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Personal Liability of Company Managers and Their Enforcement Obligations – Recent Abu Dhabi Court of Cassation Judgment
6 min 51 sec 
a.noor@tamimi.com 
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On 24 February 2026, the Abu Dhabi Court of Cassation issued Judgment No. 70 of 2026, a significant decision that reaffirmed and clarified the scope of personal liability borne by company managers in the context of enforcement proceedings under UAE law. The judgment addressed a critical question at the intersection of UAE corporate and enforcement law: whether a former manager and owner of a limited liability company (LLC) can be subjected to personal enforcement measures — including imprisonment and travel bans — for the debts of the company he once managed, even after he has transferred ownership to a third party. The Court’s decision reinforces the principle that managerial obligations under the law cannot be readily shed through corporate restructuring or the disposal of ownership interests.
Background
The dispute originated from a commercial subcontracting relationship. The first respondent, acting as a main contractor, entered into two subcontracting agreements with the second respondent company for a total sum of AED 3,525,000. The appellant was, at that time, both the owner and manager of the second respondent company. He personally negotiated and signed the contracts with the first respondent. In addition, the appellant signed guarantee cheques intended to secure the repayment of advance payments made under each contract.
When the subcontracting relationship broke down, the first respondent obtained a judgment in Case No. 333/2023 before the Abu Dhabi Commercial Court, ordering the second respondent company to pay AED 366,677.20 in principal, AED 300,000 in compensation, and late-payment interest on both amounts. An enforcement file was subsequently opened to execute this judgment. However, enforcement against the company proved futile: the guarantee cheques signed by the appellant could not be cashed, and the company appeared to have no traceable assets.
Critically, the evidence revealed that the appellant had sold and transferred the second respondent company, without consideration, to an individual who was outside the country at the time of the transfer, by way of a waiver deed notarised on 31 January 2022. The first respondent alleged that this transfer was a sham transaction designed to enable the appellant to evade responsibility for the company’s outstanding debts incurred during his ownership. The new buyer subsequently converted the company into a sole proprietorship limited liability company, but the court-appointed expert confirmed that the buyer had played no role whatsoever in the management of the company.
Proceedings Before the Enforcement and Appellate Courts
The first respondent filed an objection before the Abu Dhabi Enforcement Court, seeking to add the appellant as a party to the enforcement file in his capacity as the legal representative of the company at the time of contracting, and to activate all available legal enforcement measures against him personally. The Enforcement Court appointed an expert specialising in corporate affairs to investigate the matter. The expert’s report produced damning findings. It established that the company’s accounting system contained no financial reports relating to its financial position, nor any profit-and-loss statements, for the entirety of 2021, 2022, 2023, and 2024, as well as the period from 1 January 2025 to 30 September 2025.
The only records on the system were trial balances for 2021 and 2022. The expert concluded that the company had no proper financial statements — whether audited or unaudited — upon which its financial position could be assessed. Furthermore, the expert confirmed that all contractual obligations between the first respondent and the second respondent company were entered into during the period of the appellant’s management, and that the appellant had failed to produce any evidence that he had handed over the company’s accounts and financial records to the buyer upon the transfer.
On 20 November 2025, the Enforcement Court ruled in favour of the first respondent. It confirmed the appellant’s standing in the enforcement file and declared the first respondent’s right to take personal enforcement measures against the appellant as a person addressed by Article 322 of the Civil Procedures Law. The appellant was ordered, jointly with the second respondent company, to bear the court costs and AED 200 in legal fees. The appellant appealed this decision. On 23 December 2025, the appellate court, sitting in chambers, dismissed the appeal and upheld the first-instance enforcement ruling.
The Appellant’s Grounds of Cassation
The appellant brought the matter before the Court of Cassation, raising several grounds. He argued that the appealed decision was prejudicial to his rights, contrary to the documentary evidence, and involved an error in the application of law and a deficiency in reasoning. His principal contentions were threefold.
First, he argued that the enforcement title was binding only on the first and second respondents and did not include his name, and therefore the objection should not have been accepted against him for lack of standing. Second, he contended that because a limited liability company possesses a separate legal personality and a financial patrimony independent from that of its partners, there was no personal relationship between himself and the first respondent.
Third, he asserted that upon his exit from the company and his transfer of it to a third party, his capacity vis-à-vis the company had terminated, and he could not be held responsible for its debts — particularly where none of the statutory conditions for holding partners jointly liable in their personal assets had been established. The appellant further criticised the lower courts for disregarding the balance sheets he had submitted for his period of management and for relying on what he described as a defective expert report, alleging that the expert had refused to accept the financial documents he had presented.
Key Findings of the Court of Cassation
The Court of Cassation found all of the appellant’s grounds to be without merit. The Court began by setting out the legal framework under Article 322 of the Civil Procedures Law. It held that where the debtor is a private legal entity, the court may order the imprisonment of the person who legally represents that entity — or of any other person — if the failure to execute the judgment is attributable to them personally. The Court further noted that travel bans may also be imposed in accordance with the procedures and controls set out in Articles 324 to 326, even where the creditor does not hold a separate enforcement instrument against the representative personally, provided that an investigation is conducted in both cases.
On the question of the separate legal personality of limited liability companies, the Court acknowledged that such companies do indeed possess their own legal personality and a financial standing independent from that of their shareholders, and that they are, in principle, solely liable for debts arising from their commercial activities. However, the Court stressed that the manager of such a company is deemed its representative before the courts in respect of all rights and obligations, and that this status renders the manager the person addressed by Article 322. The consequence of this principle is that the manager may be sued in his capacity as the legal entity’s representative and that an order for his imprisonment may be issued for the company’s debts, precisely because it is he who, by virtue of his position, bears responsibility for ensuring the fulfilment of the company’s obligations.
Turning to the specific facts, the Court emphasised that the appellant was the person who had represented the subcontracting company at the time it contracted with the main contractor, that he personally signed the contracts and the guarantee cheques, and that the contractual obligations and resulting debts arose entirely during his tenure as manager. The Court found that the appellant had deliberately withheld the financial data and records that would have enabled the expert and the courts to ascertain the company’s true financial position and the movement of its funds, thereby obstructing the enforcement of the judgment.
Perhaps most significantly, the Court addressed the appellant’s argument that his sale and transfer of the company relieved him of all liability. The Court held unequivocally that the disposal of the company does not have the effect of exempting a former manager from the legal obligations imposed upon him by Article 322. This conclusion rested on two grounds: first, the subcontracting agreements that gave rise to the debt were entered into during the appellant’s ownership and management of the company; and second, the appellant failed to demonstrate that he had handed over the company’s accounts and financial statements to the buyer, rendering him responsible for the absence of the financial data necessary to evaluate the company’s financial position.
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The ruling makes clear that the protections afforded by the corporate veil of a limited liability company do not shield its managers from personal enforcement liability under Article 322 of the Civil Procedures Law.
Significance of the Judgment
Judgment No. 70 of 2026 carries several important implications for commercial practice and enforcement law in the UAE. The ruling makes clear that the protections afforded by the corporate veil of a limited liability company do not shield its managers from personal enforcement liability under Article 322 of the Civil Procedures Law. The distinction drawn by the Court is a subtle but critical one: this is not a case of piercing the corporate veil in the traditional sense, whereby a shareholder is held liable for the company’s debts. Rather, it is the application of a specific statutory mechanism that treats the legal representative of a corporate debtor as the person upon whom enforcement measures may be imposed — including imprisonment and travel bans — by reason of his role in the company’s failure to satisfy its obligations.
These mechanisms are properly characterised as enforcement measures, not as judgments on personal liability. Their purpose is to compel the legal representatives of companies (typically managers, though the category may extend to others) to take steps to satisfy outstanding judgments, where the failure to do so is attributable to their personal conduct. This issue must be distinguished from the question of direct personal liability of company managers under Articles 84 and 162 of the Commercial Companies Law. Under those provisions, judgments of personal liability may be issued against managers and board members for acts that cause harm or loss to the company, its shareholders, or third parties. In such cases, the liability of the managers is direct and personal, and judgments may be enforced against their personal assets.
By contrast, under Articles 319 and 322 of the Civil Procedures Law, the court does not issue a judgment of personal liability against the company’s representatives. Instead, the court applies pressure on them to facilitate the enforcement of judgments against the company through the execution judge, by issuing arrest warrants and travel bans where it is established that the representative is responsible for obstructing enforcement. In other words, the representative is required to satisfy the judgment amount from the assets of the company, not from his personal funds.
Where, however, a manager is found liable to pay compensation for a violation under Articles 84 and 162, the manager is ordered to satisfy the judgment from his own personal assets. A further procedural distinction exists between the two regimes: orders issued pursuant to Articles 319 to 322 of the Civil Procedures Law are challenged by way of grievance, whereas judgments issued pursuant to Articles 84 and 162 are subject to the ordinary appellate process. Equally important is the Court’s treatment of the transfer of ownership. By holding that a former manager cannot escape enforcement liability simply by selling or transferring the company to a third party, the Court has closed what might otherwise have been a significant loophole. This is particularly relevant in cases where the transfer appears to be without genuine consideration, or where the transferee is absent from the jurisdiction — circumstances that may suggest the transaction is designed to frustrate creditors rather than to effect a bona fide change of ownership.
The judgment also underscores the importance of proper financial record-keeping and transparency. The appellant’s failure to maintain or produce complete financial statements for the company, and his inability to demonstrate that he had transferred the company’s accounts to the buyer, were treated not merely as evidentiary shortcomings but as factors directly contributing to the obstruction of enforcement. Company managers should therefore be aware that a failure to maintain adequate financial records, or to ensure an orderly handover of such records upon the sale of a business, may itself constitute grounds for personal enforcement action.
Conclusion
This judgment serves as an important reminder that managing a limited liability company in the UAE carries serious personal responsibilities, particularly in the context of enforcement proceedings. The Court has confirmed that company managers are the persons addressed by Article 322 of the Civil Procedures Law and may be subjected to personal enforcement measures — including imprisonment and travel bans — for the debts of the companies they represent, irrespective of whether they continue to hold that position at the time enforcement is sought. The sale or transfer of a company does not relieve a former manager of obligations that arose during his or her tenure, particularly where the manager fails to ensure the proper transfer of the company’s financial records. For creditors, the judgment provides a clear judicial endorsement of the right to pursue the personal assets and liberty of those who stand behind corporate debtors. For company managers, it is a stark warning: the obligations of management do not end at the point of sale.
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