Kuwait Court of Cassation principle number 133

Summary: - Judgments must be based on certainty and conviction, not probability and conjecture, and their reasons must derive from the case papers and be reasonably inferred therefrom in a manner capable of logically leading to the conclusion reached in the judgment. - The papers contain nothing establishing that the disputed property was let to third parties, and the challenged judgment did not take the trouble to verify this, relying solely upon the terms of the lease underlying the action to establish that material fact. The judgment based its ruling that the lease was void on an assumed fact unsupported by the papers, considering the appellant’s purpose in leasing to be speculation and profit-making, which is prohibited for a non-Kuwaiti. An error requiring cassation. Rule: Article (23) of the Commercial Law provides: "1- A non-Kuwaiti may not engage in trade in Kuwait unless he has a Kuwaiti partner or partners, and the Kuwaitis’ capital in the joint business must not be less than 51% of the business’s total capital. 2- The following are excepted from the preceding provisions: a- Non-Kuwaiti persons practicing a simple craft or small trade referred to in Article (17) may engage in trade without a Kuwaiti partner ..." Article (17) of the same Law provides: "Individuals practicing a simple craft or small trade in which they rely on their labor to obtain small profits to secure their livelihood more than on monetary capital, such as itinerant vendors and owners of small shops, are not subject to merchants’ obligations concerning commercial books, registration in the commercial register, and the provisions on bankruptcy and preventive composition. This indicates, as established in this Court’s case law, that although the general rule prohibits a non-Kuwaiti from engaging in trade in Kuwait without a Kuwaiti partner, an exception to this rule permits a non-Kuwaiti, on his own, to practice a simple craft or small trade in which he relies on his labor more than on monetary capital. That being so, and as the lease underlying the action establishes that the appellant, an Iranian national, rented the entire building described in the contract for use as accommodation for bachelors for a monthly rent of one thousand three hundred Kuwaiti dinars, it is apparent that, although this contract was intended for speculation to achieve financial profit, in view of the rental value stated in the contract and the fact that reletting does not require capital, the appellant’s pursuit of this activity constitutes small trade in which he relies on his labor to obtain small profits. Accordingly, as an exception to the general rule, he may pursue this activity alone. The respondent’s request to vacate the disputed premises and deliver them to him on the basis that the lease is void is therefore unfounded and deserving of dismissal. Since the appealed judgment departed from this view, it merits reversal and dismissal of the request for eviction and delivery based on the invalidity of the lease. Whereas the respondent brought the action seeking eviction and delivery on two grounds, the first being termination of the lease underlying the action upon expiry of its term, and the second being the invalidity of the lease because it involves speculation to achieve financial profit, which is prohibited for the appellant because he is not Kuwaiti; and whereas the court of first instance adjudicated the second ground of the action without addressing the first ground and did not exhaust its jurisdiction concerning it, this Court’s reversal of the first-instance judgment based on the second ground requires remitting the papers to the court of first instance to adjudicate the respondent’s request based on the first ground, namely termination of the lease upon expiry of its term, so that the Court does not deprive the two litigating parties of a level of litigation.