Kuwait Court of Cassation principle number 458

Summary: - A creditor's exercise of his debtor's rights in the latter's name. Its condition. The 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 subject of the award constitutes a right of the debtor and enters his general assets. The rationale. As security for his creditors' rights and for distribution among them pro rata. The creditor's bringing the action in his personal name, seeking judgment for himself rather than his debtor. Its effect. It is considered a direct action brought by the former in his name and for his benefit. Articles 308 and 309, Civil Code. - The creditor company's bringing an action to compel the appellant and the respondents, jointly and severally and concurrently, to pay a sum of money and to release the bank guarantee issued in favor of the second respondent against the bank, on the basis that it supplied materials and equipment to sites belonging to the appellant pursuant to 2 supply contracts concluded with the latter as subcontractor, which refrained from paying the value of what was supplied, being the amount claimed. Its effect. It is considered a direct action in the claimant's name and for its benefit. The challenged judgment's departing from this view and characterizing 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 2 concerning creditors' general security and the means of preserving it, provides that: 1- Every creditor, even if his right is not due for performance, may exercise in his debtor's name that debtor's financial rights, except those specifically connected to his person or not subject to attachment, if he establishes 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 in it; otherwise, it shall be inadmissible.” Article (309) of the same Code provides that the creditor, in exercising his debtor's rights, shall be considered his representative.” This indicates that, in permitting every creditor to exercise in his debtor's name all that debtor's rights except those connected to his person 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 subject of the award constitutes a right of that debtor and enters his general assets as security for his creditors' rights, to be distributed among them pro rata. 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 benefit rather than his debtor's, it is a direct action brought in his name and for his benefit. It is established in this Court's case law that, although the court of merits has the power to ascertain the true intent of the claims submitted in the action, this is conditional upon its not departing from the content of those claims. Accordingly, the first respondent company brought the original action against the appellant and the second through fourth respondents, seeking judgment compelling them jointly and severally and concurrently to pay it ................. Kuwaiti dinars and to release bank guarantee No. (212766/5-02533-01-21), issued in favor of the second respondent company against the Commercial Bank, on the basis that it supplied ready-mixed concrete and 4 cranes to the sites of 2 projects belonging to the appellant pursuant to the 2 supply contracts it concluded with the second respondent company on 11/11/2000 and 27/4/2002, the latter being the subcontractor, which refrained from paying the value of what was supplied, being the amount claimed, and that the bank guarantee secured the supply of the equipment (cranes) covered by 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, and its action is direct, not indirect. Since the challenged judgment departed from this view and characterized the action as an indirect action through 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 to err in applying the law, requiring its cassation.