YFLG – Al-Yaqout & Al-Fouzan Legal Group Has Secured A Judicial Precedent Annulling The Dismissal Of A Manager In A Government-Owned Company

YFLG – Al-Yaqout & Al-Fouzan Legal Group Secures Judicial Precedent Annulling Dismissal of Manager in a Government-Owned Company

The Kuwaiti corporate law firm, YFLG – Al-Yaqout & Al-Fouzan Legal Group has secured a landmark judgment from the Court of Cassation overturning a disciplinary dismissal issued against an employee of a government-owned closed-shareholding company. The ruling establishes an important precedent clarifying the limits of disciplinary jurisdiction over employees of entities governed by private law.

The Court of Cassation held that the Administrative Circuit of the Court of First Instance lacked jurisdiction to hear the dispute, confirming that the matter falls outside the scope of Article (1) of Decree Law No. 20/1980 ‘Concerning The Establishment Of The Court Competent To Hear Matters Relating To The Statue Audit Bureau’.

In its reasoning, the Court confirmed that the employee is subject to the Private Sector Labour Law (Law no. 6/2010). Accordingly, jurisdiction lies with the Civil Circuit of the Court of First Instance, as opposed to the Administrative Circuit or the disciplinary courts.

Background

The dispute arose in 2016, when a disciplinary court ordered the dismissal of an employee of a government-owned closed-shareholding company. The disciplinary court asserted jurisdiction on the basis that the company was subject to the financial oversight of the State Audit Bureau.

The decision prompted significant legal debate regarding the extent to which disciplinary courts may exercise jurisdiction over employees of private entities in which the government holds an ownership interest, particularly where such entities remain subject to financial oversight; but nevertheless its employees do not qualify as civil servants and are not subject to the Civil Service Law.

YFLG’s Role

YFLG acted for the employee throughout the proceedings. The team advanced a comprehensive defence strategy based on a detailed analysis of the applicable statutory framework, drawing a clear distinction between the financial oversight exercised by the State Audit Bureau over government-owned companies; and disciplinary jurisdiction, which is limited to civil servants and does not extend to employees of private sector entities.

YFLG argued that financial oversight by the State Audit Bureau as a stand-alone factor does not subject a company’s employees to the public disciplinary regime, particularly where the company is governed by the Companies Law (Law no. 1/2016) rather than public-sector legislation.

Following sustained advocacy across multiple levels of litigation, the Court of Cassation accepted YFLG’s submissions, overturned the dismissal decision, and confirmed the lack of disciplinary jurisdiction—establishing a significant precedent in Kuwaiti administrative and labour jurisprudence.

YFLG represented the employee throughout the proceedings, with the litigation team led by Khalifa Al-Yaqout (Managing Partner), Ahmed Salem (Senior Associate), and Mutlaq Al-Mutairi (Deputy Head of Litigation). Following YFLG’s submissions, the Court of Cassation overturned the dismissal and confirmed the lack of disciplinary jurisdiction, establishing a significant precedent in Kuwaiti administrative and labour law.

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