UAE Launches First Specialised Bankruptcy Court
On 15 July 2025, UAE Federal Decision No. 39 of 2025 on the Regulation of the Bankruptcy Court (the “Decision”) came into effect. This decision operationalises the UAE’s first court dedicated to overseeing bankruptcy-related proceedings.
Jurisdiction
The Bankruptcy Court will have jurisdiction over disputes and applications arising from the implementation of UAE Federal Decree-Law No. 51 of 2023 – the Financial Reorganisation and Bankruptcy Law (the “UAE Bankruptcy Law”).
The Decision specifies that the Bankruptcy Court shall be headquartered at the Federal Court of First Instance in Abu Dhabi. The Federal Judicial Council is also given the authority to designate additional seats of the Bankruptcy Court in the other Emirates. We are not aware of any additional seats having been established as yet.
It is notable that not all of the seven Emirates in the UAE are part of the federal court system. The Emirates of Dubai, Abu Dhabi, Ras Al Khaimah, and Sharjah have their own court systems. Accordingly, the jurisdiction of the Bankruptcy Court – established as part of the federal court system – over disputes and/or applications in these Emirates is currently unclear, although it appears that the intention is to have the Bankruptcy Court as a dedicated forum for hearing applications and disputes pursuant to the UAE Bankruptcy Law.
Court Composition and Supporting Bodies
In relation to the composition of the Bankruptcy Court and its supplementary support functions, the Decision reiterates the requirements laid out in the UAE Bankruptcy Law and adds some new detail.
The Decision specifies that the Bankruptcy Court shall consist of specialised judges and will be headed by a judge of at least appellate court ranking.
The Decision confirms that the Bankruptcy Court will be supported by experts and advisors and now details the scope of the experts’ and/or advisors’ work. Amongst other things, the Decision specifies that their functions will include verifying applications received by the Court, monitoring the management of the debtor’s assets and business, implementing precautionary measures ordered by the Court, and meeting with creditors and debtors in relation to matters before it.
The Decision also confirms the establishment of a Bankruptcy Department (referred to as the “Bankruptcy Administration” in the UAE Bankruptcy Law) to handle the administrative functions of the Court. As envisaged in the UAE Bankruptcy Law, the Decision confirms that this Department shall be headed by a judge of at least appellate court ranking. The Decision also splits the functions of the Bankruptcy Department (already laid out in the UAE Bankruptcy Law) across two verticals: the Division of Applications, Notifications, Objections, and Grievances; and the Division of Oversight and Follow-Up. To assist the Department in its day-to-day clerical responsibilities. The Decision also establishes a Secretariat, which is responsible for carrying out clerical work, correspondence, and providing administrative support.
Looking Ahead
Ultimately, the UAE Bankruptcy Law and how that operates, will determine whether the UAE will see an uptick in bankruptcy applications, whether debtor- or creditor-led. Following the amendments to the UAE Bankruptcy Law in 2023 which relaxed the need for mandatory debtor-led filings, the bankruptcy market in onshore UAE has been relatively quiet. The establishment of the Bankruptcy Court itself is unlikely, on its own, to impact the volume of bankruptcy filings in the short- to medium-term. It is, however, an important step in the right direction in terms of clarifying the interpretation and application of the UAE Bankruptcy Law and increasing domestic and foreign stakeholder and investor confidence in the UAE.
