How to Manage Debt Claims Part Two – Filing Court Claims
Whilst there may be creative solutions for collecting debt using legal communication or negotiation tools, some debtors may fail to settle their payment obligations. If a debtor is not willing to honor an agreement or even consider the possibility of settling debts in an honest manner in accordance with the laws, it may be difficult to resolve the matter through negotiation. As such, it becomes necessary to initiate legal action via the courts and governmental authorities. Rather, it may become necessary to refer a debt claim to the competent courts so that the dispute can be resolved by a the correct judicial body. This article aims to outline the process of filing a legal claim with the competent courts of the UAE.
Before filing a case in court, one must first determine the appropriate court jurisdiction, meaning the court and circuit responsible for dealing with a type of claim. The court should also have the correct geographical authority, relative to the location of the transaction and parties. This is also known as Personal Jurisdiction in the Common Law. For example, if your transaction is in Dubai, and both parties are in Dubai, the case needs to be filed in the court of first instance, located in the Emirate of Dubai. However, there are other factors which also determine the governing jurisdiction, such as the contractual agreement of the parties. Some contracts will specify the court and jurisdiction in which disputes are to be tried between the parties, as well as the governing law to be applied. An example of this would be a jurisdiction clause which specifies the Dubai International Financial Courts (DIFC) as the legal jurisdiction for the resolution of the case, and English Law as the Governing Law. For the specific type of court in which the case needs to be filed, and the accompanying documents required, it is always best to seek legal advice, as there are specific requirements which need to be fulfilled in order to initiate the case in the correct court of law.
All UAE court procedures are conducted in Arabic, except for those in the DIFC or the Abu Dhabi Global Market Courts, as explained below. The Emirate of Abu Dhabi does facilitate other languages in the courts and makes certain documentation available in other languages as well. However, for the most part, proceedings are conducted in Arabic throughout the UAE legal system.
The news is filled with stories of absconding debtors and people who move money out of the UAE to avoid the repayment of debts. However, such events could be avoided with appropriate legal measures. Upon filing a criminal complaint against the debtor for a bounced cheque, fraud or any other criminal matter, the prosecution have the authority to impose a travel ban on the debtor at the outset of a criminal complaint. However, even if the criminal charges are decided in favor of the debtor, the claimant can initiate a civil claim and similarly, request the judge to impose a travel ban and/or hold the debtor’s passport, as a result of the civil claim. This is possible if it is proven that there is a risk of the debtor fleeing the country to avoid repayment of the debts and claim amount being litigated.
Furthermore, the claimant may request the judge to issue an attachment order against the debtor’s assets in the UAE, if the claimant can sufficiently prove that certain assets are being or could be moved outside the UAE to avoid exposure to the debt and the repayment obligations which are the subject of litigation. If successfully argued, the attachment order will allow the claimant to seek specific performance against the debtor’s assets directly. This means that if the claimant is successful, the defendant’s UAE based assets such as bank accounts, physical property (residences or vehicles) and other assets may be liquidated by court order, for the purposes of satisfying the debt. Furthermore, an attachment order may also allow the assets and bank accounts of the debtor to be frozen, thereby preventing the debtor from moving their assets or cash outside the UAE during court proceedings and until the debt has been settled in accordance with the judgment of the court.
When deciding to take your case to court, it is crucial to have all your documents prepared in accordance with the requirements of the competent court with which you will file your claim. Attachment orders and travel ban requests have legal standards and documentary requirements which must be respected as well. Therefore, it is always best to appoint a competent lawyer for representation, especially if the matter has reached the stage where litigation is necessary. This will ensure you will be able to benefit from all the legal tools available under the UAE judicial system which in turn, enhances the chances of recovery.