Kuwait Court of Cassation principle number 3688

A joint-stock company. Its board of directors' competence to manage it. The consequence. The chairman and the other members are agents of the board of directors and of the general meeting of shareholders. The effect. The company is not bound toward third parties by the acts and transactions undertaken by the chairman unless they fall within his competence under the company's memorandum and articles of association. The exception. Fulfilment of the conditions of apparent agency or ratification of these acts by the general meeting in accordance with the law. An example of a chairman concluding an arbitration agreement when his powers under the law and the company's articles of association authorize him only to perform acts of management, and apparent agency is not established in his case. This resulted in the arbitration clause being ineffective against the company because it exceeded the actual and apparent representative authority of its signatory and because the company did not ratify this transaction. - 724 - Agency