On the UAE level, debt collection is regulated with use of federal laws and regulations, also individual emirates’ legal particularities. It is also important to know all the legal requirements that are acted in the collection of debts between the borrowing party and the lending party.
Legal Framework
Civil Code and Commercial Code: The laws that regulate the collections processes in UAE include the UAE Civil Code (Federal Law No 5 of 1985) and the Commercial code (Federal Law Number 18 of 1993). These codes define legal requirements of any parties in the course of debt related transactions.
From the financial institution’s perspective, the practice of debt collection is administered and controlled by the United Arab Emirates Central Bank because of legal and ethical issues.
If consumer credit is granted to the consumer, the following rights and obligations of borrowers are recognized.
Right to Fair Treatment: Borrowers have rights to treatment that is fair and as provided by the UAE law. All the collectors and lenders are supposed to be ethical and are not allowed to threaten or force the debtors to pay the dues. By the Federal Law No. 4 of 2002 known as the Federal Law on the Combatting of Money Laundering and many other regulations and acts, abusive practices are banned.
Privacy Rights: A very important aspect of the consumer rights within the borrowing area is the right of the privacy of borrowers. Collectors cannot disclose any information about the borrower to any other party including the amount owed, without consent of the borrower in consonance with the privacy laws of UAE.
Right to Dispute: That is in specific with regards to the debts which borrowers can challenge claims and errors. In case of any complication, they should first contact the lender/ creditor and discuss the issue then, if not solved, take the issue to the regulatory authorities or legally through the courts of law.
Obligations to Repay: The borrowers are supposed to repay their amount as per their promise they had made during the contract period. Failing to do so or engaging in corrupt business practices may result in legal proceedings and fines, the inability to have assets sold or be banned from travelling.
Rights and Obligations of Lenders
The legal right of lenders is to claim or recover debts that are due on the loan. This encompasses sending reminders, arranging and bargaining for ways of recovering the monies as well as turning to the courts to recover the monies.
There are legal procedures that have to be followed when collecting debts from the defaulters. This concerns such aspects as serving formal notifications and adhering to legal requirements in cases when they want to turn to the court. Debt collection is to be made professionally and legally to prevent posing legal consequences in the UAE.
Where other forms of enforcing informal security fail, a lender can sue for a claim. As will be seen, the UAE legal system enables a lender to obtain a judgement against the defaulter. The collection of court judgements can include the seizure of property, garnishment of wages or placing a lien on a piece of property.
The agency, its officers, or employees, and any other person who receives any money or other things of value under this section shall not engage in any conduct that constitutes harassment or intimidation. Non-compliance with this can attract le3gal consequences and penalization to the lender in addition to compromising its image.
Court Process and Enforcement
In the event the borrower defaults, the lender can approach the courts and launch a civil suit. When it comes to the court process, we submit certain documents like the original debt agreement, and evidence of non-payment.
Once a judgement has been passed by a court, that judgement can be implemented using the following processes, among others, including the attachment and sale of the defendant’s property, or the attachment of the defendant’s earnings. The borrower may be needed to meet the obligation or otherwise, other legal actions may be initiated against him/her which entails barred travel as decided by the court.
Contained herein also mention is made of non-judicial methods of dispute settlement which include, among others, mediation and arbitration which enable the disputes to be settled through means that do not involve legal battles in the formal judicial system.
Conclusion
Like in most countries, UAE has a code of laws on debt collection that protects both the creditor and the debtor. Volumes of legal structures concerning debt collection in UAE are aimed at protecting the rights of both the creditor and the debtor. There are prohibitions to unfair practices from the side of borrowers and approved possibility of disputes in certain cases, as well as the right of collectors to recover the debt through the courts. It is a requirement to respect the legal standards and follow the ethical procedures when getting the debtor’s money.
