Banking interest and the necessity for the “General Assembly of the Court of Cassation” to intervene to unify the legal principles issued in this regard

5 min 31 sec February 18, 2026 (Edited) الترجمة العربية

Written by

Abdulkarim Alsoud

Senior Associate

a.alsoud@tamimi.com

It is well-known in all countries of the world that the banking sector, both conventional and Islamic, constitutes the backbone of the economy in all other economic sectors, by providing financing services for various local and international investments, as well as providing services for transferring investment returns and their tools (funds), and it is at the same time a commercial investment sector that aims to achieve profit.

Given the importance of this sector, all countries worldwide (including the State of Qatar) have been keen to create a legislative environment that ensures its stability and continuity by establishing a legal basis for the income generated by the banking sector as a major investment sector, which primarily relies on banking interest imposed by banks on their customers through loan agreements or banking facilities alike.

Regarding banking interest and given the absence of a decisive legal text in the Qatari Commercial Law governing the subject of “banking interest,” it is necessary to refer to Qatar Central Bank Law No. 13 of 2012, which regulated banking operations, including those related to banking interest. Article 70 of this law stipulates that the interest rates agreed upon in contracts concluded between banks and their clients shall apply to both parties, whether during the loan term, upon rescheduling, or even after the borrower defaults and ceases payment. In the absence of an agreement on a specific interest rate, the interest rates determined and announced by the Qatar Central Bank from time to time shall apply, as Article 70 of the law states the following:

The Bank shall control returns and interest rates, and the conditions for granting loans and accepting deposits in the various financial institutions.

The interest rate or yield determined by the Bank shall apply to performing or rescheduled credit facilities, unless otherwise agreed between the lending financial institutions and their customers at another price.

Despite the clarity of the text in the previous Qatar Central Bank Law No. 33 of 2006 and the current Law No. 13 of 2012, which allow the application of agreed interest rates in facility and loan contracts, Qatari courts still, to date, adopt a conservative view in some of their rulings regarding the application of interest, which has led to contradictory judicial decisions in this regard!!

Until 2010, Qatari courts, in most of their rulings, used to order the borrower to pay the principal amount of the loan, but they would refuse to rule on the interest agreed upon in the loan contract. This approach was based on the provisions of Article 568 of the Civil Code, which states the following:

“If a benefit in excess of securing the lender’s right has been stipulated in the loan contract, the stipulation shall be void and the contract shall be valid.”

In 2010, the Qatari Court of Cassation issued a judgment affirming the right of banks to apply the interest rates agreed upon in the contract, but it distinguished between two types of interest: “contractual/ interest” and “default interest”. According to the court’s definition, and based on this ruling, Qatari courts began ruling in favor of banks for the principal amount of the loan along with the accrued interest on the loan until the date of the judicial claim (filing the lawsuit). As for the claim for interest for the period subsequent to the judicial claim until full payment, the courts used to adapt it as a claim for compensation for delay in payment, and instead of ruling with interest according to the agreed percentage in the loan contract until the date of full payment, the courts used to rule with a lump sum that the courts called compensation for damages on the basis of tort liability and not on the basis of contractual liability.

In 2020, the Qatari Court of Cassation issued a very important ruling, deciding that the calculation of interest – whether contractual/compensatory or late payment interest – must be in accordance with what is agreed upon in the loan contract. It affirmed that the approach taken by the courts, considering the request for interest on credit facilities as a request for compensation for the unlawful act of non-payment and delayed payment, is an incorrect approach and is considered a deficiency in the judgment if the two parties had agreed in writing in the loan contract on determining the amount of interest and how it is calculated.  The Court of Cassation elaborated that the Qatari legislator has allocated specific provisions for both contractual liability and tort liability, each independent of the other, thereby expressing its desire to establish a defined scope for the provisions of each type of liability. It further stated that adopting tort liability in the context of a contractual relationship would, in fact, undermine the contract’s provisions regarding liability for non-performance, thus infringing upon its binding force.

(Appeal No. 171/2020 dated 16/06/2020)

After the establishment of the Investment and Trade Court in Qatar under Law No. 21 of 2021, and despite the fact that this law does not include any new provisions related to bank interest, some circuits of the Court of First Instance and the Court of Appeal in the Investment Court have already begun issuing judgments obliging the defaulting borrower to pay the bank the principal amount of the loan granted, in addition to the agreed interest, both “contractual interest” and “default interest,” according to the agreed rates from the date of the judicial claim until the date of full payment loan granted, in addition to the agreed interest, both “contractual interest” and “default interest“, according to the agreed rates from the date of the judicial claim until the date of full payment. It is noteworthy that the Qatari Court of Cassation has upheld the validity and correctness of these judgments.

(Appeal No. 713/2024 – Civil Cassation Session 22/08/2024)

(Appeal No. 1873/2024 – Civil Cassation Session 31/12/2024)

However, despite this clear trend of the Court of Cassation, some other circuits insisted on issuing their judgments according to the previous trends of the traditional civil court, as they insist that claiming agreed interest is in fact a claim for compensation for delay in payment. In order to justify their non-compliance with the Cassation judgments mentioned in the previous paragraph, these circuits state in the merits of their judgments that they take the agreed percentage in contracts as contractual and late interest as “a criterion for estimating the value of compensation,” and as a result, these courts insisted on ruling with a lump sum compensation, instead of ruling in favor of the bank with interest until full payment.

It is noteworthy that the Qatari Court of Cassation has also supported this approach taken by some appellate circuits in the Investment Court, as it decided to reject the appeals filed against it.