Article 2 of Kuwait’s constitution provides that sharia is the principle source of Kuwait’s legislation, but it is not the only one. The country’s legal system is also based on Egyptian and French codes, and in May 2012, the Emir vetoed a move by 31 of Kuwait’s 50 represented members of parliament that would have made all legislation comply with sharia.

Sharia is the primary source of Kuwait’s legislation, but it is not the only one

An essential tenet of Islam is the prohibition of unjustified enrichment, including transactions that contain excessive risk or speculation. Sharia prohibits interest, uncertainty and excessive speculation (over and above that which is necessary and unavoidable in regular business transactions) and requires the sharing of profit and losses.

In Kuwait, sharia is more strictly applied to non-commercial transactions such as inheritance and divorce. It is less rigorously applied to business law. For example, the charging of interest is generally permitted as long as rates are not unduly excessive, despite interest at any level being banned under strict sharia. There is no separate legislation in Kuwait that codifies sharia for commercial transactions.

The country is a party to the 1958 New York Convention, which stipulates that participating states recognise arbitration awards made in other contracting countries. However, the convention provides that this may be refused if the award is contrary to the public policy of the country where recognition and enforcement of the award is sought. This means that any award that breaches the general principles of sharia – for example, by demanding interest that could be seen as excessive – may not be enforced in Kuwait.