Kuwait Times, Sunday, Nov 22, 2020 | Rabi Al Thani
Kuwait laws’ updates discussed in recent business webinar
The American Business Council-AmCham Kuwait (ABCK-AmCham Kuwait), in
collaboration with German Business Council Kuwait and Al-Tamimi and Company,
hosted an informative webinar recently on the most recent updates of Kuwaiti
laws and regulations. This webinar included useful legal information on recently
issued laws and regulations, with the bankruptcy law and the new competition law
being the main topics.
Philip Kotsis, Partner and Co-Head of the Kuwait Office at Al-Tamimi and
Company, started the discussion with a general overview of various laws that
have been in focus since the start of the global COVID-19 pandemic, starting
with the labor law, rent/lease law, force majeure issues and the issuance of
Kotsis mentioned that both legal practitioners and businesses were anticipating
significant changes this summer to various laws due to the pandemic; however,
there has not been as much movement as expected. Despite much discussion and
rumors over the course of the summer, wholesale changes to the labor law (such
as relief for employers regarding salary reduction and leave time) were not
introduced. “However, we did see efforts to assist companies by providing aid to
cover Kuwaiti employees’ salaries during the pandemic,” he said.
Kotsis spoke about the ban on transferring work permits from the government to
the private sector, and the halt on the issuance of new visas for incoming
employees. He briefly touched upon the recent amendments to the rent/lease law,
including providing relief to tenants with regards to the payment of rent during
the periods of time that the government ceases business in Kuwait, and that the
courts would have discretion in determining the method and timing of such
payments in an effort to strike an equitable balance, given the effects of the
In terms of force majeure, the law was not affected; however, legal
practitioners are starting to see claims being brought before the courts
involving force majeure and exceptional circumstances. “But it will likely be
some time before we see how these laws will be applied in connection with the
pandemic as the cases work their way through the court system,” he said.
Kotsis then spoke about the new bankruptcy law, which was recently published.
Due to the fact that there was no prior independent and specialized bankruptcy
law, this legislation has become a crucial and welcome introduction for
businesses, debtors and creditors. Despite the issuance of the financial
stability law, and the bankruptcy provisions set forth in Kuwait’s commercial
law, Kuwait did not witness a significant use of the bankruptcy system, as
historically most of these situations were resolved through consensual
discussions between debtors and creditors.
The new law is a major step forward as it streamlines and modernizes bankruptcy
provisions. There is a clear desire to see companies attempt to emerge from
these distressed situations, and there is an attempt to de-stigmatize business
failure. This will hopefully have a positive impact on various aspects of
business culture in Kuwait, and will help investors outside Kuwait to see that a
structure has been put in place, which may attract more foreign investors.
Kotsis specified that the law calls for the establishment of a specialized
bankruptcy court, which is a major step, as there will be a specialized court
for the first time in Kuwait. The new law also establishes guidelines for the
implementation of bankruptcy trustees who can oversee a bankruptcy filing,
specialized bankruptcy investigators who will work with the bankruptcy court and
trustees to ensure the rights of all parties involved and prevent abuse of the
system. A separate bankruptcy commission established under the ministry of
commerce and industry will also be set up to oversee bankruptcy filings of
Kotsis concluded his presentation with a discussion of the new competition law,
which was recently published. This law regulates new areas of competition
practices that were not regulated previously. In addition to revising provisions
under the old law, one major change codified under the new law is the
introduction of vertical and horizontal competition practices.
“The new law applies to any practice that takes place inside or outside Kuwait
that may restrict, harm or negatively affect freedom of competition in Kuwait.
The new law clearly defines the areas of activities that are not subject to the
law – government-owned companies for example – that may be decided by the
Council of Ministries,” he added.
Horizontal and vertical relationships and their effects on competition are now
clearer. “For example, under horizontal relationships, activities such as price
fixing, fixing the volume of production and sale of goods, manipulating bids and
tender prices through agreement or though price fixing, and restricting
technical development or investment in producing, selling, buying or
distributing goods and services will be targeted for strict regulation and
oversight by the new law through the Competition Protection Authority. In terms
of vertical relationships, the law prohibits agreements between principals and
agents that may restrict or apply unfair competition practices in the market,”
Finally, he indicated that the Competition Protection Authority will now have
broader discretion and authority to decide whether certain activities fall
within the scope of the law. With regards to mergers and acquisitions, the 35
percent control threshold has been removed, with a focus on the effect of the
merger/acquisition on the market on a case-by-case basis, as opposed to a
general threshold standard.
During the question and answer session, Kotsis restated that the competition law
applied to most sectors except for those sectors specifically exempt in the law,
such as public utilities, and state-owned entities regulated by the Council of