Kuwait

Nowdays arbitration has become a prominent feature of both domestic and international business transactions. Prompt settlement of disputes by impartial referee contributes to stable economic relations.
On April 28, 1978 Kuwait acceded to the New York Convention. “The State of Kuwait will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It is understood that the accession of the State of Kuwait to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, on the 10th of June 1958, does not mean in any way recognition of Israel or entering with it into relations governed by the Convention thereto acceded by the State of Kuwait.”
Kuwait does not have a comprehensive arbitration law based on the UNCITRAL Model Law. Instead, provisions regulating arbitration are included in various laws – Islamic law, international law and institutional regulations.
Arbitration in Kuwait is regulated by the Code of Civil and Commercial Procedure, Law No. 38 of 1980 (Chapter 12, Articles 173 to 188) (“Procedures Law”) and the Judicial Arbitration in Civil and Commercial Matter Law, Law No. 11 of 1995 as amended by Law No. 12 of 2013 (“Judicial Arbitration Law”), neither of them is based on the UNCITRAL Model Law.
Article 173 of Civil and Commercial Procedure Code No 38 of 1980, Chapter 12 clarifies that “agreement may be made on arbitration in a specific dispute and on arbitration in all disputes arising from the implementation of a certain contract. Arbitration may not be established, save in writing. Arbitration may not be held in the matters where a compromising conciliation may not be reached. Arbitration agreement is deemed to be valid only when made by a competent person who shall have the capacity to dispose of the right under dispute. The subject matter of the dispute shall be specified in the agreement on arbitration or during the pleading, even when the arbitrator is authorized to compromise and hold conciliation, otherwise the arbitration shall be deemed null and void. Courts shall have no jurisdiction over hearing the disputes agreed to be arbitrated. Waiver to plea for non-jurisdiction may be made explicitly or implicitly. Arbitration shall not include the summary matters, unless otherwise is explicitly agreed upon.”
In Kuwait responsibility of arbitrators are envisaged for withdrawal of arbitrator after accepting to adjudicate the case. Pursuant to Article 178 of Civil and Commercial Procedure Code No 38 of 1980, “If the arbitrator withdraws without a serious reason from performing his work after accepting the arbitration, he may be adjudged to pay compensation.”
Moreover, heavy interference of national courts in the field of arbitration certainly do not uphold the interests of investors. According to the Article 185 of the Civil and Commercial Procedure Code No 38 of 1980, “the award rendered by the arbitrator shall not be enforceable, save under an order issued by the Chief Judge of the court where the award was deposited with its Clerical Department upon the request of one of the concerned parties, after having perused the award rendered, the agreement on arbitration and meanwhile verifying the nonexistence of the impediments of its implementation and the basis of appeal limitation, if the award is appealable and not urgently self-executing. The writ of execution shall be impressed at the foot of the original award document.”
According to Article 186 of Civil and Commercial Procedure Code No 38 of 1980, Chapter 12 “the arbitrator's award may not be appealed, save when otherwise is agreed upon by litigant parties prior to its rendering. The appeal shall then be filed before the Court of First Instance with an appeal panel. It shall be subject to the rules prescribed for appeal of the judgments rendered by the effect from the date of depositing of the original award with the Clerical Department pursuant to Article (184). Nevertheless, the award shall not be appealable, unless the arbitrator is authorized to compromise and conciliate, or if he is an arbitrator of Appeal, or the value of the relevant action does not exceed KD 500 or the award is rendered by the panel provided for under Article (177).”
In Kuwait, if the court has rendered a judgment nullifying the arbitrators' award, it shall then re-hear the dispute issue and determine on its merits accordingly. In essence, it implies intrusion of the court`s jurisdiction and violation of the autonomy of the parties to have their dispute settled via arbitration as a method of a dispute resolution.
The Judicial Arbitration Law of 1995 (as amended in 2013 by Law No. 12) is another instrument regulating arbitration in Kuwait. The Judicial Arbitration Law replaced Article 177 of the Procedures Law, which provided for the constitution by the Kuwait Ministry of Justice of one or several Arbitration Panels chaired by a judge and two tradesmen appointed as members. The Judicial Arbitration Law envisages a “mixed” arbitration, as the Arbitration Panel is composed of judges appointed by the State and arbitrators appointed by the parties. Arbitration Panel has jurisdiction over disputes involving governmental entities.
Article 1 of the Ministerial Resolution No. 43 of 1995 on Judicial Arbitration stipulates that “one or more Arbitration Panels shall be formed at the court of Appeal, each of which consisting of three judiciary-men selected by the Supreme Judiciary Council and two from the Arbitrators Registered in the Rolls deposited with the Arbitration Department or of other individuals. Each Arbitration Party, even if numerous, shall select one of them. The panel shall be presided over by the most senior member of the Judiciary-men, provided he holds the office of Justice (counselor). The Panel Secretariat function shall be performed by one of the Arbitration Department employees. The Panel shall hold its sittings at the Court of Appeal or at any other venue specified by the Chief of the Panel.”
Only Arbitrators registered in the Roll, can be elected to conduct the arbitration. Article 5 of the Ministerial Resolution No. 43 of 1995 on Judicial Arbitration stipulates that “each of the arbitration parties shall select his arbitrator from among the arbitrators registered in the Rolls appropriately prepared and available at the Arbitration Department or from elsewhere within ten days following the date where the Arbitration Department has requested him to do so. In case of a party's failure to appoint an arbitrator, then the said Department shall appoint an arbitrator, whose turn has come in conformity with the Roll of the Professional Arbitrators duly specialized in the issue of disputes, for the Panel's membership.”
There is no institutional arbitration body in Kuwait which would serve the needs of foreign parties to conduct procedures in an efficient and transparent manner. The Kuwaiti Chamber of Commerce and Industry (“KCCI”) has tried to promote arbitration, for instance, by establishing Kuwaiti Commercial Arbitration Center (“KCAC”)  in 1999, with the objective of supporting arbitration for commercial dispute resolution. The KCAC Rules provide that the UNCITRAL Arbitration Rules shall apply in the absence of provisions relating to a specific matter in the KCAC Rules or the Procedures Law (Article 7 of the KCAC Rules).
One of the “Kuwait Vision 2035” objectives includes cultivation of a business friendly environment that is undoubtedly presupposes the enactment of appropriate and understandable legal framework. Hence, the Kuwaiti Government needs to take proactive measures to promote effective dispute resolution mechanisms in order to enhance the trust of foreign investors in Kuwait and preserve the efficacy of the arbitral process.
Kuwait is also a party to several other regional conventions relevant for the recognition and enforcement of foreign arbitral awards, including: the Riyadh Convention on Judicial Cooperation 1983, providing for the recognition and enforcement of foreign arbitral awards without reviewing the subject matter of the underlying dispute, the Arab League Convention on the Enforcement of Judgments 1952 which deals with the enforcement of judgments and arbitral awards in all  Member States of the Arab League which have ratified the Convention, the Amman Convention on Commercial Arbitration 1987 – a regional agreement with membership open to all Arab States.
In sum, many commentators of Kuwait arbitration laws note that that Judicial Arbitration Law is composed of a series of what they call ‘arbitration-unfriendly’ provisions that neglect to distinguish between the domestic and international arbitration. The arbitral mechanism is not working in its current state that frustrates the needs of international contracting parties. Kuwait needs pro-actively take measures promoting effective mechanisms of dispute resolution to preserve the core characteristics and norms of modern practice and to enhance Kuwait’s attractiveness for foreign direct investment.
Also, certain commercial matters are not arbitrable under Kuwaiti law, which include bankruptcy disputes, trademark disputes, commercial representation matters.