Arbitration is an alternative dispute resolution mechanism used by merchants and business people to avoid the delays of court proceedings. Kuwaiti law regulates arbitration in the Code of Civil and Commercial Procedure and recognises and enforces arbitral awards.
Why arbitration? Speed — confidentiality — choice of specialised arbitrators — procedural flexibility — finality of the award.
Contents
1) The Concept of Arbitration
- Definition: an agreement by the parties to refer their dispute to one or more arbitrators for resolution instead of the ordinary courts.
- Consensual nature: arbitration is based on the parties' will — it cannot be imposed without agreement.
- Domestic and international: Kuwait recognises both domestic and international arbitration and is a party to the 1958 New York Convention.
- Scope: arbitration is permissible in commercial and civil matters — not in personal-status matters or matters of public order.
Procedural Code: Title XII of the Kuwaiti Code of Civil and Commercial Procedure governs arbitration — from the agreement through to enforcement.
2) Arbitration Clause and Submission Agreement
Arbitration clause
- A provision in the main contract requiring arbitration in case of dispute.
- Written before the dispute arises.
- May be general (all disputes) or specific.
- Remains valid even if the main contract is void (separability doctrine).
Submission agreement
- A standalone agreement concluded after the dispute arises.
- Defines the subject matter precisely.
- Names the arbitrators or their appointment method.
- Sets the timeframe and agreed procedures.
Writing requirement: the arbitration agreement must be in writing — otherwise it is void. A reference in a contract to a document containing an arbitration clause counts as a written agreement.
3) Forming the Arbitral Tribunal
- Number: the number of arbitrators must be odd — typically one or three.
- Appointment: each party appoints their arbitrator, then the two arbitrators choose the presiding arbitrator.
- Qualifications: full legal capacity and no conviction for a crime involving dishonour.
- Impartiality: the arbitrator must be independent and impartial — and must disclose any circumstances raising doubts about their impartiality.
- Challenge: an arbitrator may be challenged on the same grounds as a judge — kinship, interest, or prior expression of opinion.
4) Arbitration Procedures
- Commencement: begins on the date the tribunal is formed unless otherwise agreed.
- Submissions: each party files memorials and documents within the deadlines set by the tribunal.
- Hearings: hearings are held — or the tribunal may decide on written submissions alone.
- Witnesses and experts: the tribunal may hear witnesses and appoint experts.
- Time limit: the award must be rendered within the agreed period — otherwise either party may resort to the courts.
Applicable law: the tribunal applies the law agreed by the parties — if none is agreed, it applies the law most closely connected with the dispute. See contracts and obligations.
5) The Arbitral Award
- Majority: rendered by majority vote — a dissenting arbitrator records their opinion.
- Reasoning: must be reasoned — otherwise it is void.
- Operative part: addresses the claims, costs, and arbitrators' fees.
- Filing: the award is filed with the court clerk's office within the specified period.
6) Enforcement
- Enforcement order: an arbitral award is enforceable only upon an order from the enforcement judge after verifying that conditions are met.
- Conditions: the award must be based on a valid arbitration agreement, concern an arbitrable matter, and not contravene public order.
- Foreign awards: foreign arbitral awards are enforced under the 1958 New York Convention, to which Kuwait is a party.
- Refusal: enforcement is refused if the award violates public order or was rendered without a valid agreement.
7) Challenging the Award
Annulment action
- The only avenue for challenging an arbitral award.
- Appeal is not available unless both parties agree.
- Filed before the court that would have had original jurisdiction.
- Within 30 days of notification of the award.
Grounds for annulment
- Absence or invalidity of the arbitration agreement.
- Irregular formation of the tribunal.
- Ruling on matters outside the scope of arbitration.
- Fundamental breach of the right of defence.
Effect: annulment returns the parties to their pre-arbitration position — they may agree on fresh arbitration or resort to the courts. See methods of challenging judgments.
8) Practical Guidance
Drafting the clause
- Specify the seat of arbitration and its language.
- Specify the number of arbitrators and their appointment method.
- Specify the applicable law.
- Set a realistic timetable.
During arbitration
- File your submissions and documents on time.
- Object immediately to any procedural irregularity.
- Document every step in writing.
- Engage a lawyer specialising in arbitration.
Need help drafting an arbitration clause or representation in commercial arbitration? Contact Attorney Meshari Obaid Al-Enezi — Yumnaak Law Firm.
