Your Contractor and Its Bank Both Demand Payment: Whose Instruction Should You Follow?

A DIFC project proceeds assignment dispute should be investigated before paying either competing claimant. Ask what right the bank actually holds, what notification you received and which law applies. A contractor's fresh account instruction may not safely override the bank's rights. Equally, a document headed assignment does not answer every question about its effect.

This guide concerns a project employer faced with competing payment demands. It uses a 2022 DIFC judgment alongside the later security legislation, not the old judgment alone. Obtain advice on the payment due date as well: uncertainty about the recipient is not a general licence to withhold an otherwise due payment indefinitely.

Record	What to establish	What not to assume
Project contract	Payment rights and relevant restrictions	A consent clause necessarily defeats current statutory rights
Security or transfer document	Right created and receivables covered	The heading proves its operative effect
Notification	Sender, receipt, identified creditor and receivables	Any account-change email is equivalent
Employer response	Exact undertaking and qualifications	Acknowledging receipt always means agreeing to every request
Payment history	Amounts, dates, accounts and instructions	Following the latest contractor message is always safe

What did the DIFC project proceeds assignment case actually decide?

In DIFC Investments Ltd v Dubai Islamic Bank [2022] DIFC CFI 024, the employer obtained immediate judgment declaring no liability to the bank under the disputed arrangement. The Court examined the underlying documents and the employer's qualified response, not simply their titles.

The employer had agreed to pay a nominated account until it received contrary instructions from the contractor. The Court did not treat that response or the resulting payments as the requested consent to an assignment. It also concluded that the instrument before it did not transfer the contractual rights as the bank alleged.

That is a useful document-reading lesson. It is not safe advice to repeat the same payment strategy today without considering the later Law of Security. The judgment preceded that regime. A current assessment must separate what the old documents meant from what legislation now says about a security right, notification and discharge by payment.

A 28 June 2022 consent order subsequently resolved costs. It is not a merits reversal. The bounded later-history search did not establish a later appellate determination of the assignment issue in this case.

Why can a no-assignment clause be an incomplete answer now?

The July 2025 consolidated Law of Security 2024 requires a separate analysis. Article 20 can make a security right effective despite contractual restrictions for specified receivables, including construction receivables. Do not therefore assume that absence of employer consent defeats every current bank claim.

Scope, applicable law and transition matter. Article 9(2) extends the regime to outright receivable transfers, subject to its stated exception. Schedule 1 preserves prior law for creation of prior security rights and, subject to its enforcement qualification, proceedings begun before commencement. Identify the dates of the project contract, financing instrument, notification and proceedings. An old contract date does not by itself settle which provisions govern every later step.

Ask your adviser to classify the asserted right before relying on a contractual prohibition. Is it an outright transfer, security over a receivable, security over money in an account or merely a payment instruction? Similar commercial language can describe different arrangements. The legal consequences should follow the substance and applicable regime.

Keep the statutory inquiry separate from any allegation that the contractor breached its project contract. A complaint about that breach and the effectiveness of the bank's right are not necessarily the same question. Nor does the bank's financing relationship automatically make it the contractor under the construction contract.

Common mistake. Sending the bank an old judgment and saying that no consent means no rights. The 2022 decision must be read with the later security legislation and the particular transaction.

What exactly did the employer sign or acknowledge?

Compare the requested document with the version actually executed. Track deletions, qualifications and attached schedules. A cover email describing changes as minor does not resolve what the signed words mean. Use the final signed document, while preserving the negotiation history that explains how it arrived.

In particular, distinguish acknowledgment of receipt from an undertaking to pay, consent to a transfer and an agreement affecting defences. Do not assume that one phrase necessarily performs all four functions. Mark each operative promise and the person to whom it is made.

For a current request, ask whether the proposed undertaking goes beyond identifying the payment account. Does it purport to confirm the debt, waive deductions, restrict future amendments or require bank approval for settlement? Have those matters reviewed before signing. A routine accounts-payable form can contain provisions with consequences beyond the next transfer.

These distinctions are useful when sorting the documents.

What should I do with a notification from the bank?

Preserve the original, receipt evidence and attachments. Check whether it identifies the receivable and creditor clearly. Under Article 72 of the consolidated Law of Security, effective notification depends on receipt and sufficient identification in an understandable language. The label alone is not the whole test.

Article 73 distinguishes payment before and after notification, subject to its detailed exceptions. Article 73(8) provides a mechanism for requesting adequate proof from a notifying secured creditor. That is not an automatic permission to ignore the notice or pay the contractor immediately. Get advice on its requirements and consequences before acting.

Build a short register of every notification and payment instruction. Record who sent it, who received it and whether it concerns the whole receivable, a part or a later transfer of the asserted right. Do not apply a simple latest-email-wins rule to several competing interests.

Verify the sender and account details through a trusted channel as a practical fraud precaution. Legal entitlement and authenticity are separate checks. A genuine bank can assert a disputed right, and a convincing-looking notice can be fraudulent. Neither issue should be treated as solved merely because the other appears straightforward.

Can I settle with the contractor or change the payment account?

Do not copy the settlement-payment outcome in the 2022 case without a current review. The effect of later instructions or modifications can depend on notification and the bank's rights. Send your adviser the proposed settlement before execution, not after money has moved.

Identify what the settlement changes. Does it compromise the amount due, release a claim, offset defects, redirect payment or resolve several projects at once? Separate those elements. A global figure can obscure which receivable is affected and whether a bank is asserting an interest in it.

Ask whether a coordinated arrangement involving the relevant parties is needed. If the bank agrees to a particular payment or release, record its scope and conditions clearly. Do not assume that a relationship manager's informal acknowledgment establishes authority to release security or waive rights.

Keep the underlying payment calculation intact. A dispute over the recipient does not answer whether the contractor earned the entire sum. Identify certificates, retention, variations, deductions and previous payments separately. At the same time, do not assume that every defence against the contractor can automatically be used against every transferee without examining the governing rules and any signed undertaking.

Could a court decide this dispute without a full trial?

Possibly, but a document-heavy dispute is not automatically suitable. The current RDC 24.1-24.2 permits immediate judgment where the relevant claim or defence lacks a real prospect of success and there is no other compelling reason for trial. Construction of a document can be an issue for that procedure.

The employer succeeded on that basis in the 2022 case. Your dispute may contain different evidence about execution, authority, notification or the applicable regime. Identify those issues honestly rather than saying that the contract is clear and assuming a trial is unnecessary.

Prepare a chronology that links every alleged obligation to its source. If a bank refers to an instrument you have never seen, record when it was first requested and when it was supplied. If parties rely on an oral conversation, identify the participants and the contemporaneous record. Do not let a later summary silently replace the evidence.

Jurisdiction also needs its own assessment. This article does not adopt the 2022 judgment's discussion of the then-existing court-conflict machinery as a current forum guide. A payment merits question and the proper place to decide it are distinct tasks.

What should the first response and payment review contain?

Start with a neutral request for the basis of the competing demands, while obtaining prompt advice about the payment timetable. The response should identify the project, sum and documents in issue. Avoid admitting an assignment, debt or waiver merely to acknowledge that a letter arrived.

1. Collect the project contract, amendments and payment records.
2. Obtain the instrument said to create or transfer the bank's right.
3. Compare requested acknowledgments with the versions actually signed.
4. Log every notification, receipt and subsequent instruction.
5. Identify the relevant dates for statutory scope and transition.
6. Reconcile the amount due separately from the identity of the recipient.
7. Seek advice on a safe payment or dispute-resolution course before money moves.

Give the finance team a clear internal escalation point for any conflicting instruction. Preserve the original account details rather than overwriting them in the payment system without a record. If an earlier payment is disputed, retain the approval chain and bank confirmation so that the sequence can be reconstructed.

A short decision note should explain what has been verified and what remains unresolved. It should not conceal the difference between an agreed bank-account change and a legal conclusion that payment will discharge the debt. Where advice depends on a missing document, name that document and the question it affects.

Keep these three decisions separate.

Selected official sources were checked on 29 September 2026. The statutory text used is the July 2025 consolidation, checked against the enacted 2025 Amendment Law and its commencement notice. The official database lists that text separately from the earlier version. Its inconsistent landing-page status label remains recorded in the research notes. Recheck developments before relying on this guide for a transaction. The old judgment is not presented as an unchanged current assignment rule.

Key takeaway. Identify the right, the notification and the applicable law before choosing the payee. A payment-account instruction and a legally effective transfer cannot safely be treated as the same thing.

Frequently Asked Questions

Can I always rely on a no-assignment clause? No. Article 20 of the later security regime can affect specified receivables. Obtain a current transaction-specific assessment.

Does acknowledging receipt mean I consented to every request? Not necessarily. Read the exact signed words, attachments and any additional undertaking.

Did the bank win in the 2022 DIFC Investments case? No. The employer obtained a declaration of no liability on that arrangement. The result must not be transplanted past later legislative changes.

Can I follow the contractor's latest email after a bank notice? Do not assume that is safe. Notification can affect which payment discharges the obligation.

Can I ask the notifying bank for proof? Article 73(8) contains a proof-request mechanism with conditions. Have the request and proposed next step reviewed before relying on it.

Does assignment establish how much the contractor is owed? Not by itself. Reconcile the underlying payment entitlement separately and assess any available defences.

Will immediate judgment avoid a trial? Only if the applicable RDC test is met. Disputed facts or other compelling reasons may require trial.

Does this article decide which Dubai court has jurisdiction? No. Forum and any dispute-resolution agreement require separate current analysis.

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

See the Dubai and DIFC commercial-contracts section and these related guides.

• Payment into a nominated account
• Fit-out defects and payment disputes
• Bank-dispute jurisdiction

Related Guides

Our DIFC commercial contracts page covers payment, suspension, termination, guarantees and shareholder disputes under DIFC-law agreements.

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