Resolving Banking Disputes Disputes Effectively

Most banking disputes in the UAE are won or lost on three questions that have nothing to do with who was right about the money: which court or tribunal can hear the claim, which body of law governs the facility documents, and whether the bank can enforce its security while the argument is still running. A customer who answers those questions late usually finds that the bank answered them years earlier, in the small print of the facility letter.

That is the practical difference between banking work and ordinary commercial litigation here. A single relationship — an account opened onshore, a facility documented under English law, security registered in Dubai, a guarantor sitting in a free zone — can touch three legal systems at once.

Related: Our banking disputes practice acts for both borrowers and financial institutions across these forums.

Three legal systems, one banking market

Onshore, banks are licensed and supervised by the Central Bank of the UAE. Their contracts are read against federal legislation: the Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, which replaced Federal Law No. 18 of 1993, together with the general contract, guarantee and security principles of the Civil Code. Proceedings are in Arabic, and every document that matters — statements, facility agreements, board resolutions — has to be filed in certified Arabic translation.

The Dubai International Financial Centre and Abu Dhabi Global Market work differently. Both are common-law jurisdictions with their own courts, their own contract and civil legislation, and their own financial regulators: the DFSA in the DIFC and the FSRA in ADGM. A claim against a DIFC-licensed bank is heard in English, before judges applying precedent, in the DIFC Court of First Instance with an appeal to the DIFC Court of Appeal. ADGM runs a parallel structure with its own court and its own arbitration regulations.

None of this makes one forum better than another. It makes the choice consequential, and it makes a badly drafted jurisdiction clause an expensive thing to own.

The forum question comes first

Before pleading anything, work out what the documents actually say. A facility that names the courts of Dubai, an account mandate that names the DIFC Courts, and a guarantee that says nothing at all is a common combination, and it produces satellite litigation about jurisdiction before anyone reaches the balance owed.

Two points are worth checking early. First, the DIFC Courts can take jurisdiction where the parties have agreed to it in writing, which is why an opt-in clause buried in a facility schedule can move the whole dispute out of the onshore system. Second, a judgment obtained in the DIFC or ADGM still has to be executed against onshore assets, which is done through the execution route in the local courts rather than by the DIFC or ADGM court itself. Enforcement planning belongs in the drafting stage, not the judgment stage.

Related: See our work on banking and finance disputes in Dubai.

Arbitration clauses, including the ones naming a centre that no longer exists

Arbitration seated onshore is governed by Federal Law No. 6 of 2018, as amended in 2023. Seated in the DIFC, it runs under the DIFC Arbitration Law; in ADGM, under the ADGM Arbitration Regulations. The DIFC remains available as a seat, and choosing it does not require the underlying contract to be governed by DIFC law.

There is one legacy problem specific to this market. The DIFC-LCIA was abolished by Dubai Decree No. 34 of 2021 and its caseload passed to the Dubai International Arbitration Centre. Facility documents signed before that decree, and many signed after it out of habit, still name the DIFC-LCIA. Those clauses have to be read carefully rather than assumed dead, and where a portfolio contains a large number of them, the sensible step is to review and amend on the next refinancing rather than discover the position in a contested tribunal appointment.

Security and interim measures

In a banking dispute the real contest is often over assets rather than liability. Onshore, a creditor can apply to the court for precautionary attachment over assets and accounts; the DIFC and ADGM courts have their own freezing and interim relief jurisdiction. Applications of this kind are decided on the papers put in front of the judge, so the quality of the evidence about dissipation risk matters more than the strength of the underlying claim.

On the customer's side, the equivalent discipline is knowing what has actually been given as security: mortgages registered with the relevant land department, share pledges, assignments of receivables, and registrations of security over movable assets in the federal registry. Facilities are frequently secured more widely than the borrower's own finance team believes.

The regulator is not a substitute for the court

Retail and small-business customers have a complaint route through the bank's own complaints function and, beyond it, the independent ombudsman unit established under the Central Bank's consumer protection framework. That route is cheap and useful for service failures, mis-selling complaints and account closures. It is not a debt recovery mechanism, it does not stop the bank enforcing, and it does not determine contested contractual liability. Treat it as a parallel track, not a replacement for one.

Equally, a regulatory finding against a bank is not a judgment. It can be evidence, and it can change the commercial temperature of a settlement discussion, but the claim still has to be proved in the chosen forum.

What to check before the dispute starts

• Whether the jurisdiction and arbitration clauses across the facility, security and guarantee documents point to the same forum.
• Whether any clause still names a centre or set of rules that has been superseded.
• Where the assets are, and what would have to be done to enforce against them from each candidate forum.
• Which documents exist only in English, and what translating them would cost and delay if the claim goes onshore.
• Who has authority to bind the customer, and whether the bank's file reflects that.

Banking disputes reward preparation done before anything goes wrong. The documents are usually the bank's; the discipline of reading them as a litigator would, while the relationship is still healthy, is what gives the customer options later.

Related services: Banking disputes advisory, commercial disputes including escrow and payment claims, and intellectual property advisory for institutions whose disputes cross into brand, domain and data issues.

Also available: banking disputes in Abu Dhabi and banking disputes in the DIFC.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Further reading

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