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By Sylvia Westall and Mahmoud Harby
KUWAIT (Reuters) - Kuwait's top court ordered the dissolution of parliament on Sunday and called for fresh elections, a ruling likely to herald fresh political volatility in the U.S.-allied Gulf Arab state.
The Constitutional Court made its ruling after throwing out opposition challenges to changes to the electoral system decreed by the emir, hereditary ruler of the oil-exporting country, head judge Youssef al-Mutawa told reporters.
Political stability in Kuwait, owner of more than six percent of global oil reserves, has traditionally depended on cooperation between the government and parliament, the oldest and most powerful legislature in the Gulf Arab states.
The development is a blow to opposition politicians who boycotted a parliamentary election in December in protest at the electoral rules. The election was the fifth since 2006 and political upheaval has held up economic development and reforms.
"This verdict today is the worst decision," former opposition MP Waleed Tabtabie wrote on Twitter.
The new voting rules, decreed six weeks before the poll, triggered mass protests. Police packed the court complex on Sunday after opposition figures said they would demonstrate if the emir's decree was upheld.
The opposition case challenged the constitutionality of the move by the emir, Sheikh Sabah al-Ahmed al-Sabah, to reduce the number of votes allowed per citizen in parliamentary elections to one from four.
Political parties are banned in Kuwait so candidates campaign on an independent basis. Under the old system, voters could place four votes of equal weight for a candidate in their constituency. In December elections they could pick only one.
Protesters said the new rules aimed to weaken the opposition, which was able to form effective parliamentary alliances under the old four-vote system in the absence of parties. The government said the new voting system brought Kuwait in line with other countries.
The court ruling may divide the opposition, most of whose politicians have said they would not contest elections under the one-vote rule, though some may decide to re-enter the political system now the change has been approved by the top court.
Kuwait, which sits in a strategic position between Saudi Arabia and Iraq and across the Gulf from Iran, has the most democratic political system in the six-nation Gulf Cooperation Council. Its parliament has legislative powers and can hold government ministers to account.
However the emir has the final say in state matters and chooses the prime minister who in turn picks a cabinet, with members of the ruling Al-Sabah family occupying the top posts.
"The court's decision today enhances the durability of the democratic system," Information Minister Sheikh Salman al-Humoud al-Sabah said in a statement.
Last year's disturbances were unusual in their size and because those involved directly questioned the emir's policies. He is described as immune and inviolable in the constitution and dozens of Kuwaitis have been charged with insulting him, mainly on social media.
He is due to address the nation on state television later on Sunday. According to the court ruling, the emir must dissolve parliament and call elections. That could happen after the holy month of Ramadan which starts early next month.
Opposition politicians, who boycotted December's poll in protest at the decree, said changes to the voting system should be agreed by parliament.
The opposition boycott of the election meant that liberals, Shi'ites, non-aligned MPs and newcomers to parliamentary politics were elected to the assembly, working relatively well with the cabinet.
The more cooperative political environment has helped fuel a more than 30 percent rise of the stock exchange since the beginning of the year.
(Editing by William Maclean and Jon Boyle)