Skip to content Skip to Search
Skip navigation

UAE economic growth brings rise in court disputes, say lawyers

People in downtown Dubai. The emirate welcomed 19,000 new companies to the Dubai Chamber of Commerce in the first quarter of this year, a 17.6 percent annual jump Pixabay/Olga Ozik
People in downtown Dubai. The emirate welcomed 19,000 new companies to the Dubai Chamber of Commerce in the first quarter of this year, an 18 percent annual jump
  • Non-payment cases increasing
  • 19,000 new businesses this year
  • Inflation and cost of living pressure

Debt recovery cases in Dubai and the wider UAE are increasing, a pair of local law firms told AGBI, citing anecdotal evidence from their practices.

Behind the trend, they said, are various factors, chief among them being the influx into the emirates of new businesses from around the world.

Also contributing are a host of economic factors linked to the pandemic, as well as geopolitical causes such as the conflicts in Ukraine and Gaza and supply chain disruptions in the Red Sea.

Because the growing number of cases comes amid an expansion of the business landscape in the Gulf nation, it does not necessarily point to any increase in the percentage of contracts that end up in court for non-payment, according to Ahmad Lootah, managing partner of Hussain Lootah & Associates.

Lootah noted that the many new startups establishing themselves in Dubai and the UAE from nearly every corner of the globe testify to the emirates’ business-friendly environment and further enrich it with their diversity of backgrounds. But they also bring some added risk.

Ahmad LootahHussain Lootah & Associates
Ahmad Lootah

“These entities may encounter challenges in navigating a new jurisdiction, as well as balancing their expectations with operational realities,” he said.

“The influx … also introduces startups with varying levels of commitment to valuing long-term relationships with clients and suppliers, and differing capacities in managing cash flow effectively.” 

More than 19,000 new companies became members of the Dubai Chamber of Commerce, one of three chambers under the umbrella of Dubai Chambers, in the first quarter of this year, an 18 percent annual jump.

The emirate’s financial regulator, the Dubai Financial Services Authority, said the number of the companies it licensed in 2023 rose 25 percent year on year. 

Business licences active in Abu Dhabi hit 143,617 in 2023, an 11 percent increase over the previous year.   

Such growth is taking place on the backdrop of an increasingly complex global geopolitical environment spanning wars, unrest and big-power competition, all of which emerged just as the world began recovering from the pandemic, according to Mohammed Nedal Dajani, senior associate of the BSA Ahmad Bin Hezeem & Associates law firm.

Persistent inflation, the rising cost of living and high interest rates also put pressure on the finances of individuals and companies alike.

Mohamed Nedal DajaniBSA Ahmad Bin Hezeem & Associates
Mohamed Nedal Dajani

“These factors have all contributed to an increase in (particularly finance-based) court cases, which is further propelled by the new laws decriminalising bounced cheques and implementing a fast-track process to collect the amounts thereof,” he said.

The law decriminalising bounced cheques went into effect in the UAE in early 2022. 

More recently, an upgraded, widely praised bankruptcy and restructuring law came into force in May, along with a specialist court. 

This modernised insolvency framework as well as the UAE’s new corporate tax carry with them increased record keeping requirements for businesses. 

Dajani said this could prove an important boost to overcoming the most difficult aspect of debt recovery cases, or the “the lack of publicly available resources… to trace or confirm assets or source of income which can be attached or to execute against is always a challenge”.

Already, there are signs that the new laws might be contributing to a decline in debtors fleeing the country to avoid repaying their banks. 

“We’ve seen up to 90 percent decrease in skips,” Rohit Garg, group head of business banking at Emirates NBD, told AGBI in May.

Court battles over corporate debt, and legal disputes in general, typically lag other forms of voluntary resolutions given they are an expensive and time-consuming mechanism of last resort.

Small and medium enterprises tend to be the most affected by their clients’ failure to pay their bills.

“SMEs can safeguard their interests through proactive measures such as drafting comprehensive legal agreements, conducting thorough due diligence processes, and securing appropriate security guarantees to mitigate potential risks,” Lootah said.

Latest articles

Iraqi Airways is seeking to expand its international reach. The airline has been working to modernise its fleet and improve its service standards,

Iraq given boost in plan to lift European flight ban

Iraq has moved a step closer to returning its flag carrier to European skies after receiving the support of the International Air Transport Association (IATA). Iraqi Airways was originally banned from Europe in 1991 due to safety concerns. Restrictions were briefly lifted in 2009 but enforced again in 2015 as the airline failed to meet […]

Part of the $3 billion deal is to redevelop Indonesia's Soekarno-Hatta International Airport

Eagle Hills gets claws into Indonesia

Eagle Hills, the Abu Dhabi developer, looks set to add Indonesia to its burgeoning worldwide portfolio. A tentative agreement was signed on Wednesday with the Indonesian government to develop $3 billion worth of tourism assets in the Southeast Asian archipelago. The deal has a validity of one year only, with the possibility of renewal, and […]

People, Person, Groupshot APQ CEO Ebubekir Koyuncu (sitting left) and Aramco acting senior vice president of new business development Mohanad M Alamdar at the signing ceremony

Saudi Aramco bolsters blue hydrogen portfolio 

Saudi Aramco has acquired a 50 percent stake in Jubail-based Blue Hydrogen Industrial Gases Company (BHIG), a wholly-owned subsidiary of Air Products Qudra. No financial details were disclosed. The transaction, subject to standard closing conditions, includes options for the oil giant to offtake hydrogen and nitrogen.  The remaining 50 percent will be owned by APQ, […]

Egypt's SCA is seeking revenue of $9 billion from the Suez Canal operation in 2024/2025, 25 percent more than the previous year

Egypt to float Suez Canal subsidiary next year

Egypt’s Suez Canal Authority (SCA) is planning to list Canal Mooring & Lights Company, a specialist in the mooring and unmooring of ships, on the local bourse, a news report said. The proposed listing will take place early next year, Bloomberg Ashraq reported, quoting SCA’s chairman Osama Rabie. In June 2023, the official confirmed the […]