Enforcement, warrants of arrest and detention of debtors under UAE law

Samer Abou Said
Moaza Alkhadar Advocates and Legal Consultancy, Dubai
samer.as@thefirmdubai.com   

Every judgment creditor has the right to enforce measures against a judgment debtor if the debtor fails to comply with a judgment voluntarily. The legal framework in Dubai for the enforcement of civil and commercial judgments, as well as in other parts of the UAE, has undergone significant change over the past two years. These changes have eliminated certain harsh measures against debtors and revised the legal dynamics between debtors and creditors. Detention and arrest of debtors is now considered a last resort and is subject to several conditions.

These changes are primarily outlined in the Federal Decree-Law No (42) of 2022 for Civil Procedures (‘CPL’), Circular No (2) of 2024 issued by Dubai Courts, and various decisions by the General Assembly of the Dubai Court of Cassation (‘GA-COC’).

Detention of debtors

Article 319 addresses the detention of debtors who fail to comply with court orders for payment of a judgment debt. The article applies to individual and corporate debtors.  If the debtor is a corporate entity, the execution judge can issue a detention order against the legal representative of the company (such as its manager) or the person to whom the failure to perform is personally attributable. This could be the person who controls the company. 

Article 319 aims to ensure that debtors fulfil their financial obligations while protecting their rights by making detention a measure of last resort, ie only after the creditor has exhausted enforcement options against movable and non-movable assets without recovering fully its debt. 

The execution judge may order the detention of a debtor who fails to comply with an execution writ (court order for payment), that is issued following a court judgment, unless the debtor can prove an inability to pay. A debtor may not assert inability to pay if the debtor dissipated or concealed the assets to make it impossible for the creditor to execute against such assets[1].

In October 2023, the GA-COC issued Decision No 4/2023 which appears to have placed on the creditor the onus to prove that the debtor is solvent, on the grounds that Islamic Sharia principles presume a debtor to be insolvent as a starting point. This Decision appeared to introduce a more balanced approach to enforcement between creditors and debtors. Accordingly, the GA-COC opined that the execution judge may not order the detention of the debtor, unless the creditor establishes the solvency of the debtor or that the latter has dissipated or concealed the assets.  

As soon as this Decision was published, debtors in enforcement cases before Dubai Courts breathed a sigh of relief and rushed to submit requests for release from detention and the removal of warrants for arrests, these were largely accepted although the Courts maintained travel bans against debtors. As a result, enforcement against debtors became more difficult and creditors were required to be more diligent with whom they do business, given the challenges they might face later to prove solvency of a debtor and the additional legal costs it would entail.

Subsequently, in May 2024, the GA-COC issued Decision No 9/2024 which aimed to supplement its Decision No 4/2023. This new Decision added the following:

• The execution judge may order the detention of the debtor if the latter refrains from presenting the documents and exhibits requested by the execution judge to determine whether the debtor is solvent, or not. 
• In cases other than where detention of the debtor is not permissible, the execution judge must conduct a brief investigation to determine the debtor’s financial status before issuing a warrant for arrest and summons of the debtor.

This new Decision empowers the execution judge to inform themselves about the financial status of the debtor, for example, by ordering the debtor to present audited financial statements for a company, bank statements or other documentation which shows what happened to the debtor’s funds.

It is notable to highlight that not every warrant of arrest and summons will lead to the detention of a debtor. Following the arrest of the debtor, a decision regarding detention will be taken by the execution judge following the appearance of the debtor at a hearing. During this hearing/appearance, the debtor is given the opportunity to present a defence to seek to persuade the judge that he should not issue a detention order.

Detention periods of debtor 

• The CPL states that an initial detention of a debtor can last up to one month renewable for further periods. 
• If the debtor is not at risk of fleeing and has a known residence, the detention period cannot exceed six consecutive months.
• After 90 days from release, detention can be renewed if the debtor continues to refuse payment despite being able to pay, with a total detention limit of 36 months, regardless of the number of debts or creditors.
• Detention terms can reach up to 60 months for debts resulting from intentional financial crimes.

Payment of debt in instalments

Article 320 of the CPL provides a legal basis for the execution judge, at their discretion, to allow payment of the debt in instalments and to grant additional time to make these payments for the debtor under specific conditions. This provision aims to balance enforcement with debtor protections. In fact, it authorises the execution judge to:

• Grant the debtor up to six months to pay the debt.
• Allow the debt to be paid in instalments over a period not exceeding three years, with necessary guarantees or precautionary measures if there was a fear of the debtor fleeing the country.

In practice, judges may accept payment in instalments by individual debtors more readily than corporate debtors, and they would usually require an initial lump sum payment of 20 per cent of the debt with the rest in instalments. Simultaneously, a travel ban is usually imposed against the debtor unless satisfactory security is presented that guarantees the payment of the instalments.  

In May 2024, the Dubai Courts issued Circular No (2) of 2024 which is designed to implement the legal provisions of Article 320 by providing specific procedural guidelines and actions for execution judges when handling requests for instalment payments by debtors. This circular requires the execution judge when accepting payment of debt by instalments to do the following:

• Lift the seizure on all the debtor’s bank accounts.
• Lift the seizure and general notification on vehicles owned by the debtor, allowing their renewal, with a note prohibiting disposal within the traffic file up to the outstanding amount.
• Renew commercial licenses while keeping the seizure indication on them.

This ensures debtors have a clear pathway to fulfil their repayment obligations, while allowing them to continue to conduct their affairs without interrupting their businesses and blocking their bank accounts.

Postponement of detention orders

The execution judge has the discretion to postpone the issuance of a detention order in the following cases such as:

• the debtor is pregnant. If that is the case, detention can be postponed for up to two years from the date of delivery, or three months from the date of birth of a stillborn foetus.
• Temporary illness and certified medical evidence confirms that they cannot withstand detention, the issuance of the detention order can be postponed until their recovery.

Conclusion

The enforcement regime before the Dubai Courts has seen significant development aimed at encouraging a more balanced approach towards creditors and debtors. Indeed, creditors may not rely only on personal guarantees or security cheques as sufficient tools against default. At the same time, execution judges are more empowered to investigate the financial status of the debtor and make the appropriate decisions.

Creditors should always approach requests for warrants of arrest and detention carefully, although they put pressure on the debtor, on certain occasions they could cause business interruption of the debtor and undermine the debtor’s ultimate ability to pay the debt.