The Dubai Court of Cassation has issued a binding ruling prohibiting Islamic banks and Takaful companies from charging any form of interest or fees for delayed payments even in instances where debtors intentionally delay fulfilling their obligations.

The court declared that Islamic financial institutions and Takaful companies operating fully or partially under Islamic Sharia law are not permitted to impose late payment interest or fees regardless of whether these are labelled as compensation or by any other name on debts or financial obligations arising from Sharia-compliant transactions or commercial contracts. This prohibition applies in all cases of delayed payments, irrespective of the debtor’s intent. The court emphasized that this principle is a matter of public order and must be applied independently, even if prior rulings suggested otherwise.