A dissolved company keeps its legal personality until liquidation ends, and a custodian's appearance cures a standing defect

Federal Supreme Court, Commercial Appeals Nos. 562 and 574 of 2023, judgment of 11 October 2023

Court
Federal Supreme Courtالمحكمة الاتحادية العليا
Case
Federal Supreme Court, Commercial Appeals Nos. 562 and 574 of 2023, judgment of 11 October 2023
Arabic citation
الطعنان رقما 562 و574 لسنة 2023 تجاري، جلسة 11/10/2023
Topics
Company law · Courts & arbitration · Commercial law
Laws applied
Commercial Companies Law
The judgment
Read it on moj.gov.ae ↗ (Federal Supreme Court Technical Office, Collection of Judgments 2023 (Ministry of Justice), pp. 368-373)
Summary written
1 November 2026
Print

The principle

A company dissolved by judgment is treated as continuing, with its legal personality, for the needs of liquidation until liquidation is complete, so that its claims can be collected, its debts paid and the balance divided among the partners, and to protect third parties. Standing is a question of fact for the trial court, decided on adequate grounds. Where the court-appointed custodian of a company instructed lawyers, filed pleadings and dealt with the experts during the first-instance proceedings, he acquired standing in the case, the defect was cured, and the company's claim could not be dismissed as brought by a party without standing.

The case and the decision

A contracting LLC sued the real estate LLC that owned a project comprising a hotel, residential buildings, a garden and beachfront villas, after the owner stopped paying certified interim payments when the works were more than 91.5 per cent complete. The contractor sought an engineering expert to establish the works done, the sums paid and the cause of delay. On 12 October 2022 the court of first instance ordered the owner to pay the contractor AED 85,236,921.69 with 5 per cent interest. It also ordered the contractor, represented by its court-appointed custodian, to pay two intervening claimants AED 108,500 and AED 39,700,691.71 respectively, and dismissed the owner's counterclaim. On 9 May 2023 the federal appeal court set aside the main award and declared the contractor's claim inadmissible as brought by a party without standing. Both companies appealed. The Federal Supreme Court restated that judgments must rest on clear and sufficient reasons; that a defendant has standing where the right claimed exists against him; and that identifying the parties' capacity is for the trial court on sound grounds. It added that a company dissolved by judgment keeps its legal personality for the purposes of liquidation until liquidation ends. The record showed that the custodian had instructed lawyers for the contractor before the court of first instance, filed memoranda and responded to the experts. He had therefore acquired standing while the case was pending, and the defect had been cured. The appeal court, which failed to notice this, reasoned unsoundly and erred in law. Its judgment was quashed and the case remitted; the second appeal, concerning the same indivisible dispute, was quashed with it.

Why it matters

Disputes involving companies under a court-appointed custodian or in liquidation often turn on who may act for the company. The Court confirms that dissolution does not end a company's capacity to sue and be sued for liquidation purposes, and that an objection to standing fails where the proper representative has in fact taken over the litigation. The judgment does not say why the custodian had been appointed.

Laws applied

Federal Decree-Law No. 32 of 2021 (Commercial Companies Law): rule that a dissolved company keeps its personality for liquidation, stated by the Court without citing an article

In the court’s words

“الشركة التي يحكم بحلها تعتبر قائمة لتسوية العلاقات القانونية الخاصة بالتصفية ، وأن انتهاءها لا يمنع من اعتبارها قائمة محتفظة بشخصيتها المعنوية لحاجات التصفية حتى تنتهي تصفيتها”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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Source. Summary written by Polaris from the judgment published by the Federal Supreme Court on moj.gov.ae (Federal Supreme Court Technical Office, Collection of Judgments 2023 (Ministry of Justice), pp. 368-373), read on 1 November 2026. Party names are anonymised in the court’s publication.
Published for general information by Polaris Corporate Services FZ-LLC. It is not legal advice. This page is a summary written by Polaris; it is not the judgment and is not an official translation. Read the judgment on the court’s official service before relying on it. A judgment decides the dispute before the court; its weight in a later case depends on the court, the facts and any later change in the law or in the court’s own case law.

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