Dubai court orders man to repay Dh1.47 million after loan default

A Dubai civil court has ordered an Arab man to repay Dh1.47 million to a woman who lent him money through a combination of cash and a bank loan taken out on his behalf.

The court ruled that the woman is entitled to recover all amounts she paid, but not the additional Dh40,000 the pair had agreed as extra profit, Emarat Al Youm reported.

According to the claim, the woman asked the court to compel the defendant to settle Dh1.41 million, plus 5 per cent legal interest from the date of the claim until full repayment. She said he issued five cheques worth a total of Dh1.37 million as a guarantee, but the bank refused to honour them because they were written on outdated cheque books. Despite repeated attempts to settle the matter amicably, he refused to pay, prompting her to file the case.

The court appointed a financial expert, who confirmed the existence of a valid loan agreement and found that the defendant was obliged to repay the full value of the bank loan, its interest, and the cash amount he received. The expert also noted that the claimant could not recover her money through a property pledged as security, as the defendant and another joint owner had sold it to a third party. The report further confirmed that the defendant had not paid the claimant anything since signing the agreement.

After reviewing the parties’ submissions, the court found the loan contract legally sound under Articles 125, 243 and 710 of the Civil Transactions Law, which require both parties to fulfil their contractual obligations and repay loans when due.

However, the judge ruled that the extra Dh40,000 profit clause was void under Article 714, which prohibits any additional benefit for the lender in civil personal loans. While the clause was annulled, the court held that the original loan agreement remained valid as its legal elements were intact.

The defendant was ordered to repay Dh1.47 million, which is the loan amount without the extra profit, along with 5 per cent annual interest from the date the case was filed until payment is completed. The court rejected the request for expedited enforcement and ordered him to pay legal costs and lawyer’s fees.

In its judgment, the court stressed the importance of protecting lenders’ rights while preventing borrowers from being subjected to unlawful additional gains.