Kuwait

middle east

Key points
The Commercial Arbitration Centre of the Kuwait Chamber of Commerce and Industry was set up in 2000. The Kuwaiti Parliament has ratified many bilateral investment treaties drawn up between countries in the Middle East and others worldwide; these treaties provide for the settlement through arbitration of disputes arising under them. Kuwaiti laws governing arbitration apply only to procedures for domestic arbitration and to the enforcement of foreign awards. The detail around enforcement of foreign awards is set out in the Code of Civil and Commercial Procedure (CCCP). Under the Kuwaiti arbitration system, parties may themselves determine the applicable rules in arbitration proceedings. Kuwait is a signatory of the New York Convention. Only awards made in another signatory state are enforceable in Kuwait. For awards made in other states, reciprocity is required. Confidentiality There is no statutory provision for confidentiality, although the Judicial Arbitration Law prohibits the publication of an arbitral award, or part thereof, unless all parties agree.

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Model arbitration clause

Any dispute whatsoever which may arise out of this contract, its execution or its cancellation is to be referred to arbitration in accordance with the conditions stipulated in the Reconciliation and Arbitration System of the Kuwait Chamber of Commerce and Industry. Commercial Arbitration Centre of the Kuwait Chamber of Commerce and Industry (KCAC) See the Arbitration section for best practice in drafting arbitration clauses. Weblink www.kcci.org.kw Kuwait Chamber of Commerce and Industry (with a link to the Commercial Arbitration Centre, in Arabic)

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What arbitration bodies are there within the jurisdiction?

The main arbitration body in Kuwait is the Commercial Arbitration Centre of the Kuwait Chamber of Commerce and Industry (KCAC). In addition, specialised bodies with expertise in particular areas, such as the Kuwait Stock Exchange and the Kuwaiti Society of Engineers, have established their own arbitration rules and committees. Under the Judicial Arbitration Law (JAL), arbitrations are conducted by the arbitration council of the Court of Appeal; the council consists of three judges (appointed by the higher judicial authority) and two arbitrators (selected by the parties concerned). Kuwait is a member of the Gulf Cooperation Council (GCC), and recognises the GCC Commercial Arbitration Centre (GCAC) and awards rendered by it.

Is there an Arbitration Act governing arbitration proceedings, and is it based on the UNCITRAL model law?

The rules covering optional arbitration are mainly contained in the Code of Civil and Commercial Procedure (CCCP). The CCCP which is not based on the UNCITRAL model law was promulgated by Law 38 of 1980 and subsequently amended by Law 36 of 2002; articles 173 to 188 refer in particular to arbitration. The JAL is concerned with judicial arbitration in civil and commercial matters (Law 11 of 1995).

What are the available rules?

Under Kuwaiti law, the parties are free to negotiate and to include in their agreement such arbitration terms as they consider appropriate. Therefore,

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contracts involving Kuwaiti entities may include clauses referring disputes to arbitration under the rules of reconciliation and arbitration of KCAC, the International Chamber of Commerce (ICC), or any other international or regional arbitral forum. KCACs rules apply the UNCITRAL model law in the absence of provisions (either in KCACs rules or in the CCCP) relating to a specific matter. Further rules are contained in the JAL and the parties may refer their dispute to arbitration in accordance with its rules and procedures. Arbitration in accordance with the JAL is conducted by the arbitration councils of the Court of Appeal, which have jurisdiction to hear all civil and commercial disputes regarding contracts whose parties have agreed that the JAL shall apply, as well as contracts that fail to specify an arbitral body, provided they were concluded after the law was passed and include an arbitration clause. The arbitration councils also have exclusive jurisdiction over disputes arising between governmental agencies, or between them and state-owned companies, and may hear disputes referred by individuals and corporate entities relating to claims against the Kuwaiti government and its ministries and other divisions, or wholly state-owned companies. The arbitration councils may settle preliminary questions concerning the dispute that would normally fall within the jurisdiction of the civil and commercial courts, and may, as a preliminary matter, settle questions concerning their own jurisdiction to hear the dispute. The rules set out in the CCCP on arbitration proceedings apply to domestic arbitration only, except for articles 199 and 200, which govern the enforcement of foreign arbitral awards. In the absence of specific provisions in the JAL, the rules of the CCCP apply.

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What supervision is there of arbitrators and their awards?

In ad hoc arbitration, the court may supervise the arbitration proceedings if it is requested to decide on the appointment, removal or replacement of an arbitrator (article 175 of the CCCP and article 1 of the JAL). The courts may also hear challenges to arbitrators awards, through an action for nullification, or, if the parties agree, through an appeal. Where arbitration proceedings are conducted through a specific arbitration institution, they are supervised by that institution.

How quickly can a tribunal be set up?

The length of time to set up a tribunal depends largely on the agreement reached by the parties. Kuwaiti law allows parties to agree on the number of arbitrators (provided it is an odd number) and the procedures to be followed. In the absence of any prior agreement on this issue, or if the parties fail to agree after the dispute has arisen, the arbitrators are appointed by the court that originally had jurisdiction over the dispute (article 175 of the CCCP). Consequently, the constitution of the tribunal may take some time, although any judgment appointing an arbitrator is final. Under the JAL, if the parties fail to appoint the arbitrators within ten days of the courts request, the arbitrators are appointed by the Court of Appeal (article 1 of the JAL). If the dispute is governed by the rules of the KCAC, the arbitrators are appointed by the parties, or, if the parties fail to do so, by the executive committee of KCAC. As with arbitration under the CCCP, this process can take a few months.

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What happens if one party refuses to participate in the process?

A default judgment can be entered against any party who, despite being duly notified, fails to appear for the arbitration, or otherwise fails to cooperate with or participate in it. In these circumstances, the award is rendered on the basis of the documents and evidence in the hands of the tribunal (article 179 of the CCCP). One of the requirements for enforcement of a foreign arbitral award is that the parties have been duly summoned to appear, and duly represented, at the arbitration proceedings (articles 199 and 200). However, a Kuwaiti court would probably enforce a foreign arbitral award issued in absentia if the defaulting party had been duly notified of the proceedings. If arbitration proceedings are regulated by KCACs rules, the absence, without a valid excuse, of a party duly summoned to appear would not prevent the proceedings from continuing (article 32).

What interim measures are available?

Urgent matters (for example, interim injunctive relief) can only be referred to arbitration if there is an agreement between the parties to this effect (article 173(6) of the CCCP). In addition, the CCCP reserves jurisdiction for the Kuwaiti courts to determine certain matters, such as matters arising during the proceedings that are beyond the jurisdiction of the arbitrator (article 180(2)). Only the Kuwaiti courts may compel third parties to produce evidence (article 180(b) of the CCCP and article 5 of the JAL) and fine witnesses who fail to attend a hearing (article 180(a) of the CCCP).

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What right is there to challenge the appointment of an arbitrator?

Arbitrators may be removed by the parties acting jointly. Their appointment can also be challenged for reasons arising after their nomination that would call their independence into question. Under the JAL, interlocutory appeals concerning the removal of any of the arbitrators of the arbitration council may be made to the Kuwaiti Court of Cassation. Such appeals should be made within five days of notification of the formation of the panel or the subsequent occurrence of any of the reasons for the request (article 6).

Can a party appeal the arbitrators decision and, if so, are there any time limits to be aware of or unusual provisions?

An award issued by the tribunal is final and not subject to appeal, unless the parties have agreed otherwise before the award is rendered (article 186 of the CCCP). In addition, the award may not be appealed if the arbitrators were given the powers of amiable compositeur or if the amount of the claim does not exceed KD 1000 (article 186). Any appeal should be filed before the first-degree court sitting as an appellate court, and is subject to the same rules that govern the appeal of court judgments in Kuwait. The time limit for lodging the appeal is 30 days from the date when the award is deposited in the court that originally had jurisdiction to hear the case. In addition to any appeal, a party can ask the court to nullify or set aside an award, even if the parties had agreed otherwise before the commencement of proceedings, if any of the following grounds apply: the award was issued in the absence of an arbitration agreement or on the basis of a void or expired agreement

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the arbitrators ruled on matters that were not included in the arbitration agreement the award is invalid or the proceedings are invalid so as to affect the award there are other grounds for revision or reconsideration of judgments. The application to set aside the award must be filed within 30 days from the date of the award (article 187 of the CCCP). Initiating proceedings for setting aside the award does not automatically prevent or stay its enforcement. The court may, however, on request (and if the grounds appear to support the likely invalidation of the award), suspend enforcement of the award to prevent considerable damage to the aggrieved party. In such circumstances, the court may make an order requiring the party against whom the award was being enforced to provide security pending enforcement. Arbitral awards issued pursuant to the JAL are not subject to appeal. However, under article 10 parties can apply (within 30 days from the date of the award) to the Court of Cassation to have it set aside, if: there are serious irregularities affecting the proceedings or the award the law has been violated or misinterpreted the award contradicts a prior judgment issued by either the Kuwaiti courts or another arbitral tribunal between the same parties there are other grounds for revision or reconsideration of judgments.

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10 Is Kuwait a party to the New York Convention?

Yes. However, enforcement of awards made in non-signatory states is subject to reciprocity.

11 Will an arbitration award be enforceable in Kuwait and, if so, what is the procedure?
The Kuwaiti arbitration system distinguishes between domestic and foreign awards. An application for enforcement of an arbitral award made in Kuwait must be filed with the president of the court that originally had jurisdiction over the case. The execution order will be issued only if the court has verified that there is a valid arbitration clause, that no right of appeal remains, and that there is no justification for not enforcing the award. The judge may not, while examining the award, reconsider the merits of the dispute. If a foreign award is rendered in a New York Convention member state, the courts of Kuwait will recognise and enforce it (articles 199 and 200 of the CCCP). Awards issued in non-signatory countries are also enforceable provided there is reciprocity of enforcement between Kuwait and the jurisdiction in question (articles 199 and 200). Under article 200, the courts of Kuwait will recognise and enforce the award, without retrial or examination of the merits of the case, if: the subject matter of the award is capable of settlement by arbitration under Kuwaiti law the award is enforceable in the jurisdiction in which it was rendered the procedural requirements have been satisfied (article 199).

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The procedural requirements outlined in article 199 stipulate that the award be issued by a competent arbitral tribunal, according to the law of the state in which it was issued; that it be issued following proceedings to which the parties were duly summoned and at which they were duly represented; that it be final and subject to no further appeal; and that it neither contradict any prior judgment or order rendered by the courts of Kuwait nor conflict with public order or morality in Kuwait. If the provisions of articles 199 and 200 of the CCCP are satisfied, the award is enforced similarly to a domestic judgment, by the commencement of a claim in the Kuwaiti courts. Awards not written in Arabic must be accompanied by an official Arabic translation and a copy of the arbitration agreement, before the award is referred for recognition and enforcement by the Kuwaiti court.

12 What are the likely costs of arbitration?

Costs depend on whether the arbitration is ad hoc or institutional. The costs and fees of ad hoc arbitration have to be agreed between the parties; in institutional arbitration the costs will be fixed by the relevant institution. In the absence of agreement between the parties, the costs will be allocated between them by the tribunal. If the arbitration is conducted under the JAL, no administrative costs are charged to the parties. However, each party must pay the fees of its chosen arbitrators. Arbitrators fees are determined as a percentage of the amount in dispute, and range between one per cent or KD 10,000 (whichever is lower) if the amount of the dispute exceeds KD 350,000, and ten per cent or KD 1000 (whichever is lower) if the amount of the dispute does not exceed KD 20,000.

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If a party declines to settle its arbitrators fees, the other party may settle them in order to proceed with the arbitration; otherwise, the arbitration request will be set aside. Under the rules of KCAC, arbitration fees and costs are calculated on the basis of scales similar to those adopted by the Court of Arbitration of the ICC. I

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