The Federal Supreme Court has rejected an appeal filed by a bank customer seeking to overturn a ruling allowing the enforcement of a Dh2.3 million cheque in favor of a bank.
The customer had challenged an earlier decision placing an enforcement formula on the cheque, arguing that it should not be used to recover a personal loan. He claimed the cheque was issued in connection with the loan and that the bank’s enforcement action was therefore invalid.
In his lawsuit, the claimant argued that the bank approved the loan without obtaining sufficient guarantees despite his limited income. He said his monthly salary at the time did not exceed Dh25,000, which he claimed violated a 1995 directive regulating personal borrowing from banks and financial institutions.
The regulation aims to prevent excessive indebtedness by setting conditions on income levels and loan guarantees.
A court of first instance appointed an expert to review the case. While the court accepted the enforcement challenge in form, it rejected it in substance. The Court of Appeal later upheld the ruling, prompting the customer to elevate the case to the Federal Supreme Court.
In his appeal, the customer argued that both lower courts failed to properly address his main defense, that the loan was granted in violation of the 1995 regulations, rendering their decisions flawed.
The Federal Supreme Court rejected the appeal, explaining that the 1995 directive was introduced to curb excessive personal debt among citizens and residents. It requires banks to ensure that a borrower’s income is proportionate to the loan amount, that the borrower is not unemployed or earning a limited income, and that sufficient guarantees are in place.
The court ruled that determining whether these conditions were met is a factual matter within the discretion of the trial judge, as long as the conclusion is reasonable and supported by evidence. It found no legal error in how the lower courts handled the case.
The Supreme Court ultimately upheld the Court of Appeal’s decision, confirming the enforceability of the cheque and rejecting the customer’s request to cancel the enforcement formula.
