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Bank Loan Dispute UAE: Loan Broke Central Bank Limits, Still Not Void
Introduction: AED 1.59m Loan, 300 Instalments, "Void" Claim Rejected
A personal loan of AED 1,594,000, repayable over 300 months, with an instalment the borrower said took more than 59% of his salary. He argued the loan broke the Central Bank's rules and was void. In this bank loan dispute in the UAE, the Abu Dhabi Court of Cassation (Commercial Appeals 949 and 950 of 2026, judgment of 15 October 2026) held that the breaches did not void the contract or discharge the debt. It also reversed an appeal ruling that had cut the balance to AED 203,237.77.
What the Court Decided: The AED 203,237.77 Recalculation Is Gone
As the judgment summarises his case, the borrower signed a personal loan on 23 April 2016 with a bank that later merged into the respondent bank. The loan was AED 1,594,000 at a fixed 7.4% a year, secured by his monthly salary of AED 19,913.50, repayable in 300 monthly instalments of AED 11,807, the first due on 25 May 2016. He said the loan exceeded twenty times his salary, the term exceeded the 48-month maximum for personal loans, and the instalment was more than 59% of his salary against a 50% cap. He said he had paid AED 1,639,962.23 between 31 May 2016 and 27 November 2025, AED 45,962.23 more than the principal, and that the bank had applied compound interest.
His final requests were to rescind the loan contract as void, relying on Supreme Resolution No. 6321/1/5 of 27 February 1995 on borrowing by individuals, on the Central Bank law and circulars, and on the bank's failure to take sufficient security; a declaration that he owed no interest; a refund of AED 45,962.23; AED 500,000 in compensation; AED 10,000 for a consultant expert report; and the return of his original guarantee cheque.
The bank answered that the loan was granted in 2016, before the Central Bank law of 2018 and its 2022 amendment, that the term and number of instalments did not affect the contract's validity, that his salary had increased and he had other income, and that he had paid only AED 1,008,975.46 up to the filing of the case.
At first instance, a court-appointed accounting expert calculated simple interest at the agreed 7.4% and found AED 910,444.27 owed to the bank up to the filing date of 4 February 2026. On 11 June 2026 the court dismissed the borrower's case. On 22 July 2026 the Abu Dhabi Commercial Appeal Court (Appeal 939/2026) partly reversed that judgment and recalculated the debt at AED 203,237.77 only, ordering the bank to adopt that figure. It used a "standard" 48-month instalment of about AED 38,400, giving a total of AED 1,843,200, and deducted the AED 1,639,962.23 it found had been paid.
The Court of Cassation quashed the appeal judgment on the bank's appeal, decided the appeal itself, rejected it and affirmed the dismissal of the borrower's case. It also rejected the borrower's own cassation appeal. On the bank's appeal, the borrower was ordered to pay the fee and expenses and AED 1,000 in lawyers' fees, and the bank's deposit was returned. On the merits of Appeal 939/2026, he was ordered to pay the fees and expenses and AED 500 in lawyers' fees. On his own appeal, he was ordered to pay the fee and expenses and AED 1,000 in lawyers' fees, and his deposit was forfeited.
What the Law Says: Articles 409, 109, 167 and 133
The Court cited Article 409 of the Commercial Transactions Law: in a bank loan, the bank delivers a sum of money to the borrower or credits it to his account, and the borrower must repay the loan and its interest on the agreed dates and terms.
It cited Article 109 of the Law of Evidence in Civil and Commercial Transactions: a court may appoint experts on technical points and facts it cannot readily establish, while legal questions remain for the court alone. The Court stated that a court may not itself carry out a technical examination that needs scientific or professional expertise ("فلا يجوز للمحكمة أن تباشر بنفسها الفحص الفني"), and an expert may not address legal questions.
On procedure, it applied Article 167 of the Civil Procedure Law, under which an appeal court may decide an appeal in chamber only to affirm the judgment or to declare the appeal not permissible, inadmissible or lapsed, and must set a hearing to rule otherwise. On costs, it applied Article 133 of the same law.
Is a Personal Loan Over Central Bank Limits Void? The Court Said No
The Court held that exceeding the permitted personal loan limit, breaching the repayment term or the deducted amount has no effect on whether the case is admissible ("لا أثر له على قبول الدعوى من عدمه"). It added that such breaches do not void the contract, do not discharge the borrower from sums he was proved to have received, and do not require the return of sums he paid on a loan the bank had deposited into his account.
Deciding the appeal on the merits, the Court said the first instance judgment had given the breaches established against the bank their correct legal effect: they do not discharge the borrower's debt, do not void the contract and do not make the case inadmissible. That judgment, based on the expert's findings, was affirmed.
Bank Loan Dispute UAE: Why the Appeal Court's Figure Fell
It ruled on something nobody asked for. The Court repeated that the claimant defines the scope of the case and that a court may not award what was not requested or more than was requested. The borrower's final requests, in his memorandum for the session of 23 April 2026, did not clearly and firmly ask for the debt to be recalculated at any specific amount, or for the bank to be ordered to adopt such a figure. His appeal requests did not go beyond those at first instance.
It did the expert's work itself. The Court held that the appeal court's recalculation disregarded contract terms the parties had freely accepted, which it described as the law between them, and went into technical matters outside its role. It also contradicted the court-appointed expert, who had excluded compound interest and calculated simple interest at the agreed rate.
The bank's procedural complaint failed. The minutes showed that on 21 July 2026 the appeal court considered the appeal in chamber and set 22 July 2026 for a merits hearing, which both lawyers attended, so Article 167 had been followed.
The borrower's own appeal. He challenged the refusal of compensation, of the AED 10,000 consultant report cost, and the order that the bank bear only 75% of the fees and expenses rather than all of them. The Court held that, because the claims of nullity had failed, there was no basis for compensation, and the bank remained his creditor for the amounts found by the court-appointed expert. As he had lost his case, he bore all of its costs under Article 133.
Key Takeaways from the Judgment
Exceeding the personal loan limit, the repayment term or the salary deduction did not void the loan, discharge the borrower or require refunds of sums paid.
A court may not award what the claimant did not request; the final requests set the limits.
A court may not carry out technical loan calculations itself; that is the expert's role.
The dismissal of the borrower's case, based on the expert's findings, was affirmed, and the bank remained creditor for the amounts the expert found.
With nullity rejected, the compensation claim failed and the borrower bore the costs.
We have covered other bank loan disputes in the UAE, including an Islamic bank ordered to credit fair rent on financed villas and the Central Bank's 2026 regulation on Islamic financial transactions.
How Juris Maestro Can Help
As legal consultants in the UAE, we advise borrowers and businesses on bank loan disputes in the UAE. We review loan agreements, offer letters and statements of account, explain the options and timetables, and draft notices, rescheduling requests and settlement terms.
If you're unsure, let's talk. Before it turns into a case.
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This article interprets a court judgment for general information only. It is not legal advice.
