Kuwait Court of Cassation principle number 159

The principle of autonomy of the will governs the relationship between banks and their customers. Its implication: contracts concluded between them may stipulate the interest rate payable on loans granted to them. Its condition: the interest rate must not exceed the rates announced by the Central Bank, fixed by its Board of Directors after approval by the Minister of Finance. An agreement on interest exceeding these rates requires its reduction to the rates announced on the date of conclusion of the loan contract. The basis for this. - Agreement in loan contracts to grant banks the power to increase the agreed interest rate without requiring the customer’s approval. Permissible pursuant to Central Bank decisions amending interest rates. - Decisions issued by the Central Bank fixing the interest rate charged by banks pursuant to Article 74 of Law 32 of 1968 concerning Currency, the Central Bank of Kuwait, and the Banking Profession. They may not have any retroactive effect and do not prevent performance of agreements concluded between banks and their customers before their issuance. The basis for this. Agreement to grant the bank the power to amend the rate agreed in the contract in accordance with decisions issued by the Central Bank amending the interest rate. The bank’s subsequent increase of the rate in exercise of that power. This does not contravene the law. The judgment’s contravention of this requires its cassation.