Officially... Decree-Law on Arbitration Issued

- 108 articles regulating arbitration, setting controls for state entity contracts, and safeguarding public funds

- Licensing and oversight of arbitration centers, arbitrator registers, and integration of judicial arbitration into a unified legislation

- Disciplinary provisions protecting the arbitration system and limiting arbitrator civil liability to fraud and gross negligence

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 deadlines and simplified procedural orders, safeguards public funds with strict controls over state entity contract arbitration, and provides peace of mind to arbitrators by limiting their liability and to investors by restricting grounds for appeal and ensuring swift resolution. It also regulates arbitration institutions under prudent oversight, making arbitration in the State of Kuwait a specialized, efficient, and reliable judiciary, serving as a pillar of its economic development.

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The explanatory memorandum for the aforementioned decree-law, which comprises 108 articles distributed across 15 chapters, stated that the State’s progress in implementing its developmental policies aimed at transforming Kuwait into an attractive financial and commercial investment hub requires a modern arbitration environment that inspires confidence among stakeholders.

It added that this law was drafted to serve as an independent and comprehensive arbitration legislation, drawing inspiration from the most stable international systems while preserving the distinctiveness of the Kuwaiti legal system.

It clarified that recent contracts have witnessed profound transformations in arbitration systems and their applications, with countries successively issuing 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 a set of 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 streamlined system for interim and conservatory measures with a name consistent 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; integrating judicial arbitration into this law after it was previously governed by separate legislation, thereby unifying the reference for arbitration in the State; and keeping pace with modern technological means in all arbitration litigation procedures.

According to the explanatory memorandum, the law included necessary definitions to ensure disciplined 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 entrusts its administration to arbitration centers according to their rules. This distinction carries legal effects in several provisions.

The law also defined the scope of its application in one of its articles based on a dual criterion: a territorial criterion, under which every arbitration seated in the State of Kuwait is subject to its provisions; and a voluntary criterion, which allowed parties to an arbitration conducted abroad to agree to subject it to its provisions. All of this is without prejudice to effective international conventions in the State and mandatory provisions of the law. One article addressed a highly important issue: arbitration in disputes arising from contracts concluded by state entities, establishing a graduated system that balances encouraging investment with protecting public funds.

Chapter Four of the Law addresses arbitration procedures in Articles 22 to 40. Article 22 obliges the arbitral tribunal to respect fundamental principles of due process, uphold public order, and manage proceedings efficiently without undue delay or unnecessary costs, while treating the parties equally. Article 23 grants the parties freedom to choose the procedures, including referral to the rules of any arbitration center within or outside Kuwait; if they fail to agree, the tribunal shall select what it deems appropriate within the framework of the Law’s provisions.

The memorandum clarified that Chapter 14 of the Law sets out 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 sanctions are established solely to safeguard the regulatory framework of arbitration, public confidence in it, and the confidentiality of its proceedings. Under no circumstances do these sanctions extend 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 state as an arbitration seat, as demonstrated by comparative legal experience, which shows that criminalizing arbitrators’ work can harm a country’s reputation as an arbitration venue.

The Law concluded with Chapter 15, which contains final provisions in Articles 106 to 108. It assigned the competent administration within the Ministry of Justice, responsible for both free and institutional arbitration, the task of maintaining registers for arbitrators and arbitration centers, as well as other duties stipulated 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 deregistration. Thus, the state’s tools for overseeing the arbitration system are fully established, ensuring supervision that regulates rather than restricts, and controls rather than obstructs.