Kuwait issues new arbitration law to strengthen investment environment
A decree-law (No. 120 of 2026) promulgating a new Arbitration Law was issued on Tuesday, establishing an integrated national arbitration framework aimed at expediting dispute resolution, protecting public funds, regulating arbitration institutions and boosting investor confidence.
The law comprises 108 articles divided into 15 chapters, according to its explanatory memorandum, which said Kuwait’s development plans to become an attractive financial and commercial hub required a modern arbitration environment that would inspire confidence among businesses and investors.
The legislation was designed as a comprehensive, independent law drawing on established international arbitration systems while preserving the distinctive features of Kuwait’s legal system, the memorandum added. It noted that arbitration laws and practices had undergone major changes in recent decades, with countries adopting modern standalone legislation and arbitration centers attracting major disputes and related legal and financial services.
Kuwait’s existing framework, however, had remained governed by provisions that no longer adequately addressed contemporary requirements. The new law establishes safeguards for arbitration in contracts concluded by state entities to protect public funds without excluding such entities from arbitration.
It also introduces a system for interim and precautionary measures, establishes licensing and oversight of arbitration centers under a specialized department at the Ministry of Justice, and incorporates judicial arbitration into the new legislation to unify the regulatory framework.
The law also accommodates modern technology throughout arbitration proceedings and distinguishes between ad hoc arbitration, in which the parties organize proceedings themselves, and institutional arbitration administered by arbitration centers under their own rules.
Its scope is determined by two criteria: a territorial criterion covering arbitration seated in Kuwait, and a consent-based criterion allowing parties to agree to apply the law to arbitration conducted abroad. These provisions remain subject to Kuwait’s applicable international agreements and mandatory legal rules.
Regarding disputes arising from contracts concluded by state entities, the law establishes a graduated framework intended to balance investment promotion with the protection of public funds. Chapter Four, covering Articles 22 to 40, regulates arbitration procedures.
Article 22 requires tribunals to respect fundamental principles of litigation, observe public order, manage proceedings efficiently without unnecessary delay or expense, and treat parties equally. Article 23 allows parties to choose their procedures, including by referring to the rules of arbitration centers inside or outside Kuwait. In the absence of agreement, the tribunal may determine appropriate procedures within the law’s provisions.
Chapter 14, comprising Articles 100 to 105, sets out penalties and establishes a comprehensive framework for protecting the regulatory system governing arbitration, public confidence in it and the confidentiality of proceedings.
The memorandum stressed that criminal protection would not extend to arbitrators’ judicial work. Arbitrators would remain subject to civil liability only in cases of fraud or gross negligence, in line with lessons drawn from comparative legal experience that criminalizing arbitral work could undermine a country’s standing as an arbitration seat.
The final chapter, comprising Articles 106 to 108, assigns responsibility for ad hoc and institutional arbitration to the specialized department at the Ministry of Justice. The department will maintain registers of arbitrators and arbitration centers and carry out other duties specified by the law and implementing ministerial decisions.
The Minister of Justice will issue a decision governing the department’s work, including the rules, conditions and fees for registration and removal from the relevant registers, completing the state’s oversight framework for arbitration while ensuring that regulation does not obstruct proceedings.
— KUNA
