Thursday , February 22 2018

Parties encouraged to initially litigate disputes through ADR – Kuwait arbitration centers increasing their ability to effectively manage and resolve disputes

Najmah Brown Esq
The expansion and globalization of cross-border investment and trade has led to increased relationships between foreign entities. Inevitably, many of these relationships break down. Whether on a small or large scale, parties should consider the best means of resolving disputes at the onset of the relationship. Even if the parties agree to litigate disputes, they should initially attempt to resolve disputes through Alternative Dispute Resolution (ADR). However, many disputants are discouraged from utilizing ADR tools to resolve disputes because of the lack of precedent and ruling on legal rights, as well as the possibility of obtaining a lower compensation award than what a judge in a traditional legal proceeding would grant.

While many consider ADR as a concept of the new age, it has existed long before the coming of Islam. “Tahkim” is an old Arabic word, which means to designate someone as an arbitrator, and authorize such person to evaluate disputes and render decisions. Later, Islam recognized Tahkim as a means of dispute settlement. In modern ADR, Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator, outside of court. Thus, arbitration and other forms of alternative dispute resolution are just being married with the modern legal system.

With a continued emphasis on improving the legal environment for doing business in Kuwait, especially for the international market, Kuwait arbitration centers and international chambers are increasing their ability to effectively manage and resolve disputes in Kuwait conducted in English. Several events were recently held in Kuwait to educate the population on recent changes to international arbitration rules and how arbitration is applied in various sectors, as well as seminars on how to properly draft arbitration provisions.

International Chamber of Commerce:

Effective as of March 1, 2017, the International Chamber of Commerce Arbitration has amended the ICC Arbitration Rules. The most significant of the 2017 amendments is the introduction of an expedited procedure providing for a streamlined arbitration with a reduced scale of fees. If the parties to a contract agree to have their dispute managed by the ICC, this expedited procedure will automatically apply if the amount in controversy does not exceed $2 million, unless the parties opt out. The expedited procedure will also be available for higher-value cases, if parties elect to opt in.

The highlights of the expedited procedures are: 1) No terms of reference; 2) a case management conference will be held within 15 days after the date of filing; 3) arbitral tribunal may decide on documents only; 4) arbitral tribunal may limit the number, length and scope of written submissions and written witness evidence; and 5) final award is rendered within six months from the case management conference.

The most significant benefit of the expedited procedures are the reduced fees, where parties are able to cut administrative and arbitration fees by over 20%, in comparison to a traditional arbitration managed by ICC. Some parties may find themselves paying less for an ICC managed arbitration than what they would pay for a litigation held before the Kuwaiti courts. Parties should also be aware that arbitrations managed by the ICC can be held locally in Kuwait.

Enforcement of Contracts and Arbitration Judgements in Kuwait

While many international parties may still be hesitant to hold arbitration hearings in Kuwait, whether its managed by a local or international arbitration center, they should be assured that arbitration awards are more widely and readily enforceable than court judgements in Kuwait.

While contract enforcement is of significant importance to local and international entities, arbitration is a top source to resolve disputes and enforce deal terms against non-performing parties. Parties should take advantage of the Kuwait Commercial Arbitration Center, International Chamber of Commerce and other organizations geared towards foreign entities.

Email: najmahbrown@aladwanilawfirm.com

By Najmah Brown Esq

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