The Effectiveness of Special Economic Zones between the Discipline of Legal Regulation and the Flexibility of the Litigation System: A Comparative Study

Dr. Bilal Aql Al Sandid
Associate Professor of Public Law – Kuwait International Law School
Dr. Mahmoud M. Al Moghrabi
Assistant Professor of Private Law – Kuwait International Law School


Global competition in attracting foreign direct investment has always been a main feature of the economies of the contemporary world seeking to achieve comprehensive sustainable development. One of the precursors of this global trend is the unprecedented boom in the spread of special economic zones, particularly during the past three decades. These zones have become one of the priorities of the economic policies of numerous countries and the most important method of attracting foreign investments. Currently, there are 5,400 special economic zones, and according to the World Investment Report of the year 2019, issued by the United Nations Conference on Trade and Development (UNCTAD), it is expected that more than 500 economic zones will be established in the coming years.
What is striking about these zones is the variety of their forms, and the diversity of their patterns, not only between countries but even within a single country. While some of them are limited to facilitating trade and logistic services, others aim to localize modern industries and high technologies, develop financial services, and develop fields of science and innovation. Due to the lack of a unified model for a special economic zone to be emulated on the one hand, as well as the scarcity of performance evaluation reports in terms of quantity, quality and impact on the other hand, each country is unique in designing and implementing its own economic zones in line with its own development vision. As a result, experiences on the international level, according to the attached report, varied greatly between remarkable successes and remarkable failures.
In the face of this conflicting situation –and apart from the important economic dimension of the special economic zones –both the discipline of the legislative system and the flexibility of the litigation system are considered to be of particular importance in order to achieve the desired effectiveness and productivity without neglecting the subjective properties of each country.
In light of Kuwait’s tendency to approve the draft law for the establishment of the northern special economic zone, and the establishment of other economic zones, based on the text of the third paragraph of Article (4) of the Direct Investment Promotion Law in the State of Kuwait No. 116/2013, it is necessary to examine the challenges of the legal environment related to the establishment, management, and operation of the prospective economic zone and the flexibility of dispute settlement in light of the reality of local legislation that governs the world of finance, business and investment on the one hand, and comparative law on the other. In this context, several important questions arise regarding the following issues: First, the legal basis for the establishment of economic zones in the administrative organization of the State of Kuwait based on the Kuwaiti constitution’s recognition of utility and regional decentralization, and its effect on the administrative subordination and the political responsibility of the minister supervising the work of these areas; second, the legal nature of the economic zones in the State of Kuwait, and the differences in this regard between one economic zone and another, according to the instrument of their establishment by a special law, or based on the aforementioned Law No. 116/2013, and the extent to which the concept of public economic facility applies to them, and the impact of this on the job system and the legal framework that governs its work, its contracts and its relationship with the public; third, the compatibility of the litigation system adopted in the economic zones with the general principles recognized in the comparative and Kuwaiti laws.
In order to shed light on these problems, find answers to these questions and others, and measure their legal implications, this study adopts a critical analytical approach to the comparative legal texts and delves into the theoretical and practical principles and foundations that govern best practices in the economic zones, in an attempt to adapt them to serve the expected Kuwaiti experience.
Accordingly, the study is divided into two main sections; the first one addresses the discipline of legal regulation of the special economic zones in the State of Kuwait in terms of the basis and the legal nature of each of them, in the light of general legal principles and comparative experiences, as there is no doubt about the impact of the unity and coherence of the legal framework on the economic effectiveness of the areas under study; the second one focuses on verifying the flexibility of the litigation system adopted, in order to reach a conclusion that offers appropriate proposals to achieve the hoped-for compatibility between the specificity of Kuwaiti local requirements and the requirements of standard best practices.

Keywords: Legal system of economic zones, foreign direct investment, alternative means of dispute settlement, public utility, sustainable development.

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