Author: Salma Ismail Elrouby

Time limits for initiating legal claims In UAE are fundamental in both commercial and civil law, as they promote legal certainty and the prompt enforcement of rights.

Although the concept of prescription applies across various areas of law, its duration and implementation differ based on the nature of the right and the relationship between the parties.

A comparison between Article 92 of the UAE Federal Decree by Law No. (50) of 2022, Promulgating the Commercial Transactions Law (“UAE Commercial Transactions Law”), and Article 474 of UAE Federal Law No. (5) of 1985, Concerning the Civil Transactions Law, as amended by UAE Federal Decree-Law No. (30) of 2020 (together, the “UAE Civil Transactions Law”), highlights a subtle but important difference in how limitation periods are treated - particularly in relation to the nature of the right being claimed.

Commercial limitation under Article 92

Under Article 92 of the UAE Commercial Transactions Law, claims arising from commercial obligations between traders cannot be heard after five years from the due date of payment, unless a shorter period is prescribed by law.

This rule applies to dealings between traders and underscores the importance of prompt enforcement of commercial rights. The relatively short limitation period reflects the dynamic nature of trade, where certainty, speed, and liquidity are essential to maintaining confidence in commercial relationships.

Civil limitation under Article 474

By contrast, Article 474 of the UAE Civil Transactions Law governs periodic renewing rights, such as rent or recurring payments. It establishes a five-year limitation period for claims arising from the denial of such rights without a valid excuse.

However, it introduces an important exception - claims for yields, such as rent owed by a bad-faith possessor, are subject to a fifteen-year limitation period, provided there is no valid excuse. This longer timeframe recognises the continuing nature of such rights and the principle that a bad-faith possessor should not benefit from their conduct.

Practical implications

While both provisions share a five-year standard period, the basis of the claim - whether commercial or civil- determines which limitation period applies. This can create uncertainty when classifying transactions involving both commercial and civil elements, such as mixed contracts between traders and individuals.

This distinction is not merely technical. It can determine whether a claim is time-barred or enforceable. Businesses and individuals alike should therefore seek early legal advice to ensure that the correct limitation period is applied and to avoid procedural risks that could defeat an otherwise valid claim.

Judicial discretion

UAE courts, including the Cassation Court, have affirmed that even where limitation periods are not expressly defined, judges retain discretion to interpret and apply the law based on the nature of the right and the context of the dispute.

This reinforces that the classification of a right is not always straightforward - and that delay or misclassification can have significant procedural consequences. Obtaining legal advice at an early stage helps ensure that claims are brought within the correct timeframe and before the limitation clock runs out.

Conclusion

Understanding the distinction between Article 92 of the Commercial Transactions Law and Article 474 of the Civil Transactions Law is essential for legal practitioners and clients. These provisions directly affect the enforceability of rights, and missing a limitation deadline can be decisive in the outcome of a case.

At BDO, our Dispute Resolution team advises clients on limitation risks and claim strategy across both civil and commercial disputes. Early guidance helps preserve rights, prevent procedural barriers, and ensure that limitation periods support justice rather than hinder it.

Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.