Nisna K Muhammed

Senior Legal Correspondent

In a decisive move to reinforce its financial legal infrastructure, the United Arab Emirates has officially launched a Federal Bankruptcy Court to exclusively adjudicate bankruptcy-related disputes, debt restructuring matters, and associated commercial conflicts. This initiative reflects the UAE’s growing commitment to fostering a robust and transparent business environment where commercial certainty and investor confidence are protected by specialised legal mechanisms.

The newly established court, based within the Abu Dhabi Federal Court of First Instance, will serve as the central authority to hear and resolve bankruptcy applications filed under the Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy. While headquartered in the capital, the Ministry of Justice has confirmed that the court will have jurisdiction across all Emirates, with the capacity to open branches in other regions as needed. The aim is to provide uniformity in decisions, enhance efficiency in handling complex financial disputes, and reduce the burden on general civil courts.

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What distinguishes the new Bankruptcy Court is its dedicated administrative and judicial structure. It will be led by a chief judge at the appellate level, supported by a bench of experienced judges with specialised knowledge in financial and insolvency law. In addition, a permanent bankruptcy department will manage the procedural and clerical aspects of all cases, including the submission of applications, creditor objections, notifications, registration of judgments, and oversight of compliance with court-approved restructuring plans.

A core feature of the system is the integration of bankruptcy experts and advisors appointed by the court to assist in managing proceedings. These experts will be instrumental in overseeing the debtor’s assets, facilitating settlement processes, advising on recovery strategies, and implementing interim precautionary measures. This professionalisation of the insolvency process is expected to accelerate proceedings while maintaining judicial oversight and creditor fairness.

The formation of this court is a direct consequence of the enactment of Decree-Law No. 51 of 2023, which came into force in May 2024 and replaced the outdated bankruptcy framework introduced in 2016. The new law introduced several critical reforms, such as preventive settlement mechanisms, enhanced restructuring procedures, and stronger safeguards for creditors. It also laid the groundwork for the creation of a centralised insolvency registry and formalised the roles of trustees and insolvency practitioners, many of whom will now play an active role in supporting the court’s work.

For businesses operating in the UAE, the establishment of this court brings clarity to a previously fragmented system. Companies facing financial difficulties will now have a single, reliable forum to seek protection, initiate restructuring, or liquidate assets under judicial supervision. For creditors and investors, the court offers greater transparency, predictability, and protection of rights, three pillars essential to any modern financial jurisdiction.

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The UAE’s new Bankruptcy Court is not just a procedural enhancement; it is a statement of the country’s evolving legal maturity. It reflects a deliberate policy direction to align with international best practices, reduce the stigma surrounding insolvency, and encourage commercial rehabilitation wherever possible. In doing so, the UAE is sending a strong signal to local and global stakeholders that it is prepared to manage financial risk through institutional strength and legal certainty.

As the court begins its work, its performance will be closely observed by business and legal communities alike. But its mere establishment is, without doubt, a significant leap forward in the UAE’s legal and economic landscape.