Can a UAE contract charge interest or daily fees on late payment?

Delay interest on commercial debts

Article 86 of the Commercial Transactions Law says interest for delay in repaying a commercial debt runs from the debt's maturity date, unless the law or the agreement provides otherwise. The start date is therefore the due date, not a later demand, unless the contract says so.

Article 87 lets the creditor claim complementary compensation on top of delay interest only by proving that the loss beyond the interest was caused by the debtor's deception or serious error. Where the creditor in bad faith prolongs the dispute, the court may reduce the interest or award none for the unjustified period.

Article 88 forbids compound interest: the creditor may not claim interest on frozen interest, nor claim it as complementary compensation. A clause that compounds monthly, or adds interest on accrued interest, asks for what this article excludes.

Fixed late fees

A daily or monthly charge fixed in the contract is an agreed compensation under Article 340 of the Civil Transactions Law. The court may reduce it if the debtor proves the figure was excessive or the obligation was partly performed, and any agreement contrary to the article is void. A fee with no cap, no grace period and no relation to the amount owed is the kind of clause this article reaches.

Questions

From when does late-payment interest run on a commercial debt?

From the maturity date of the debt, unless the law or the agreement provides otherwise (Article 86).

Can interest be charged on unpaid interest?

No. Article 88 says a creditor may not claim compound interest or claim it as complementary compensation.

Is a fixed daily late fee enforceable as written?

It is an agreed compensation under Article 340; the court may reduce an excessive amount, and an agreement to exclude that power is void.