We, Mohammed bin Zayed Al Nahyan, President of the United Arab  Emirates, 

Having reviewed: 

− The Constitution; 

− Federal Law No. (1) of 1972 on the Competences of Ministries and the Powers of  Ministers, as amended; 

− Federal Law No. (8) of 2018 on Finance Lease; and 

− Based on the Proposal submitted by the Minister of Finance, and the approval thereof by  the Cabinet, 

Have enacted thefollowing Decree-Law: 

Chapter 1: General Provisions 

Article (1) Definitions 

For the purpose of applying the provisions of this Decree-Law, the following words and  expressions shall have the meanings assigned thereto respectively, unless the context  requires otherwise: 

The State: The United Arab Emirates. 

The Minister: The Minister of Finance. 

The Central Bank: The Central Bank of the United Arab Emirates. 

Person: A natural or legal person. 

Asset: 1. Every non-consumable object owned or legally possessed by 

Federal Decree-Law No. (32) of 2023 on Finance Lease 1 

the Lessor, pursuant to the provisions of this Decree-Law  

and the resolutions issued in pursuance hereof, and used in  

the Lessee’s craft, trade, business or personal uses, including: 

• Off-plan real estate units that may be the subject of legal  

transactions, pursuant to the legislation in force in each  

Emirate; and 

• Capital and future Assets, Assets manufactured in a  

certain way, equipment, plants, living and unborn  

animals. Movable property shall be deemed an Asset  

even if it becomes immovable by destination or is  

incorporated in real property. 

• A leased Asset excludes the following: 
• Aircraft, airframes, helicopters and aircraft engines of any  

type that are subject to registration in special registers,  

pursuant to the legislation in force in the State and  

international treaties and conventions to which the State 

accedes; 

• Marine vessels of any type that are subject to registration  

in special registers, pursuant to the legislation in force in the State; 

• Cash; 
• Investment bonds; and 
• Parcels of land granted by the State. 

Business A place where a Person manages its transactions on a regular 

Federal Decree-Law No. (32) of 2023 on Finance Lease 2 

Headquarters: basis. In the absence of a proof of such place, the address  registered with the competent authorities or the Person’s usual  

place of residence shall be considered its Headquarters. 

Finance Lease: A Lease whereby the Lessor leases out the Asset to the Lessee  against a rent for a specific term, while the Lessee may be  

granted an option to own the Asset, pursuant to the provisions  

of Article (3) hereof. 

Lease Agreement: An agreement whereby the Lessor leases out the Asset to the  Lessee pursuant to the provisions of this Decree-Law. 

Lessee: A Person that acquires a right to possession and use of a leased  Asset under the Lease Agreement, including sub-lessee. 

Lessor: A legal Person that grants another Person a right to possession  and use of a leased Asset under the Lease Agreement, including  

sub-Lessor. 

Supplier: A Person from whom the Lessor acquires the leased Asset under  the Supply Contract in a tripartite lease. 

Supply Contract: A contract whereby the Lessor acquires the Asset from the  Supplier for the purpose of leasing it out to another person in a  

tripartite lease. 

Special Movables: Movables which the legislation in force in the State requires to  be registered, excluding movables where rights created thereto  

are registered in the register created under the provisions of  

Federal Law No. (4) of 2020 Guaranteeing Rights to Movable  

Property.

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In  

Writing/Written: 

Information created, transmitted, received or stored in writing or  via any electronic means, including modern means of  communication. 

Article (2) Applicability 

1. The provisions of this Decree-Law shall apply to any Finance Lease of a leased Asset in  the following cases:

2. If such leased Asset exists in the State or at any free zone ungoverned by special  provisions regulating the Finance Lease; 
3. If Lessee’s Business Headquarters is located in the State or at any free zone  ungoverned by special provisions regulating the Finance Lease; and 
4. If the Lease Agreement provides for applying the provisions of the State’s laws to the  contractual relationship. 
5. This Decree-Law shall not apply to the financial free zones in the State. 

Article (3) Types of Finance Lease 

1- The Finance Lease shall be bilateral, whereby the Lessor grants the Lessee a right to possession and use of an Asset for the term set out in the Finance Lease Agreement  against a rent or other amount payable under such transaction. The agreement shall  include the following: 

• An option to purchase the leased Asset, in whole or in part; and 
• A rent or other amounts payable under the Lease Agreement and the payment  method.

2- The Finance Lease that includes the following characteristics shall be considered a Federal Decree-Law No. (32) of 2023 on Finance Lease 4 tripartite lease: 

• The Lessee designates the leased Asset and its features and selects the Supplier; and b. The Lessor owns the leased Asset for the purposes of lease, while the Supplier is  aware of the same. 
• A tripartite Finance Lease Agreement may provide for granting the Lessee an option to  purchase the Asset, in whole or in part. 
• A sale-leaseback, whereby the Supplier sells the leased Asset and then the Supplier  leases it from the Lessor, as a Lessee, under a Lease Agreement, shall be considered a  tripartite Finance Lease. 
• A sublease is made when the Lessee leases out the leased Asset to third parties. 

Article (4) Regulating and Licensing the Activity of Finance Lease

1- The Central Bank shall regulate, license and supervise the activity of Finance Lease  practiced by banks, companies and institutions governed by the same under the  legislation in force in the State, and shall issue the conditions and controls for  engagement in this activity. 

2- At the proposal of the Minister, the Cabinet shall: 

• Determine the authority or authorities supervising the regulation, licensing and  supervision of legal Persons authorized to engage in the activity of Finance Lease  other than banks, companies and institutions governed by the Central Bank; and 
• Issue the conditions and controls of engagement in the Finance Lease activity for  legal Persons referred to in Paragraph (a) of Clause (2) of this Article. 

3- The Minister shall issue the regulations necessary for developing the provisions of the Finance Lease accounting treatment.

4- The relevant authorities in the State that approve the procedures for registering or  licensing Assets or annotating the registers with basic transactions introduced thereto  shall amend or adapt such procedures to register cases in which such Assets become  leased under a Lease Agreement governed by the provisions of this Decree-Law in their  registers.

Chapter 2:Finance Lease Agreement 

Article (5) Details of Finance Lease Agreement 

1- The parties to the Lease Agreement may agree to set the provisions regulating the rights  and obligations of each one of them. 

2- The Lease Agreement shall include, as a minimum, the following details and information: a. Name and details of the Lessor and the Lessee; 

• Name and details of the Supplier in tripartite agreement; 
• Description of the leased Asset; 
• Term of the Lease Agreement; 
• Purpose for using the leased Asset and the scope of use; 
• Amount of rent, number of payments and payment dates; 
• Rights and obligations of parties to the Lease Agreement; and 
• Any other details or information to be agreed upon by the parties to the Lease  Agreement, without prejudice to the provisions of this Decree-Law. 

3- Dropping any of the details set out in Paragraphs (d, e, f and g) above will not  compromise the validity or effectiveness of the Lease Agreement vis-à-vis third parties.

4- The Lease Agreement shall be In Writing, otherwise it shall be null and void.

 

Article (6)Enforcement Between Parties and Vis-à-Vis Third Parties

1. The Lease Agreement shall be enforceable and binding on the parties thereto pursuant  to its terms and conditions. 

2. The enforcement of rights of parties to the Lease Agreement vis-à-vis third parties,  including any third party that purchases the leased Asset, creditors of the parties and a  bankruptcy trustee, shall be governed by the provisions of Clauses (3), (4) and (5)  hereof. 
3. The enforcement of rights of parties to the Lease Agreement vis-à-vis third parties shall  be governed by Law No. (4) of 2020 Guaranteeing Rights to Movable Property, in so far  as its provisions are applicable to the Assets. 
4. The Lease Agreement of property and any amendment thereto shall, at the request of the  Lessor or Lessee, be entered in the real estate register of the property with the competent  authority in the relevant Emirate in accordance with its applicable procedures, and shall  be enforceable vis-à-vis third parties from the date of such entry. 
5. The Lease Agreement of movables and any amendment thereto shall, at the request of  the Lessor or Lessee, be entered in the relevant register with the competent authority in  the relevant Emirate in accordance with its applicable procedures, and shall be  enforceable vis-à-vis third parties from the date of such entry. 
6. The entry made pursuant to the provisions of Clauses (4) and (5) above may be removed  only if a final judgment is rendered by the competent court on such removal, or upon the  approval of parties to the Lease Agreement or their legal successors, or pursuant to any  other legislation in force in the State, as the case may be. 

Article (7) Beneficiary of the Supply Contract in Tripartite Lease

1. The Supplier’s obligations under the Supply Contract in a tripartite lease shall be owed to 

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the Lessee as if the Lessee were a party to the Supply Contract and as if the leased Asset  were to be supplied directly to the lessee. The Supplier may not be held accountable for  compensating both the Lessor and the Lessee for the same action that causes damage  more than once. 

2. The Lessor shall, at the request of the Lessee, transfer its rights related to the  performance of the Supply Contract to the Lessee, including rights related to judicial and  arbitral proceedings. In case of the Lessor’s abstention, it shall be responsible towards  the Lessee to perform the Supplier’s obligations. 
3. If the Lessee approves the Supply Contract, the rights thereof arising from the Supply  Contract may not be affected by any amendment introduced thereto, unless the Lessee  approves this amendment In Writing; otherwise, the Lessor shall be responsible for  performing the Supplier’s obligations to the Lessee within the scope of the amendment. 
4. Unless otherwise agreed by the parties, the Lessee may not negotiate the amendment or  termination of the Supply Contract. 

Article (8) Rights of Parties to the Lease Agreement 

1. The rights of parties to the Finance Lease Agreement shall be enforceable and legally  effective vis-à-vis the Lessor’s creditors. 
2. The invalidation or termination of the Supply Contract shall have no impact on the  Finance Lease Agreement. 

Article (9)Exclusion of Liability of the Lessor in Tripartite Lease

Unless otherwise agreed by the Parties in a tripartite lease, the Lessor shall not be liable to  the Lessee or third parties for deaths, personal injury or material damage to property caused by the leased Asset or its use, within the limits of its capacity as a Lessor of the Asset, as set  out in the Supply Contract and the Lease Agreement. 

Chapter 3: Implementation 

Article (10) Irrevocability of Obligations 

1- Unless otherwise agreed between the Lessor and the Lessee: 

• In a tripartite lease, when the leased Asset, subject of the Lease Agreement, is  delivered to and accepted by the Lessee, the obligations of the Lessor and the Lessee,  as set forth in the Lease Agreement, shall become independent and irrevocable. 
• In a bilateral lease, the Lessor and the Lessee may agree to render any of their  obligations independent and irrevocable by specifically identifying such obligations  as irrevocable and independent. 

2- Without prejudice to the provisions of Clause (3) of Article (23) hereof, every  independent and irrevocable obligation shall be implemented, even if a third party fails  to implement its obligations, unless the party in whose interest the obligation must be  fulfilled terminates the Lease Agreement. 

Article (11) Risk of Loss 

Unless otherwise agreed by the Lessor and the Lessee: 

1- In a Tripartite Lease: 

• The risk of loss of the leased Asset shall pass to the Lessee from the effective date of  the Lease Agreement between the parties thereto. 
• If the leased Asset is not delivered or is partially delivered to the Lessee or is delivered  in such a manner inconsistent with the Lease Agreement, and the Lessee claims compensation under Article (14) hereof, the Lessor or Supplier, as the case may be,  shall be liable for the loss.

2- In a bilateral Lease Agreement, the Lessor shall be liable for the leased Asset loss and the  liability may not be transferred to the Lessee, unless the loss is caused by the Lessee. 

Article (12)Loss and Damage of the Leased Asset 

Unless otherwise agreed between the Lessor and the Lessee: 

1. In a tripartite lease, if the leased Asset, subject of the Lease, is lost or damaged, in full or  in part, before taken over by the Lessee without any fault on the part of the Lessee or  Lessor, the Lessee may request to inspect the leased Asset and may accept it and the  supplier shall guarantee the diminution in value, or may claim the other compensations  prescribed for the Lessee under the legislation in force in the State. 
2. In a bilateral lease, if the leased Asset is damaged before the Lessee takes it over without  any fault on the part of the Lessee or Lessor, the Lease Agreement shall terminate. In case  of partial damage, the Lessee may request to inspect the leased Asset, and may either  deem the Lease Agreement terminated or accept the leased Asset and reduce the rent  and other amounts payable for the rest of the Lease Agreement term, equivalent to the  diminution in value, without having the right to claim other compensation from the  Lessor. 

Article (13) Acceptance of the Leased Asset 

Unless otherwise agreed by the Lessor and Lessee, the Leased Asset shall be deemed  accepted by the Lessee if the latter informs the Lessor or Supplier that the Leased Asset is in  conformity with the Supply Contract’s terms and conditions, or if the Lessee fails to reject 

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taking over the leased Asset after taking an appropriate opportunity to inspect or use the  leased Asset. 

Article (14) Regularization 

Unless otherwise agreed between the Lessor and the Lessee: 

1. In a tripartite lease, if the leased Asset is not delivered or is partially delivered or if the  delivery is late or in a manner not in conformity with the conditions of the Lease  Agreement or the Supply Contract, the Lessee may claim any compensation prescribed  therefor under the legislation in force in the State, and may claim the Supplier to deliver  an alternative identical to the Asset, as the case may be. 
2. In a bilateral lease, if the leased Asset is not delivered or is partially delivered or if the  delivery is late or in a manner not in conformity with the conditions of the Lease  Agreement, the Lessee may accept or reject the leased Asset or terminate the Lease  Agreement, without prejudice to the provisions of Article (23) hereof; provided that the  Lessor is notified of the rejection/termination within a reasonable time from the delivery  of the leased Asset. 
3. In a bilateral lease, the Lessee may, after accepting the leased Asset, reject it in pursuance  of the provisions of Clause (2) above; provided that the inconformity of the leased Asset  with the terms of the Lease Agreement has a material negative impact on its value, even  if either of the following cases is realized: 

• The Lessee has accepted the leased Asset without being aware of the inconformity  due to the difficulty to detect the same; or 
• The Lessor has urged the Lessee to accept the leased Asset under guarantees issued  by the Lessor.

4. In a bilateral lease, if the Lessee rejects the leased Asset, pursuant to the provisions of this  Decree-Law or under the Lease Agreement, the Lessee may refrain from paying the rent  until it receives compensation for the delivery that is not in conformity with the terms of  the Lease Agreement, and may recover the rent and any other amounts paid in advance  after deducting an amount for the Lessee’s utilization of the leased Asset. 
5. If the Lessee is the one that provides the Lessor or Supplier with certain specifications to  be met in the leased Asset, then it shall be deemed an acceptance by the Lessee to hold  the Lessor or the Supplier harmless against any claim by way of infringement that arises  out of compliance with such specifications. 

Article (15) Transfer of Rights and Obligations 

1- Unless otherwise agreed between the Lessor and the Lessee: 

• The Lessor’s rights under the Lease Agreement shall be transferable with no need for  the Lessee’s approval. 
• The Lessor and the Lessee may agree that the Lessee may not invoke, vis-à-vis the  person to whom the rights of the Lessor are transferred, any pleas or offset rights  prescribed for the same vis-à-vis the Lessor, except for rights arising from the Lessee’s  incapacity, without prejudice to the Lessee’s right to invoke its rights vis-à-vis the  Lessor. 
• The Lessor’s obligations arising from the Lease Agreement may be transferred only  subject to the Lessee’s Written consent, and the Lessee may not withhold such  consent without a good reason, taking into account third parties’ rights. 
• The Lessee’s rights and obligations arising from the Lease Agreement may be  transferred subject to the Lessor’s Written approval, and the Lessor may not withhold  such approval without a good reason, taking into account the rights of third parties.
• The new Lessee to whom the Lease Agreement has been transferred shall replace the  original Lessee with regard to all rights and obligations arising from the Lease  Agreement. 
• The transfer of the Lessor’s rights to collect the rent and other amounts payable shall  be subject to the provisions of Federal Law No. (4) of 2020 Guaranteeing Rights to  Movable Property. 
• Unless otherwise agreed by the Parties, in case the Lessee is a natural person, his  rights, after his death, shall be transferred to the universal or particular successor. 

Article (16) Warranty of Quiet Possession of the Leased Asset

Unless otherwise agreed by the Lessor and the Lessee: 

1. The Lessor shall warrant that the Lessee shall have and enjoy quiet possession and  utilization of the Asset without any disturbance caused by any Person having a superior  right in rem or in personam, or alleging under a court order to have a superior right in  rem or in personam, or alleging negligence or intentional act or omission of the Lessor,  whether the Lease Agreement is bilateral or tripartite. 
2. Without prejudice to the provisions of Clause (3) of Article (23) hereof, the Lessee may  claim compensation for a disturbance of the quiet possession by instituting an action for  damages against the Lessor. 

Article (17) Warranties of the Supplier and the Lessor 

Unless otherwise agreed by the Lessor and the Lessee: 

1. In a tripartite lease, the Supplier shall warrant that the leased Asset described in the  Supply Contract is of a type that conforms to the business practice and that it is fit for the 

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ordinary purposes for which an asset of that type is used. Subject to the provisions of  Clause (2) of Article (7) hereof, this warranty shall be enforceable only against the  Supplier. 

2. In a bilateral lease, the Supplier shall warrant that the leased Asset agreed upon in the  Lease Agreement is of a type that conforms to the business practice and that it is fit for  the ordinary purposes for which an asset of that type is used if the Lessor usually deals in  Assets of such type. 

Article (18) Obligation of the Lessee to Maintain the Leased Asset

1- The Lessee shall exercise due care for preserving the leased Asset, and shall use it  reasonably in the light of the manner in which such assets are ordinarily used, and shall  retain it in the condition in which it had been delivered to them, subject to fair wear and  tear. 

2- Unless otherwise agreed by the Lessor and the Lessee, the Lessee shall maintain the  leased Asset based on the technical instructions issued by the Supplier or manufacturer,  if any. 

Article (19)Licensing the Leased Asset 

1. Unless otherwise agreed by the Lessor and the Lessee, subject to Clause (2) below, the  Lessee shall, at its own expense, license and renew the license of the leased Asset and  obtain the necessary approvals from the competent authorities to enable the Lessee to  utilize it if the Asset by nature requires a license under the legislation in force in the State. 
2. The Lessor shall provide the Lessee with all the necessary documents and authorizations  to enable the Lessee to perform the duty provided in Clause (1) above.

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Chapter 4: Breach and Termination 

Article (20) Breach of Obligations Arising from the Lease Agreement or the  Provisions of the Decree-Law 

The parties may agree to determine the cases that constitute a breach or give rise to rights or  compensations as described in this Chapter. Where such agreement is not made, the breach  shall be deemed to have occurred if a party breaches any of their obligations arising from the  Lease Agreement or the provisions of this Decree-Law. 

Article (21) Notices 

Unless otherwise agreed by the Lessor and the Lessee, the affected party shall give the  breaching party notice of the breach, implementation or termination, and of the possibility  of remedy. 

Article (22) Damages 

1. Unless otherwise agreed by the Lessor and the Lessee, when a breach takes place, the  affected party may claim damages, whether exclusively or in combination with other  compensations, pursuant to the provisions of the Lease Agreement, which are necessary  for reparation, so as to place the affected party in the situation in which the Lease  Agreement would have been implemented in accordance with the conditions contained  therein. 
2. If the Lease Agreement stipulates that the party breaching its obligations included in the  Lease Agreement shall pay the affected party a specific amount or an amount to be  calculated as compensation for such breach, the affected party may claim such amount.

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Article (23) Termination of the Lease Agreement 

Unless otherwise agreed by the Lessor and the Lessee: 

1- The Lease Agreement may be terminated in the following cases: 

• Pursuant to the provisions of Clause (2) of Article (12) hereof; 
• Upon the agreement of the parties; 
• At the request of the affected party in the event of a material breach is committed by  the Lessor or Lessee; and 
• In case the Lessor breaches the warranty of quiet possession clause set out in Article  (16) hereof. 

2- Notwithstanding the provisions of Paragraphs (a) and (b) of Clause (1) above, in case of  a tripartite lease, after the leased Asset has been delivered to and accepted by the lessee,  the Lessee may not terminate the Lease Agreement for a material breach by the Lessor or  Supplier, without prejudice to its right to claim for other compensations agreed between  the parties or stipulated by the legislation in force in the State. 

3- Subject to the provisions of Article (10) hereof, in the event of termination of the  agreement, all corresponding obligations required to be implemented by the two parties  under the Lease Agreement shall be discharged, except for the obligations enforceable as  a result of its termination and rights arising from the breach or implementation prior to  the termination. 

Article (24) Bankruptcy and Liquidation 

1. If the Lessor is liquidated or declared bankrupt, the Lessee may continue performing the  Lease Agreement, pursuant to its terms and conditions, provided that the liquidator or  bankruptcy trustee is so notified. 
2. The new Lessor, to whom the ownership of the leased Asset has been transferred by 

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liquidation or declaration of bankruptcy, may continue performing the Lease Agreement  if the Lessee expresses its desire to do so. 

Article (25)Surrender of the Leased Asset and Possession and Disposition  Right 

1. Upon the termination or expiration of the Lease Agreement, the Lessee shall surrender  the leased Asset to the Lessor, as per the condition set out in Clause (1) of Article (18)  hereof, unless otherwise agreed by the parties to the agreement, or the agreement  provides for the Lessee’s ownership of the leased Asset upon the expiration of the  agreement term. 
2. By virtue of a Lease Agreement related to movables, the Lessor may effect an execution  to collect its rights, pursuant to the provisions of Federal Law No. (4) of 2020  Guaranteeing Rights to Movable Property. 

Article (26) Improvements to the Leased Asset 

Unless otherwise agreed by the Lessor and the Lessee, if the leased Asset is surrendered to  the Lessor, pursuant to the provisions of Clause (1) of Article (18) hereof, the following shall  be observed: 

1. All improvements separable from the leased Asset without harming it, which the Lessee  made at its expense, shall remain the property of the Lessee. 
2. The Lessee may claim compensation from the Lessor for any improvements the Lessee  introduced to the leased Asset at its own expense with the Lessor’s prior Written consent  if such improvements are inseparable from the leased Asset without harming it
3. The Lessee shall not be entitled to any compensation for the improvements the Lessee introduced to the leased Asset at its own expense, which are not separable from the  leased Asset without harming it, if the Lessee introduces the same without the Lessor’s  prior written consent.

Chapter 5:Final Provisions 

Article (27) Penalties 

Without prejudice to any severer penalties provided by any other law, any Person that  engages in the Finance Lease activity or uses the phrase of, or synonyms to Finance Lease in  his tradename without license shall be sentenced to imprisonment for a term not exceeding  (6) six months and/or a fine of not less than (AED 100,000) one hundred thousand dirhams  and not more than (AED 5,000,000) five million dirhams. 

Article (28) Judicial Officers 

The employees designated by a resolution of the Minister of Justice, in agreement with the  Minister, or a resolution by the chief of the local judicial authority, in agreement with the  chairman of the relevant authority, shall have the capacity of judicial officer to detect  violations of the provisions of this Decree-Law, the Executive Regulations hereof and the  resolutions issued in pursuance of the Decree-Law. 

Article (29) Repeals 

1. Federal Law No. (8) of 2018 on Finance Lease, and any provision repugnant to, or in  conflict with the provisions of this Decree-Law is hereby repealed. 
2. The resolutions applicable before the provisions of this Decree-Law enter into force shall remain in force, in so far as they do not contradict the provisions hereof, until the  substituted resolutions are issued, pursuant to the provisions of this Decree-Law.

Article (30) Publication and Entry into Force 

This Decree-Law shall be published in the Official Gazette, and shall enter into force (6) six  months following its publication date. 

Mohammed bin Zayed Al Nahyan 

President of the United Arab Emirates 

Issued by us at Abu Dhabi Presidential Palace: 

On 10th Rabi’ Al-Awwal 1445 AH. 

Corresponding to: 25th September 2023 AD.

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