Recent amendments to the UAE Civil Procedure Code (CPC) are aimed at modernising and enhancing the litigation process in the UAE Courts. This includes simplifying and expediting the process for a creditor to obtain an enforceable judgment on admitted debt claims as a "Payment Order". Clyde & Co reports here on this welcome development and a very recent success with such a claim under the new regime.
On 9 December 2018, the UAE Cabinet issued Resolution No. 57 of 2018 concerning the Executive Regulation of the Civil Procedure Law No. 11 of 1992 (Executive Regulation), which came into force on 16 February 2019. The Executive Regulation, among other things, broadened the scope of expedited Payment Order claims in relation to admitted debts.
Payment Order claims
Payment Order claims, which are a form of summary claim for immediate judgment on debt claims without notice to the debtor, were previously available under the CPC, but were limited to financial instrument / commercial paper claims, e.g. Promissory Notes, Cheques, Bills of Exchange. Also, interest could not be claimed under the former procedure.
While this appeared to be an attractive option for debt recovery claims in the UAE, in practice, Payment Order claims were seldom used because the UAE Courts invariably transferred Payment Order claims to be determined by the full Court of First Instance under the more lengthy standard claim procedure.
An Expedited Process
The key changes for Payment Order claims are summarised below:
- An expedited Payment Order claim can now be made for any written admission of debt, including an email admission, subject to a minimum period of 5 days having elapsed from a written demand for payment being issued to the debtor.
- Interest on the outstanding debt amount can now be claimed.
- The Court's decision on the Payment Order claim is to be issued within 3 days of the claim submission, without the claim being notified to the debtor.
- A debtor / defendant who is notified with a Payment Order (once issued) has only 15 days in which to appeal a Payment Order (Article 66 of the Executive Regulation) whereas previously the appeal period was 30 days.
- The rules of 'immediate enforcement' will apply to the Payment Order, according to other provisions of the CPC and the Executive Regulation.
Clyde & Co very recently acted for a creditor in bringing a successful Payment Order claim in the Dubai Courts under the new CPC regime. As far as we are aware, this was the first Payment Order claim filed after the Executive Regulation came into force. Within one week of filing the claim, the client had obtained judgment in excess of USD 8 million, plus interest at 9% per annum from the date of judgment. Subject to any appeal, the judgment can now be immediately enforced against the judgment debtor's assets – and the client has avoided the more lengthy standard civil litigation procedure before the Court of First Instance.
What this means for the UAE
We see these as extremely positive developments for creditors with problem debts due from counterparties in the UAE that may need to be legally pursued through the onshore UAE Courts. It is also a move that should boost business confidence generally in the jurisdiction to enhance the legal framework through which commercial debts can be proportionately and effectively pursued, both in terms of time and cost.
We are hopeful that these developments signal greater efficiencies within the UAE civil judicial system to determine simple debt claims in a manner more in line with the expectations of creditors to be able to enforce their rights expeditiously and cost-effectively. We expect now to see many more creditors seek to take advantage of the new regime to enforce debts in the UAE.
For more information about these developments and debt claims in the UAE Courts, please contact Keith Hutchison or Jess McGuirk.