On 20 April 2026, the Abu Dhabi Court of Cassation (Commercial Cassation No. 324/2026) issued a landmark judgment confirming that vacant land granted by the state to UAE nationals is not immune from forced judicial sale, therebyoverturning two lower‑court decisions that had excluded such property from enforcement.
An Execution Judge had rejected the bank’s request, ruling the land was a government grant that could not legally be auctioned.
The Court of Appeal upheld the decision, relying on an expert report issued by the Abu Dhabi Real Estate Appraisal Committee, which concluded that enforcement was barred because:
- The land constituted the debtor’s only owned property and was therefore treated as his presumed residence (pending construction); and
- The land had been granted by the state.
Cassation Court Findings
On the question of the residential exemption prescribed under Article 242 of the Federal Civil Procedures Code, the Cassation Court found that, even if it was the debtor’s only property, the fact that it was not built on means that it cannot be considered his place of residence.
More importantly, and in addressing the grant issue, the Cassation Court found that, contrary to the lower courts’ findings: “The prohibition on disposing of state-granted residential properties applies only to voluntary, consensual transactions between private individuals — it does not extend to forcible judicial sale ordered by a Court or Execution Judge”. This precedent therefore draws a sharp line between private disposals of granted lands (prevented under certain provisions determined under Presidential Decree in 2007) on one hand; and judicial disposals on the other by stating that it was never the intent to insulate a debtor’s property from a creditor armed with a binding enforcement instrument.
What This Means in Practice
The ruling may carry notable implications for judgment creditors (including banking and financial institutions) and judgment debtors (including banking borrowers) alike.
For banking and financial institutions (lenders) holding mortgages over state-granted plots, the ruling could be read as indicating that real estate property cannot be immunized behind grant-status protections to avoid judicial enforcement. That said, Article 150 of the UAE Federal Central Bank Law remains a critical consideration for lenders: the property must actually be mortgaged in exchange for the underlying judgment’s debt. This ruling is likely to be relied upon by mortgaged banks in future enforcement proceedings involving state‑granted land.
For all other judgment creditors, this ruling may suggest, in principle, a broader scope for enforcement without satisfying this statutory mortgage requirement, subject to the applicable general rules that govern execution proceedings.
For borrowers, this ruling could be understood as narrowing the extent to whicha gifted property may be relied upon as a shield against judicial enforcement, especially since the Cassation Court has ruled that the dispositive prohibition does not apply to judicial enforcement, unless they are able to prove that the property is their actual, one and only place of residence, thereby benefiting from the statutory exception prescribed under the Federal Civil Procedure Code.
Seek Legal Counsel
For further information or advice in relation to any of the matters addressed above, please feel free to contact our Partner – Head of Banking and Financial Disputes, Ali Dakhlallah.