Kuwait Court of Cassation principle number 370

Summary: - The doctrine of unforeseen circumstances. Its application by the court. A discretionary power intended to reduce the obligation to a reasonable level by narrowing its scope or increasing its counter-performance. Judicial intervention to reduce the obligation to a reasonable level. Its condition. Hardship threatening exorbitant loss. Its criterion. Objective considerations only, not circumstances relating to the debtor personally. Rule: The appealed judgment's contravention of Article – 198 of the Civil Code, on the basis that the court should have applied the doctrine of unforeseen circumstances and reduced the obligation to a reasonable level by narrowing its scope or increasing its counter-performance on the occasion of the emergence of the financial crisis that struck the countries of the world, including the State of Kuwait and the appellant company, during the period between the commencement of performance of the contract and before its completion, as it led to a shortage of its financial liquidity and its inability to fulfil its financial obligations. Judicial intervention to reduce the obligation to a reasonable level is a discretionary power whose exercise requires the fulfilment of certain conditions, the most important being hardship threatening exorbitant loss. The criterion for this hardship is objective considerations, not circumstances relating to the debtor personally. Since the appellant attributed the damage it suffered to its own personal circumstances and not to objective considerations concerning the relationship in dispute, the appeal has been brought without its legal and factual foundation, requiring a judgment dismissing it and affirming the appealed judgment in the manner to be set out in the operative part.