for Kuwaiti nationality for bidders and to eliminate the discretionary power that previously allowed restricting tenders to national or foreign companies. The memorandum linked these amendments to opening the market to all and enhancing competition, thereby contributing to improving the quality of products and services and lowering prices.
It can be inferred from this that the legislator did not merely allow foreign companies to conduct business without a local agent, but also removed the restrictions that previously prevented them from participating directly in public tenders.
The New Ban Under the 2026 Amendment
Decree-Law No. 94 of 2026 added an explicit provision to Article 31, prohibiting the use of a local agent or commission agent in all contracting procedures, according to the rules approved by the Council of Ministers. This amendment represents a continuation of the legislative trend that began in 2024, shifting the regulatory framework from abolishing the requirement for a local agent and enabling foreign companies to contract directly, to establishing an explicit ban on the use of a local agent or commission agent in public contracting procedures.
As previously explained in the earlier publication, Article 31 prohibited the "use of a local agent or commission agent" in contracting procedures, but it did not stipulate a ban on commercial agencies themselves or prevent companies that have agency or distribution relationships from participating in tenders.
The Implication of Legislative Development
The link between the amendment to Article 24 of the Commercial Law and Article 31 of the Public Tenders Law in 2024, and the latest amendment issued in 2026, reveals a legislative trend aimed at facilitating direct dealings with foreign companies and enhancing competition in public contracts.
In light of this development, the most logical interpretation of the text and its objectives is that the prohibition applies to the use of a local agent or a commission-based agent in contracting procedures, without extending merely to prevent companies that hold commercial agencies from bidding and contracting in their own name. Mazen Mohamed Talaat, Al-Ghanim, Al-Humaidi & Al-Khalid for Legal Practice and Consultations, GHK Lawyers
