Kuwait's highest court on Wednesday annulled the results of a February parliamentary election in which opposition lawmakers won a majority, and reinstated the previous assembly.
The ruling was the latest twist in an escalating row between a government appointed by the ruler and mainly Islamist lawmakers who had threatened to summon senior ministers to parliament for questioning.
Prominent opposition lawmaker Musallam al-Barrak announced that he and several other MPs were resigning from the restored parliament, calling the court's ruling "a coup against the constitution".
Opposition politicians won a majority in February's elections, held after the emir dissolved the previous assembly amid bickering with the government over corruption allegations that had held up economic reforms and economic development.
Analysts said Wednesday's ruling would not be welcomed by many voters who backed opposition politicians due to allegations of financial irregularities against some former lawmakers.
"The previous parliament is completely unpopular," said Abdullah al-Shayji, a political science professor at Kuwait University.
"It does not have the support of the majority of Kuwaitis who voted for the new parliament and rejected most of the (former) parliamentarians who were rumored to be involved in the (corruption) scandal."
But some investors said the court's ruling to dissolve parliament was a positive step as a protracted row between the government and parliament had long delayed economic reforms and held up vital development projects.
"The old parliament being reinstated is likely to benefit the private sector. I expect to see some positive reaction in the market," said Talal Al-Hunaif, senior investment analyst at Coast Investment and Development Co.
"The country is suffering from constant political unrest and we saw no positive effect on the market since the new parliament was elected."
The OPEC member and U.S. ally has weathered the popular uprisings that have swept the Arab region since last year, but tensions rose between the cabinet and opposition lawmakers pushing for a say in government.
In one incident last year, some lawmakers let demonstrators briefly occupy parliament to demand to change the then prime minister, a senior member of the ruling family.
Opposition lawmakers failed to strike a deal with the ruling family in February for a significant share of cabinet posts and started exercising their right to summon ministers for questioning as a way of pressuring the government.
Lawmakers were considering questioning the interior and defense ministers, members of the ruling family, as well as the oil minister.
The emir, Sheikh Sabah al-Ahmad al-Sabah, suspended parliament for a month earlier this week - something he has done several times over the years - to avert a political crisis between lawmakers and the cabinet.
Although Kuwait is home to one of the region's most outspoken parliaments, the country's political system does not resemble Western democracy. The cabinet is hand-picked by the prime minister who is appointed by the emir who has the last say in politics and the constitutional right to dissolve parliament.
Political parties are banned so lawmakers rely on forming blocs and use grilling sessions to pressure the government. They can end in confidence votes that force ministers from office.