Kuwait Court of Cassation principle number 2834

The relationship of banks with their customers. Subject to the principle of autonomy of will. Its implication. They may agree on the interest rate applicable to loans. The condition therefor: that this rate not exceed the rates announced by the Central Bank. Article 111 of the Commercial Code. Agreement on interest exceeding these announced rates on the date of conclusion of the loan. It is permissible to agree to authorize the bank to raise the agreed interest rate in accordance with decisions issued by the Central Bank amending the discount rate, without requiring renewed consent from the customer. The bank raising the interest rate in this case is not a retroactive application of these decisions, but rather gives effect to the concurrence of the parties’ intentions. Absence thereof and its effect. The bank is bound by the agreed rate. Contravention thereof is an error in the application of the law requiring cassation of the judgment.