FNC passes draft law on debt defaulters

According to the local daily, Gulf News, the Federal National Council passed a draft law granting relaxation to debt defaulters on humanitarian grounds on May 19, 2014.  Under the bill, which requires final endorsement into law by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, pregnant women, terminally ill patients, seniors, and minors under the age of 18 won’t go to jail for defaulting on debts.The relaxation comes as part of changes suggested by the Government in the UAE Civil Procedure Code to match best internationally recognised standards, the House was told.The legislation also suggests that a debtor does not risk a jail term if he or she presents a collateral agreement to answer for the debt, or presents a surety which assumes legal responsibility for the fulfilment of the debt.

The draft law would also prohibit the jailing of defaulters for debts less than AED10,000 — unless the debt is a fine or a maintenance paid by a court order. The draft law also provides that a creditor may request the court to impose precautionary attachment on the movable property of the other party in the event that the creditor fears he may lose his rights due to the debtor not having a permanent residence in the UAE, or where the creditor fears that the debtor may abscond, smuggle or conceal his money, or where security over the debt is at risk.