The Dubai Court of Cassation has rejected an appeal by a bank compelling a customer, who holds two of its credit cards, to pay 19 per cent interest on the outstanding amount, from the date of the customer stopped payments.
The court, however, upheld the request of the bank requiring the client to pay the interest as mentioned in the original contract signed by the customer - 12 per cent.
The court based its judgment on the fact that the bank cannot raise interest rates without informing the client, and without a signature on an affidavit from the bank seeking to raise the interest rate.
According to the details of the case, the bank filed a lawsuit before the Court of First Instance in Dubai against the customer.
The bank was seeking that the court oblige the customer to pay Dh130,000 based on the client's use of two credit cards.
The court assigned an expert to submit a report on the client, using the original contract signed with the bank.
The Court of First Instance ruled that the client needs to pay Dh55,000 - the value of the amount he owed.
The bank did not accept this provision and challenged it before the Appeals Court, which supported the earlier verdict.
The bank appealed before the Court of Cassation, which issued the above verdict.
The court said the client is not bound by conditions imposed by the credit card issuer as regards modifying fees and interest rates, if such terms are not specified in the original contract signed by the client.
The court also clarified that its decision in this case - not requiring the client to pay interest fees higher than what is mentioned in the original contract - is an arbitrary decision, and not binding on all cases.