KUWAIT Law and Practice Contributed by: Michel Ghanem, Patrick Obeid and Michel Ata, Meysan
entry into related-party transactions. These rights help ensure that the minority shareholder has a say in deci - sions that could materially affect its investment. Other contractual rights often include information rights, pre-emption rights on new issuances, and tag- along rights in the event of a transfer of shares by the majority partner. In some joint ventures, the minority shareholder is granted a seat on the board or a super - visory committee with the authority to review major operational and financial matters. In practice, minority protections are sometimes fur - ther strengthened by provisions requiring consensus at the operational committee level, thereby embed - ding mutual oversight and promoting collaboration at all levels of governance. 6.8 Applicable Law and Dispute Resolution in International JVs The choice of law and dispute resolution forum is a key consideration in cross-border joint ventures involv - ing Kuwaiti entities. While Kuwaiti law is commonly selected when the joint venture operates primarily in Kuwait or involves significant local regulatory interac - tion, foreign law (most often English law) is sometimes preferred where the investors are based outside the region or where greater predictability and neutrality are desired. Dispute resolution clauses typically provide for arbitra - tion, often under ICC or LCIA rules, seated in a neutral jurisdiction such as London, Paris, or Dubai. Where Kuwaiti law is selected, parties may choose arbitration within Kuwait or resort to the Kuwaiti courts, depend - ing on the enforceability concerns and procedural requirements. Kuwait is a signatory to the 1958 New York Conven - tion on the Recognition and Enforcement of Foreign Arbitral Awards (“the Convention”), which significantly facilitates the enforcement of foreign arbitral awards in the country. In practice, however, enforcement remains subject to compliance with certain local pro - cedural requirements under Kuwaiti law. Once these formalities are satisfied, the party seeking enforcement must file a petition before the Kuwaiti
courts for the recognition and enforcement of the award. The court will review the request primarily for procedural compliance but may also consider whether any of the limited grounds for refusal under the New York Convention or public policy under Kuwaiti law apply. In most cases, the court’s role is not to revisit the merits of the dispute but to ensure that enforcement does not contradict Kuwaiti public order or mandatory rules. The entire process must be conducted in Ara - bic, and while Kuwait’s accession to the Convention has improved predictability for foreign parties, practi - cal enforcement may still face delays depending on the complexity of the case and the responsiveness of the local judiciary. As indicated previously in this chapter, the composi - tion and structure of the board in Kuwaiti joint ven - tures is generally driven by the negotiated balance of power between the shareholders, often reflecting, but not strictly following, their respective equity holdings. In many cases, including high-profile international joint ventures, the board is structured with equal rep - resentation for each party to ensure shared decision- making and governance parity, even where sharehold - ing ratios differ. The joint-venture agreement typically governs the appointment, removal, and replacement of directors, as well as the frequency of board meetings, quorum rules, and chairmanship. In some arrangements, the chairperson does not hold a casting vote, ensuring that no single party can unilaterally control board deci - sions. Instead, escalation mechanisms (such as refer - ral to an OGC or the shareholders themselves) are used to resolve deadlocks. 7. The JV Board 7.1 Board Structure Kuwaiti law does not prohibit the appointment of non-Kuwaiti nationals to the board of a company. However, residency requirements must be satisfied. Additionally, where directors are appointed as manag - ers of the WLL, certain restrictions may apply to non-
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