Recent Abu Dhabi Court of Cassation Judgment: The Enforceability of Consumer Credit Claims in the UAE

4 min 3 sec December 3, 2025 (Edited)

The enforceability of consumer credit claims in the UAE has been reshaped by recent case law interpreting the statutory requirement of “adequate security”. Since the introduction of Article 121 bis into the Central Bank Law, courts have been asked to determine when a bank may bring proceedings to recover consumer credit, and what constitutes “adequate security” as a condition to admissibility. In parallel, judicial and regulatory guidance — most notably the 2011 consumer credit regulations and the Abu Dhabi Judicial Department Circulars Nos.  9 of 2022 and 3 of 2023 — has sought to align court enforcement with supervisory policy.

This article will consider the recent Abu Dhabi Court of Cassation Judgment No. 819 of 2025 dated August 28 2025 and the court’s approach to consumer credit enforcement. The court in this case highlights the threshold nature of Article 121 bis and brings welcome clarity on scope, timing, and the content of “adequate security”.

Background

Article 121 bis of Federal Decree-Law No. 14 of 2018 (as amended by Federal Decree-Law No. 23 of 2022) obliges licensed financial institutions to obtain adequate security for facilities extended to natural persons and private sole proprietorships, commensurate with the client’s income or other security and the size of the facilities, as determined by the central bank. It further provides that no action, application, or plea by a licensed financial institution will be entertained in credit disputes with such customers absent the requisite security.

The Central Bank’s 2011 Regulation on bank loans and services to individual customers (No. 29/2011), as amended, is significant for assessing adequate security in the consumer context. Article 7 of the 2011 framework permits banks and finance companies to take from the customer a number of cheques covering instalments in an amount not exceeding 120% of the loan or debit balance.

Complementing the legislative and regulatory regime, the Abu Dhabi Judicial Department issued Circular No. 9 of 2022 and Explanatory Circular No. 3 of 2023.  The latter confirms that the directive limiting execution to security accepted by the financial institution applies to all banking disputes involving credit facilities, regardless of the date of the contracts, and to all recipients of credit facilities whatever their juridical nature, while identifying the 2011 regulation as the reference for Article 121 bis.

Abu Dhabi Court of Cassation Judgment 819 of 2025

 In this case, a bank’s claim to enforce a personal loan was dismissed at first instance and on appeal, on the premise that the security obtained was inadequate and that the loan exceeded twenty times the borrower’s salary. The bank argued that it held a salary certificate, credit insurance, and a single promissory cheque for the full facility amount, which together satisfied Article 121 bis, as read with the 2011 Regulation and ADJD circulars.

The Court of Cassation accepted the bank’s position, holding that the bank had indeed obtained adequate security. It based its reasoning on Article 121 bis, and the Court relied expressly on Explanatory Circular No. 3 of 2023 (supplementing Circular No. 9 of 2022) and Article 7 of the 2011 consumer credit regulations as the normative benchmark for adequate security.

The Court affirmed that a single cheque for the full facility amount is capable of constituting adequate security, notwithstanding that the regulation contemplates “a number” of cheques, because the cheque — in form and substance — secured the total indebtedness and its accessories.

The Court further held that any breach of prudential guidance on the salary-to-loan multiple (such as exceeding twenty times the salary) may have administrative or supervisory implications for the bank but does not, in itself, bar admissibility of the bank’s claim if adequate security exists within the meaning of Article 121 bis. The Court accordingly quashed the inadmissibility ruling and remanded the matter for reconsideration on the merits.

The Abu Dhabi Court of Cassation Judgment No. 819 of 2025 provides a three-part framework:

1. it grounds the admissibility requirement in Article 121 bis;
2. it uses the 2011 consumer credit regulation as the substantive benchmark for what counts as adequate security; and
3. it operationalises ADJD Explanatory Circular No. 3 of 2023 (supplementing Circular No. 9 of 2022) to confirm that, for enforcement purposes, cheques that secure the total indebtedness are sufficient in consumer credit cases.

The decision provides a clear, administrable rule: where the bank holds a cheque securing the full facility (alongside salary assignment evidence or insurance, where present), the adequacy threshold under Article 121 bis is met, and the action is admissible.

Conclusion

Abu Dhabi Court of Cassation Judgment No. 819 of 2025 is an important case on the concept of “adequate security” in consumer credit enforcement. It expressly integrates Article 121 bis, the 2011 consumer credit regulation, and ADJD Circular No. 3 of 2023 into a coherent rule that privileges substance over form:

• a single cheque securing the full facility is adequate;
• salary-multiple breaches are supervisory, not jurisdictional; and
• the claim is admissible.

The net effect is a clearer pathway to enforcement for lenders in Abu Dhabi and a correspondingly narrower procedural doorway for borrowers to resist claims on the basis of Article 121 bis, with ongoing importance attached to sound documentation and compliance with the 2011 regulatory architecture across the UAE.