Kuwait's Court Of Cassation Upholds Arbitration Clause In Distribution Agreement

On 13th February 2018, the Kuwaiti Court of Cassation confirmed in a landmark judgement that an arbitration clause providing for international arbitration in a distribution agreement is valid and excludes the jurisdiction of the Kuwaiti courts. The decision puts an end to many years of ambiguity regarding the arbitrability of disputes based on commercial agency, dealership, and franchise agreements in Kuwait.

For many years, whether disputes based on distribution agreements may be submitted to arbitration was an unsettled matter in Kuwait. This ambiguity stems from Article 285 of the Kuwaiti Commercial Code, which establishes the competence of the courts at the "place where the contract is performed" for all "disputes based on agency". Furthermore, Article 286 of the Commercial Code applies Article 285 to exclusive dealership contracts.