Law No. 41 of 1993 on the State’s Purchase of Certain Debts and the Manner of Their Collection

Law No. 41 of 1993
on the State’s Purchase of Certain Debts and the Manner of Their Collection

Preliminary Part
Definitions

Article 1

For the purposes of applying the provisions of this Law, the following shall mean:
1- Purchased Debts:
The balances of cash credit facilities purchased for the account of the State from local banks, from investment companies subject to the supervision of the Central Bank of Kuwait and from Kuwait Finance House pursuant to the provisions of each of Decree-Law No. (32) of 1992 and Law No. (41) of 1993.
As well as the balances of non-cash facilities outstanding on 1/8/1990 and owed by Kuwaiti clients once they have been converted into cash facilities, provided that, with respect to banking operations covered by other offsetting operations, the purchase shall be confined solely to the uncovered portion of such operations.
With respect to documentary credits at sight and deferred payment credits, it is required that the terms of their opening do not provide for the receipt of the goods subject of the credit outside the State of Kuwait.
Credit facilities granted for the purpose of financing money market and foreign exchange operations shall not be included in the Purchased Debts.
2- Real Estate Portfolio:
The local real estate portfolio belonging to Kuwait Finance House purchased for the account of the State on 31/12/1991.
3- Selling Entities:
The local banks, investment companies subject to the supervision of the Central Bank of Kuwait and Kuwait Finance House that sold to the State the Purchased Debts and the Real Estate Portfolio referred to in Clauses (1) and (2) of this Article.
4- Bonds:
The bonds issued and to be issued by the Central Bank of Kuwait as obligations of the State or with its guarantee in consideration of the purchase of the debts referred to in Clause (1) or in consideration of the purchase of the Real Estate Portfolio referred to in Clause (2) of this Article.
5- Clearing Debts:
The balance of debts resulting from loans extended by Kuwait Investment Company and Kuwait Company for Trading, Contracting and Foreign Investments, or through them, to finance the needs of borrowers to meet their obligations arising from post-dated cheques from forward sales of shares registered with Kuwait Clearing Company in implementation of the provisions of Decree-Law No. (57) of 1982 referred to above.
6- Client:
The debtor of Purchased Debts or the debtor of Clearing Debts, or the guarantor of either of them, including the clients of the Difficult Credit Facilities Settlement Programme issued in 1986.
7- Manager:
The bank that sold to the State the largest share of the Client’s debts. If Kuwait Finance House or one of the investment companies sold the largest share of the debt, the Manager shall be the bank holding the largest share of the debt owed to banks. If the debt is confined to Kuwait Finance House or the investment companies, or both, the Industrial Bank shall be the Manager. The Central Bank of Kuwait may appoint another manager for the debt if the interest so requires, after the approval of the bank nominated for management and of the Client.

* Clause (1) replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).
* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Part One
Purchase of Debts

Article 2

In addition to the debts purchased in accordance with Decree-Law No. 32 of 1992 referred to above, the Central Bank of Kuwait is authorised, on behalf of the State, to purchase the total cash facilities extended by local banks, by investment companies subject to the supervision of the Central Bank of Kuwait and by Kuwait Finance House before 2/8/1990 to:
1- Natural persons who are citizens of the States of the Cooperation Council for the Arab States of the Gulf, to the extent outstanding on 1/8/1990 together with the interest thereon until 31/12/1991. Cash repayments made by such clients after 1/8/1990 and until 6/9/1993 shall be treated as immediate cash settlement in accordance with the percentages and brackets set out in the Schedule attached to Law No. 41 of 1993, with refund of any amount paid in excess.
2- Kuwaiti clients, within the limits of the amounts repaid of such facilities after 1/8/1990 and before the entry into force of this Law; such amounts shall be re-settled as immediate cash settlement in accordance with the percentages and brackets set out in the Schedule attached to this Law, with refund of any amount paid in excess.
The purchase of the facilities provided for in the two preceding Clauses shall exclude the provisions available against them with the Selling Entities, and shall be made in consideration of the issue of bonds constituting obligations of the State or guaranteed by it, maturing within a period not exceeding twenty years from 31/12/1991.
The Selling Entities shall be paid the return due on the bonds issued under Clause (1) of this Article from the date of entry into force of this Law, and on the bonds issued under Clause (2) from 1/1/1992.

* Clause (1) replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 3

The Purchased Debts shall be transferred to the State with all their real and personal securities, and the provisions on assignment of rights set out in the Civil Code shall apply thereto insofar as they do not conflict with the provisions of this Law and the provisions of Decree-Law No. 32 of 1992 referred to above. The assignment shall be effective against the debtor and against third parties from the date of entry into force of this Law, or the debtor’s acceptance thereof, or his notification thereof, whichever of these dates is earliest.
The Real Estate Portfolio shall likewise be transferred to the State encumbered with any mortgages or securities established thereon in favour of third parties on 31/12/1991, and Kuwait Finance House shall manage it for the account of the State without any remuneration.

Article 4

The Central Bank of Kuwait may grant an annual return on the Bonds, in which case the Central Bank shall be guided by the average cost of funds at local banks, provided that the rate of return shall be the same for all Bonds, whoever their owner may be.

Article 4 bis

Clients of the Difficult Credit Facilities Settlement Programme issued in August 1986 who are subject to the instructions issued on the bases and controls of immediate settlements of debts not exceeding two hundred and fifty thousand Kuwaiti Dinars, and who notarised settlement contracts before 2/8/1990, may express to the Manager, within a period not exceeding three months from the date of entry into force of this Law, their wish to continue the settlement of their debts in accordance with the terms set out in those contracts.

* Added by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).
* The word «debts» (للديون) was corrected from «Bureau» (للديوان) by the corrigendum published in Kuwait Al-Youm (Supplement to Issue No. 223, Year 41).

Part Two
Collection of Debts

Article 5

The interest due on the Purchased Debt for the period from 2/8/1990 until 31/12/1991 shall be waived for the Client who undertakes to settle his debt by one or more of the following methods of payment:
1- Immediate cash settlement of the debt within two years from the date of entry into force of this Law, in accordance with the percentages and brackets set out in the Schedule attached hereto.
1 bis- Cash settlement of the debt in five equal annual payments, the first of which shall fall due within a maximum period of three months from 6/9/1995, and the remaining payments shall fall due within each year of the following four years, in accordance with the percentages and brackets set out in the Schedule attached to Law No. (41) of 1993. Each payment, except the first, shall bear a debt service charge calculated on the declining balance of the cash settlement amount of the debt, at a rate determined by the Central Bank of Kuwait on the basis of the average rate of return paid on the debt bonds in the same year, plus a percentage for debt services determined by the Central Bank.
2- Settlement of the debt on the basis of its rescheduling over a period not exceeding twelve years after the end of the grace period.
In all cases, it shall be a condition that the Client express his wish as to the choice of the method of payment before 31/3/1994.

* Clause (1) bis added by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).
* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 6

Subject to the provisions of the preceding Article, the debt shall be rescheduled in equal annual instalments, the rescheduling commencing on 1/4/1994 preceded by a grace period ending on the day preceding that date.
The instalments shall be paid on the dates determined by the Central Bank of Kuwait for the various categories of debtors according to the rescheduling terms, taking into account the seniority of the debts, provided that the due dates of the instalments shall be fixed as determined by the Central Bank in the first year of the rescheduling.
A discount factor of 8% per annum shall apply to instalments paid before their due date during the rescheduling period, if the debt has been rescheduled in accordance with Clause (2) of the preceding Article.

Article 6 bis

By way of exception to Article (5) of this Law, the direct and indirect debts to which the provisions of Law No. (41) of 1993 and its amendments apply, and which relate to martyrs whose names are registered with the Martyr’s Bureau and to prisoners of war whose names are registered with the National Committee for Missing and Prisoners of War Affairs, shall be written off.

* Added by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 7

By way of exception to the provisions on set-off set out in the Civil Code, the compensation due to the Client or to any of his minor children for damage to his property resulting from the Iraqi invasion of the State of Kuwait, as well as the valuation amounts arising from the expropriation of any real estate owned by the Client or by any of the minor children, even if the expropriation preceded the entry into force of this Law, shall be used to settle the Client’s debt, subject to the following:
1- Expropriation valuation amounts or compensation collected during the immediate cash settlement period, for clients who chose the cash settlement method, shall be deemed immediate cash settlement of the debt in accordance with the percentages and brackets set out in the Schedule attached to Law No. 41 of 1993.
2- Expropriation valuation amounts or compensation collected during the rescheduling period, for clients who chose to reschedule their debts, shall be deemed early payment to which a discount factor of 8% per annum shall apply.
Property devolving to minors by way of inheritance, bequest or gift from a person not subject to the provisions of this Law shall be excluded from the provisions of this Article.

* Replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 8

A Client who wishes to reschedule his debt in accordance with the provisions of Articles (5) and (6) of this Law shall be required to notarise in person before the Notary Public in Kuwait, within a period not later than 31/3/1994, an official acknowledgement constituting an executory instrument, on the form attached to this Law, in which he undertakes the following:
1- To settle his debt in accordance with the provisions of this Law.
2- To accept in advance the settlement of his debt from any amounts due to him in accordance with the provisions of the preceding Article.
3- To mortgage such assets as the Client may have in Kuwait or abroad that are not mortgaged, against the debt, provided that they do not altogether exceed the balance of the debt claimed; cash balances mortgaged with the Selling Entities shall be treated in the same manner as the other mortgaged assets.
4- To make good any shortfall in the value of the securities referred to in Clause (3) of this Article from any property devolving to him by any means, including inheritance, and to undertake to make good any shortfall in such securities upon their annual revaluation within three months from the date of his notification by registered letter with acknowledgement of receipt.
5- To open an account with the Manager for the purposes of the rescheduling.
6- To use his free credit balances held with banks in a manner that benefits the debt.
7- To manage the mortgaged assets and those to be mortgaged in accordance with the rules and procedures set out in the Executive Regulations.
However, a Client who wishes to make an immediate cash settlement in accordance with the provisions of Article (5) of this Law shall notarise in person before the Notary Public in Kuwait, within a period not later than 31/3/1994, an official acknowledgement bearing the executory formula, on the form attached to this Law, in which he undertakes the following, unless he has made the settlement within that period:
1- To make immediate cash settlement of the debt within two years from the date of entry into force of this Law, in accordance with the percentages and brackets set out in the Schedule attached hereto.
2- To accept in advance the settlement of his debt from any amounts due to him in accordance with the provisions of the preceding Article, on the basis of the bracket set out in the Schedule attached to this Law within which his debt falls.

* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 8 bis

The period for choosing the method of payment and for submitting and notarising the acknowledgement provided for in the second paragraph of Article (5) and the first and second paragraphs of Article (8) shall be extended until 31/10/1994 for those who did not submit their acknowledgement before the entry into force of this Law.
The acknowledgement provided for in the preceding paragraph shall be notarised in person before the Notary Public; however, such notarisation may be made under a special official power of attorney in cases of extreme necessity and in accordance with the rules and conditions determined by a decision of the Minister of Justice.
In all cases, a power of attorney for notarising the acknowledgement shall not be accepted if issued by a Client convicted of a crime relating to public funds or referred to investigation or criminal trial on a charge of committing any such crime.

* Added by Law No. 102 of 1994 (Kuwait Al-Youm, Issue No. 170).

Article 8 bis (a)

Subject to the provisions of Article (13) of this Law, a Client who wishes to settle his debt in accordance with Article (5) of this Law, even if he has not previously notarised an acknowledgement under the provisions of Law No. (41) of 1993, shall be required to notarise in person before the Notary Public in Kuwait, within a period not exceeding three months from the date of entry into force of this Law, an official acknowledgement on the form attached to the Law in which he expresses his wish to choose the method of payment or to change the method of payment he previously chose and notarised. In cases of extreme necessity, the required acknowledgement may be notarised under a special official power of attorney in accordance with the rules and conditions laid down by the decision of the Minister of Justice issued in application of Article (8) bis of Law No. (102) of 1994. The method of payment stated in the acknowledgements previously notarised by clients who did not wish to change that method within the prescribed period shall be relied upon, and the time limits set out in those acknowledgements shall be extended in accordance with the provisions of this Law.

* Added by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 9

The provisions of this Law shall apply to a Client against whom the debt is claimed judicially or who disputes the existence of the debt and its amount, if the debtor accepts the book balance in the records of the Selling Entity. In such case, the court shall rule that the plaintiff has abandoned his action and the appellant has abandoned his appeal, provided that the appellee assigns to the Government what was awarded to him by the judgment rendered in his favour and authorises it to enforce it.
A Client in respect of whose debt a final court judgment was rendered before 6/9/1993 may also request to benefit from the application of the provisions of this Law within the period provided for in Article (8) bis (a) hereof, provided that the debt is purchased in accordance with the judgment rendered in this respect.

* The second paragraph replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 10

The Manager, as statutory agent of the State and without remuneration, shall carry out the following tasks:
1- Calculating and reviewing the balances of the clients’ Purchased Debts.
2- Valuing and revaluing the mortgaged assets annually and notifying the clients to make good any shortfall therein, the Client bearing the costs arising therefrom.
3- Carrying out immediate cash settlement or rescheduling of the debts in accordance with the provisions of this Law.
4- Recovering the Client’s debt from the value of the mortgaged assets in the event of his breach of the rescheduling terms or of the obligations provided for in this Law.
5- Taking all legal and judicial measures against clients who breach the obligations imposed on them by this Law.
6- Any other tasks provided for in this Law and its Executive Regulations.

Article 11

The Client shall notify the Manager of any lawsuit to which the Client is a party, even if pending before courts abroad, and the Manager shall intervene in the lawsuit if the judgment to be rendered therein would bind the Client to an obligation that weakens the general security of creditors or affects his financial position so as to render him unable to pay the debt. If the judgment is rendered without the Manager having intervened in a lawsuit filed before the national courts, the Manager shall have the right of third-party opposition to the judgment without being bound by the conditions provided for in Article (158) of the Civil and Commercial Procedure Code.

* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 12

All of the Client’s property shall secure the payment of the debt, and in recovering it the State shall have priority over ordinary creditors whose debts do not have a certified date (date certain) prior to 2/8/1990.
Transactions of clients made after the said date in favour of a relative up to the second degree shall not be enforceable against the State.

Article 13

The debt shall become immediately due and the Client shall be bound to pay it together with its accessories and any part of it that may have been waived, until the date of payment, in the following cases:
1- If the Client does not express his wish as to the choice of the method of payment of his debt within the period provided for in Article (8) bis (a) of this Law.
2- If the Client breaches any of the obligations imposed on him by Law No. (41) of 1993, its amendments and its Executive Regulations.
3- If the Client is late in making the payments due from him more than twice in the case of immediate cash settlement, or more than three times in the case of rescheduling instalments.
A Client who is late in making any payment or paying any annual instalment due from him, whether he has expressed his wish to choose the immediate cash settlement method or rescheduling, shall submit to the Manager, within fifteen days from the due date of the payment or instalment, a letter explaining in detail the reasons for his late payment. The period of delay in payment may not exceed four months, calculated from the original due date of the payment or instalment due, and a late payment penalty at the rate of 15% per annum shall be payable for the period of delay. If the Client fails to make the payment or pay the instalment by the end of that period, the debt, its accessories and any part of it that was waived shall fall due.

* Replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Part Three
Special Provisions on the Bankruptcy of a Client Who Has Ceased Payment

Article 14

The Public Prosecution may request the declaration of bankruptcy of a Client who ceases payment in accordance with the provisions of this Law. It may also, at any time, request the declaration of bankruptcy of a Client who had ceased payment before his death, or whose heirs cease paying his Purchased Debt in accordance with the provisions of this Law out of what has devolved to them from their predecessor’s estate, without being bound by the two-year period provided for in Article (562/1) of the Commercial Code.
The urgency provided for in Article (559) of the Commercial Code shall be presumed in the request of the Public Prosecution.
The request for the declaration of bankruptcy shall be submitted by petition to the President of the Court of First Instance, and the provisions of Article (559) of the Commercial Code shall be followed in its procedures, in summoning the litigants before the court and in deciding thereon. If the Client had ceased payment before his death, notification shall be made to the heirs collectively at the last domicile of the deceased or to one of the heirs in his capacity as representative of the estate.
One or more special circuits of the Court of First Instance shall be assigned to the bankruptcy of clients subject to the provisions of this Law, composed of three judges. In the judgment declaring bankruptcy, the court shall appoint the Kuwait Investment Authority as trustee of the bankruptcy, and the provisions of Book Four of the Commercial Code shall be followed before the court in the declaration of bankruptcy, insofar as no special provision is made in this Law.
The request for the declaration of bankruptcy of the Client shall entail a ban on his travel abroad, unless the court decides to lift the travel ban.

* The first and third paragraphs replaced by Law No. 67 of 2004 (Kuwait Al-Youm, Issue No. 672, 27 June 2004; published as Law No. 30 of 2004 and its number corrected by a corrigendum).
* The Constitutional Court, in Case No. 11 of 2012 «Constitutional» (session of 19 November 2012), ruled unconstitutional the provision of the first paragraph that read: «even if a judgment having the force of res judicata had previously been rendered dismissing the petition for the declaration of bankruptcy of the deceased Client as inadmissible for having been filed more than two years after his death»; that phrase has therefore been deleted from the text.
* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 15

The Public Prosecution shall prepare a report on the financial position of the Client whose bankruptcy is requested, including in particular an estimate of the value of the following:
1- His assets of real estate and movables inside and outside the country.
2- The debts owed to him and the value of what is expected to be collected thereof.
3- The other debts owed by him, including debts arising from forward share transactions.
4- The preferred or priority debts owed by him.
Upon completing the preparation of this report, the Public Prosecution shall submit a copy thereof to the court and publish a notice thereof in the Official Gazette and in at least two daily newspapers. The person in respect of whom the report was prepared, his creditors and his debtors shall have the right to inspect this report or to obtain a copy thereof.

Article 16

When preparing the report provided for in the preceding Article of this Law, the Public Prosecution shall conduct the necessary investigations to ascertain whether the debtor referred to it has concealed any of his property or transferred it abroad.

Article 17

By way of exception to the conditions, provisions and procedures prescribed for preventive composition in the Commercial Code, the person whose bankruptcy is requested, or his heirs, or the Kuwait Investment Authority may submit to the court before which the bankruptcy request is pending their proposals for a preventive composition.
After hearing him or his heirs or some of them, the Kuwait Investment Authority and any of his creditors who so wish, the court shall rule either to continue hearing the bankruptcy request or to approve the preventive composition if it finds its terms appropriate, provided that it is approved by one quarter of the creditors holding one half of the debts.
The court may approve the preventive composition where there are other creditors, if their debts are secured by an in rem security or are being paid regularly, and none of those creditors has intervened in the action requesting the declaration of bankruptcy of the Client who wishes to compound.
Such judgment shall be deemed equivalent to the signature of all the creditors on the composition agreement and to its ratification by the court.
The procedures and provisions set out in the Commercial Code that follow the court’s ratification of a preventive composition shall apply to the remaining procedures of the composition approved by the court.

* Replaced by Law No. 67 of 2004 (Kuwait Al-Youm, Issue No. 672, 27 June 2004; published as Law No. 30 of 2004 and its number corrected by a corrigendum).

Article 18

The Kuwait Investment Authority shall submit to the court hearing the bankruptcy a report on the measures it has taken in inventorying, receiving and managing the debtor’s property.
The report referred to in Article (15) of this Law shall be deemed the list of debts under Article (658) of the Commercial Code, and the court that rendered the bankruptcy judgment, instead of the bankruptcy judge, shall decide on the disputed debts.

Article 19

Judicial composition and composition with abandonment of assets shall take place by a judgment of the court that declared the bankruptcy, after the approval of the Kuwait Investment Authority and after hearing the bankrupt and any of his creditors who so wish, without following the procedures relating to the composition meeting provided for in the Commercial Code.
The debtor shall be deemed to have become solvent within the meaning of Article (699) of the Commercial Code if his assets become equal to the debts owed by him.

* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 20

The Kuwait Investment Authority shall have the capacity of trustee and supervisor of the bankruptcy and of manager of the union of creditors in accordance with the provisions of the Commercial Code in all the bankruptcies referred to in this Law, and shall also have the capacity of supervisor of the composition provided for in the Commercial Code in any composition made in accordance with the provisions of this Law.
The amounts collected from the sale of the bankrupt’s property shall be deposited with the Manager’s treasury, by way of exception to Article (725) of the Commercial Code.

Article 21

If the bankruptcy is closed for insufficiency of assets, or if interim distributions are made, or if amounts are collected as a result of a judicial composition or a composition with abandonment of assets, and upon the termination of the bankruptcy and in all cases in which interim or final distributions are made in accordance with the provisions of the Commercial Code, the Manager shall receive such funds and distribute them among the creditors in proportion to their shares in the bankruptcy, without prejudice to their rights provided for in Articles (666) and (732) of the Commercial Code, and subject to Article (12) of this Law.

Article 22

All creditors and debtors, whatever the causes of their debts, shall be notified of all hearings, time limits and procedures relating to the settlement, to the bankruptcy proceedings and to preventive composition under the provisions of this Law, and of all procedures and actions arising from the bankruptcy and the verification of debts, by publication in the Official Gazette and in at least two daily newspapers.

Part Four
Penalties and Precautionary Measures

Article 23

Without prejudice to any more severe penalty provided for by law, anyone who conceals an existing fact or alters the truth of a fact, or fabricates a debt instrument or a fictitious transaction, or conceals an existing debt instrument or transaction, or uses a fictitious debt instrument or transaction or one in which the truth has been altered, shall be punished by imprisonment for a term not exceeding five years and a fine not exceeding five thousand Dinars, where this is done with the intent of evading payment of the debt.

Article 24

The same penalty provided for in Article (23) shall apply to anyone who submits or gives to any judicial authority or other official authority false data or information, or commits fraud or deception in a testimony or declaration, with the intent of enabling the offender to escape punishment for any of the crimes provided for in this Law.

Article 25

Without prejudice to any more severe penalty provided for by law, any employee of the bank acting as Manager or of any of the entities concerned with the implementation of the provisions of this Law who deliberately breaches the duties imposed on him by this Law, resulting in the defeat of the State’s right to recover its dues or to obtain sufficient securities therefor, shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding five thousand Dinars, or by either of these two penalties.

* Replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 26

Anyone who knows of a plan to commit any of the crimes provided for in this Law, or knows of its actual commission, and refrains from reporting it to the public authorities or to the Manager shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding five thousand Dinars, or by either of these two penalties. The provision of this Article shall not apply to the spouse, ascendants or descendants.

Article 27

Transactions made by the convicted person in respect of property connected with the crimes provided for in this Law, or by those to whom such property has devolved, shall be void if they were intended to defeat the State’s right to recover the debt, even if such transactions were made before the entry into force of this Law.
The nullity provided for in the preceding paragraph shall not apply to transactions made for consideration to persons acting in good faith; a person shall not be deemed to be in good faith if he knew, or could have known, of the crime or of the purpose of the transaction.
In all cases, the right to request the annulment of the transaction shall lapse only upon the expiry of fifteen years from the date on which it was made.

Article 28

Any Client who fails to pay his debt or to fulfil the undertakings and obligations provided for in this Law or in the official acknowledgement referred to in Article (8), or who submits false information in that acknowledgement, shall be referred to the Public Prosecution.
The Public Prosecution, if there is sufficient evidence against the Client of his commission of any of the crimes provided for in this Law, may take the following measures:
1- Ordering the seizure of any papers or documents it deems necessary to uncover the truth.
2- Requesting the data and information necessary for the performance of its task from the Central Bank of Kuwait, from the entities referred to in Article (1) of this Law, from the State Audit Bureau or from any other entity.
3- Instructing judicial police officers to gather evidence on the debtor and on the assets he owns and the securities he has concealed.
The Public Prosecution may notify the competent authorities to consider the case of any of those in charge of implementing this Law who violates the duties of his office or is negligent in his work, and may request that disciplinary measures be taken against him, without prejudice to criminal liability in the cases that so require.

Article 29

The Attorney General, or whoever acts on his behalf from among the Advocates General, shall have the power to take the measures provided for in Article (24) of Law No. (1) of 1993 on the Protection of Public Funds in respect of a person accused of committing the crime provided for in Article (23) of this Law, or of his spouse, his minor or adult children, or others.
In such case, the provisions of Articles (25) and (26) of Law No. (1) of 1993 referred to above shall apply, provided that the Kuwait Investment Authority shall manage such property and shall have in this respect the powers prescribed for the custodian under the Civil Code.
Any transaction made by any of the said persons in respect of the property placed under the Authority’s management after the issue of the order prohibiting disposal shall be void. The order prohibiting disposal or management shall not be lifted until the State has recovered its dues from him under this Law, unless the Attorney General issues a decision to close the case or a judgment of acquittal is rendered therein, without prejudice to the rules prescribed for the declaration of bankruptcy.

* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 30

In all cases, the Kuwait Investment Authority, in its capacity as custodian, shall not be liable for the debts of the person subject to custodianship except within the limits of the property placed under custodianship. Each creditor of that person shall notify the Authority of his debt, stating its amount and cause, and submit his debt instrument within thirty days from the date of publication of the order prohibiting disposal in the Official Gazette and in one daily newspaper, failing which his right to claim against the custodianship shall lapse.

Article 31

The taking of any of the measures provided for in Article (29) against the Client shall not prevent proceeding with the attachment of such property and compulsory execution thereon for the State to recover its debt provided for in this Law, and the execution procedures provided for in the Civil and Commercial Procedure Code shall be followed in the attachment and sale of the debtor’s property.

Part Five
General and Final Provisions

Article 32

The Manager shall trace any property that may have devolved to the Client by any means, including inheritance, and the competent bodies of the Ministry of Justice and the entities concerned with the implementation of this Law shall provide the Manager with any information they have in this respect.

Article 33

If one of the holders of a joint account with any of the Selling Entities becomes subject to the provisions of this Law, their financial estates shall be separated and the balance of the account shall be divided equally among them, unless otherwise agreed before the date of purchase of the debt, and none of them shall be deemed a guarantor of the other or liable for the debt for the purposes of applying the provisions of this Law.
Where there are several guarantors of a single debt, the value of the deficit in the debt after payment by the debtor shall be distributed among them in accordance with the provisions of the preceding paragraph.

* Typographical errors in this Article corrected by the corrigendum published in Kuwait Al-Youm (Issue No. 135, Year 40).

Article 34

Valuation amounts in cases of expropriation, or compensation for damage caused by the Iraqi invasion, shall not be paid before the beneficiary submits a certificate issued by the Central Bank of Kuwait stating that he is not indebted, directly or indirectly, under any of the Purchased Debts.

* Replaced by Law No. 80 of 1995 (Kuwait Al-Youm, Issue No. 221, 27 August 1995).

Article 35

The period from 2/8/1990 until the date of entry into force of this Law shall not be counted in calculating the periods upon the expiry of which the Government’s action to claim its debts provided for in this Law becomes time-barred.

Article 36

The Central Bank of Kuwait shall submit an annual report to the Government on the status of the debts, including the debts settled by immediate cash settlement, a statement of the debts rescheduled, the amounts collected annually from those debts, the returns paid on the bonds issued, the bonds redeemed, and the legal measures taken against clients who do not comply with the provisions of this Law.

Article 37

The Government shall submit to the National Assembly, together with the final account of the State’s general budget, a report setting out the following:
1- The debts collected.
2- The measures taken against clients who have not fulfilled their obligations and their numbers, and the numbers of those against whom court judgments have been rendered or judicial or criminal measures taken.
3- The remaining balance of the debts and its distribution by bracket.
4- The efforts made by the managing entities in collection.

Article 38

The appropriations necessary to implement the provisions of this Law shall be drawn from the State General Reserve, and a special account shall be established into which the amounts collected from the debts shall be credited and which shall be used to implement the provisions of this Law.

Article 39

The maximum original value at which the Bonds are issued, including the bonds issued under the provisions of this Law, shall be KWD 5,750 million (five thousand seven hundred and fifty million Kuwaiti Dinars).

Article 40

The provisions of the Civil and Commercial Procedure Code and of the Code of Criminal Procedure shall apply insofar as they do not conflict with the provisions of this Law.

Article 41

The Executive Regulations of this Law shall be issued by a decision of the Council of Ministers, setting out the rules and procedures for the purchase of the debts and the issue of the Bonds, the rules and procedures for the rescheduling of the debts and the management of the assets that are mortgaged, placed under custodianship or of which the debtor is prohibited from disposing, the rules, bases and arrangements for returning the Real Estate Portfolio to Kuwait Finance House, and such other rules, bases and conditions as this Law requires to be included in the Executive Regulations or as are required by the provisions set out therein.

Article 42

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall be published in the Official Gazette and shall come into force from the date of its publication in the Official Gazette.

Attached Schedule
Brackets and Percentages of Immediate Cash Settlement

Bracket	Percentage of settlement at the end of the period set for payment
Zero – 50 thousand	25%
More than 50 – 100 thousand	30%
More than 100 – 250 thousand	35%
More than 250 – 500 thousand	40%
More than 500 thousand	45.64%

1) If the debt falls within more than one bracket, the percentage specific to each bracket shall apply.
2) The percentages provided for in this Schedule shall be reduced by half a percentage point for each three-month period of early payment.

Law No. 63 of 1998
Amending Certain Provisions of Law No. 41 of 1993 on the State’s Purchase of Certain Debts and the Manner of Their Collection

Article 1

Debtors who have not notarised acknowledgements of payment of the debt, and debtors who have notarised the acknowledgements but failed to pay all or some of the payments due from them under the immediate cash settlement method, may come forward to pay the overdue payments on the following conditions:
1- The debtor who has not notarised his debt shall notarise it within two months from the date of entry into force of this Law.
2- They shall pay the overdue payments no later than 30/6/1999.
3- Each payment shall bear, until the date of its settlement, the financial costs prescribed in Clause (1) bis of Article (5) of Law No. 41 of 1993 as amended by Law No. 80 of 1995.
4- Each payment shall bear a late payment penalty for a period of four months at the rate of 15% per annum.
5- The payment or payments that the debtor failed to make shall bear a non-compliance penalty at the rate of 5% per annum, calculated on the amount of the payment after adding the financial costs and the late payment penalty provided for in Clauses (3) and (4) of this Article, for the period from the expiry of the four-month time limit until the date of settlement of the payment.
The debtor’s payment of the overdue payments in accordance with these conditions shall entail the termination of the legal and judicial measures taken against him.

Article 2

Debtors who have failed to pay one or more rescheduling instalments under the method of payment on the basis of rescheduling the debt in equal annual instalments may come forward to pay the overdue instalments no later than 30/6/1999.
The instalment or instalments that the debtor failed to pay shall bear a non-compliance penalty at the rate of 5% per annum for the period from the due date of the instalment until the date of its settlement in accordance with the payment deadline set out in this Article.
The debtor’s payment of the overdue instalments as prescribed shall entail the termination of the legal and judicial measures taken against him.

Article 3

The fourth payment, due on 6/9/1998 under the immediate cash settlement method, and the fifth payment, due on 6/9/1999, shall be merged and paid in three equal payments, the first falling due on 6/9/1999, the second on 6/3/2000 and the third on 6/9/2000.
Only the financial costs prescribed in Clause (1) bis of Article (5) of Law No. 41 of 1993 as amended by Law No. 80 of 1995 shall be added to the amount of each payment, until its due date.

Article 4

The Ministers, each within his competence, shall implement this Law.

* Law No. 63 of 1998 (Kuwait Al-Youm, Supplement to Issue No. 371, 4 August 1998). Its provisions are self-standing and do not replace any text of Law No. 41 of 1993.

Issued on 6 September 1993 and published in the Official Gazette Kuwait Al-Youm on 7 September 1993.