Debt collection in the UAE

The debt collection procedure in the United Arab Emirates begins with an analysis of the debtor’s financial capacity, its field of activity, the history of the enterprise, the availability of documentary evidence of the debt, current court cases and initiated enforcement procedures, as well as the possibility of contesting the debt. This analysis forms the strategy that will be used on behalf of the client to recover the debt.

If there are no ongoing lawsuits against the debtor or court decisions on debt collection, and if he is actively engaged in his business, then it is advisable to use amicable debt collection.

This stage is based on active negotiations with the debtor to reach an agreement regarding payment of the creditor’s claims or other settlement options (for example, return of goods, transfer of debt to a third party, exchange of services or goods).

Interaction with the debtor begins with sending a notification via mail, email, telephone or instant messengers. This process involves intensive communication with the debtor to put pressure on him. The main goal is dialogue with key decision makers in order to speed up debt repayment.

The average term for out-of-court collection is up to 60 days. If this stage does not bring the expected results or if after an initial analysis it becomes clear that it is not applicable, then you should proceed to recovery through the court.

The statute of limitations varies depending on the type of debt, but in general it is 15 years. However, in rare cases it can be 5 years, 3 years or one year. The legislation does not allow changing the specified limitation periods by agreement of the parties. However, the very fact that the limitation period has expired does not prevent the initiation of a case or the filing of a debt claim, and the court cannot independently establish the limitation period. The consequences of missing the statute of limitations in court are applied at the initiative of the debtor.

UAE legislation provides for the possibility of debt collection through the court, by issuing a court order and through general consideration.

The procedure for issuing a court order is applicable to claims for collection of receivables based on their documentary evidence. To carry out this procedure, you must submit a corresponding application to the court with proof of the debtor’s obligation to pay the debt. Within three days, an order is issued indicating the amount to be paid. If the order is not submitted for execution within three months, it is automatically considered non-existent. If the amount of the order is within the final quorum of the trial court, the debtor may appeal it within fifteen days from the date of notification of the order by filing a complaint with the judge who issued the order. If the value of the order exceeds the final quorum, then the order is appealed within the time limits and in the manner provided for appealing ordinary court decisions.

The general procedure for litigation is carried out by filing a statement of claim in court. The period for consideration of the case in the court of first instance is from 60 to 90 days. If there is a need to appoint an expert to consider any technical issue in the case, the period may be extended. The decision of the court of first instance comes into force within thirty days from the date of its adoption, unless it is appealed.

An appeal against a court decision in the general manner is considered within thirty to sixty days. As a result of considering the complaint, the appellate court makes a decision that can be enforced.

Each party to the case has the right to file a cassation appeal within thirty days after the decision of the appellate court, provided that the amount of the claim exceeds AED 500,000. The appeal processing period ranges from 30 to 60 days. In fact, a cassation appeal does not prevent the entry into force of a decision of the appellate court, unless the court decides to do so under certain conditions.

After the court decision enters into legal force, provided that the debtor refuses to comply with it voluntarily, forced execution should be initiated by presenting the writ of execution to the headquarters of the court of first instance. The duration of the enforcement process varies depending on the specifics of each case. Knowing the debtor’s assets will significantly shorten the process. As part of the enforcement process, debt repayment can be realized by writing off funds from the debtor’s accounts, arresting the debtor’s movable and immovable property with their subsequent sale, confiscating the debtor’s property from other persons, or arresting the debtor.

If within thirty days the debtor is unable to ensure the fulfillment of the creditor’s demands from the moment they arise, and the amount of debt exceeds 100,000 UAE dirhams, then it becomes possible to initiate bankruptcy proceedings for the debtor. In the event of bankruptcy of a company, all partners in it must be bankrupt, and the bankruptcy petition includes the partner who left the company after it stopped paying, provided that no more than one year has passed from the date of his withdrawal If the court makes a decision to declare the company bankrupt, it may, on its own initiative or at the request of any interested party, demand that these persons be declared bankrupt, even if they are not accomplices. A court that has declared a company bankrupt may order the director or members of the board of directors, all or some of them jointly or severally, to pay all or part of the company’s debts in cases where their liability for the company’s losses is proven in accordance with the provisions of the Law on Commercial Companies.

It should also be taken into account that the Law on Civil Transactions provides for the responsibility of the company’s partners to repay the company’s debt with their personal funds within the limits of each partner’s share. Moreover, if the company’s internal documents provide for joint liability of the company’s partners for the company’s debts, then they pay the debt jointly.

If you have any questions or need support regarding international debt collection in the UAE, our company is ready to provide our expert assistance to effectively resolve your debt issue. Please contact us to receive additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY UAE

06.11.2024

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