Kuwait's New Arbitration Law (decree-law No. 120 of 2026): What Contractors, Investors and Counsel Must Do Now

Kuwait’s new arbitration law, Decree-Law No. 120 of 2026, marks the most significant overhaul of the country’s arbitration framework in three decades. Issued on 13 October 2026 and published in the Official Gazette (Kuwait Alyoum) on 18 October 2026, the Decree-Law promulgates a standalone arbitration statute comprising 108 articles across 15 chapters, and repeals the prior judicial-arbitration regime under Law No. 11 of 1995. For contractors, investors, arbitral institutions and in-house counsel, the change is practical and immediate: arbitration clauses may need re-papering, state-contract approval steps have shifted, pending cases require careful handling, and enforcement mechanics have been clarified. This guide explains what has changed and what to do now.

Why Decree-Law No. 120 matters for contractors, investors and counsel

For almost thirty years, arbitration in Kuwait sat within the framework of Law No. 11 of 1995 concerning judicial arbitration, which treated arbitration largely as an adjunct to the judicial system. The new instrument changes that posture. By creating a dedicated, free-standing arbitration law and repealing the 1995 regime, Kuwait signals a modern, pro-arbitration orientation aligned with international practice.

The practical consequences reach across the contracting lifecycle. Commercial parties must check that their existing arbitration clauses remain fit for purpose. State counterparties and their contractors must understand which approvals are now required before an arbitration agreement binds a government body. Arbitral institutions operating in Kuwait face a defined compliance window. And anyone with a live dispute needs clarity on whether the old or new rules govern their proceedings. The remainder of this guide works through each of these themes, anchored to the text of the Decree-Law.

Key changes introduced by Decree-Law No. 120 of 2026, headline summary

At a high level, Kuwait’s new arbitration law, Decree-Law No. 120 of 2026, reorganises the field into a single coherent statute and introduces a series of modernising provisions. The headline changes are:

• Scope and structure. A standalone arbitration law replaces the embedded judicial-arbitration model of Law 11/1995, giving arbitration its own dedicated legislative home across 108 articles.
• Written agreement requirement. Arbitration agreements must be in writing, with the concept of “writing” expressly extended to digital exchanges and incorporation by reference.
• Composition of the tribunal. The tribunal must comprise a sole arbitrator or an odd number of arbitrators, with three as the default where the parties do not specify.
• Appointment procedure. Where parties cannot agree on appointment, the competent court may appoint an arbitrator, with reference to a register of arbitrators maintained under the new framework.
• Institutional compliance. Arbitration centres operating in Kuwait must bring their rules and operations into line with the new statute within the transition period set by the law.
• State-contract approvals. Government contracts require specified approvals before an arbitration agreement is valid, with the highest level of sign-off reserved for the most sensitive categories of contract.
• Transitional provisions. Proceedings already underway are, in principle, dealt with under transitional rules, while institutions are given a transition window to comply.
• Court support and enforcement. Courts are directed to decline jurisdiction where a party objects on the basis of a valid arbitration agreement, and the commencement of a court action does not, of itself, halt arbitration.

Each of these is examined in detail below. Because the precise wording and article numbering of a newly promulgated decree-law are critical, practitioners should always verify specific clauses and figures against the official Gazette text before relying on any clause or checklist in this guide.

Writing requirement and arbitration agreement validity, practical effects

One of the most commercially important features of the new law is its treatment of the writing requirement. Under Decree-Law No. 120 of 2026, an arbitration agreement must be in writing to be valid, but “writing” is defined broadly to accommodate modern commercial practice. This removes doubt that previously surrounded informal or electronic arrangements.

Acceptable forms of a written arbitration agreement

The law recognises the arbitration agreement in several forms. These include a traditional signed document, but also exchanges that establish the parties’ consent through recorded communications. The agreement may be concluded either before a dispute arises (a classic arbitration clause within a contract) or after a dispute has crystallised (a submission agreement). This flexibility allows parties already in conflict to agree to arbitrate without needing a pre-existing clause.

Incorporation by reference

The statute also permits incorporation by reference, a contract that refers to another document containing an arbitration clause can validly bind the parties to arbitrate, provided the reference makes that clause part of the contract. This is particularly relevant where parties use standard terms, framework agreements or purchase orders that cross-refer to master agreements.

Sample reference language, DRAFT ONLY. Obtain local counsel review. “The arbitration clause set out in Clause [X] of the Master Agreement dated [date] is incorporated into and forms part of this Purchase Order, and the parties agree to be bound by it.”

Electronic signature and evidence considerations

Because digital exchanges now plainly satisfy the writing requirement, parties should retain clear electronic records demonstrating mutual assent. When concluding arbitration agreements electronically, keep auditable evidence of who agreed, when, and to what terms. This reduces the risk of a later challenge to the existence or scope of the agreement. The direction of travel mirrors the UNCITRAL Model Law’s approach to the form of the arbitration agreement, which is helpful comparative context when drafting for cross-border counterparties.

Tribunal composition, appointment and arbitrator registration

The Decree-Law sets clear default rules for how tribunals are constituted. A tribunal must consist of a sole arbitrator or an odd number of arbitrators, avoiding the deadlock risk of an even-numbered panel. Where the parties have not agreed on the number, the default is three arbitrators.

Default rules and party autonomy

Party autonomy remains the starting point: the parties are free to specify the number of arbitrators and the method of their appointment. The statutory defaults apply only to fill gaps where the parties’ agreement is silent or incomplete. This means careful drafting can avoid reliance on default mechanisms altogether.

Court appointment procedure

Where the parties cannot agree on appointment, the competent court may step in and appoint an arbitrator. This supervisory role provides a reliable fallback so that a recalcitrant or unresponsive party cannot stall the constitution of the tribunal. Where the law provides for appointment by reference to a register of arbitrators, this introduces a degree of institutional oversight over who may serve; counsel should confirm the exact appointing authority and procedure against the statutory text.

Independence, impartiality and grounds for challenge

As with any modern arbitration regime, arbitrators are subject to standards of independence and impartiality, and parties retain the ability to challenge an arbitrator on recognised grounds. When drafting, counsel should align the challenge procedure in any institutional clause with the statutory framework to avoid conflict between the chosen rules and the governing law.

State contracts and approvals, what contracting parties must do now

The provisions on state contracts are among the most consequential in Kuwait’s new arbitration law, Decree-Law No. 120 of 2026, and they demand immediate attention from anyone contracting with Kuwaiti government entities. The statute conditions the validity of arbitration agreements in government contracts on obtaining specified approvals before the agreement takes effect.

Which contracts need which approvals

The Decree-Law distinguishes between categories of government contract, reserving higher-level sign-off for more sensitive arrangements. In broad terms:

• Sensitive / strategic contracts (such as certain natural-resource contracts). These require approval at the highest executive level before an arbitration agreement is valid, reflecting the policy decision to reserve the most senior sign-off for them.
• Other government contracts. These require the approval of the competent minister or equivalent authority. Where the law provides that such approval is non-delegable, it must come from the responsible authority directly rather than being passed down to officials.

Because the precise categorisation and the identity of the approving authority are determined by the statutory text, parties should confirm the applicable approval category and authority for their specific contract with local counsel before signing. The practical effect is that no arbitration agreement in a state contract should be treated as binding until the correct approval has been secured and documented. A failure to obtain the right approval risks rendering the arbitration agreement invalid, with potentially severe consequences for dispute resolution later.

Sample approval clause

Sample clause, DRAFT ONLY. Obtain local counsel review. “The parties acknowledge that this arbitration agreement is subject to the approval required under Decree-Law No. 120 of 2026. The required approval shall be obtained in writing from the competent authority prior to [signature / effectiveness] of this Agreement, and a copy of such approval shall be appended as a schedule. The arbitration agreement shall not take effect until such approval has been obtained.”

Risk allocation if approval is missing

Counsel should treat the approval as a condition precedent and allocate the consequences of non-approval expressly. Consider building in a fallback dispute-resolution mechanism that engages only if the required approval is not obtained, so the contract is not left without a resolution pathway. A practical checklist for state-contract parties includes:

1. Identify early whether the counterparty is a government entity and which approval category applies.
2. Build approval into the contract timeline as a condition precedent, with responsibility and deadline clearly assigned.
3. Obtain written evidence of the approval and retain it on file with the executed contract.
4. Draft a fallback mechanism in case approval is refused or delayed.
5. Confirm the approving authority is correct for the contract type, based on the statutory text and local advice.

Drafting and re-papering arbitration clauses, templates and redlines

With a new statute in force, existing clauses should be reviewed and, where appropriate, re-papered to reference the correct governing law and to capture the new approval and appointment mechanics. Below are four drafting examples for different contract types. Each is a starting point only.

All clauses below are DRAFT ONLY, verify against the text of Decree-Law No. 120 and obtain local counsel review before use.

Template A, bilateral commercial contract (ad hoc, seat Kuwait)

“Any dispute arising out of or in connection with this Agreement shall be finally resolved by arbitration seated in Kuwait City, Kuwait, conducted in accordance with Decree-Law No. 120 of 2026. The tribunal shall consist of [one / three] arbitrator(s). The language of the arbitration shall be [English/Arabic].”

When to use: straightforward two-party commercial contracts where the parties prefer an ad hoc process. Redline note: specify the number of arbitrators to avoid the default three where a sole arbitrator would be more cost-effective.

Template B, institutional clause (ICC/LCIA/DIAC style) adapted to Decree-Law 120

“Any dispute arising out of or in connection with this Agreement shall be finally resolved under the Rules of [ICC / LCIA / DIAC] by [one / three] arbitrator(s) appointed in accordance with those Rules. The seat of arbitration shall be Kuwait City, Kuwait, and the arbitration shall be governed by Decree-Law No. 120 of 2026. The language of the arbitration shall be [English/Arabic].”

When to use: where parties want institutional administration and a recognised ruleset. Redline note: confirm the chosen institution’s appointment and challenge procedures are compatible with the statutory framework, and that any institution administering an arbitration seated in Kuwait complies with the new law’s requirements for centres operating in Kuwait. Parties using the ICC should note that the ICC Arbitration Rules in force from 1 June 2026 apply to cases filed on or after that date.

Template C, state contract clause with approval workflow

“Subject to the approval required under Decree-Law No. 120 of 2026, any dispute arising out of or in connection with this Agreement shall be finally resolved by arbitration seated in Kuwait City, Kuwait, under Decree-Law No. 120 of 2026, by three arbitrators. The approval of the competent authority shall be obtained in writing prior to the effectiveness of this arbitration agreement, and shall be appended as Schedule [X].”

When to use: any contract with a Kuwaiti government entity. Redline note: make the approval a condition precedent and identify the correct approving authority based on contract type and current law.

Template D, investor-state style / multi-party

“Any dispute arising out of or relating to this Agreement, including disputes involving [multiple parties / affiliated entities], shall be finally resolved by arbitration seated in Kuwait City under Decree-Law No. 120 of 2026 and the Rules of [institution]. The parties agree to consolidation and joinder in accordance with those Rules, and the tribunal shall comprise three arbitrators appointed [as specified].”

When to use: complex, multi-party or investment-type arrangements. Redline note: address consolidation, joinder and appointment carefully to avoid gaps that trigger default rules.

Redlining checklist, notice language and fallback appointment

• Replace references to Law No. 11 of 1995 with Decree-Law No. 120 of 2026.
• Specify the number of arbitrators (sole or three) to control cost and avoid defaults.
• For state contracts, insert the approval condition precedent and identify the authority.
• Confirm seat, language and any institutional rules are stated.
• Include a fallback appointment mechanism recognising the court’s power to appoint where the parties fail to agree.
• Add clear notice and waiver language consistent with the chosen rules and the statute.

Transitional provisions and pending arbitrations, what happens now

A critical question for anyone with a live dispute is whether the new law applies. The treatment of pending proceedings is governed by the transitional provisions of Decree-Law No. 120 of 2026, and parties mid-arbitration should not assume they automatically migrate to the new regime. Because transitional arrangements can be nuanced, counsel should map each proceeding against the precise transitional text to determine the governing framework.

When to consider opting into the new law

Where parties wish to benefit from features of the new statute, they may be able to agree to adopt elements of it by consent, subject to the status and stage of their proceedings and to what the transitional rules permit. Any such decision should be taken with local counsel, documented in writing, and tested against the transitional rules to confirm it is permissible and effective.

Institutional compliance actions

Arbitration centres operating in Kuwait are given a transition window under the new law to bring their rules and operations into compliance. Institutions should begin this work promptly: reviewing their rules against the statute, updating appointment and challenge procedures, and confirming that their administration aligns with the statutory requirements. The precise length of the compliance window should be confirmed against the statutory text. Early compliance reduces the risk of challenges to awards administered under outdated rules.

Implications for existing cases and awards

Parties with pending cases should map their proceedings carefully: identify the governing framework, confirm the tribunal’s constitution remains valid, and plan enforcement strategy accordingly. For awards that are made or enforced across the transition, counsel should document the applicable regime at each stage to pre-empt enforcement challenges.

Court assistance, jurisdictional challenges and enforcement

The new law strengthens the courts’ supportive, rather than interventionist, role, a hallmark of a modern arbitration regime and a key reason Decree-Law No. 120 of 2026 is regarded as pro-arbitration.

Decline of jurisdiction

Where a party objects on the basis of a valid arbitration agreement, the court is directed to decline jurisdiction and refer the parties to arbitration. Importantly, the commencement of a court action does not, of itself, stop the arbitration from proceeding. This discourages a party from using litigation as a delaying tactic and reinforces the primacy of the parties’ agreement to arbitrate.

Interim measures and court assistance

The law contemplates court assistance for arbitration, including support where the tribunal’s powers need to be supplemented. Parties seeking urgent protection should understand the interaction between the tribunal’s authority and the courts’ supportive jurisdiction, and should draft clauses that preserve the ability to seek interim relief without being treated as a waiver of the arbitration agreement.

Enforcement procedures and challenges

For enforcement, the framework provides for recognition and enforcement of awards, with defined grounds on which enforcement may be resisted or an award challenged. Counsel should structure proceedings with enforcement in mind from the outset, ensuring the award is reasoned, the tribunal was properly constituted, and procedural fairness is documented.

Interaction with the New York Convention

For cross-border matters, enforcement of foreign arbitral awards engages Kuwait’s international obligations as a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention framework remains an essential reference point for understanding how awards rendered in one jurisdiction are recognised and enforced in another, and it complements the domestic enforcement provisions of the new law. Recent Kuwaiti Court of Cassation decisions have also shaped the practical boundaries of arbitration, and counsel should keep developing case law in view when assessing enforcement risk.

Practical risk matrix for contractors, investors and sovereign counterparties

Comparison table: Law 11/1995 vs Decree-Law No. 120 of 2026

Next steps checklist and recommended timeline for counsel and institutions

1. Audit existing contracts for clauses referencing Law No. 11 of 1995 and re-paper to cite the new law.
2. For all government contracts, verify which approval applies and secure it in writing before effectiveness.
3. Review pending arbitrations to confirm the governing framework and plan enforcement strategy.
4. Advise arbitral institutions to begin compliance work within the transition window set by the law.
5. Update template clause libraries with the four drafting examples, each reviewed by local counsel.
6. Establish a record-keeping protocol for electronic arbitration agreements and approvals.

Conclusion and next steps

Kuwait’s new arbitration law, Decree-Law No. 120 of 2026, is a decisive modernisation that affects how contracts are drafted, how state agreements are approved, how tribunals are constituted, and how awards are enforced. The most urgent priorities are clear: re-paper clauses to reference the new statute, secure the correct approvals for government contracts, map pending disputes against the transitional rules, and ensure institutions begin their compliance work. Every drafting example in this guide is a starting point only and must be verified against the text of the Decree-Law and reviewed by local counsel before use. Contractors, investors, arbitral institutions and in-house counsel who act now will be best placed to benefit from Kuwait’s strengthened, pro-arbitration framework.

For tailored support on re-papering clauses, state-contract approvals and enforcement strategy, connect with the Arbitration & Dispute Resolution, Kuwait practice team and the Global Law Experts directory of Kuwait arbitration lawyers.

Sources

1. UNCITRAL, Model Law on International Commercial Arbitration
2. United Nations, New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
3. ICC, 2026 Arbitration Rules