Commercial Appeal on Statute of Limitations and Substantial Defense
The Federal Supreme Court
UNITED ARAB EMIRATES
THE FEDERAL SUPREME COURT
Session of Tuesday, December 9, 2025
Presided over by the Honorable Judge / Al-Tayyib Abd Al-Ghafour Abd Al-Wahab "President of the Chamber"
And the membership of the Honorable Judges Dr. Mohammed Ali Ali Suwailem and Dr. Hassan Mohammed Hassan Hind.
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Appeal No. 1380 of 2024 Commercial
(1-4) Civil Procedures "Appealing Judgments - Cassation: Reversal of a Cassation Judgment: Scope of the Reversal Panel's Jurisdiction". Defense "Substantial Defense". Judgment "Defects in Reasoning: Insufficiency".
The jurisdiction of the reversal panel upon nullifying the res judicata of a cassation judgment. Its scope is limited to confirming the existence of one of the exclusive grounds for reversal, namely a procedural error, reliance on a repealed law which, if correctly applied, would have changed the outcome, or contravention of established judicial principles of the General Assembly of the Court or its combined chambers. The appeal is then referred to another chamber for reconsideration as if the annulled judgment never existed. The principle: The court hearing the case post-reversal has full authority to form a new understanding of the appeal and apply sound legal principles different from those relied upon in the reversed judgment. The exception: If the reversal panel establishes a specific legal rule or decides on a particular fact, making it the basis for its decision's operative part and giving it the force of a final ruling, the post-reversal court is bound by this ruling. Its review is then limited to the grounds of appeal on which the panel did not rule.
Omission by the judgment to examine a substantial defense, the investigation of which would lead to the nullification of the judgment, constitutes a vitiating insufficiency.
The appealed judgment's disregard for the appellant bank's substantial defense concerning the expiration of the statutory limitation period, the validity of which was established by the five-member reversal panel and granted the force of a final ruling, proving the respondent's acknowledgment of the debt and his attempt to obtain a rescheduling from the appellant bank. This constitutes a violation of established judicial principles, a breach of the right to defense, and a contradiction of the documentary evidence, thus warranting cassation and referral.
Appeal No. 1380 of 2024 Commercial, Session of (09/12/2025)
LS The Federal Supreme Court
1. It is established, guided by the text of Article (190) of the Federal Decree-Law No. 42 of 2022 issuing the Civil Procedure Law, that the jurisdiction of the reversal panel is confined to removing the res judicata effect of a Court of Cassation judgment by confirming one of the three exclusive grounds for reversal: a procedural error by the Court of Cassation or its supporting bodies, reliance on a repealed law, or contravention of judicial principles established by the General Assembly or combined chambers that have been consistently applied. The appeal is then referred to another chamber for reconsideration, after the reversed judgment is nullified and its res judicata effect is erased. The appeal proceedings and the parties revert to their state prior to the issuance of that judgment. The post-reversal court may base its judgment on a new understanding of the grounds of appeal and its scope, and on legal principles and foundations other than those stated in the judgment that prompted the reversal. However, if the reversal panel, in the course of examining the grounds of the request, establishes a legal rule in its reasoning, or pronounces on a contested fact, delivering its opinion and deciding on it definitively and intentionally, and this becomes a pillar of its decision's operative part, then the reasons for its decision that carry the operative part acquire the force of res judicata within the scope and extent of what it established. The post-reversal court, upon resuming its review of the appeal, must not infringe upon this res judicata effect and must confine its review to the grounds of appeal within the scope determined by the reversal decision.
2. It is established that a court's failure to examine a defense raised by a party renders the judgment void if that defense is substantial and influential on the outcome. Such failure is considered an insufficiency in the factual reasoning of the judgment, which mandates its nullification.
3. As it was, and as is evident from the records of the five-member panel's decision in Review Request No. 27 of 2025, dated 16/10/2025, the plaintiff bank—the review applicant—had raised substantial defenses against its opponent's plea of the statute of limitations. This was supported by documents, including electronic messages contemporaneous with the filing of the lawsuit, which indicated the defendant's acknowledgment of the debt, his efforts to secure the bank's approval for rescheduling, and his commitment to payment. However, the reasoning of the appealed judgment, which was upheld by the decision to dismiss the appeal, failed to address this defense in any way, nor did it examine the documents submitted in its support. It calculated the limitation period starting from the date of default on 08/02/2012 until the date the lawsuit was filed on 29/01/2024, and concluded that the claim was time-barred without considering the facts of the case as evidenced by the documents and without examining the opponent's substantial defense in this regard.
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This is considered a departure from judicial principles. These reasons, which carried the operative part of the decision, have acquired the force of res judicata within the scope and extent of what they settled, and the court, upon reconsidering the appeal, must not infringe upon this res judicata. As the appealed judgment contravened this view and ignored the appellant's defense established in its defense memorandum submitted before the Court of Appeal in the session of 24/06/2024, it is flawed for violating the right to defense, contravening the law and its application, and contradicting the established facts in the documents. This has prevented it from examining the appellant's defense regarding the interruption of the statute of limitations period against the respondent, which necessitates its cassation, with the cassation including referral.
The Court
Whereas the appeal has fulfilled its formal requirements.
Whereas the facts, as they appear from the appeal documents, show that the respondent obtained from the appellant bank credit facilities amounting to AED 35,000,500. The respondent then defaulted on paying the due amounts at their maturity, in violation of the agreed terms of the facilities agreement, resulting in a debt of AED 7,505,200. Despite repeated demands from the bank, the respondent did not pay the debt, despite not denying it. Consequently, the appellant bank filed Case No. 722 of 2024 Commercial to claim the aforementioned debt. The case was deliberated, and in the session of 13/05/2024, the first instance court ruled to dismiss the case as time-barred and ordered the plaintiff to pay costs and expenses. As the plaintiff did not agree with the judgment issued by the Court of First Instance, it appealed it under Appeal No. 935 of 2024 Commercial Appeal. The appeal was heard, and in the session of 21/01/2014, the court ruled to accept the appeal in form, and in substance, to overturn the appealed judgment and to order the respondent to pay the appellant bank the amount of AED 6,261,096 plus interest from the date the judgment becomes final, and an amount of one thousand dirhams for legal fees.
As the respondent did not agree with this decision, he challenged it with Appeal No. 860 of 2024, and in the session of 03/09/2024, the court ruled to quash the appealed judgment and refer the case to the court
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that issued the judgment to decide on it with a different panel. The appeal was retried in sessions, and in the session of 25/11/2024, the referral court ruled to accept the appeal in form, but to reject it in substance and to uphold the appealed judgment.
As the appellant was not satisfied with this decision, he challenged it with Appeal No. 1380 of 2024 Commercial. The Federal Supreme Court ruled on 21/01/2025 to dismiss the appeal in chambers. On 20/05/2025, the bank (the plaintiff) submitted a request to reverse that decision. On 16/10/2025, the five-member panel decided—in chambers—to reverse the decision issued in Appeal No. 1380 of 2024 dated 21/01/2025, and to refer the papers to His Excellency the President of the Federal Supreme Court to take the necessary action. It ordered the respondent to pay the fees and expenses of the request, along with one thousand dirhams for attorney's fees, and ordered the return of the security deposit. The appeal was heard before the court as shown in the session minutes, and in the final hearing session, the court reserved the case for judgment in today's session, in which it was issued.
Whereas the appellant faults the appealed judgment for error in the application of the law, insufficiency in reasoning, flawed inference, and violation of the right to defense. In explaining this, he states that he had argued before the Court of Appeal with a defense that the appellant bank had taken amicable measures and issued several warnings, and that the respondent had acknowledged the debt and requested rescheduling with the bank. All of these are actions that interrupt the period of the statute of limitations. However, the appealed judgment ignored the appellant's defense and did not bother to investigate it, despite it being a substantial defense that could change the outcome of the case. It concluded by upholding the appealed judgment which ruled that the claim was time-barred, making it defective and warranting its cassation.
Whereas this argument is valid, as the principle, guided by the text of Article (190) of the Federal Decree-Law No. 42 of 2022 issuing the Civil Procedure Law, is that the jurisdiction of the reversal panel is limited to removing the res judicata of a cassation judgment by confirming one of the three exclusive grounds for reversal: a procedural error by the Court of Cassation or its supporting bodies, reliance on a repealed law, or contravention of judicial principles established by the General Assembly or combined chambers and which
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have been consistently applied. The appeal is then referred to another chamber for reconsideration after the reversed judgment is nullified and its res judicata effect is erased. The appeal proceedings and the parties revert to their state prior to the issuance of this judgment. The post-reversal court may base its judgment on a new understanding of the grounds of appeal and its scope, and on legal principles and foundations other than those stated in the judgment that prompted the reversal. However, if the reversal panel, in the course of examining the grounds of the request—whatever the viewpoint may be—establishes a legal rule in its reasoning, or pronounces on a contested fact, delivering its opinion and deciding on it definitively and intentionally, and this becomes a pillar of its decision's operative part, then the reasons for its decision that carry the operative part acquire the force of res judicata within the scope and extent of what it established. The post-reversal court, upon resuming its review of the appeal, must not infringe upon this res judicata and must confine its review to the grounds of appeal within the scope determined by the reversal decision.
It is established that a court's failure to examine a defense raised by a party renders the judgment void if that defense is substantial and influential on the outcome, as such failure is considered an insufficiency in the factual reasoning of the judgment, which mandates its nullification.
This being the case, and as is evident from the records of the five-member panel's decision in Review Request No. 27 of 2025, dated 16/10/2025, the plaintiff bank—the review applicant—had raised substantial defenses against its opponent's plea of the statute of limitations. This was supported by documents, including electronic messages contemporaneous with the filing of the lawsuit, which indicated the defendant's acknowledgment of the debt, his efforts to secure the bank's approval for rescheduling, and his commitment to payment. However, the reasoning of the appealed judgment, which was upheld by the decision to dismiss the appeal, failed to address this defense in any way, nor did it examine the documents submitted in its support. It calculated the limitation period starting from the date of default on 08/02/2012 until the date the lawsuit was filed on 29/01/2024, and concluded that the claim was time-barred without considering the facts of the case as evidenced by the documents and without examining the opponent's substantial defense in this regard. This is considered a departure from judicial principles, and these reasons, which carried the operative part of the decision, have acquired the force of res judicata within the scope and extent of what they settled, and the court must
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not infringe upon this res judicata when reconsidering the appeal. Since the appealed judgment contravened this view and ignored the appellant's defense as established in its defense memorandum submitted before the Court of Appeal in the session of 24/06/2024, it is flawed for violating the right to defense, contravening the law and its application, and contradicting the established facts in the documents. This has prevented it from examining the appellant's defense regarding the interruption of the statute of limitations period against the respondent, which necessitates its cassation, with the cassation including referral.