The Kuwait Constitutional Court has established a significant precedent by declaring paragraph 1 of Article 34 of the Competition Law (Law No. 72 of 2020) unconstitutional. 

In recent judgements concerning appeals against paragraph 1 of Article 34, the Court emphasised the necessity of legislation being carefully drafted to achieve its intended objectives. The Court determined that penalties must be conducive to the protection of established rights with measures to prevent their abuse. Critically, it ruled that judicial discretion in penalty determination must not result in disproportionate financial sanctions, as such penalties constitute unconstitutional expropriation of private property. 

The principle of proportionality between penalties and offenses, a cornerstone of civil law, was underscored. The Court found the imposition of a 10% fine on the gross revenue of the breaching party for the year preceding the violation, as stipulated in paragraph 1 of Article 34, to be unacceptable. This penalty was deemed an unjust confiscation of funds unrelated to the specific offense, exceeding the bounds of balanced financial penalties and contravening Articles 16, 18, and 19 of the Kuwaiti Constitution. 

This ruling serves as a vital reminder to legislators and judges to prioritise the objectives of legislation and ensure equitable outcomes. 

Consequently, paragraph 1 of Article 34 of Law No. 72 of 2020 is now null and void. In accordance with Article 6 of Law No. 14 of 1973, judgements of the Constitutional Court are applied retrospectively. Therefore, entities subjected to this invalidated provision and compelled to pay excessive penalties under paragraph 1 of Article 34 may now seek reimbursement. 

For case-specific evaluations and further clarification, please contact the ASAR Disputes Resolution team.