Dubai Court of Cassation (General Assembly), Resolution No. 3 of 2025, 26 March 2025
Under Federal Decree-Law No. 51 of 2023 on Financial Reorganisation and Bankruptcy, the specialised bankruptcy court has exclusive jurisdiction over all requests and proceedings in bankruptcy cases, including disputes over a company's debts, from the moment a bankruptcy petition is accepted and proceedings opened; it decides the validity, amount and priority of debts and takes measures to protect creditors and debtors. No substantive action may be brought, or continued, against the debtor once the opening decision is made. Excluded are actions on assets and dispositions not covered by the debtor's divestment, actions the law allows the debtor to bring or defend, and criminal cases. Disputes decided or reserved for judgment before the Decree-Law took effect stay with the ordinary courts.
The President of the Court of Cassation asked the General Assembly to set rules on the jurisdiction of the bankruptcy court over disputes about companies' debts under Federal Decree-Law No. 51 of 2023 on Financial Reorganisation and Bankruptcy.
The Assembly noted that the Decree-Law aims to simplify and speed up bankruptcy, reducing its cost and duration. It created an administrative unit headed by a judge of at least appeal-court rank, which receives applications, notifies interested parties, verifies applications for preventive composition, restructuring and bankruptcy, implements precautionary measures ordered by the bankruptcy court, holds creditor meetings and carries out preparatory steps. It also created specialised courts, which implies their exclusive jurisdiction over all bankruptcy-related disputes, including debt disputes, while the ordinary courts keep civil and commercial disputes outside that exclusive jurisdiction. The trustee verifies the validity and value of debts and reports to the court.
The Assembly resolved, first, that the bankruptcy court has exclusive jurisdiction over all requests and proceedings in bankruptcy cases, including company debt disputes, as soon as the bankruptcy petition is accepted and the proceedings are opened, with power to decide the validity, value and ranking of debts; no substantive action may be brought against the debtor, or a pending one continued, once the opening decision is issued. Second, three categories are excluded: actions concerning assets and dispositions not affected by the debtor's divestment; actions relating to procedures under the Decree-Law that the debtor is permitted to bring or be party to; and criminal cases. Third, as a transitional rule, the ordinary courts continue to hear disputes already decided or reserved for judgment before the Decree-Law came into force, and appeals against those judgments follow the rules in force when they are issued.
Creditors suing a company in financial difficulty in Dubai face a hard stop once bankruptcy proceedings open: debt claims must be pursued within the bankruptcy, and pending ordinary lawsuits against the debtor cannot continue. The resolution gives a clear allocation between the bankruptcy court and the ordinary courts, including for cases caught by the change of law.
| Federal Decree-Law No. 51 of 2023 on Financial Reorganisation and Bankruptcy |
“تختص محكمة الإفلاس حصريًا بنظر جميع الطلبات والإجراءات المتعلقة بدعاوى الإفلاس، بما في ذلك منازعات الديون المتعلقة بالشركات”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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