Personal Liability of Company Managers in UAE Enforcement: Proceedings: Abu Dhabi Cassation Ruling No. 70/2026

On 24 February 2026, the Abu Dhabi Court of Cassation delivered a landmark ruling in Judgment No. 70 of 2026. This decision provides important clarification on the personal responsibilities of company managers during the enforcement of court judgments under UAE law.

The core issue was whether a former manager and owner of a limited liability company (LLC) could face personal enforcement actions—such as imprisonment or travel bans—for company debts incurred during their tenure, even after transferring ownership to another party. The Court firmly upheld that managerial duties and related obligations persist and cannot be easily avoided through ownership changes or corporate transfers.

Case Background

The matter stemmed from a commercial subcontracting arrangement. A main contractor (the claimant) entered into two agreements with an LLC (the debtor company) valued at AED 3,525,000 in total. At the time, the appellant served as both owner and manager of the LLC. He personally handled negotiations and executed the contracts, and he also issued guarantee cheques to secure advance payments.

Following a dispute, the Abu Dhabi Commercial Court (Case No. 333/2023) ruled in favour of the claimant, ordering the LLC to pay AED 366,677.20 in principal, AED 300,000 in compensation, plus late-payment interest. Enforcement efforts against the company failed: the guarantee cheques bounced, and no meaningful assets could be located.

Investigations showed that the appellant had transferred the LLC without consideration to a third party via a notarised waiver deed dated 31 January 2022. The buyer was reportedly outside the UAE at the time. The new owner later restructured the entity into a sole proprietorship LLC. A court-appointed expert determined that the buyer had no involvement in the company’s management.

Enforcement Proceedings and Lower Court Decisions

The claimant applied to the Abu Dhabi Enforcement Court to join the former manager (appellant) to the enforcement file as the legal representative at the time the debts arose, seeking personal enforcement measures under relevant provisions of the Civil Procedures Law.

An expert in corporate matters was appointed. The expert’s report highlighted serious deficiencies: the company’s accounting records lacked proper financial statements, profit-and-loss accounts, or audited reports for 2021 through September 2025. Only limited trial balances existed for earlier years. All relevant contracts and obligations originated during the appellant’s management period, and he provided no proof of handing over complete records to the new owner.

On 20 November 2025, the Enforcement Court accepted the application, confirmed the appellant’s position in the file, and authorised personal enforcement measures against him as the person addressed under Article 322 of the Civil Procedures Law. The appellant and the company were jointly liable for costs and fees. The appellate court upheld this decision on 23 December 2025.

Appellant’s Arguments Before Cassation

The appellant challenged the ruling on several grounds, claiming errors in law application, insufficient reasoning, and disregard for evidence. Key points included:

• The enforcement title named only the company, so he lacked standing.
• An LLC has separate legal personality and independent finances, creating no direct personal link to the creditor.
• Transferring ownership ended his role and responsibility, especially without meeting statutory conditions for piercing limited liability.

He also criticised reliance on the expert report and claimed the expert ignored balance sheets he submitted.

Court of Cassation’s Decision and Reasoning

The Court of Cassation rejected all grounds of appeal. It explained the framework under Article 322 of the Civil Procedures Law: When a debtor is a legal entity, the court may impose imprisonment on the legal representative (or another responsible person) if non-execution stems from their actions. Travel bans can also apply under Articles 324–326 following proper investigation, even without a separate title against the representative personally.

While acknowledging the independent legal personality of LLCs and their primary liability for debts, the Court stressed that the manager acts as the company’s representative in all rights and obligations. This position makes the manager the “person addressed” by Article 322, allowing enforcement measures to compel fulfilment of the company’s duties.

In this case, the appellant had signed the contracts and cheques, and all debts arose under his management. His failure to maintain or transfer proper financial records obstructed enforcement, supporting personal measures.

Crucially, the Court ruled that selling or transferring the company does not release a former manager from Article 322 obligations. Liability here tied to the period when debts were incurred and the lack of proper handover of records.

Key Distinctions and Practical Implications

This ruling applies a specific enforcement mechanism rather than traditional corporate veil piercing or direct personal liability under Articles 84 and 162 of the Commercial Companies Law (which can lead to judgments payable from personal assets for misconduct causing harm). Under the Civil Procedures Law (Articles 319–322), measures like arrest warrants or travel bans pressure representatives to enable company-level satisfaction of judgments, without automatically shifting the debt to personal funds.

Challenges to such orders typically proceed via grievance, unlike ordinary appeals for direct liability claims.

The decision closes a potential loophole in sham or nominal transfers, especially where consideration is absent or the buyer is uninvolved and absent from the jurisdiction. It also highlights the critical need for robust financial record-keeping and orderly handovers upon ownership changes. Failure in these areas can itself justify enforcement actions against managers.

Takeaways for Businesses and Creditors

• For company managers and owners: Managerial responsibilities under enforcement rules do not automatically end with ownership transfer. Proper documentation, record maintenance, and formal handovers are essential to mitigate risks of personal measures such as imprisonment or travel restrictions.
• For creditors: The judgment strengthens options to pursue enforcement against individuals behind non-compliant corporate debtors, particularly where obstruction or inadequate records are evident.

This Abu Dhabi Court of Cassation judgment reinforces accountability in UAE corporate governance and enforcement practices. It serves as a clear reminder that the corporate form offers protections but does not eliminate the personal duties tied to management roles.

Disclaimer: This summary is for informational purposes and does not constitute legal advice. Parties should consult qualified legal professionals for advice specific to their circumstances.