Kuwait Court of Cassation principle number 459

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 resolutions issued by the Municipal Council, conditional upon furnishing a bank guarantee in favor of the Municipality for the value of the works required to be performed, as security for their performance, and the Municipality’s right to liquidate the guarantee in favor of the State and carry out the works at the owner’s expense. Its implication. The guarantees concerned by liquidation are those furnished by owners of properties within the city for increased construction. Bank guarantees furnished by owners of other properties to whom the provisions of the Municipal Council resolution 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 in accordance with their legal nature as security for the performance of works and requirements in return for permission for the owner to build. Its effect. The Municipality may not refuse to return them except where those works have not been performed, and to the extent corresponding to the value of what ought to have been performed thereof. Rule: It is established—in the jurisprudence of this Court—that the provisions of the resolutions 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 resolutions, including the owners’ obligation to furnish a bank guarantee in favor of the Municipality for the value of the works required to be performed, in order to preserve the State’s right concerning the requirement that owners perform the required works and requirements, and that the Municipality may liquidate these guarantees in favor of the State, with its entitlement to perform 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 concerned by liquidation and payment into the public treasury pursuant to Resolution No. (M B / T 5 /123/3/2005) are those guarantees furnished by owners of properties within the city for increased construction on their properties in accordance with its provisions. As for bank guarantees furnished by owners of other properties to which the provisions of Resolution (M B /Q 20 /232/2000), issued on 10/5/2000, apply, pursuant to the Municipality’s requirements—whatever its basis for them—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 in accordance with their legal nature as security for the performance of the works and requirements specified by the latter resolution in return for permission for the owner to increase construction. Consequently, the Municipality has no right to refuse to return them except where those works and requirements have not been performed, to the extent corresponding to the value of what ought to have been performed thereof.