Kuwait Court of Cassation principle number 340

Summary: - Banks. They are institutions whose business is accepting deposits for use in banking operations, such as accepting deposits, opening documentary credits and granting loans. Its implication. Money exchange companies are prohibited from conducting those activities. The reason. Banks play an important role in the country's economic sphere. - Shares. The right to trade them. A fundamental right of their owner. He may not be deprived of them. - Trading shares pursuant to the contract concluded between the parties to the cassation appeal. Its absence from the prohibited banking operations specified by Article 54 of the Currency and Central Bank Law, provided for in the Commercial Law, or regarded by custom as being of that nature. Its consequence. This contract is not void. The challenged judgment's conclusion that this contract was void on the basis that it contravened the error imposed on institutions not registered with the Central Bank in receiving funds for investment. A violation of the law and an error in its application that led it to give an erroneous legal characterization to the relationship between the parties to the contract, rendering it defective and requiring its cassation. Rule: It is established that a share confers upon its owner fundamental rights of which he may not be deprived and which may not be infringed. These rights are human or citizens' rights that the public authority must respect. Foremost among these rights is the right to trade shares by selling, purchasing and assigning them. That being so, and as the share sale and purchase transactions were the basis upon which the investment contract underlying the action, dated 14/2/2006, was drawn up, bearing the respondent's signature, which the latter did not deny, and providing for the trading of shares by sale and purchase on various exchanges by the respondent; and as this trading was not included among the banking operations specified by Article 54 of the Currency and Central Bank of Kuwait Law, provided for in the Commercial Law, or regarded by custom as being of that nature, which the law prohibited from being conducted except by institutions taking the form of companies, the aforementioned contract is not void, particularly since the law guarantees freedom to trade shares by sale, purchase or assignment. Since the challenged judgment departed from this view and concluded that the said contract was void for contravening the prohibition on institutions not registered with the Central Bank receiving funds for investment,, it violated the law and erred in its application, which led it to give an erroneous legal characterization to the relationship between the appellant and the respondent and to award the respondent the amount claimed on the basis of the rules of restitution of what is not due. It is therefore defective in a manner requiring its cassation.