Introduction
The UAE legislator has regulated the action for non-enforceability of dispositions (the Paulian action) under Articles (396), (397), (398), (399), and (400) of the UAE Civil Transactions Law (Civil Code). Pursuant to these provisions, a creditor or multiple creditors may seek a judgment declaring a debtor’s dispositions unenforceable against them where it is established that such dispositions have prejudiced the general guarantee securing the satisfaction of the outstanding indebtedness.
The objective of these provisions is to protect creditors from any attempt by the debtor intended to undermine the general guarantee allocated for the repayment of debts owed to creditors.
Nevertheless, the practical application of these provisions before the Dubai Courts has revealed an important judicial trend, namely that the payment of a legitimate debt in consideration for necessary services—such as an attorney’s professional fees—does not constitute a disposition prejudicial to the general guarantee. Accordingly, such a payment may not be challenged by way of an action for non-enforceability, even where the disposition is effected after the creditor’s debt has arisen.
This article examines the statutory framework governing the action for non-enforceability under UAE law and analyses a recent judicial exception recognised by the Dubai Court of Cassation in relation to an attorney’s professional fees.
The General Principle Governing the Action for Non-Enforceability of Dispositions
Article (396) of the UAE Civil Transactions Law provides:
“Where a debt, whether due or deferred, encumbers the debtor’s assets to the extent that it equals or exceeds them, the debtor shall be prohibited from making gratuitous dispositions that are neither obligatory upon him nor customary, and the creditor may seek a judgment declaring such disposition unenforceable against him.”
Article (397) of the same law further provides:
“If creditors claim their debts from a debtor whose debts encumber all his assets, the debtor may not make gratuitous dispositions of his property, nor dispose of it for consideration, even without favoritism. The creditors may seek a judgment declaring such disposition unenforceable against them, and they may request the sale of the debtor’s assets and the distribution of the proceeds among them in accordance with the law.”
Article (398) of the same law also stipulates:
“If the creditor alleges that the debt encumbers the debtor’s assets, he is only required to prove the amount of the debts owed by the debtor, while the debtor himself must prove that he owns assets exceeding the value of the debt.”
The Purpose of These Provisions and of the Action for Non-Enforceability
The apparent objective of the aforementioned provisions is to protect the debtor’s general guarantee and to safeguard creditors’ rights by preventing the debtor from disposing of his assets—whether by way of gratuitous disposition or disposition for consideration—where his assets are insufficient to satisfy his debts. Such dispositions would inevitably weaken the general guarantee securing the creditor’s claim.
The action for non-enforceability of dispositions constitutes a legal mechanism available to the creditor to preserve his rights when the debtor undertakes an act that prejudices the general guarantee. Through this action, the creditor seeks to restore the disposed asset to the general guarantee in preparation for enforcement thereon.
This principle was affirmed by the Dubai Court of Cassation in Appeal No. 158/2023, wherein the Court held that all of a debtor’s assets constitute a guarantee for the satisfaction of debts, and that the creditor is entitled to monitor the debtor’s assets—both what enters and what exits his patrimony—in order to protect the general guarantee from any negligence, bad faith, or fraud on the part of the debtor.
Judicial Position on the Payment of Attorney’s Professional Fees
Although the aforementioned statutory provisions are general in nature and do not contain an express exception, the Dubai Court of Cassation has settled, by virtue of its judgment dated 13 August 2025 in Commercial Appeal No. 769/2025, that a debtor’s payment of attorney’s professional fees established under a valid fee agreement does not constitute a disposition prejudicial to the general guarantee and, therefore, may not be challenged by the creditor by way of an action for non-enforceability, even where such fees arise subsequent to the debtor’s obligation toward the creditor.
The Court attributed this conclusion to the principle that the debtor has an inherent right to appoint a lawyer to defend him in proceedings brought against him, and that the lawyer is correspondingly entitled to receive fees in consideration for the legal services rendered. Accordingly, the debtor’s issuance of a cheque in payment of such fees—where those fees are evidenced by a duly executed attorney’s professional fee agreement between the debtor and his lawyer—does not fall within the category of dispositions that a creditor may seek to have declared unenforceable against him, even if such payment is made after the creditor’s right has arisen.
To hold otherwise would effectively prevent the debtor from discharging payment for necessary services rendered to him and would constitute an unjust infringement of the rights of the party who provided those services.
Legal Basis of This Judicial Approach
This judicial approach constitutes a recognised exception to the general application of Articles (396), (397), and (398) of the UAE Civil Transactions Law. It is grounded in the principle that the debtor has an inherent and fundamental right to appoint legal counsel to defend him in proceedings brought against him—a right that may neither be restricted nor diminished. Corresponding to this right is the debtor’s lawful obligation to pay the attorney’s professional fees due to his lawyer in consideration for the legal services performed.
Accordingly, the debtor’s payment of such fees—where they are established by a valid attorney’s professional fee agreement duly executed between the debtor and his lawyer—does not fall within the category of dispositions that a creditor may seek to have declared unenforceable against him, even where such payment occurs subsequent to the arising of the creditor’s right. Any contrary interpretation would prevent the debtor from discharging payment for necessary legal services rendered to him and would entail an unjust infringement of the rights of the service provider.
Moreover, permitting challenges to such payments would deprive the debtor of access to essential legal or professional services, a result that is inconsistent with the proper administration of justice and the orderly conduct of judicial proceedings.
Conclusion
The Dubai Court of Cassation has established the principle that a debtor’s payment of attorney’s professional fees—duly evidenced by a valid fee agreement executed between the debtor and his lawyer—does not constitute a disposition subject to an action for non-enforceability by the creditor, even where such payment is made after the creditor’s right has arisen.
This judgment represents an important judicial limitation on the scope of the Paulian action under UAE law and provides certainty for legal practitioners and service providers, while preserving the balance between creditors’ rights and the debtor’s fundamental right to legal representation.
Disclaimer
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