Kuwait Court of Cassation principle number 2831

The relationship between banks and their customers. Subject to the principle of autonomy of will. Its implication: the contracts concluded between them may stipulate the interest rate applicable to the loans granted to them by banks. The condition: this rate must not exceed the rates announced by the Central Bank. Their agreement on interest exceeding these rates. It must be reduced to the rates announced on the date of the agreement. Agreement in these contracts to empower banks to increase the agreed interest rate without requiring renewed customer consent. A discretion granted to the bank. There is no violation therein. The contract’s failure expressly to include such an agreement. Its effect. Central Bank decisions adjusting the interest rate have no retroactive effect on what was agreed before them. - The bank’s entitlement to increase the interest rate. Its basis. The shared intention of the bank and the customer to accept the new rate, upwards or downwards, so long as it remains within the rate announced by the Central Bank. - 525 - Obligation