The announcement of a new bankruptcy court in Abu Dhabi is expected to broaden the UAE's appeal to foreign firms considering setting up operations in the country, according to experts.
The Arab world’s second-largest economy on Thursday announced the establishment of the bankruptcy court, which will adjudicate requests and disputes arising from bankruptcy cases.
More branches of the court can be established in other emirates, and these will have the same jurisdiction as the headquarters, the Ministry of Justice said.
“Foreign companies considering onshore operations – particularly in FinTech, private credit and digital assets, will welcome enhanced insolvency frameworks,” said Andrew Mackenzie, partner and regional head of litigation, arbitration and regulatory at DLA Piper Middle East.
“The ability to restructure, exit or resolve disputes efficiently is now a credible legal assurance, making onshore incorporation a more attractive proposition.”
The UAE is continuing to attract foreign direct investment as the economy grows amid diversification strategies.
The UAE received Dh167 billion ($45.5 billion) in foreign direct investment last year, up 48 per cent compared to the previous year, and the country has its sights firmly set on an aggregate FDI target of Dh1.3 trillion by 2031.
The UAE accounted for 37 per cent of the total foreign investment flows in the region, according to a social media post on X last month by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai.
Cepa boost
The Emirates is also signing new Comprehensive Economic Partnership Agreements that are helping to attract more foreign direct investment into the country. It has concluded 27 Cepas with different partners across the globe, with 10 of those deals now being implemented.
The establishment of a dedicated bankruptcy court marks “a significant step in further strengthening the UAE's legal infrastructure”, Zubair Mir, senior partner at law firm Norton Rose Fulbright, said.
“It is likely to enhance investor confidence by ensuring transparent, efficient resolution of financial disputes and insolvency cases – all key considerations for foreign entities looking to invest or establish operations in the region,” Mr Mir said.
UAE's new reforms
In 2020, the country overhauled its commercial companies' law to attract more foreign capital and annulled the requirement for onshore companies to have an Emirati shareholder.
It also unveiled the NextGen FDI programme, which aims to speed up licensing, increase the issuance of bulk or golden visas, improve banking services and provide commercial and residential lease incentives for technology companies seeking to relocate to the country.
The new bankruptcy court is expected to strengthen emerging financial sectors such as crypto, private credit and modern banking.
“These sectors depend on robust legal frameworks that can swiftly and securely resolve creditor issues and restructuring protocols,” Mr Mackenzie said. “This court greatly enhances legal certainty around new finance models, attracting greater institutional interest and investment.”
Regional advantage
The new move is also expected to help the UAE position itself ahead of regional peers and attract more FDI.
“While jurisdictions like Saudi Arabia have modernised insolvency laws, many still rely on commercial or generalist courts, and these courts often delay formal restructuring,” Mr Mackenzie said.
“Establishing a dedicated judicial forum places the UAE ahead of regional rivals – making it the go‑to jurisdiction for financial dispute resolution in the Gulf region.”
The introduction of a dedicated bankruptcy court in Abu Dhabi is “an extremely positive step towards providing additional certainly and security to both international and local businesses operating in the UAE”, said Mark Gilligan, partner at global law firm Morgan Lewis
“The introduction of a dedicated bankruptcy court will increase the already strong reputation of the UAE as a global commercial and financial centre.”
