UAE Supreme Court Backs Bank in Dh2.3M Cheque Enforcement Case

The Federal Supreme Court has ruled in favour of a bank in a Dh2.3 million cheque dispute, rejecting an appeal by a customer who sought to block the enforcement of the cheque issued against a personal loan.

 

The customer had challenged an earlier ruling that placed an enforcement formula on the cheque, arguing that it could not be used to recover the loan amount. He claimed the cheque was linked to a personal loan and that the bank’s enforcement action was therefore invalid.

 

In his lawsuit, the claimant contended that the bank had approved the loan without obtaining adequate guarantees, despite his limited income. He told the court that his monthly salary at the time did not exceed Dh25,000, and argued that the loan breached a 1995 directive regulating personal borrowing from banks and financial institutions, which aims to prevent excessive indebtedness.

 

A court of first instance appointed an expert to review the case. While the court accepted the enforcement challenge in form, it rejected it on substance. The Court of Appeal later upheld the ruling, prompting the customer to escalate the matter to the Federal Supreme Court.

 

Before the top court, the plaintiff argued that both lower courts had failed to properly consider his main defence -- that the loan had been granted in violation of the 1995 regulations. He said this omission rendered their judgments legally flawed.

 

The Federal Supreme Court dismissed the appeal, outlining the legal framework governing such disputes. It noted that the 1995 directive was introduced to curb excessive personal debt and requires banks to ensure that a borrower’s income is proportionate to the loan amount, that the borrower is not unemployed or earning a limited income, and that sufficient guarantees are in place.

 

The court held that determining whether these conditions have been met is a factual issue within the discretion of the trial judge, as long as the assessment is reasonable and supported by evidence.

 

While acknowledging that the claimant had raised concerns about his income and the lack of guarantees, the court found no legal error in how the lower courts evaluated those arguments.

 

The Federal Supreme Court ultimately upheld the appeal court’s judgment, confirming that the cheque could be enforced and rejecting the customer’s request to cancel the enforcement formula.

 

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.