Dubai Court Throws Out Dh3.15M Cheque Suit Between Brothers
Judges rule cheque was issued only as a security guarantee, lost all legal effect under later contracts, and could not be enforced as a debt.
Staff WriterJan 21, 2026, 11:00 AMA Dubai civil court has dismissed a lawsuit filed by an Arab national seeking to force his brother to honour a cheque worth Dh3.15 million, after finding that the instrument was issued purely as a guarantee and not as payment for a debt.
The court ruled that the cheque had lost its legal value once the purpose for which it was issued had been fulfilled, making it unenforceable under UAE law.
The dispute stemmed from investment arrangements between the two brothers dating back several years. The claimant told the court he had transferred funds to his brother representing his share in a group of jointly owned companies.
Court records showed that the defendant issued the Dh3.15 million cheque as a security for his financial obligations. When the claimant later attempted to encash the cheque, it was returned unpaid after the account had been closed, prompting the lawsuit following failed settlement efforts and formal legal notices.
The defendant sought dismissal of the case, arguing that the dispute was subject to arbitration. However, the court rejected this defence, noting that the arbitration clause relied upon appeared in an earlier sales contract that was unrelated to the guarantee cheque.
In its judgment, the court referred to Dubai Court of Cassation precedents distinguishing cheques issued as payment from those provided solely as security. Citing Article 125 of the Civil Transactions Law, the judges held that clear contractual terms are binding on the parties.
The court found that the cheque originated from a 2016 agreement valuing the investment at Dh21 million, with the claimant holding a 15 per cent share. It noted that guarantee cheques were intended to lapse after about two years and that a subsequent 2019 contract explicitly cancelled the legal and penal effect of all earlier guarantee cheques, including the one in dispute.
The claim was dismissed, with the plaintiff ordered to pay court fees and legal costs.
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