Dubai Court of Cassation, Commercial Appeal No. 112 of 2024 (joined with Appeal No. 187 of 2024), judgment of 24 June 2024
Under Article 1092 of the Civil Transactions Law, once a guaranteed debt falls due the creditor must claim it within six months, failing which the guarantor is released; this applies to commercial guarantees. The rule is not of public policy, so a guarantor may agree to remain bound for longer, but only by clear and unequivocal consent. Late-payment interest compensates the presumed harm of a solvent debtor's delay and excludes a separate claim for damages for the same delay. Where the sum claimed is known at the time of the claim, delay interest runs from the judicial claim, not from the date the judgment becomes final.
Under a 2010 addendum to a construction contract, a project owner agreed to pay subcontractors on behalf of the contractor, an LLC, and two of its partners signed the addendum as its guarantors. The subcontractors later obtained a judgment against the owner and the contractor jointly, which became final on 6 June 2022, and the owner paid AED 1,983,985 through enforcement between January 2022 and March 2023. On 31 March 2023 he sued the contractor and the two guarantors for that amount, AED 1 million in damages and interest. The courts below ordered the contractor alone to pay AED 2,120,145 with interest from the date the judgment became final, and held that the guarantors had been released.
The owner's appeal (No. 112 of 2024) was dismissed on the guarantee point. Under Article 1092 the creditor must claim within six months of maturity, and the rule applies to commercial guarantees. The appeal court had found that the debt fell due when the subcontractors' judgment became final on 6 June 2022 and that the claim was filed more than six months later; nothing showed that the guarantors had agreed to a longer period. The damages claim also failed: interest for delay is itself the compensation for the harm caused by the debtor's delay, a harm presumed by law.
The owner succeeded on the start date of interest. A sum known at the time of the claim attracts delay interest from the judicial claim unless an agreement or custom sets another date. Here the amount was fixed by the earlier final judgment and was not a matter for the court's discretion, so interest ran from 31 March 2023. The Court partly quashed the judgment and amended it accordingly. The contractor's appeal (No. 187 of 2024), which argued that the owner could recover only half or only excess payments, was dismissed as a challenge to the expert findings.
Creditors relying on personal guarantees, including those given by partners or managers, must act within six months of the debt falling due unless the guarantee contains clear wording extending it. The judgment also limits claimants to delay interest for late payment and confirms that interest on a liquidated sum runs from the date the claim is filed.
| Article 1092 of Federal Law No. 5 of 1985 (Civil Transactions Law) on the creditor's six-month period to claim against a guarantor — text of article 1092 Decided under this law; it has been replaced by Civil Transactions Law 2025. |
“إذا اُستحق الدين فعلى الدائن المطالبة به خلال ستة أشهر من تاريخ الاستحقاق وإلا اعتبر الكفيل خارجا من الكفالة”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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