The Strategic Guide to Banking Disputes in the UAE
The first thing to establish is not the merits but which entity contracted, under which law, with which jurisdiction clause, and where the assets that matter are held.
Most banking disputes in the UAE fall into four groups: a lender calling a facility and enforcing its security, a demand under a guarantee or letter of credit, an account frozen or closed for compliance reasons, and a complaint about how a product was sold or a transaction executed. Each has its own starting point, and the forum comes from the paperwork rather than the topic.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
Banking disputes in the UAE are less varied than the phrase suggests. Strip away the labels and most of them fall into four groups: a lender calling a facility and enforcing its security; a demand under a guarantee or a letter of credit; an account frozen, restricted or closed for compliance reasons; and a customer complaining about how a product was sold or how a transaction was executed. Each has a different starting point, a different evidential problem and, frequently, a different forum.
Related: See our banking disputes practice for advice on the situations described below.
Where the claim is heard depends on the paperwork, not the topic
There is no single banking court. Onshore, claims involving a bank licensed in the UAE go before the civil courts of the emirate where the branch or the contractual connection sits, applying federal law. Banking activity onshore falls under the Central Bank framework set out in Federal Law No. 14 of 2018 on the Central Bank and Banking Sector, alongside the general commercial and civil law.
In the financial free zones the picture changes entirely. The DIFC and the ADGM are common-law jurisdictions with their own courts, and firms operating there are licensed and supervised by the Dubai Financial Services Authority and the Financial Services Regulatory Authority respectively. A facility agreement between a DIFC-based lender and a borrower, expressed to be governed by DIFC law with DIFC Courts jurisdiction, is a DIFC matter from beginning to end, including enforcement questions that would be argued very differently onshore.
So the first thing to establish in a banking dispute in the UAE is not the merits. It is which entity contracted, under which law, with which jurisdiction clause, and where the assets that matter are held.
Complaining to a regulator is not the same as claiming money
Customers often spend months inside a complaints process and then find it cannot give them what they want. The Central Bank operates a complaints route for customers of onshore-licensed banks, and the DFSA and the FSRA supervise conduct within their own zones. Those channels can compel a bank to answer, to correct a record or to change a practice, and supervisory findings can be useful evidence later. What they are generally not is a route to a contested award of damages.
If the objective is repayment, reversal of a debit or compensation, the regulatory complaint should run alongside the legal claim rather than instead of it. Contractual notice periods and time limits keep running while a complaint is being considered.
Related: Banking claims rarely travel alone — see our commercial disputes practice, and, where a payment fraud involves misuse of a brand or a domain name, our intellectual property advisory team.
The bank holds the record, and that shapes the case
In almost every banking dispute the decisive documents sit on the bank's side of the table: account statements, call recordings, the suitability file behind an investment product, transfer logs, the credit memorandum behind a decision to call a facility. Build the case around reaching that material early.
- Request statements and transaction records in writing, and keep both the request and the response.
- Preserve your own side completely — payment instructions, emails, messages exchanged with the relationship manager, board approvals for the borrowing.
- Where the argument is about figures, an accounting analysis of how interest, fees and charges were applied against the facility documents usually carries more weight than submissions. Recalculating the account is a standard and effective line of attack.
Onshore, the court will commonly appoint an expert to examine the accounts, and that report tends to drive the outcome. Preparing for the appointment, with the documents organised and the calculation already done, matters more than the pleading that precedes it.
Guarantees and security enforcement
Demands under guarantees escalate fastest, because the instrument is usually designed to pay first and argue afterwards. Two questions decide most of them. Does the demand comply exactly with the terms of the instrument? And has the guarantee been discharged by something the lender did — a variation of the underlying facility, the release of other security, or expiry of the instrument on its own terms? Personal guarantees signed by directors and shareholders deserve a separate review; they are usually given on the bank's standard form and their scope is wider than the signatory remembers.
Enforcement against security raises its own procedural questions, and they differ by asset: mortgaged property, pledged shares, assigned receivables and cash collateral each follow a different route. Advice on enforcement and defence in banking matters should begin with the security document, not with the correspondence.
Arbitration clauses in bank documentation
Most standard bank documentation in the UAE points to the courts, and lenders rarely give that up. Where an arbitration clause does appear — typically in syndicated, structured or cross-border facilities — it deserves the same scrutiny as any other. Arbitration seated in the UAE is governed by Federal Law No. 6 of 2018, as amended in 2023. Clauses naming institutions that no longer operate under those names should be corrected at the next amendment rather than tested during a dispute.
The first few weeks
Reply in writing to every demand, if only to reserve your position; silence is read as acceptance more often than clients expect. Do not leave the account unreconciled while the dispute runs. Read the jurisdiction and notice clauses in the facility before anyone files anything. And decide early whether the real objective is to defeat the claim, to restructure the debt or to gain time, because those three lead to different tactics from day one.
Related Services: Our banking disputes and compliance and banking litigation services cover facility enforcement, guarantee demands, account restrictions and mis-selling claims.
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
