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Editorial

Doing business in Kuwait: independent water and power projects

Contributed by Al Markaz Law Firm

This article discusses the legal aspects of undertaking an independent water and power project in Kuwait. The main focus of this article shall be on the legal framework of doing business in Kuwait and managing certain aspects of legal risk.

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Legal market overview

In 2015, Kuwait’s cabinet – despite sectarianism and concerns over significant revenue reduction caused by the sharp drop in international oil prices – managed to secure the parliament’s approval of a five-year development plan that envisages spending $116bn on projects, as well as increasing the size of the private sector share of the economy.

This change of direction for an economy historically mired in public sector ennui was somewhat pre-empted as construction contracts and related legal work soared in 2014, with big-ticket awards including $12bn in contracts for the clean fuels refinery upgrade project and also the $4.8bn construction of a terminal, runway and 30 passenger gates at Kuwait International Airport.

The petroleum industry, which accounts for nearly half of GDP and 95% of export revenues and government income, remains in public sector hands and continues to bar the world’s international energy companies from active participation. As a result, external legal work in the sector is limited, although there is still good work to be found in serving the oil services companies that are required to assist the state-owned Kuwait Oil Company and the Kuwait National Petroleum Corporation in facilitating their projects.

Of the international law firms, only DLA Piper and regional heavyweight Al Tamimi & Company have forged alliances in Kuwait, with the resultant benefit of gaining access to the local courts. A number of local firms have developed extra-jurisdictional foreign law capability by hiring foreign qualified lawyers, notably including the highly ranked ASAR – Al Ruwayeh & Partners.

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