Awatif Mohammad Shoqi Advocates & Legal Consultancy | View firm profile
Introduction:
In commercial transactions, the process of recovering debts owed by companies may sometimes necessitate legal intervention.Under Federal Decree-Law No. 42/2022 on Civil Procedure Law, specific procedures are outlined for the issuance of execution orders against corporate debtors.
Understanding these procedures is important for creditors seeking to enforce their rights within the bounds of the law.
Issuance of Detention Orders:
According to Article 319 of the Civil Procedure Law, the execution judge has the authority to issue an order to imprison the debtor upon the request of the prevailing party, provided that the debtor has abstained from enforcing any writ of execution.
Notably, insolvency claims of debtors may not be accepted if certain conditions are met, such as evidence of smuggling or concealing assets with the intent to defraud creditors.
Summary Investigation and Payment Arrangements:
Furthermore, Article 320 stipulates that before issuing a detention order, the execution judge may conduct a summary investigation if the supporting documents provided are deemed insufficient. Additionally, the judge may allow debtors a period to pay off their debts or arrange for instalment payments, provided that certain conditions and guarantees are met.
Exceptions to detention orders are defined in Article 321, which may prohibit the issuance of such orders under specific circumstances. For instance, individuals who are underage, elderly, or suffering from certain medical conditions may be exempted from detention. Moreover, the judge may postpone the issuance of a detention order in cases of pregnancy or temporary illness.
Detention Orders for Business Entities:
When the debtor is a business entity, Article 322 of the UAE Civil Procedure Law allows for the issuance of detention orders against its legal representatives or other individuals personally responsible for the company’s debts if they are found to be responsible for abstaining from execution.
In addition to detention orders, creditors may request a travel ban against debtors who are at risk of absconding the country to avoid their obligations. Article 324 outlines the specific conditions for issuing such bans, including requirements for written evidence and guarantees to protect the debtor’s interests in the event that the creditor’s claims are deemed unfounded and the judge may conduct investigations before issuing the ban.
Travel Ban Orders:
The duration and conditions for travel ban orders are specified in Article 325, which states that bans remain in force until the debtor’s obligations expire or certain conditions are no longer met. The judge may rule to extinguish travel bans under various circumstances, including mutual agreement between the parties or the provision of adequate guarantees by the debtor.
Finally, Article 327 authorizes judges to impose additional precautionary measures if debtors fail to comply with orders or show signs of attempting to avoid their obligations. These measures may include requiring payment or attendance guarantees to secure creditor interests.
Conclusion:
The procedures for issuing execution orders against corporate debtors under the UAE Civil Procedure Law are designed to balance the rights of creditors with the obligations of debtors. By understanding these procedures, creditors can ensure the enforcement of their rights while adhering to the principles of justice and fairness outlined in the law.