Charging interest on a loan between individuals in a
non-commercial relationship is a criminal offence in the UAE. Apart
from this, when the lender is a legal entity, lending on interest
is illegal if the lender does not have an appropriate licence or
does not comply with other regulatory requirements. An illegal loan
agreement is unenforceable in respect of interest.
The DIFC Court of First Instance considered these principles of
UAE law in two recent judgments: NS Investment Limited v Ajay
Sethi [2020] DIFC CFI 055 of 27 September 2023 and
Alexander Reuter and Ors v Wellness United INC and Ors [2021]
DIFC CFI 107 and 108 of 27 October 2023. (The latter
are in fact, two cases; however, the relevant facts and the
relevant parts of the judgments in both cases are the same.) In
both cases, the lender was a company, and the borrower was an
individual.
