Banking & Finance

Common banking disputes in the UAE include loan recovery and debt collection matters, disputes over facility agreements and their terms, issues with letters of credit and trade finance, mortgage disputes, allegations of mis-selling of financial products, unauthorised transactions and fraud, and disputes arising from the enforcement of security interests. Both retail and corporate banking relationships can give rise to significant disputes.

Banking disputes in the UAE follow a tiered resolution process. The parties must attempt to resolve the issue with their banks If unresolved after several days, the requests should be escalated through ‘Sanadak’, the mandatory financial ombudsman for consumers and SMEs in the UAE which offers binding decisions for smaller claims. While negotiation and settlement are often the first steps for corporate disputes; retail disputes must undergo the process established by Sanadak. If unsuccessful, parties may proceed to mediation or arbitration, if the contract provides for it. Litigation in the UAE courts is also an option, with specialised banking and commercial divisions in some courts. For disputes involving DIFC-based banks, the DIFC Courts have jurisdiction and apply common law principles.

The banking sector in the UAE is primarily regulated by the Central Bank of the UAE (CBUAE) under Federal Law No. 06 of 2025 (the Central Bank Law). This law governs the licensing and supervision of banks, financial institutions, and payment service providers. Additionally, the UAE Civil Code and Commercial Transactions Law apply to banking contracts and transactions.  Freezones such as DIFC and ADGM have their own regulatory frameworks for financial services within those free zones.

Defaulting on a loan in the UAE can have serious consequences. The bank may demand immediate repayment of the entire outstanding amount, enforce any security (such as property mortgages), and pursue legal action to recover the debt. A court judgment can lead to asset seizure and, in some cases, a travel ban. While the UAE has decriminalized bounced cheques for most purposes by shifting them to civil matters, criminal liability may still arise in certain circumstances related to fraud.

Islamic banking, also known as Sharia-compliant banking, operates according to Islamic principles that prohibit the payment or receipt of interest (riba). Instead of interest-based loans, Islamic banks use structures such as Murabaha (cost-plus financing), Ijara (leasing), Musharaka (partnership), and Sukuk (Islamic bonds). The UAE has a significant Islamic banking sector, and disputes involving Islamic finance may require specialised knowledge of both Sharia principles and commercial law.

Yes, if you are facing financial difficulties, it is advisable to contact your bank proactively to discuss your situation. Banks in the UAE often have hardship programs or may be willing to restructure loans, extend repayment periods, or reduce interest rates for customers in genuine difficulty. Early communication can help avoid default and its consequences. If negotiations are unsuccessful, a banking lawyer can assist with more formal restructuring or dispute resolution.

The CBUAE regulates and supervises banks and financial institutions. While it does not adjudicate individual disputes between banks and customers, Sanadak, the independent ombudsman unit, can adjudicate on individual disputes.  It can receive complaints about banks’ conduct and take regulatory action if banks violate regulations. The Central Bank has also issued consumer protection regulations that banks must follow. Filing a complaint with the Central Bank can sometimes encourage a bank to resolve a dispute.

If you suspect fraudulent activity on your bank account, you should immediately contact your bank to report the suspicious transactions and request that your account be frozen or secured. File a police report as soon as possible, as this is important for any subsequent investigation or legal action. Keep records of all communications and transactions. A banking lawyer can advise on recovering lost funds and pursuing claims against the bank if it failed in its security obligations.

Yes, some UAE courts have specialised divisions for banking and commercial disputes. Sanadak handles the mandatory first filing for retail and SME claims The Dubai Courts, for example, have a Banking and Commercial Division that handles complex financial cases. The DIFC Courts have jurisdiction over disputes involving DIFC-registered entities and can also hear cases where parties have opted into DIFC jurisdiction. These specialised courts have judges with expertise in financial matters, which can lead to more informed and efficient resolution of disputes.

A banking and finance lawyer in Dubai can assist with a wide range of matters, including reviewing and negotiating loan and facility agreements, advising on regulatory compliance, representing clients in disputes with banks, assisting with debt restructuring, handling security enforcement matters, and advising on Islamic finance structures. Whether you are a borrower facing difficulties or a lender seeking to recover funds, experienced legal advice is essential.