A New Era for Digital Trade in Kuwait: MOCI’s Draft Law Aims to Transform Kuwait’s E-Commerce Sector
On December 4, 2024, the Ministry of Commerce and Industry (“MOCI”) held a conference to discuss a proposed draft law on digital commerce. The law aims to organize the rapidly growing commercial sector by establishing a regulatory framework to protect consumers, foster sector growth, and localize digital trade. As part of MOCI’s phased priorities, the draft of the “Digital Commerce Law – Phase One” includes provisions aimed at regulating the sector, protecting consumers, and opening new horizons for the growth of digital trade in Kuwait.
The Minister of the MOCI outlined three key objectives of the draft law:
- Regulating the digital trade sector.
- Protecting consumer rights.
- Enabling the growth of digital trade, recognizing its vital importance to Kuwait’s economy.
While the full text of the draft law has not been made public, several key provisions were outlined during the conference:
1- Provisions for engaging with the business and professional sectors (including doctors, lawyers, and accountants) requiring the service providers to offer electronic payment options approved by the Central Bank of Kuwait. This promotes the use of local financial technology companies, creating opportunities for them to expand their services in a rapidly evolving and vital sector.
2- Provisions requiring service providers to protect consumer data prohibiting sharing consumer data with third parties without prior consent, promptly report security breaches or data leak within 72 hours of its discovery and ensure the delivery of secure and efficient logistical services. This enables consumers to take necessary measures to protect their data or mitigate potential risks.
3- Provisions adopting advanced technologies such as blockchain, smart contracts, and artificial intelligence to enhance the efficiency of digital trade.
4- Provisions obligating the use of the Arabic language for product descriptions, purchasing procedures, digital payment processes, and communication at all stages of digital commerce. This requirement reflects Arabic’s status as the official language of the State of Kuwait.
5- Provisions addressing the commercial relationship between social media influencers and advertisers to ensure transparency and compliance with anti-money laundering standards. It prohibits deceptive promotions or unauthorized use of content, thereby supporting the protection of intellectual property rights. This regulation also aims to curb misleading promotions of foreign real estate and harmful or counterfeit products while safeguarding intellectual property.
6- Provisions requiring all merchants to register their electronic stores in the commercial register. Additionally, a dedicated register for unregistered professionals, referred to as the “Professional Register,” will be established.
7- Provisions granting consumers the right to terminate the contract and recover paid amounts if the product or service provider fails to execute or deliver within 15 days, unless otherwise agreed. Providers are also required to notify consumers in advance of any delays.
8- Provisions obligating providers to establish transparent and effective mechanisms for handling consumer complaints. These mechanisms must include direct communication channels, responses within a specified timeframe, and proper documentation of complaints and their resolutions. This ensures consumers can easily access providers when needed.
A key feature of the law is its approach to dispute resolution, introducing a modern and efficient system to protect consumer rights. The system operates through two specialized committees: one for handling violations and the other for judicial dispute resolution. This framework ensures disputes are resolved and reduces the burden on courts.
The MOCI has prepared an initial draft to present to relevant parties for their feedback. Subsequently, workshops will be held to refine the second draft, which will then move forward toward legislation. This initiative is part of the ministry’s efforts to create a more advanced market framework that delivers positive outcomes for market participants.
The preparation of the draft law involves several stages. Participation in the draft law is accessible through the MOCI official website; the public consultation on the draft “Digital Commerce Law- Phase one” is open until December 18, 2024. After which the second draft will be submitted to the “Legal Advice and Legislation Department” by January 5. By March 31, the draft will be included on the Cabinet’s agenda for review and approval. Upon receiving Cabinet approval, the law will be officially endorsed, implemented, and enforced. To ensure its continued relevance, the law will be updated every two years.
Authors: Mohamed Abdelhamed, Legal Director, Mohammed Al Awadhi, Legal Director and Maha Abdullah, Trainee Lawyer.