Commercial Licenses Now Recognized as Attachable Assets in Debt Recovery

Commercial Licenses Now Recognized as Attachable Assets in Debt Recovery

In a landmark ruling on January 31, 2024, the General Assembly of the Dubai Court of Cassation established a new legal precedent confirming that commercial licenses can be included in the scope of an attachment order for debt recovery. The judgment in Cassation No. 1 of 2024 marks a significant shift in the legal framework, enhancing the enforcement of creditors' rights in the UAE. The court's decision was based on a broader interpretation of assets under Article 391 of the Civil Transactions Law, which stipulates that all property of a debtor stands as security for their obligations. Additionally, Article 247 of Federal Decree-Law No. 42 of 2022 allows creditors to seek attachment on both real and movable property to protect their security, with certain exceptions under Article 242. The judgment recognized that commercial licenses, though intangible, enhance a company's value and are therefore subject to seizure. This overturns a previous principle from Cassation No. 122 of 2018, which held that commercial licenses were non-transferable personal authorizations with no value beyond the licensee. The new ruling clarifies that commercial licenses can be materially assessed and sold, subject to official approvals and compliance with regulatory requirements. This development broadens the scope of assets available for debt recovery, providing creditors with additional means to secure their rights. The General Assembly Judgment is expected to influence future legal interpretations and creditor strategies within the UAE, potentially serving as a model for other jurisdictions. By recognizing commercial licenses as attachable assets, the court has significantly advanced the legal landscape of debt recovery, offering new tools for creditors in their efforts to recover debts and enforce judgments. This pivotal decision marks a progressive step in the UAE’s legal system, enhancing the effectiveness of debt enforcement mechanisms.