Kuwait Court of Cassation principle number 83

Summary: - Shares. The right to trade them. A fundamental right of their owner. The owner may not be deprived of them. - Trading shares pursuant to the contract concluded between the parties to the appeal. Its non-inclusion among the prohibited banking operations specified by Article 54 of the Currency and Central Bank Law, stipulated by the Commercial Law, or deemed by custom to be of that kind. The implication thereof. The contract is not void. The challenged judgment’s conclusion that this contract was void on the ground that it contravened the error applicable to institutions other than those registered with the Central Bank receiving funds for investment. A violation of the law and an error in its application which led it to give the relationship between the parties to the contract an erroneous legal characterization, rendering it defective and requiring its cassation. Rule: It is established that a share confers upon its owner fundamental rights of which the owner may not be deprived and which may not be infringed. These rights are human or citizen’s rights which the public authority must respect. Foremost among these rights is the right to trade shares by selling, purchasing and assigning them. That being so, the operations of selling and purchasing shares were the basis upon which the investment contract constituting the foundation of 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. Since this trading was not included among the banking operations specified by Article 54 of the Currency and Central Bank of Kuwait Law, stipulated in the Commercial Code, or deemed by custom to be of that kind, 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 guaranteed freedom to trade shares by sale, purchase or assignment. Since the challenged judgment departed from this view and concluded that the aforementioned contract was void because it contravened the prohibition on institutions other than those registered with the Central Bank receiving funds for investment,, it violated the law and erred in its application, which led it to give the relationship between the appellant and the respondent an erroneous legal characterization 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.