AlRaqaba Magazine issued Annually by State Audit Bureau of Kuwait Issue No. 18 December 2022 the Crown Prince Receives the Annual Report of the State Audit Bureau from Al-Shaya
AlRaqaba Magazine, a specialized audit and accounting magazine issued periodically by The State Audit Bureau of Kuwait, is pleased to open the call for professionals from all SAIs in neighboring Arab countries to contribute to the different sections of the magazine. AlRaqaba Magazine has a diverse range of sections that focus on the fields of audit, accounting, finance and law,and they are: Legislations, Audit and Financial Standards, Audit Perspectives, Environmental Audits, Auditing and Computers, Researches, Studies, in addition to the Articles Section. The magazine will publish your contribution, whether research an article or a study if it applies to the following conditions: • Be of a value and an asset to the content of the magazine. • Adheres to academic writing standards and principles. • Observes academic citation rules. • Has not been previously published elsewhere. • After being published in AlRaqaba, the submitted research, article or study is not to be published in another platform except with a prior permission from the editor-in-chief. • Has to be 2 – 6 A4 pages. Relevant pictures if any, a personal photo and a brief about the writer must be kindly attached to the submitted content. Special rewards will be granted to the participants whose contributions are published, and that is subsequent to the approval of the committee in charge of the post-publication assessment of the magazine. CALL FOR CONTRIBUTION! contributions are sent at the following email address: magazine@sab.gov.kw To preview the magazine you can visit the SAB website: www.sab.gov.kw
ALRAQABA . ISSUE 18 1 Editorial Chief Editor Essam B. Al-Mutairi The role of scientific research and the preparation of specialized studies in the accounting field and the scientific and professional fields that support the accounting field has become of great importance. So, governmental and non-governmental institutions tended to reaffirm the specialized professional concept by supporting scientific research and specialized studies, and developing professional publications. This activity came at the forefront of the activities adopted by the professional institutions to achieve development and keep pace with the new professional field to overcome the shortage in specialized publications sponsored by various publishing houses, especially those issued in Arabic. On the other hand, specialized professional publications issued by official institutions, especially the supreme audit institutions, include high professional and scientific value. They are developed by experienced specialists who employed their research skills to reflect realistic professional expertise representing the results of refinedwork experiences and perfected tools. SAB, in addition to its professional position as an audit institution working to protect public funds, has gained a scientific position due to its sponsorship of scientific and professional publishing and the adoption and support of all activities that enrich the accounting literature. Thus, SAB possessed valuable references such as publications, which varied between books, reports, professional guides and guidelines, research studies, and working papers. SAB products are of reputable success and contributed to making SAB a major destination that nourishes specialized researchers from inside and outside SAB. They provide researchers with scientific and distinguished professional references among which are the intellectual property of the SAB and are not available in the external publishing market. SAB has acquired this remarkable position as an exporter of scientific materials and a sponsor of specialized intellectual production due to the planning and support policies that put the preparation movement and specialized scientific research into its focus to enhance specialized knowledge and support and enrich professional literature. SAB was directed to document and organize such products by developing the Regulatory Resolution No. 12 of 2012 on depositing, organizing, and documenting intellectual products by SAB’s Information Center as it is concerned with managing SAB’s publications under the approved regulatory mechanism. SAB also emphasized its keenness and interest in its intellectual products by making this orientation a strategic goal, as it came within the framework of the first strategic goal in SAB’s 5th Strategic Plan 2021/2025. The goal of “building personnel, institutional and organizational capacities.” Among SAB initiatives came the “Development of Specialized Reference Structure Capable of Providing Scientific and Professional Reference Support Services.” This initiative becomes a strategic means to complete the process of building the specialized reference base for SAB, upon which SAB’s sectors, organizational units, and specialists will work to achieve this target, each in his/her field of competence. The Specialized Intellectual Production of the State Audit Bureau
The Specialized Intellectual Production of the State Audit Bureau 01 Editorial ____________________ 04 SAB News Legal Protection of Trademarks Against Imitation and Forgery on Local and International Level 17 Legislations ____________________ 25 Organiztions & Audit Institutions The Strategic Plan and a New Phase 34 Strategy Approval of Public Debt Law and Its Impact on the Fiscal Status of Kuwait 37 Feature Article Overview of Financial Leasing 52 Thesis SAIs’ Role in the Fight Against Corruption 56 Audit Vision Risk-based Audit 59 Research Digital Transformation at the Operation of Financial and Administrative Systems in Public and Private Sectors, Its Connection to the Effectiveness of Control and Audit Procedures and Its Role in the State of Kuwait 67 Audit and Computer Book Review: “Proceedings of the Virtual International Conference: The Role of Institutions in Achieving Sustainable Development during Global Pandemics” 73 Feature Book SAB’s Role in Auditing SDGs 78 Articles Kuwait between Digital Transformation and Human Resource Investment 97 Break AlRaqaba Magazine issued by State Audit Bureau of Kuwait Chief Editor Essam B. Al-Mutairi Deputy Editor Hala Al-Shemaimri Editorial Secretary Fatma Al-Nasser Editorial Board Members Ebrahim Bo Kobar Dr. Abulrahman AlMukhaizeem Jassim Mohammed Sadeq Fatma Al- Failkawi Adbulaziz Abdulla Hasan Translated by The Translation Section at SAB Design Deema Al-Kandari Bedour Al-Hasawi Correspondence Editor’s Name AlRaqaba Magazine State Audit Bureau P.O.Box 17 Shamia Kuwait 71661 Tel. +965-24957000 Ext. 7152 Direct: +965-24957152 Fax: +965-24957062 magazine@sab.gov.kw www.sab.gov.kw sab_Kuwait sab_q8
ALRAQABA . ISSUE 18 3 52 37 21 59 Feature Article Public Debt and Its Impact on the Fiscal Position of the State of Kuwait Thesis Overview of Financial Leasing Legislations The Concept of the Natural Judge Principle and its Connotations Research Features of Publicprivate Partnership The Concept of the Natural Judge Principle and its Connotations Overview of Financial Leasing Features of Public-private Partnership Public Debt and Its Impact on the Fiscal Position of the State of Kuwait
4 ALRAQABA . ISSUE 18 SAB News On Wednesday 19th of October 2022, His Highness the Crown Prince of the State of Kuwait, Sheikh Mishaal Al-Ahmad Al-Sabah, may Allah protect him, met the President of the State Audit Bureau, Mr. Faisal Al-Shaya. Mr. Al-Shaya submitted the annual report of the State Audit Bureau on the findings of the conducted examination and review of the final accounts and budget implementation of entities subject to SAB’s control (part one – the fiscal year 2021-2022). H.E. Al-Shaya also submitted copies of the report to the Parliament Speaker, Mr. Abdulaziz AlSadoun, and the Prime Minister, Sheikh Ahmad Al-Nawaf Al-Sabah. The Crown Prince Receives the Annual Report of the State Audit Bureau from Al-Shaya
ALRAQABA . ISSUE 18 5 SAB News
6 ALRAQABA . ISSUE 18 SAB News SAB Auditors Meet with French Delegation Representing MINFRA In light of the bilateral cooperation between the State of Kuwait and the French Republic, a team of SAB auditors met with the French delegation representing MINFRA on Wednesday, March 23, 2022, at the Millennium Hotel. It is worth noting that MINFRA is the French counterpart of the Kuwait Authority for Partnership Projects (KAPP). During the meeting, the SAB’s team presented a brief about the establishment of the State Audit Bureau, its mission, and its connection with other State institutions. The team also presented a preview of the SAB’s organizational chart. On the other hand, the French delegation made a presentation on a few of their accomplished projects. The meeting also included an exchange of information and reflections on public-private partnership projects. Furthermore, the representatives of SAB demonstrated the roles of pre-audits and post-audits in auditing projects, along with the required procedures and duration. Afterward, a discussion followed on MINFRA’s role in proposing its partnership projects, the main impediments and risks that challenge these projects, and how to deal with them. In the meeting, SAB was represented by Mr. Ali Khashawi, Technical Office Senior Member in the Pre-Audit and Technical Support Sector; Mr. Ahmed Alfares, Chief Auditor at the Economic Affairs Pre-Audit Department; Mr. Bander Alotaibi, Chief Auditor at the Economic and Organizational Affairs Audit Department; Mr. Basel Alfadhli, Senior Auditor at the Economic AffairsPre-AuditDepartment;Ms.DalalAlmutawa, Principal Auditor at the Supplementary Bodies of Investment and Service Affairs Audit Department; Mr. Yaqoub Alwazzan, Senior Translator at the Training and International Relations Department; and Ms. Tahani Alshammeri, Assistant Auditor at the Supplementary Bodies of Investment and Service Affairs Audit Department. The French delegation, on the other hand, was represented by Mr. Bruno Zanghellini, Economic Adviser and Head of the Economic Department at the French Embassy in Kuwait; Ms. Laure Hilzenkopp, Project Director at FIN INFRA (a PPP unit affiliated with the French Ministry of Economy, Finance and Industrial and Digital Sovereignty); and Mr. Nicolas Vital, Project Director at FIN INFRA.
ALRAQABA . ISSUE 18 7 SAB News SAB Participates in a Workshop Held by the French Embassy on PPP Symposium SAB participated in a workshop arranged by the French Embassy representatives in Kuwait with the attendance of specialists from MINFRA, the French counterpart of the Kuwait Authority for Partnership Projects (KAPP). The workshop was held on Wednesday, 23rd March 2022, at the Millennium Hotel. The workshop showcased the PPP system in the French Republic and emphasized exchanging expertise with a special focus on the legal and financial structuring of projects. Ms. Laure Hilzenkopp, Project Director at FIN INFRA (a PPP unit affiliated with the French Ministry of Economy, Finance and Industrial and Digital Sovereignty) and Mr. Nicolas Vital, Project Director at FIN INFRA, delivered a presentation on the French experience in PPPs and concessions. Mr. Nayef Al-Haddad, representing Kuwait Authority for Partnership Projects, delivered a presentation on “the New Era of Kuwait through PPP.” Mr. Ali Khashawi, a Technical Office Senior Member in the Pre-Audit and Technical Support Sector; Mr. Bandar Al-Otaibi, Chief Auditor in the Economic and Organizational Affairs Audit Department; Mr. Yagoub Al-Wazzan, Senior Translator at the Training and International Relations Department; and Ms. Tahani Al-Shammari, Assistant Auditor at the Supplementary Bodies of Investment and Service Affairs Audit Department attended the workshop.
8 ALRAQABA . ISSUE 18 SAB Holds Digital Transformation Symposium The State Audit Bureau (SAB) held a technical symposium on “Digital Transformation” that took place during the period from March 29 – 30, 2022. The Symposium was attended by Mr. Adel AlSarawi, Vice President of SAB, and was delivered by Dr. Abdulla AlMutawa, Faculty Member at The College of Engineering and Petroleum at Kuwait University. The Symposium targeted important topics such as the ultimate utilization of the applications of Technology and Artificial Intelligence (AI) in addition to the implementation of up-to-date work methods that would lead to saving time and effort. Leading such an approach would contribute to efficient data analysis that would support decision-making and the establishment of the principles of governance. Not only that, but also the expedient and accurate achievement of work procedures, minimization of error, analysis of big data with high speed to support decision making, and realizing professional satisfaction for the SAB Staff, all can be accomplished by taking such a direction. The Symposium also tackled the implications of Digital Transformation, which includes the SAB Website that represents the organization’s online reference and interface. The SAB Website serves as an integrated electronic system as it incorporates a Task Management System, Human Resource Management System (HRMS), and a Customer Relationship Management (CRM) System that serves both the SAB Staff and the external entities that SAB works with. In addition, the Website also incorporates Financial Transactions and Storerooms Management Systems, Financial Data Analysis Software, InventoryManagement System, and an Electronic Filing system. The Symposium also included discussions on the impediments and difficulties that faced Digital Transformation in the experiences of other organizations. The discussions concluded that the key to achieving Digital Transformation is summed up in a number of elements, mainly, the conviction of the SAB leadership and chief staff in the importance and benefits of Digital Transformation, the presence of simplified administrative digital systems that would ease the access to Digital Transformation, and finally the formation of a team specialized in Digital Transformation with diverse expertise. SAB News
ALRAQABA . ISSUE 18 9 The mechanisms to implement Digital Transformation were also approached during the symposium and were identified as follows: analyzing the current state of the State Audit Bureau and assessing the applied work methods, developing the work plan outlining intermediate objectives and achievement timetable, processes engineering and enhancing, in addition to forming a supervisory task team with diverse experiences. Alongside Mr. AlSarawi, the attendance of the Symposium included Mr. Sami AlDuwaihis- Assistant Undersecretary of The Independent Bodies Audit Sector, Mr. Yousef AlFouzan- Assistant Undersecretary of The Supplementary Bodies and Companies Audit Sector, Mr. Faisal AlAdwani- Director of The Information Technology Department, Mr. Saad AlQahtani- Director of The Ministries and Government Departments Audit Sector Technical Office, Ms. Aziza AlRushoud- Controller of The Training and International Relations Department, Mr. Ahmed AlMutairi- Principal Coordinator at The Training and International Relations Department, and Mr. Bander AlEnzi- Training Programs Implementation and Evaluation Principal Coordinator at The Training and International Relations Department. SAB Conducts Coordination Meeting with Kuwait AntiCorruption Authority (Nazaha) SAB conducted a coordination meeting with the Kuwait Anti-Corruption Authority (Nazaha) attended by the Assistant Undersecretary of the Pre-audit and Technical Support Sector, Mr. Khaled AlAbdulghafour. The meeting was held on Sunday, 26th of September 2021. It discussed SAB’s report on the assignment delegated by the National Assembly and the Council of Ministers regarding the expenditure allocated for the Covid crisis. Ms. Fatema Darweesh, a Principal Auditor, Social Affairs Pre-audit Department, delivered a presentation on SAB’s recommendations concerning contracts with governmental institutions during the Covid crisis. She also discussed significant observations and conclusions from the examination and review procedures. SAB’s team was represented by Mr. Zuhair Ashkenani, the Director of the technical office of the Pre-audit and Technical Support Sector, Mr. Waleed Al-Mazidi, the Director of the Social Affairs Pre-audit Department, and Mr. Ali Khashawey, Senior Member of the Technical Office of Pre-audit and Technical Support Sector. On the other hand, Kuwait Anti-Corruption Authority was represented by Ms. Abrar Al-Hammad, the Assistant General Secretary of Preventive Sector, and the Advisor Dr.Tareq Al-Duwaisan. SAB News
10 ALRAQABA . ISSUE 18 SAB Presents its 2020/2021 Annual Report Observations to the Council of Ministers In response to the warm invitation by the Council of Ministers, Mr. Faisal Al-Shaya, the President of the State Audit Bureau and several SAB officials, delivered a presentation demonstrating statistics and its 2020/2021 Annual Report observations. A statement discussing the National Assembly and the Council of Ministers mandated assignments was also discussed during an exceptional meeting held by the Council of Ministers with the control bodies on Thursday, 24th March 2022. Al-Shaya praised the Council of Ministers for calling the meeting and discussing ways to avoid the reported observations on ministries, government institutions, and bodies as the Council listened to SAB’s comments and recommendations. Alshaya elaborated that this gesture reflects the Council of Ministers’ interest in SAB’s reports along with the incorporated violations and observations and addressed methods to avoid and limit them in the future. He confirmed that this invitation and SAB’s interaction manifested Article (151) of the Kuwait Constitution. Al-Shaya explained that SAB shall provide the Council of Ministers with the findings of the relevant studies to enhance fruitful cooperation toward preserving public funds and the welfare of our beloved nation. The Council of Ministers, in return, has applauded the pioneering role of SAB in protecting public funds and assisting government bodies in improving their financial performance. The Council also valued SAB’s efforts in developing studies and reports that enhance the government’s financial work and monetarism in government bodies. SAB News
ALRAQABA . ISSUE 18 11 2020 Release of 12th Issue of SAB Annual Book The State Audit Bureau (SAB) has released the 12th issue of the SAB Annual Book for the year 2020. The Book covers topics around the achievement of the 2020 work plans and executive programs pertaining to the Bureau’s sectors and administrative units in all domains that have a direct impact on the achievement of the Sustainable Development Goals (SDGs). The compilation of the Annual Book has undergone evident modification and enhancement over the years in respect of form and content. The team in charge of the Book has been keen to keep pace with the developments in the publications of these sorts of books, namely those covering the achievements of organizational work. They had intended to develop a format for the book that was distinct from the traditional format of the first issues. Thus, a modern publication approach was taken, one that highlights the pursuits of States, their programs, and projects toward achieving Sustainable Development Goals (SDGs). Similarly, SAB has also kept pace with this organizational publication approach in its official releases, and encouraged the task team responsible for compiling the Book’s content to highlight SAB’s organizational role and its achievements that have a direct impact on the achievement of the SDGs. Thus, the Annual Book was released for the second year in a new form, presenting a documentation of the progressive contribution of the Bureau, and the efforts of those who are in charge of its tasks within the domain of the SDGs. Under national responsibility, all State Institutions including the State Audit Bureau are keen to play an effective role to collaborate to achieve the targeted development. All State institutions, each within its professional domain, contribute to the planning, execution and implementation of development projects that serve the Vision of New Kuwait 2035. It is noteworthy that the content of the Annual Book is distinct from other SAB publications, whether technical, scientific, or academic. The Book’s content is mainly directed to all segments of society and those of interest in the Bureau’s work and its accomplishments as in its auditees, CSOs, professionals and students. In addition to other SAIs, institutes and professional organizations may be of interest in the Book’s content, as it presents the achievements of the Bureau in an objective, concise and accessible way. SAB News
12 ALRAQABA . ISSUE 18 SAB Conducted a Workshop for GPFA In light of SAB’s aspiration to enhance collaboration with the Government Performance Follow-up Agency (GPFA), a workshop titled “SAB’s Role in Auditing Institutions Subject to its Control” was organized. The workshop intended to enhance knowledge, exchange expertise and invest in the advancement of both institutions. The event was held on Sunday, 5th of December 2021, on SAB’s premises. Mr. Homoud AlDeehani, SAB Assistant Undersecretary, Head of Studies and Government Reports, and Head of Assignments Sectors in GPFA, attended the workshop. The workshop aimed to introduce participants to SAB’s working mechanism. It also provided information about the knowledge, skills, and tools required by SAB to develop the assigned control reports on the auditees. The event included several pivots, such as an overview of the work nature at SAB and the types and styles of control, the control function mechanisms, and control outcomes and ways to handle findings in the State Audit Bureau. Ms. Eman Al-Huwaidi, Expert at the Technical Office, Independent bodies Audit sector, and Haya Al-Muhaimeed, Senior Auditor at the Supplementary Bodies of the Social and Public Affairs Audit Department delivered the workshop. Recommendations: * It is necessary to enhance communication between SAB and GPFA to address persistent observations on the entities subject to SAB control. * A mechanism must be put in place, and there should be a clear organization of the styles by which SAB displays the detected financial violations during the examination year along with the proceeding violations. Some departments may include violations within the report, whereas others may exclude them as a result of their referral as financial violations. Violation reports only show breaches within the financial year under examination. The number of proceeding violations from previous years under investigation with the entity is not shown. * Annual report developers and those responsible for drafting relevant issues on referring auditees to disciplinary courts must be directed to demonstrate the entity’s name, the subject of the referral, and the corresponding decisions issued clearly. * Focusing on delivering workshops to enhance the awareness of GPFA personnel of SAB’s role. * Allocate a colloquium addressing the functions of post-audit and financial violation in SAB to GPFA’s personnel or other interested parties. * Share SAB’s annual training plan with GPFA and enable them to communicate with SAB to participate in any topic of interest. SAB News
ALRAQABA . ISSUE 18 13 The State Audit Bureau... A Monument for Control, Service and Development On July 7 of every year, the State Audit Bureau of Kuwait (SAB) commemorates the anniversary of its establishment, which took place in 1964. On November 11, 1962, the Constitution of Kuwait was ratified, explicitly providing that a commission shall be established for financial control and its independence shall be protected by law. Article 151 of the Constitution stipulates that “a financial control and audit commission is established by a law, which ensures its independence. The commission is attached to the National Assembly and assists the Government and the National Assembly in controlling the collection of State revenues and the disbursement of its expenditures within the limits of the budget. The commission submits to both the Government and the National Assembly an annual report on its activities and its observations.” Accordingly, pursuant to the provisions of the article, Law 30 of 1964 was passed on July 7, declaring the establishment of the State Audit Bureau. This year SAB marks 58 years of service. This year is also marking a gradual return to normal life in the aftermath of the COVID-19 pandemic. It is worth mentioning that the pandemic has had an impact on the whole world, restricting movement and hindering the majority of work. However, work at SAB did not halt as it continued to monitor its auditees and has released its Annual Report, demonstrating that the SAB’s control remains active even when the majority of State institutions cease operating. SAB’s Objective and Duties The StateAudit Bureau aims at achieving effective control over public funds in order to ensure their SAB News
14 ALRAQABA . ISSUE 18 protection and optimum use. SAB also plays a role in ensuring that the proposed plans and programs accomplish their projected goals and reach their objectives. Furthermore, SAB is keen on building firm and constructive connections with its auditees, as demonstrated by the motto it embraces, “Partners and Auditors”. It aims to contribute to assisting these entities in regulating their financial and accounting operations and working to find solutions to the difficulties they face during the practice of their duties. This is only possible by maintaining effective cooperation with different State institutions at all levels. The SAB’s financial control covers all public ministries, departments, and authorities, which constitute the State’s administrative body. It also includes all municipalities and other local public corporate bodies, aswell as the public authorities, institutions, and facilities that are affiliated with the State, its municipalities, or other local public corporate bodies. In addition, SAB also audits companies or organizations of which the State or any other public legal entity holds a share of no less than 50% of their capital or is guaranteed a minimum limit of profit. Furthermore, the SAB’s control also covers companies that are authorized to use or manage States facilities or ones that are granted rights to exploit the State’s natural resources. SAB performs its duties which concentrate on auditing, examination, and review. The SAB’s audits may take place without notice and are performed by the SAB technical staff who are highly qualified with credentials in law or commerce or their equivalent, received from educational institutions acknowledged by the relevant official entities in Kuwait. SAB has also enhanced its technical body by employing experienced professionals in the fields of engineering, IT, and administration, all for the aim of enhancing the effectiveness and capacity of its control. Audits take place either in the auditees’ workplace or in the SAB building, the matter which is determined by SAB in accordance with the work’s interest. SAB’s Audit Methods and Prominent Audit Reports: SAB practices its financial control by applying two audit methods that are consistent with the state of affairs and systems in Kuwait. SAB combines the methods of pre-audit and SAB News
ALRAQABA . ISSUE 18 15 post-audit while inclining chiefly toward postauditing. The SAB pre-audit takes place prior to commitment and disbursement for supply and public work tenders as well as for any proposed commitment or agreement, where the value of each is 100 thousand KD or above. The SAB post-audit, on the other hand, takes place after commitment and disbursement, and it covers all forms of administrative and financial procedures. Remote Regional and International Contributions: SAB has participated in many meetings and conferences of all levels. Most prominent of these participations were the following: the 56th Meeting of the Governing Board of the Asian Organization of Supreme Audit Institutions (ASOSAI), the 15th General Assembly of the Asian Organization of Supreme Audit Institutions (ASOSAI), the 30th Meeting of the INTOSAI Working Group on Information Technology Audit (WGITA), and the ASOSAI Capacity Development Committee (CDC) Meeting. Moreover, SAB has also participated in the following meetings: the 1st meeting of the task team in charge of preparing the ARABOSAI’s strategic plan (2023-2028), the meeting for studying results of the planning stage of the Cooperative Audit on Extractive Industries, the 29th meeting of the Training and Development Committee for Employees of SAIs chaired by the SAI of Bahrain, the 22nd meeting of GCC SAIs’ Undersecretaries, the 18th meeting of the GCC SAIs’ Chairs, in addition to the 30th meeting of the Training and Development Committee for Employees of SAIs chaired by the SAI of Bahrain. SAB has also attended the meeting for WGITA’s first project that was on the topic of “Cybersecurity/ Challenges to Data Safety”, as well as the annual meeting of the Working Group on Public Debt (WGPD), the 31st meeting of the INTOSAI Working Group on Information Technology Audit (WGITA), and the seminar on “Auditing E-Procurement Systems”. SAB’s Achievements in the Past Year: SAB has released a number of important reports, periodic and non-periodic, and has presented a number of studies and initiatives, which added up to the sum of its regulatory achievements. - The Annual Report on the Examination and Audit Findings of the Budget Implementation of Auditees and their Final Accounts for the Fiscal Year 2020/2021. - Specialized reports mandated per Article 25 of the SAB Establishment Law Number (30) of 1964, in light of the assignments from the National Assembly or the Council of Ministers. The National Assembly’s assignments are periodic and non-periodic: First: Periodic Assignments: - SAB Report on the Periodic National Assembly’s Assignment on Invested Funds for the Period from 1/1/2021 to 30/6/2021, published on 22/9/2021. - SAB Report on the Periodic National Assembly’s Assignment on the Examination and Audit Findings of the Kuwait National Focal Point for Environment Projects (KNFP), published on 10/10/2021. - SAB 9th Report on the National Assembly’s Assignment on Following Up on the Issuance of Government Bonds, which covers the period from 1/1/2021 to 30/6/2021, published on 28/10/2021. - Report on SAB’s Remarks on the Periodic National Assembly’s Assignment on Invested Funds for the Period from 1/1/2021 to 30/6/2021 (past due date), published on 3/11/2021. - State Financial Statement, published in December 2021. Second: Non-Periodic Assignments: - Memorandum on the Response to the Request of the National Assembly’s Budget and Final Account Committee on the Legal Opinion on Subjecting Companies Affiliated to SAB News
16 ALRAQABA . ISSUE 18 SAB’s Auditees to SAB’s Control, published on 16/08/2021. - SAB’s Report on the National Assembly’s Assignment on Examining the Tasks of the Ministry of Defense (Army Fund), published on 17/08/2021. - SAB’s Report on the National Assembly’s Assignment on Assessing the Procedures Taken by Government Entities (the Ministry of Foreign Affairs, the Ministry of Defense, the Public Authority for Agriculture Affairs and Fish Resources (PAAF), the Communication and Information Technology Regulatory Authority (CITRA) and the Kuwait Oil Company (KOC)) in Response to SAB’s Remarks, published on 22/09/2021. - SAB Report on the National Assembly’s Assignment on the Examination and Audit Findings Concerning the (Eurofighter) Aircrafts Purchase Contract, published on 22/09/2021. Third: Studies and Initiatives: SAB has been extremely keen on producing specialized studies on topics deemed necessary to be subject to technical examination and analysis. SAB also releases consecutive separate reports relevant to these studies, as initiatives of its own. The reports are submitted to the National Assembly, the Council of Ministers, and the concerned SAB auditees. A number of these technical studies have been accomplished, for example: - Report on SAB’s Contributions to Environment Audit and Climate Change in the State of Kuwait. - SAB Report on the Assessment of the Efficiency and Effectiveness of the Public Authority for Agriculture Affairs and Fish Resources (PAAF) in Maintaining Food Security. - SAB Report on the Assessment of the Efficiency and Effectiveness of the Educational Services Performance in the Hawalli Educational Area. - SAB Report on the Follow-Up on the Recommendations of the Efficiency and Effectiveness Assessment of Well Drilling Systems and Plans (Exploratory, Appraisal and Development), and their Impact on Reserve Size and Targeted Production Quantities in the Kuwait Foreign Petroleum Exploration Company (KUFPEC (- Region of Europe, Middle East and Africa. - SAB Report on the Follow-Up on the Efficiency and Effectiveness Assessment of the Investment Activity of Zakat House. - SAB Report on the Follow-Up on the Performance Assessment of the Government Printing Department in the Ministry of Information. SAB News
ALRAQABA . ISSUE 18 17 The trademark is at the heart of industrial and commercial property, and it is the first and main face of commodities and products in front of the public’s eye. The attention to trademarks has increased along with the evolution of local and international trade. It increased even further with the transition to online shopping, which has become the driver of trading in the current age, especially, during the Covid19- Pandemic, as demand on online shopping has grown in return of the heath conditions and precautionary measures. Therefore, due to the importance of trademarks for products, it was crucial to protect them legally against any imitation, forgery, or unfair competition. The State of Kuwait has made significant efforts towards the protection of industrial property and trademarks. Kuwait has joined The Paris Convention for the Protection of Industrial Property, which was approved by Law 2014/36. The Convention focuses on the protection of trademarks on the international level. In addition, based on The GCC’s Unified Economic Agreement, the GCC Supreme Council has adopted the Law on the “Trademark System in GCC Countries” on 2012/12/25. One of the outcomes of that Law was the issue of Law 2015/13 on approving the trademark system in GCC countries, which explained the necessary procedures for registering trademarks, and the regulations and requirements for every trademark. The following are the most important articles from the Laws mentioned above, which bestow protection for trademarks specifically against imitation and forgery. First: Law 2015/13 on Approving the Trademark System in GCC Countries - Trademark Definition Article (2) defined a trademark as “any distinctive name, word, signature, letter, symbol, numeral, address, seal, drawing, image, inscription, packaging, figurative element, shape, color, Sara Faisal Al-Hamar Assistant Auditor at Companies Audit Department Legislations Legal Protection of Trademarks Against Imitation and Forgery on Local and International Level
18 ALRAQABA . ISSUE 18 Legislations set of colors or any combination thereof, or any sign or group of signs used or intended to be used for distinguishing goods or services of one establishment from those of other establishments, indicating the provision of a service, or monitoring or inspection of goods or services. Marks relating to sounds or scents may be deemed trademarks”. -Trademark Registration It is very important to register trademarks according to the procedures stated by the Law. If a trademark is not registered, it will not enjoy any legal protection. In addition, trademark registration is a requirement for trademark ownership. Therefore, if someone would imitate or forge an unregistered trademark, and they were the first to register it, they would have priority for said trademark, and no one would have the right to dispute unless by filing a deregistration case. The foregoingwouldbe in accordancewithArticle (8) of the Law, which states that, “Any person registering a trademark in good faith shall be deemed the owner of said trademark. Ownership of said trademark may not be challenged if it has been used for at least five years without being legally disputed”. -Cases Where Trademarks Can Not Be Regi stered The Legislator emphasized not registering any trademark which undermines fair competition. Article (3) of the Law specified the cases where a trademark can not be registered in order to protect the persons of interest. Some of these cases are as follows: - Marks which would mislead the public, or those providing false information relating to the origin or sourceof goodsor servicesor other characteristics thereof, as well as marks containing fictitious, imitated or forged trade names. - Any trademark identical or similar to a mark previously filed or registered by a third party for the same or relevant goods or services, if using such mark would create the impression of association between it and the goods and services of the owner of the previously registered mark or adversely affect their interests. - Marks representing copies, imitations, or translations of a third-party’s famous trademark, or a material part thereof, to be used for distinguishing goods or services non-identical or dissimilar to those distinguished by said famous mark, if such use would indicate an association between said goods or services and the famous mark and is likely to adversely affect the interests of the owner of said famous mark. A famous trademark here means the degree to which it is recognized by the relevant public as a result of promotion or period of registration or use thereof; the number of countries where it is registered or famous; or the value and impact of such mark on promoting the goods or services distinguished by it. Article (4) states “A famous trademark with a reputation beyond its registration country may not be registered for identical or similar goods or services unless so was requested or explicitly approved by the owner of said mark”. The reason for focusing on famous products
ALRAQABA . ISSUE 18 19 Legislations (global trademarks) is because they are more likely to be imitated or forged due to their good reputation in the market. -Trademark Protection Period Article (21) specified the protection period for registering a trademark, which is 10 years. The protection can be extended for a similar period if the owner applied for an extension during the last year of the protection period, without the need for further examination, and regardless of any objections made by third parties. -Trademark Registration Objections Should the competent authority (The Ministry of Commerce and Industry in Kuwait) approve the registration of a trademark, it must be published in the official gazette according to the executive regulations of this Law. Any concerned party may, within 60 days from the date of publication, submit an objection to the registration of said mark, provided that it is in writing. Otherwise, the competent authority may follow through with the registration procedures. In this case, the objector would only have the option to appeal against the registration decision within 30 days from the date of notification of rejecting the objections. Another way to protect trademarks is that the competent authority or any concerned party may apply to cancel the registration of a trademark if the trademark was unlawfully registered, without consideration to the elapsed time since the date of registration. -Penalties Imposing penalties is necessary to ensure the respect of the law. Articles (39) and (40) of this Law state the applicable penalties in case of breaching the provisions of this Law by way of imitation or forgery. They are as follows: 1. A sentence of imprisonment for a period not exceeding five years and/or a fine not exceeding one million Saudi Riyals or its equivalent in other GCC currencies shall be imposed on any person convicted of the following: - Forging or imitating a trademark registered under this Law in a manner that would mislead the public, or using in bad faith a forged or imitated mark. 2.A sentence of imprisonment for a period not exceeding three years and/or a fine not exceeding one hundred thousand Saudi Riyals or its equivalent in other GCC currencies shall be imposed on any person convicted of the following: - Knowingly selling, offering for sale or trading, or possessing with the intention of trading any goods bearing false or imitated marks. - Knowingly possessing tools or material intended to be used in the imitation of registered or famous trademarks.
20 ALRAQABA . ISSUE 18 Second: The Paris Convention for the Protection of Industrial Property The Paris Convention is not a novel notion. It was first introduced in 1883, and it applies to industrial property in its broadest concepts. It includes patents, trademarks, graphs, and industrial designs. It also includes utility models, service trademarks, commercial names, and geographical data. In addition, the Paris Convention defies unfair competition. This International Convention is considered a major step towards helping creators to protect their intellectual property in other countries. The State of Kuwait is amember of this convention according to Law 2014/36, which approved the joining of Kuwait into The Paris Convention for the Protection of Industrial Property. Regarding the protection of trademarks, Article (1) of the Law states that the countries governed by this Convention shall establish a union to protect industrial property. The protection includes patents, utility models, graphs, and industrial designs. As well as, industrial, commercial, and service trademarks which are the subject of this article. The Scope of Legal Protection Regarding Legal Personnel Law No. 2015/13 on approving the trademark system in GCC countries, has offered protection to trademarks in GCC countries that have joined the Convention. According to Article (13), any party who applies for registering a trademark has the priority to register based on a prior application registered in any member country of the Convention. Such is the case if the trademark was registered in the State of Kuwait. References: 1. Law No. 2014/36 on approving the joining of the State of Kuwait to The Paris Convention for the Protection of Industrial Property, which protects trademarks on the international level. 2. Law No. 2015/13 on approving the trademark system in GCC countries and its executive regulations. Moreover, the trademark owner may ask for temporary protection if their product or commodity meets all the registration terms and conditions during a fair or exhibition held in GCC countries or other, without the need to register the trademark again in the country where the fair is held. As for The Paris Convention for the Protection of Industrial Property, Article (1) states that countries within this Convention shall form a union, which ensures the protection of industrial property. If a trademark was registered in any member state of this Convention, it can be used as proof of ownership in any other member state of this Convention. In the end, and based on the above, we would like to empahsize that trademarks comprise the basis of the economy, and that the protection of the trademark would entail the following; first, protecting the local and international economy that countries and governments depend on; second, protecting consumers from confusion between high-quality original trademarks and other less-quality imitated ones; and third, protecting trademark owners from unfair competition that may compromise their business. Legislations
ALRAQABA . ISSUE 18 21 The Concept of the Natural Judge Principle and its Connotations The right to litigation is considered one of the natural rights of human beings, which is guaranteed by the constitution. Therefore, any person has the right to go to court if any of their rights were violated in order to reclaim their right. As such, everyone – including the State and its institutions – is subject to the rule of law. Thus, the rule of law becomes a reality and not a theoretical mantra that lacks practical application. In addition, countries can not be described as democratic unless we examine how well they guarantee the right to litigation for their people in a way that ensures their rights. The jurisprudence and the law defined the natural judge as “the judge who hears claims according to applicable general legal regulations before referring the claim to court. If the decision to refer the case was issued to a department other than the competent department defined by law, the defendant or litigants in such case are considered to be referred to a judge other than their natural judge.” Moreover, “if a new law was issued after a crime was committed that transfers a certain claim from its original judge to be within the competency of another court, then this new legislation is being deviated from the legitimate purpose of issuing this law. Consequently, the judge of this court will not be the natural judge for the case”. It is worth mentioning that the reason for setting this guarantee is to connect the judge with the incident itself rather than the Sayed Mohammed Al-Jammal Expert, Legal Affairs, Financial Violations, and Performance Audit Sector Technical Office Legislations
22 ALRAQABA . ISSUE 18 defendant in order to achieve the highest degree of neutrality. Furthermore, it is very crucial to define the major elements of the concept of the natural judge. They can be summarized into three major elements, as follows: First: The court must be a permanent court and established by law: The jurisdiction of the court must be permanent and unbound by time, whether it was a certain period of time or certain conditions such as a state of war or emergency. Courts that are defined by a certain period of time do not fall under the natural justice system. On the other hand, the court must be established according to a law considering that it is the main source of regulations regarding general procedures, including the rules that regulate the judicial system. Therefore, the executive authority can not go against the regulation of the judicial authority. Article (164) of the Kuwaiti Constitution established the pillars of the judicial authority and referred to the Law to regulate its affairs and determine its competencies. However, this mandate must be bound by its limits and can not be used as an excuse to waste, undermine, or infringe upon this competency; otherwise, it falls within constitutional illegitimacy. The judicial authority is an original authority and is considered equal to the legislative and executive authorities. It derives its existence and entity from the constitution, not the law. The constitution bestowed it with the application of justice, and it is independent in that regard from other authorities. Therefore, no one can issue any legislation that wastes the jurisdiction of this authority – completely or partially – without being argued by Article (164) of the constitution, which states that the law must categorize courts based on their types and degrees and state their function and competencies. This means that the legislator totally handles the distribution of jurisdictions over those authorities in a way that ensures the achievement of justice and enables people to practice the right of litigation without compromising the judicial authority itself or removing any aspect of disputes from its jurisdiction. Second: The competency of the court must be defined before the emergence of the case It means that every citizen must be aware of the competent court hearing their case in advance in any proceedings they might be involved in within the qualitative and geographical competency of courts. Hence, no person can be taken away from their natural judge and put into another court. The Amiri Decree No. 1959/19 and its amendments concerning the law of judicial regulations stated the competencies of courts and their jurisdictions. Therefore, the legislative authority can not amend the rules of judicial competencies unless within the mandate given; otherwise, their actions will be considered null and void. Originally, regulating or restricting rights and freedoms must be done according to laws. However, it has to be done with Legislations
ALRAQABA . ISSUE 18 23 legal equality between all people without discrimination for any reason. Nevertheless, in cases where the judicial competency is transferred, under a legislative amendment, to a court that offers more guarantees for the defendant, such a transfer does not constitute a violation of the judicial authority. Transferring the competency of hearing the case to a higher court does not breach the defendant’s right to resort to their natural judge. In fact, forming this court provides more guarantees for the defendant compared to the original court, considering that higher courts have more experienced judges with seniority. Also, this court has a higher degree in terms of the judicial hierarchy and includes more judges than the original court. In general, a new judge is always better for the defendant whenever their intervention provides more protection and judicial oversight over procedures. Also, changing the competency opens up the door for appeals before another higher court. All of the aforementioned is applied provided that the guarantees offered to the defendant before their new judge are not less – if not more – than the ones they had before their original judge. Third: The court must possess all the guarantees that ensure a fair trial for the defendant All judges must be independent and impartial. The court must be formed by judges who are specialized in judicial work, and they can not be revocable since they are the protectors of rights and liberties. In addition, judges must have scientific and practical competency that enables them to fully understand the law both in text and spirit, which demands that they have a high degree of knowledge, legal qualifications, and judicial training so that they can discern the legal positions of litigants in the cases presented before them. Furthermore, a judge must be fully independent in his/her job, away from any pressure or lobbying. The impartiality and independence of judges are the basic guarantees of people’s rights. In fact, judges’ seeking public interest and staying away from personal interest, external pressure, or personal whims that affect their judgment is considered the cornerstone of any judicial system. There is no doubt that when court members fully enjoy elements of impartiality and independence, it guarantees a fair trial for all people, where they will enjoy all constitutional and legal guarantees available to them. International covenants and agreements and modern constitutions have been keen on confirming the independence of judges and making sure that they are only subject to the law, and in turn, the State, its institutions, and its people are all subject to the law. Confirming these principles, the First Justice Conference concluded that the natural court is tasked with two things: 1.The court must be defined by abstract Legislations
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