Charging interest in The United Arab Emirates

The right to charge interest, whether simple or compound, has always been an area of uncertainty for contracting parties in the United Arab Emirates (“UAE”). However, in 2018, UAE introduced Federal Law No. 14 on the Central Bank and Organisations of Financial Institutions and Activities (“New Banking Law”), which has, amongst other things, clarified the Central Bank of UAE’s (“UAE Central Bank”) position in relation to banks and financial institutions charging compound interest on credit and lending facilities.

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