Can you recover money owed by a UAE company or individual? Debt Recovery and Collection in Dubai UAE
Updated: Jan 8, 2020
Those individuals or companies who have substantial payments due from another company/individual can recover the debt through the help of debt recovery legal professionals irrespective of the amount due or whether the person concerned has absconded to another country. Inquire at communications@gulfvakil.com with your questions.
Understanding what is debt:
Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they cannot afford under normal circumstances. One may accumulate debt by loaning to clients or suppliers, or delivering products or services on credit.
How can debt be securely provided:
The duty or obligation arising out of debt is usually secured through negotiable instruments or debt agreements through which the lender can recover the amount due, via permissible legal remedies available under the local jurisdiction, or if failed, via the international remedial institutions.
What is bad debt and what are its consequences to businesses?
Bad debt is an expense that a business incurs once the recovery or repayment of credit previously extended to a customer is estimated to be collectible.
Debt occurred out of defaulted payments of purchased invoices or other hire purchase terms often give way to bad debts especially when the amount stands small in commercial terms and writing it off looks more favorable than taking legal action against the absconding individual, which may be more expensive and time consuming. However, these small write-offs add up and create serious consequences for the business.
In such a situation, the small and medium enterprises are forced to give up often marginal profits and even their cost. Many small and medium business owners fuel their businesses out of invoiced debts and market capital. The absconding of borrowers from the market poses a serious threat to the sustenance of such business owners. Market research reveals that cyclical business loss and profits compels untrained borrowers to flee without paying off the debt, although such absconding poses serious legal consequences for them. But the innocent seller, to whom the amount is due on account of goods sold or service rendered or terms agreed is left with no other remedy than to convert legitimate debt to bad debt.
Is is possible to recover debt owed to you?
Yes, with the right approach and legal counsel. Those individuals or companies who have substantial payments due from another company/individual can recover the debt through the help of debt recovery legal professionals irrespective of the amount due and to wherever the person concerned has absconded.
As per UAE law, the debt is not deemed invalid beyond the UAE border; the liability shall persist until repayment. The majority of the people think that nothing can be done if the buyer/borrower has not paid back the debt, but this is not true. Since UAE is a part of the Riyadh agreement, the judgment of UAE court can be enforced internationally. What is required in such circumstances is a proper strategy, planning and execution to follow up and urge the debtor to clear the debts.
What are the tools available for creditors to recover their debt?
Below are some of tools at the disposal of creditors in the region, which may be used to incentivise a debtor to settle a claim.
Asset investigation: It is often sensible to engage an asset investigation company to produce a report on the debtor’s assets, before a decision is taken as to whether or not to commence legal proceedings.
Attachment: It may be possible to file an application to the local court to attach the debtor’s assets and/or bank accounts. Such investigations into assets may be helpful to a creditor weighing up the potential benefits of pursuing further legal action. Whether or not it is possible to file an attachment application into the local court must be judged on a case-by-case basis. However, if the debtor has assets and the attachment is granted, said attachment should put the debtor under significant pressure to pay the debt, or to deposit security to release that attachment.
Bankruptcy Law: Federal Law by Decree No. (9) of 2016 on Bankruptcy (the “Bankruptcy Law”) allows a creditor owed a debt of AED 100,000 or more, to apply to the Court to commence bankruptcy proceedings against the debtor company, following the proper notice procedure.
Criminal action: It is fairly common practice in the UAE for companies to issue post-dated cheques. When a post-dated cheque bounces, we assist clients in liaising with the local authorities and the banks to file criminal complaints, that may lead to the imprisonment of the signatory.
Ship arrest: In the case of maritime debts, it may be possible to arrest that vessel as security, if a debtor has a ship located within UAE territorial waters. We can advise on whether or not a debt qualifies as a “maritime debt” under UAE law and are experienced in assisting with ship arrests in the UAE and elsewhere in the Middle East.
As per UAE law, the debt is not deemed invalid beyond the UAE border; the liability shall persist until repayment. The majority of the people think that nothing can be done if the buyer/borrower has not paid back the debt, but this is not true. Since UAE is a part of the Riyadh agreement, the judgment of UAE court can be enforced internationally. What is required in such circumstances is a proper strategy, planning and execution to follow up and urge the debtor to clear the debts.
Advice for creditors:
If you have a debt which remains unpaid, we would recommend consideration of the following:
Do not delay action: If direct negotiations with the debtor are unsuccessful it is worth considering outsourcing the recovery of the debt as soon as possible. Not only does this free up your team to focus on day-to-day operations, but the highest levels of recovery in the fastest timeframes are typically achieved for clients who take quick action.
Furthermore, certain types of claims are subject to relatively short limitation periods in the UAE, so it is important to have your claim assessed early, to ensure that your rights are protected.
Document everything: If you are struggling to obtain payment of a debt and enter into negotiations with the debtor, it is important to ensure that all exchanges and agreements are documented and kept safe. Such evidence could prove crucial should the matter later progress to Court proceedings.
Submit inquiries to +971 50 991 9081 (Call/ WhatsApp), and one of our coordinators will connect you to a lawyer who can help.