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Suing a foreign bank in UAE courts while all agreements are signed abroad

If a UAE resident (natural person) signs a loan agreement (simple Lombard loan agreement with the pledge of securities at the same bank) with another jurisdiction bank (e.g. in a European Union country like Austria), and if a conflict occurs between the bank and the UAE resident natural person in the future, could he sue the bank in UAE court jurisdictions even though all loan agreement documents signed in Austria by just referring Austrian court jurisdictions at the loan agreement and even though his financial assets are invested and pledged at an Austrian bank account?

Best regards,

MIO Law Firm (Abu Baker Salem Advocates & Legal Consultants)
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1 Jun 2020, 11:35

Hello,

As per UAE Civil law, there are two rules to judge the jurisdiction as follows:

First, the jurisdiction where the agreement was signed.

Second, the residence of the loan obligor.

As per your query, you have availed some loan from the bank (Jurisdiction of the bank is unknown?). If it is foreign, then the UAE courts will not be applicable.

Further, at the time of signing the contract, if you are not a residence of UAE, then also UAE courts will not come under jurisdiction as per civil law.

Provided if you were a resident in the UAE at the time of signing, Dubai courts can involve depending on the case and after verifying the papers since you will be the obligor to pay the loan.

Please call us for further queries or contact us via email.

Bin Eid Advocates & Legal Consultants
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1 Jun 2020, 16:29

You need to check the bank loan agreement. It mentions jurisdiction for legal action; it can be by the court or arbitration. If a place of jurisdiction is not mentioned, then mostly the place of signing of the agreement will be a jurisdiction of the dispute.

You may contact me for consultation with detailed information so I can guide you further.

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