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Navigating Debt Recovery in the UAE: Insights on Leveraging Commercial Licenses as Attachable Assets
The recent judgment by the General Assembly of the Dubai Court of Cassation in Cassation No. 1 of 2024 issued on 31 January 2024 (the “General Assembly Judgment”), has expanded the options of attachable assets in relation to debt recovery. Before discussing the nuances of this judgment, let us look into the framework of debt recovery in the UAE.
Legal Framework of Debt Recovery in the UAE
Debt recovery in the UAE is governed by a set of laws, rules and regulations. However, the primary laws addressing debt recovery are the UAE Civil Transactions Law (Federal Law No. 5 of 1985) and the UAE Commercial Transactions Law (Federal Law No. 50 of 2022). Additionally, other laws dealing with debt recovery and restructuring include Federal Decree-Law No. (51) of 2023 promulgating the new Financial and Bankruptcy Law.
Key Laws Governing Debt Recovery in the UAE:
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- Federal Decree Law No. (5) of 1985 Promulgating Civil Transactions Law: This law (as amended) provides the legal framework for debt collection in the UAE, outlining the rights and obligations of creditors and debtors and providing legal remedies for debt collection.
- Federal Decree Law No. (50) of 2022 Promulgating UAE Commercial Transactions Law: Governs the collection of commercial debts and provides additional legal remedies for debt collection.
- Federal Decree Law No. (31) of 2021 Promulgating the Crimes and Penalties Law: Provides criminal penalties for debtors who fail to pay their debts or provide false information to creditors.
- Federal Decree-Law No. (51) of 2023 Promulgating the UAE Financial and Bankruptcy Law: Aims to reserve the rights of creditors and assist the debtor in settling its debts with its creditors.
- UAE Central Bank regulations: The Central Bank of the UAE has issued several regulations and guidelines related to debt collection practices, including regulations on debt collection agencies, fair debt collection practices, and the use of credit reporting agencies.
- UAE Ministry of Economy regulations: The Ministry of Economy has also issued regulations related to debt recovery, including guidelines on the use of electronic payment systems and the resolution of disputes between creditors and debtors.