Kuwait Court of Cassation principle number 140

Summary: - Approval for owners of properties within the city in commercial areas to increase the building ratio of their properties in accordance with the controls and conditions contained in the decisions issued by the Municipal Council, provided that a bank guarantee is submitted in favor of the Municipality for the value of the works required to be carried out, as security for their execution, and the Municipality’s right to encash the guarantee in favor of the State and carry out the works at the owner’s expense. Its implication: the guarantees subject to encashment are those submitted by owners of properties within the city to increase construction. Bank guarantees submitted by owners of properties other than those properties, to whom the provisions of the Municipal Council decision apply, in return for increased construction on their properties, are not among those guarantees. They are subject to the general rules applicable to guarantees according to their legal nature as security for the execution of works and conditions in return for permission for the owner to build. Its effect: the Municipality may not refuse to return them except where those works have not been carried out, and to the extent corresponding to the value of what should have been carried out thereof. Rule: It is established in this Court’s case law that the import of the provisions of the decisions issued by the Municipal Council Nos. (M B/F 30/396/15/1998) dated 19/10/1998, (M B/F/20/232/9/2000) dated 10/5/2000, (M B/F 18/169/6/2001) dated (27/3/2001), (M B/F 15/258/10/2002 dated 25/7/2005, which included approval of the request of owners of properties situated within the city in commercial areas to increase the building ratio of their properties in accordance with the controls and conditions contained in those decisions, including the owners’ obligation to submit a bank guarantee in favor of the Municipality for the value of the works required to be executed, in order to preserve the State’s right concerning the requirement that owners carry out the required works and conditions, and that the Municipality has the right to encash those guarantees in favor of the State, together with its right to execute those works itself at the owner’s expense, with the owner bearing price differences and the latter expenses, collectively indicates, in accordance with the context of their provisions, that those guarantees subject to encashment and remittance to the Public Treasury pursuant to Decision No. (M B/T 5/123/3/2005) are those guarantees submitted by owners of properties within the city to increase construction on their properties in accordance with its provisions. As for bank guarantees submitted by owners of properties other than those properties, to which the provisions of Decision (M B/Q 20/232/2000), issued on 10/5/2000, apply, pursuant to the Municipality’s conditions—whatever its basis for them—in return for approval to increase construction on their properties, they are not among those guarantees. Rather, they are subject to the general rules applicable to guarantees according to their legal nature as security for execution of the works and conditions specified by the latter decision in return for permission for the owner to increase construction. Consequently, the Municipality has no right to refuse to return them except where those works and conditions have not been carried out, to the extent corresponding to the value of what should have been carried out thereof.