Decree-Law Issued on Enactment of Arbitration Law

- It establishes an integrated national system that saves time and safeguards public funds through strict controls to arbitrate contracts with state entities.

- The law is among the region’s earliest arbitration laws to include a comprehensive penal chapter.

Today, Tuesday, Decree-Law No. 120 of 2026 concerning the issuance of the Arbitration Law was promulgated. This law establishes an integrated national arbitration system that saves time through fixed timelines and streamlined procedural orders, and safeguards public funds through strict controls governing the arbitration of contracts with state entities. It also limits arbitrators’ liability and restricts investors’ grounds for appeal to ensure swift resolution, while regulating arbitration institutions under prudent oversight. Consequently, arbitration in the State of Kuwait becomes a specialized, effective, and reliable form of justice, serving as one of the pillars supporting 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 instills confidence in market participants. It added that this law was drafted as a standalone, comprehensive arbitration legislation that draws upon the best stable international systems while preserving the distinctiveness of Kuwait’s legal system.

It highlighted that recent contracts have witnessed profound transformations in arbitration systems and their applications, with countries successively enacting modern, independent arbitration laws and establishing arbitration centers that attract major disputes and associated legal and financial services. Meanwhile, the Kuwaiti system remained governed by provisions that no longer suffice to meet the demands of the modern era.

The memorandum 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; introducing a system for interim and conservatory measures with a title aligned with national procedural terminology; subjecting 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; incorporating judicial arbitration into this law, whereas it was previously 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 ad hoc arbitration, which is organized by the parties themselves without the supervision of an arbitration institution, and institutional arbitration, which is entrusted to arbitration centers according to their rules. This distinction carries legal effects in several provisions.

The law also defined its scope of 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 voluntary criterion, allowing parties to an arbitration conducted abroad to agree to be subject to its provisions. All of this is without prejudice to applicable international conventions in the State and to mandatory provisions of the law. Furthermore, one article addressed a highly significant issue: arbitration in disputes arising from contracts concluded by state entities. It established a graduated system that balances encouraging investment with protecting public funds.

Chapter Four of the law addressed arbitration procedures in Articles 22 to 40. Article 22 obliged the arbitral tribunal to respect fundamental litigation principles, observe public order, and manage proceedings efficiently without delay or unnecessary expenses, while treating the parties equally. Article 23 granted parties freedom to choose the procedures, including referral to the rules of any arbitration center within or outside Kuwait. In the absence of agreement, the tribunal would determine the appropriate procedures 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 aims to avoid undermining the standing of the state as the seat of arbitration, as comparative experience has demonstrated that criminalizing the work of arbitrators can harm that standing.

The Law concluded with Article 15, which contained the final provisions in Articles 106 to 108. It entrusted the competent administration for arbitration at the Ministry of Justice with matters concerning both free and institutional arbitration. Specifically, it assigned this administration the task of establishing registers for arbitrators and registers for arbitration centers, as well as any other duties assigned to it by the Law and the implementing decisions of the Minister of Justice. A ministerial decision shall be issued to regulate these registers, setting out the rules, conditions, and fees for registration and deregistration. Thus, the state’s tools for supervising the arbitration system are fully established, ensuring supervision that regulates without expropriating and controls without obstructing.