Debt Recovery Made Easy In UAE: Processes, Law, And Amendments

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00


Debt Recovery In UAE, debt, UAE, Amendment in UAE,

“Debt is the money borrowed by one party from another to serve a financial need that otherwise cannot be met outright. Many organizations use debt to procure goods and services that they can’t manage to pay for with cash.” The parties involved in the debt process are known as debtors and creditors, who at all times strive to maintain a healthy relationship between them. However, in certain cases, where the debtor is unable or doesn’t make the repayment of the debt to the creditor, the debt recovery procedures are being resorted to by the creditor.

The debt recovery system of the UAE is not quite amicable because of the non-existence of special courts that deal with financial litigation. This in turn implies that when the creditor acquires services from a lawyer or a debt recovery agent, the proceedings that have to be initiated against the debtor are brought forward to the civil courts (Court of Cessation or Federal Supreme Court).

In order to recover the debt in the UAE, out of court processes for receiving the same are considered to be more favourable, affordable, and effective for the parties. Out of court procedure of debt recovery with the help of a professional service provider involve the following steps which are divided into two types: Extra-judicial procedures and Court settlements.

Extra-Judicial Procedure

  1. All the significant information on the debtor is collected by the agency.
  2. A reminder about the pendency of the repayment of the debt is professionally sent to the debtor. It is pivotal to note that the communication of the reminder can be done only through telephonic calls or emails.
  3. The debtor is then informed about the legal repercussions that they might suffer in case of failure of payment of the debt. 

Court Proceedings

When acquiring the debt is not possible through amicable means, court proceedings have to be resorted to force the payment of the debt.  The significant information that the lender is supposed to know and the procedure to be followed is given as follows:

  • Time Limitation: The fundamental rules concerning limitations of bringing a claim against the debtor in court is given under Law No. 5 of 1985. According to the basic rules stated under this Law, the limitation upon bringing a claim is 15 years, until and unless the otherwise is provided under some specific provision.
  • Bringing a Claim Against Debtor: The first claim to start proceedings of a dispute which is Civil or Commercial should be presented to the Reconciliation and Settlement Committee which strives to settle the claim of debt recovery. If the settlement doesn’t succeed, then the claim is to present before a relevant court of law. The documents required for debt collection and the claim must be in Arabic. If the documents are created in another language, then they have to be translated into Arabic by a translator.

When the claim is brought before the court, the defendant will be informed about it and will be directed by the court to be present for the proceedings. However, if the debtor doesn’t respond to claims, the legal proceedings can be initiated and the court can deliver the judgement in the absence of the defendant. Once a date has been set for the hearing, no further documents are accepted, no new defendant can be introduced.

The option of seeking an Appeal before a higher court (Court of Appeal) is available, and the filing of the appeal ought to be done within 30 days of the date on which the judgement was passed by the Court of First Instance. Further right to appeal before the Court of Cessation is also available. However, certain monetary prerequisites need to be fulfilled. The appeal can only be filed within 60 days of the judgement which was passed by the Court of Appeal.

  • Passing of the Judgements: During the proceedings, the creditor can ask for the asset of the debtors in the judgement only when the Executive Court permits so after proper scrutiny of the case. For the Court to provide such certification the judgement passed must be final and there shouldn’t be any scope of appeals. The judgement of the Court of First Instance can be considered to be the final judgement only in cases where both parties fail to appeal the case to the Court of Appeal within the time period of 30 days. “The main ways to enforce a local judgment are:
  • Attachment and sale of the debtor’s property (movables).
  • Attachment of stocks, bonds and shares.
  • Attachment and sale of real estate.
  • Imprisonment of the defaulting debtor.”[1]

The parties to the case are allowed to present new facts, defendants and documents before the Court of Appeal. When the Court of Appeal passes it judgement and both the parties don’t appeal or fail to appeal further within the stipulated time period (30 days), that judgement is considered to be the final one.


In September 2021 certain amendments were made which simplified the debt recovery process. “One of the most impactful amendments relates to the process of seeking expedited debt recovery judgments, commonly referred to as payment orders. The new Cabinet Resolution 75 of 2021 (the “2021 Executive Regulation”) seeks to remove the risk of creditors having claims rejected in respect of filing a traditional civil claim where a payment order expedited process is required.”

The amendment made to the 2018 Regulations gave rise to the 2021 Executive Regulations. Article 17(8) of the same declares that the Courts, during the period of litigation, can issue payment orders by fulfilling the requirements to a valid payment order which will help both the parties in settling their dispute without making excessive monetary expenditures, and without spending a long time in Courts.

The most effective approach to optimize repayment of a debt is to collect the debt before the commencement of legal procedures. If this can't be done, the lender must pursue all laws diligently and without abusing the debtor. The 2021 Executive Regulations seem to recognize the existence of payment orders for lenders, which is a significant development toward enhancing their usefulness in accordance with the customary judicial process.

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