Session of 4 January 2011
Civil Cassation Appeal by Cassation No. 207 / 2010

(1) The legislature, in connection to banking operations, allows interest on loans extended by banks to their clients at the rate determined by Qatar Central Bank in cases where such rate is decided by the bank, or at the rate agreed by the parties in the case of loan contracts and credit facilities.
Section 110 of Decree Law No 33 of 2006 on the Qatar Central Bank provides that “Interest or return to be determined by the Qatar Central Bank shall apply on scheduled credit facilities unless a different rate is agreed between the financial institutions and their clients”. This means, as established by the jurisprudence of this Court, that the legislature, in connection to banking operations, allows interest on loans extended by banks to their clients at the rate determined by Qatar Central Bank in cases where such rate is decided by the bank, or at the rate agreed by the parties in the case of loan contracts and credit facilities.

(2) Delay interest becomes due where it is so agreed upon default be the debtor on his commitment to pay the debt at the time of payment. It is considered as compensation for the delayed satisfaction of the debt by the debtor.
Interests are of two types. Compensatory interest: where the debtor and the creditor agree on the same against the use of an amount of money for a specified period. Delay interest: which become due where it is agreed to be deserved upon default by the debtor on the payment of the debt at the time fixed for such payment, and are considered as compensation for delay by the debtor in paying such debt.

(3) The legislature allows the bank, in the case of credit cards and automatic telling cards, to charge costs for issuing and operating such cards, subject to agreement between the two parties in the credit card and automatic telling card contract. Section 433 of the Commerce Law provides that “The regulation of rights and obligations of the bank and the client emanating from the issuance and use of credit cards, automatic telling and other cards shall be subject to terms agreed between the parties. In particular, the specification of amounts for drawing ceilings, the validity of the card, costs due to the bank and the means of payment”. This means that the legislature, in the case of credit cards and automatic telling cards, allows the bank to charge the costs of issuance and operation of the card, and that this shall be subject to the agreement executed between the two parties under the credit card or automatic telling card contract.

(4) The judgment appealed against by cassation refused to decide the payment of interest on the loan and the costs of the credit card as applied, without considering the credit facilities contracts and the agreements therein on interest and costs, the rate due, the time for payment and the terms, in contradiction with the Qatar Central Bank Law, and the law of Commerce, and without observing the agreement of the parties. This renders the judgment defective and necessitates its cassation.
Therefore, the judgment appealed against refused to issue a judgment in favour of the interests and costs because the bank did not deserve the same, since the Appellant has limited the debt to the amounts due until the closing of the account, with no justification for any further amounts. The judgment also did not consider the credit card contracts and the agreements included therein on interest, costs, rates due, time for payment and the terms thereof, thereby violating the Qatar Central Bank Law and the Law of Commerce, and disregarding the agreement between the parties, which renders such judgment defective and necessitate its cassation regarding the part of it in connection to refusal to decide, as applied, in favour of interest on the loan and credit card costs.

The Facts
On 26.9.2010 an appeal by cassation was lodged against the judgment of the Court of appeal No 1431/2009 issued on 28.7.2010, by a statement wherein the Appellant applied for a judgment admitting the appeal by cassation in form and, as regards the substance, to conduct cassation of such judgment and consider the substance. On the same day the Appellant submitted an explanatory statement. On 5.10.2010 the Respondent was notified with the statement of appeal by cassation. At the session held on 7.12.2010 the said appeal was presented before this Court at the deliberation chamber where it decided that it deserves consideration and fixed a session for the litigation. At the session held on 21.12.2010 the claim was heard before this Circuit as detailed in the minutes of the session, where the Appellant’s advocate insisted on the contents of his statement. The Court postponed judgment to this session of today.

The Court

Having reviewed the documents, heard the report read out by the Presiding Judge and heard the pleadings, and after due deliberation on the appeal by cassation which satisfied its formal requirements;

The facts, as revealed in the judgment appealed by cassation and other documents, may be summarised as follows. The appellant brought the claim No 310 of 2009 – civil – general – applying for a judgment ordering the Respondent to pay to him, first, the amount of 60,947.10 Riyals, being the amount due on a car loan. Secondly, the amount of 154,799.10 Riyals, being a debt owed by the Respondent on a personal loan, and the interest due on the two amounts at 13.75% per annum from 1.1.2009 until the completion of payment, and thirdly, the amount of 14,881.04 Riyals due to the bank and owed by the Respondent, as a result of using the Visa card, with interest at 23% from 1.1.2009 until the completion of payment. When the Respondent failed to pay the debt as claimed and deserved by the Appellant Bank the latter brought the claim. The court ordered the Respondent to pay to the Appellant the amount of 1,230,627.24 Riyals and rejected other applications. The Bank lodged an appeal No 1431/2009 on the refusal to order the interests applied for. On 28.7.2010 the court issued a judgment dismissing the said appeal and confirming the judgment appealed against. The Appellant lodged against such judgment an appeal by cassation which was presented before this Court at the deliberation chamber where it fixed a session for its consideration.

This appeal by cassation is based on three reasons in which the Appellant contends against the judgment appealed against that it involved error in the application of the law and contradiction with documentary evidence. It states that the judgment decided on the deserved debt without interest applied for, as agreed upon in the credit facilities contract executed by the two parties and allowed by the law, whic renders the judgment defective and necessitates its cassation.

This contention is appropriate. Section 110 of Decree Law No 33 of 2006 on the Qatar Central Bank provides that “Interest or return to be determined by the Qatar Central Bank shall apply on scheduled credit facilities unless a different rate is agreed between the financial institutions and their clients”. This means, as established by the jurisprudence of this Court, that the legislature, in connection to banking operations, allows interest on loans extended by banks to their clients at the rate determined by Qatar Central Bank in cases where such rate is decided by the bank, or at the rate agreed by the parties in the case of loan contracts and credit facilities. Interests are of two types. Compensatory interest: where the debtor and the creditor agree on the same against the use of an amount of money for a specified period. Delay interest: which become due where it is agreed to be deserved upon default by the debtor on the payment of the debt at the time fixed for such payment, and are considered as compensation for delay by the debtor in paying such debt. Section 433 of the Commerce Law provides that “The regulation of rights and obligations of the bank and the client emanating from the issuance and use of credit cards, automatic telling and other cards shall be subject to terms agreed between the parties. In particular, the specification of amounts for drawing ceilings, the validity of the card, costs due to the bank and the means of payment”. This means that the legislature, in the case of credit cards and automatic telling cards, allows the bank to charge the costs of issuance and operation of the card, and that this shall be subject to the agreement executed between the two parties under the credit card or automatic telling card contract. The judgment appealed against by cassation refused to decide the payment of interest on the loan and the costs of the credit card as applied, without considering the credit facilities contracts and the agreements therein on interest and costs, the rate due, the time for payment and the terms, in contradiction with the Qatar Central Bank Law, and the law of Commerce, and without observing the agreement of the parties. This renders the judgment defective and necessitates its cassation in this connection, namely, the refusal to decide on the interest on the loan and the costs of credit card as applied for.

Therefore
The Court applies cassation on the judgment appealed against by cassation, orders the Respondent to pay the costs, and the case to be referred to the Court of Appeal for a new judgment to be issued by a panel of different judges. The Court also ordered that the Appellant shall pay the costs and the surety to be expropriated.