Following the passing of the new commercial transactions law (No.50 of 2022), the limitation period for commercial claims (including debt recovery claims) in the United Arab Emirates has been reduced from ten years to five years.
Article 92 of the UAE Federal Commercial Transactions Law No. 50 of 2022 states “Claims arising from obligations among merchants shall not be heard if denied and without a legitimate justification once a period of five years has passed from the due date of the obligation unless the law provides for a shorter period.”
The new commercial law came into force on 2 January 2023. Accordingly, claims arising from transactions concluded as of that date shall be time-barred after five years from the obligation’s due date.
It remains unclear if the amendment has a retroactive effect. (i.e. if an invoice falls due on 1 Jan 2018, it is unclear if legal action by a creditor would be time-barred today). We expect this point to be addressed in transitional provisions or in the implementation regulation of the newly enacted law.
For more information or questions on your existing claims in the UAE, please contact us on [email protected].
