Abu Dhabi loan dispute ruling has led to the dismissal of a bank case worth nearly Dh950,000. The court said the bank did not follow key Central Bank rules on loan guarantees. This made the claim invalid under UAE law.
A bank in Abu Dhabi went to court to recover Dh949,938. The case was filed against a woman borrower and a guarantor. The bank also asked for 9 percent yearly interest from the time of default. It also demanded legal costs.
Court papers show the loan was given to the woman. Another person signed as a guarantor. The bank submitted a loan contract, account records, and a guarantee copy. It said these proved the debt.
But the court did not agree. It found a major problem in how the loan was given. The judge said the bank did not secure proper guarantees when the credit was issued. This was a key failure.
The ruling referred to Federal Decree-Law No. 6 of 2025. This law covers the Central Bank and financial firms in the UAE. Article 150 says banks must take and keep strong guarantees before giving loans to individuals.
The court said this rule is strict. It is not optional. Banks must follow it in all lending cases. If they do not, their claims may be rejected in court.
The judgment also explained rules about cheques used as loan security. It said banks cannot depend on just one cheque for a full loan in most cases. This is only allowed if the loan is paid in one instalment.
For loans paid in parts, banks must collect several cheques. Each cheque must match each payment instalment. The total value of cheques must also stay within 120 percent of the loan amount.
In this case, the court found no proof of such compliance. The bank did not show valid guarantees. It also did not show a proper cheque system linked to repayments.
The court also explained that contracts are normally binding. But they must follow the law. If a contract breaks legal rules or public policy, it cannot be enforced.
Because of these issues, the court ruled the case inadmissible. This means the court refused to hear the claim. The bank lost the case completely.
The court also ordered the bank to pay legal costs. This is standard when a claim fails due to legal violations.
Legal experts say this ruling sends a strong message to lenders. Banks must follow Central Bank rules carefully. They cannot rely only on signed contracts. Proper guarantees are required at the start of any loan.
The decision also highlights strong consumer protection in UAE banking law. Courts check if banks followed the correct process before approving credit. If rules are ignored, claims may be rejected even if money was lent.
For borrowers, the ruling is important. It shows that courts look at how loans are issued, not only repayment status. Legal process matters in every credit case.
The Abu Dhabi loan dispute ruling may also affect future banking practices. Financial institutions may review their lending systems. They may strengthen documentation and guarantee checks before issuing loans.
The case also shows the growing role of regulation in financial disputes. UAE courts are applying banking laws strictly. This helps ensure fair lending practices in the financial system.
In the end, the court decision confirms a key legal principle. Loans must follow both contract terms and financial regulations. If either part fails, the claim may not stand in court.
