Kuwait Court of Cassation principle number 219

Summary: - A creditor's exercise of his debtor's rights in the latter's name. Its condition: a creditor claiming his debtor's right must bring an action in the debtor's name and in his capacity as the debtor's creditor, so that the award belongs to the debtor and enters his general assets. The reason: to secure the rights of his creditors and enable them to share it proportionately as creditors. A creditor bringing an action in his personal name seeking judgment for himself and not for his debtor. Its effect: it is regarded as a direct action brought by the former in his own name and interest. Articles 308 and 309 of the Civil Code. - The creditor company bringing an action seeking to oblige the appellant and respondents, jointly and severally and in solidum, to pay a sum of money and to release the bank guarantee issued in favour of the second respondent against the bank, on the basis that it supplied materials and equipment to sites belonging to the appellant pursuant to two supply contracts it concluded with the latter as subcontractor, which refused to pay the value of the supplies, being the amount claimed. Its effect: it is regarded as a direct action in the claimant's name and interest. The challenged judgment's departure from this view and characterization of it as an indirect action intended to protect the rights of its debtor, the latter company. An error in understanding and applying the law requiring its cassation. Rule: Article 308 of the Civil Code, contained in Chapter Two concerning creditors' general security and means of preserving it, provides that: 1- Every creditor, even if his claim is not due for payment, may exercise in his debtor's name that debtor's pecuniary rights, except those strictly personal to him or not subject to attachment, if it is established that the debtor has not exercised those rights and that his failure to exercise them is liable to cause or increase his insolvency. 2- The creditor's exercise of his debtor's rights does not require formal notice to that debtor, but if an action is brought in his name, he must be joined therein, otherwise it shall be inadmissible. Article (309) of the same Code provides that a creditor exercising his debtor's rights shall be deemed the debtor's representative. This indicates that, by permitting every creditor to exercise in his debtor's name all that debtor's rights except those personal to him or not subject to attachment, the legislature required a creditor claiming his debtor's right to bring the action in the debtor's name so that the award belongs to that debtor and enters his general assets as security for his creditors' rights, to be shared proportionately among them as creditors. If he does not bring it in his capacity as a creditor but brings it in exercise of a direct right of his own and seeks judgment for his own benefit rather than his debtor's, it is a direct action brought in his own name and interest. It is established in the jurisprudence of this Court that, although the trial court has authority to ascertain the true intent of the claims submitted in an action, this is conditional upon not departing from the substance of those claims. Accordingly, the first respondent company brought the original action against the appellant and the second through fourth respondents, seeking judgment obliging them, jointly and severally and in solidum, to pay it ................. Kuwaiti dinars and to release bank guarantee No. (212766/5-02533-01-21), issued in favour of the second respondent company against the Commercial Bank, on the basis that it supplied ready-mixed concrete and four cranes to the sites of two projects belonging to the appellant pursuant to the two supply contracts it concluded with the second respondent company on 11/11/2000 and 27/4/2002, the latter being the subcontractor, which refused to pay the value of the supplies, being the amount claimed. The bank guarantee secured the supply of the equipment (cranes) forming the subject of the contract dated 27/4/2002. Thus, the first respondent company brought the action in its own name, not as representative of its debtor, the second respondent company; its action is therefore direct, not indirect. Since the challenged judgment departed from this view and characterized the action as an indirect action by which the first respondent sought to protect its debtor's—the second respondent's—rights against the appellant, it erred in understanding the facts of the action, which led it into an error in applying the law requiring its cassation.