UAE launches first bankruptcy court

The move, which comes in the wake of modernised insolvency rules brought in last year, replaces the previous regime where cases were handled by general commercial courts.

The new court, which will also include a bankruptcy administration department, will look to centralise expertise in insolvency issues in the UAE, allowing greater efficiency and transparency around bankruptcy proceedings.

The judges forming the new court, which will be based in Abu Dhabi’s federal court, must be specialized and of rank not lower than appellate.

Faisal Attia, a civil law expert with Pinsent Masons in Dubai, said the move would strengthen the UAE’s reputation for financial dealings and increase investor confidence in the region.

“By centralising bankruptcy cases under a dedicated judicial body, this move will foster business stability and hence, further positions the UAE as a regional hub for restructuring and insolvency,” he said.

“The attractiveness of the new regime is reinforced by the objectives in article two of the law, which prioritise economic vitality, creditor rights, and debtor assistance to avoid liquidation. Combined with the court’s two specialised divisions for applications and oversight, this structure promotes compliance and efficiency, which are key factors for lenders, investors, and businesses in the current climate.”

The court was created under the auspices of the Federal Judicial Council, following Decree-Law No. 51 of 2023, which came into effect on 1 May 2024.

That law introduced key reforms around the nature of assets and how bankruptcy and insolvency roles would work in the new regime – paving the way for the new court to take effect.

Nour Abi Rached, a civil commercial law expert with Pinsent Masons in Dubai, said the nature of the court meant companies operating in the UAE now needed to be clear about their own insolvency approaches to align with the new regime.

“Firms should review insolvency strategies, monitor implementation and seek guidance on these changes, as early operational challenges, such as case transfers or integration with the new bankruptcy administration department may impact timelines,” she said.