Answer: Yes, it is.
According to Article 72, Article 73, Article 84, and Article 85 of Federal Law No. 18 of 1993 on Commercial Transactions (now replaced by Federal Decree-Law No. 50 of 2022 “On Civil and Commercial Transactions”):
- If the obligation relates to a monetary sum determined at the time of its creation and the debtor delays payment, the debtor must pay the creditor interest on arrears as compensation.
- Recovery of such interest does not require proof of actual damage.
- If the contract expressly stipulates an interest rate, that rate applies rather than the prevailing market rate.
This interpretation was confirmed by the Supreme Court in Commercial Appeal No. 15 of 2025, where:
- A bank client obtained financing in the form of lease-to-own.
- The contract stipulated a profit rate of 7.99% per annum on overdue payments.
- The courts of first instance and appeal rejected the bank’s claim for the contractual rate, asserting that no such agreement existed.
- The Supreme Court held that this was a misapplication of the law, noting that the rate was...