Kuwait Court of Cassation principle number 141

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 requirements contained in the decisions issued by the Municipal Council, on condition that a bank guarantee be submitted in favour 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 favour of the State and carry out the works at the owner’s expense. Its import. The guarantees subject to encashment are those submitted by owners of properties within the city for increased construction. Bank guarantees submitted by owners of properties other than those properties, to whom the provisions of the Municipal Council’s decision apply, in return for increased construction on their properties. They are not among those guarantees. They are subject to the general rules applicable to guarantees according to their legal nature as security for carrying out the works and requirements in return for authorising 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 ought to have been carried out of them. Rule: It is established in the jurisprudence of this Court 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/F15/258/10/2002 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 requirements contained in these decisions, including the owners’ obligation to submit a bank guarantee in favour of the Municipality for the value of the works required to be carried out, in order to safeguard the State’s right regarding requiring owners to carry out the required works and requirements, and that the Municipality is entitled to encash these guarantees in favour of the State, with its right to carry out these works itself at the owner’s expense, with the owner bearing price differences and the latter expenses, collectively indicate, according to the context of their provisions, that these guarantees subject to encashment and payment into 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 the 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 requirements—whatever its basis in that respect—in return for approval of increased 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 carrying out the works and requirements specified by the latter decision in return for authorising the owner to increase construction. Consequently, the Municipality is not entitled to refuse to return them except where those works and requirements have not been carried out, to the extent corresponding to the value of what ought to have been carried out of them.