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Debt Recovery Options in the UAE, by Helen Barrett, Partner, CBD Corporate Services

Date Posted: Wed, 22 Apr, 2020

Debt Recovery Options in the UAE, by Helen Barrett, Partner, CBD Corporate Services



In the current state of economic flux created by the Covid 19 crisis, debt collection will be high on the list of priorities for most businesses.

There are various methods of debt recovery available in the UAE, but the right options will often be dependent upon the contractual terms agreed by the parties and the amount of the debt. Given the cost of litigation in the UAE, there is a risk that debtors may spend more on debt recovery solutions than the actual debt itself.

The method of debt recovery to be adopted in each case will depend upon the contractual terms agreed by the parties, but could take the form of one or more of the following:

1. Debt recovery letter sent by a lawyer;
2. Notarised debt recovery letter served by a UAE court bailiff;
3. Litigation or other forms of dispute resolution, such as, mediation or arbitration; or
4. Engaging a debt recovery agent;

All court proceedings in the UAE must be conducted in Arabic by a local advocate with a special licence and there is no system of precedent. Together, this can render litigation proceedings costly and unpredictable.

Arbitration is often the preferred method of dispute resolution as it allows for proceedings to be conducted in private and in the language of the parties’ choice. The method of dispute resolution is usually used in complex, sensitive or high value disputes.

Debt collection agencies are available in the UAE and operate on a ‘no-win no-fee’ basis. However, before engaging a debt collection agency, debtors should consider the effect that this approach may have on the longer term relationship with clients or customers.

Given the time and costs that are associated with the management of any dispute, it is preferable to seek an amicable solution by, for instance, re-negotiating payment terms, offering barter deals or seeking some other form of payment e.g. an equity share in the debtor’s business. The BBG has many law firm members which can advise on the right course of action for your business to ensure that debtors do not throw good money after bad.

Helen Barrett is a UK Solicitor and Director of Legal & Secretariat for the BBG

Please contact Helen on 056 211 7373, or email helenbarrett@cbddubai.com