Answer: Yes, they can.
According to Article 72, Article 73 and Article 74 of Federal Decree-Law No. 50 of 2022 on Commercial Transactions:
- The creditor is entitled to receive interest on a commercial loan at the rate specified in the contract,
- In the absence of a contractual rate, the market rate at the time of the transaction applies (not exceeding 9% per annum),
- In case of default by the debtor, interest accrues at the agreed rate until full repayment,
- Interest is payable at the end of the year or on the due date of the debt if the term is less than a year.
This was confirmed by the Supreme Court in Commercial Appeal No. 1256 of 2024 (hearing dated 8 January 2025), where:
- The parties entered into a credit agreement for AED 500,000 with a fixed rate of 3.5% for the first year, and thereafter at EIBOR + 2.5%,
- The bank claimed repayment of the debt together with contractual interest (7.96%) until full settlement,
- The courts of first instance and appeal rejected the claim, effectively disregarding the contractual terms,
- The Supreme Court ruled that the co...