Debtor imprisonment reinstated under Kuwait’s Bankruptcy Law

01/04/2025

Debtor imprisonment reinstated under Kuwait’s Bankruptcy Law

KUWAIT CITY, April 1: Decree-Law No. 58/2025 amended Article 5 of Bankruptcy Law No. 71/2020 on “Arrest Orders, Subpoenas, and Detention of Debtors,” outlining the controls to be incorporated into the amended Civil and Commercial Procedures Law, reports Al-Seyassah daily. Article 1 of the decree, which was published in the official gazette Kuwait Al-youm, specifies that the phrase regarding the nullification of “Articles 292, clauses one, two, and four of Articles 293, 294, 295, and 296 of Decree- Law No. 38/1980,” included in Article 5 of Law No. 71/2020, shall be deleted.

The explanatory memorandum states the following: Article 5 of Bankruptcy Law No. 71/2020 repealed Articles 292, clauses one, two, and four of Articles 293, 294, 295, and 296 of Decree- Law No. 38/1980, which governs the Civil and Commercial Procedures Law, leading to the lapse of all arrest warrants and the imprisonment of debtors. It was then decided to reinstate the debtor imprisonment system with the controls to be included in the Civil and Commercial Procedures Law. This necessitates an amendment to the text of Article 5 of Law No. 71/2020.

This amendment is considered one of the most important measures creditors use to compel debtors to pay. Furthermore, following the issuance of the Amiri Order on 5/10/2024, which stipulated in Article 4 that laws shall be issued by decrees with the force of laws, the draft bankruptcy decree-law was prepared. Its first article mandates the deletion of the phrase that cancels the articles from the aforementioned Civil and Commercial Procedures Law.

Article Two requires the ministers, each in their capacity, to implement this decree-law, effective from the date of its publication in the official gazette. Meanwhile, the official gazette Kuwait Al-youm also published Decree-Law No. 59 of 2025, which amends certain provisions of the Civil and Commercial Procedures Law. These amendments aim to strengthen pressure mechanisms to encourage solvent debtors to repay their debts, eliminate obstacles to debt settlement wherever possible, and take into consideration the circumstances of insolvent debtors.