01
Legal issue
Where a loan agreement sets no interest rate, maximum rates in Central Bank circulars do not themselves create an obligation to pay interest.
02
Published principle
The Arabic text published by the Supreme Court is the primary source. The English translation was published by the Technical Bureau; Russian and Chinese are unofficial Smart Global Capital editorial translations.
This is a published legal principle—an extract selected by the Supreme Court of Oman Technical Bureau—not the full text of the judgment.
The relationship of the parties shall be governed exclusively by the terms of the loan agreement, which, in the present case, does not stipulate any applicable interest rate. Consequently, the Respondent may not be held liable for any such amounts, as the agreement constitutes a binding and enforceable contract between the parties. The periodic circulars issued by the Central Bank serve solely to prescribe the maximum permissible interest rates applicable to banking institutions and do not impose any mandatory minimum rates. Accordingly, parties remain free to negotiate interest rates below such thresholds. In light of the foregoing, the Respondent cannot be compelled to pay interest where no such obligation was expressly undertaken under the terms of the agreement.
03
Applicability
The principle does not set a current rate or cap. It addresses the absence of an agreed rate and the ceiling function of CBO circulars. The agreement, current CBO circulars, customer type and product must be checked.
04
Related instruments
- Applicable Central Bank of Oman circulars
05