Court restores citizens' rights, rejects bank guarantee instruments misuse in debt issue
KUWAIT CITY, June 24: In a landmark ruling, the Commercial Circuit of the Court of Cassation has established a pivotal legal precedent by overturning a prior appellate judgment in favor of a Kuwaiti citizen. The appellant was represented by legal counsel Dr. Fawaz Khaled Alkhateeb of Taher Group Law Firm Co. The court affirmed the necessity of crediting all amounts previously repaid under a loan arrangement and rejected the notion that bank guarantee instruments can serve as standalone sources of debt obligation.
The court held that the true nature of the relationship between the parties was a loan agreement and that all associated instruments, such as promissory notes and declarations, constitute evidentiary tools within the framework of that primary contract. Accordingly, any payments already made must be duly deducted when calculating the remaining debt. The court further emphasized that failure to recognize the repayments made by the borrower constitutes a serious violation of the right of defense and a fundamental legal error affecting the integrity of the judgment, thus warranting its annulment.
It ruled that the financial institution is obligated to reassess the indebtedness in light of the amounts proven to have been repaid, thereby applying the principles of economic justice and prohibiting unjust enrichment. Commenting on the ruling, Dr. Fawaz Alkhateeb stated, 'This decision reinforces judicial safeguards against the misuse of bank guarantee instruments and ensures that individuals' financial rights are not undermined under the guise of formalities.'
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Court restores citizens' rights, rejects bank guarantee instruments misuse in debt issue
KUWAIT CITY, June 24: In a landmark ruling, the Commercial Circuit of the Court of Cassation has established a pivotal legal precedent by overturning a prior appellate judgment in favor of a Kuwaiti citizen. The appellant was represented by legal counsel Dr. Fawaz Khaled Alkhateeb of Taher Group Law Firm Co. The court affirmed the necessity of crediting all amounts previously repaid under a loan arrangement and rejected the notion that bank guarantee instruments can serve as standalone sources of debt obligation. The court held that the true nature of the relationship between the parties was a loan agreement and that all associated instruments, such as promissory notes and declarations, constitute evidentiary tools within the framework of that primary contract. Accordingly, any payments already made must be duly deducted when calculating the remaining debt. The court further emphasized that failure to recognize the repayments made by the borrower constitutes a serious violation of the right of defense and a fundamental legal error affecting the integrity of the judgment, thus warranting its annulment. It ruled that the financial institution is obligated to reassess the indebtedness in light of the amounts proven to have been repaid, thereby applying the principles of economic justice and prohibiting unjust enrichment. Commenting on the ruling, Dr. Fawaz Alkhateeb stated, 'This decision reinforces judicial safeguards against the misuse of bank guarantee instruments and ensures that individuals' financial rights are not undermined under the guise of formalities.'
