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Lifting the Burden on Debtors: Dubai Courts Facilitate the Ease of Settling Debt


Mohammed Nedal Dajani Senior Associate, Head of Sharjah & Northern Emirates offices nedal.dajani@bsabh.c...
Mohammed Nedal Dajani Senior Associate, Head of Sharjah & Northern Emirates offices nedal.dajani@bsabh.com

When a judgment is handed down ordering a debtor to pay compensation, it is possible for the creditor to submit a request to the Execution Judge to seize and issue circulars against the assets of the debtor, such as bank accounts and vehicles, or impose travel bans on the debtor until the full settlement is paid. 

On the side of the debtor, in certain circumstances, they are permitted to request an installment payment plan to help alleviate the burden.

Historically, and prior to the recent issuance of Circular No. 2 of 2024 by the President of the Execution Court in Dubai (the “Circular”), a Judge had full authority and discretion in accepting or rejecting the debtor’s request for an installment payment plan, leading to uncertainty as to the outcome of the request.

Compounding this uncertainty, a successful request for an installment payment plan did not necessarily result in the Judge ordering the cancellation of any seizures or circulars against the debtor’s assets. 

Instead, the debtor was often compelled to apply separately to the Judge to cancel any such seizures or circulars, of which the acceptance or rejection also fell at the discretion of the Judge. 

However, upon the issuance of the Circular, the Dubai Courts adopted a streamlined approach aimed at enhancing efficiency and certainty by unifying the decisions to be taken by Execution Judges relating to seizures, circulars, and installment payment plans. 

Particularly, where the Judge accepts an installment payment plan, the following decisions must thereafter be taken:

  1. Release the seizures on all bank accounts belonging to the debtor which have been seized;
  2. Release the seizures and circulars on vehicles belonging to the debtor and permitting their renewal, provided that a seizure remains on the debtor’s traffic file within the limits of the debt liability owed; and
  3. Permitting the renewal of the commercial licenses belonging to corporate debtors while retaining the seizures imposed on the commercial licenses.

Accordingly, the Circular represents the Dubai Courts’ tactical approach to easing the debtor’s ability to settle their debt, by increasing the means through which a debtor is free to access their funds in a manner that does not prejudice the rights of creditors. 

The changes also mirror the recent trend of decisions which protect the rights and freedoms of debtors, such as Decision No. 4 of 2023 issued by the General Authority of Dubai Court of Cassation, which regulated the ability to order the imposition of arrest warrants and detention orders against debtors, unless a creditor proves that:

  1. The debtor possesses the ability to pay;
  2. The debtor is smuggling or concealing his money;
  3. The debtor has refrained from paying the installments as decided by the Judge; or
  4. The debtor refrains from submitting papers or documents requested by the Judge relating to his ability to pay.

It is important to note that the Circular abstained from addressing whether travel bans imposed on debtors may also be lifted in cases where the Judge accepts an installment payment plan. Given this, it may be assumed that travel bans will not automatically be lifted, which will serve to balance the rights of debtors with that of creditors, by preventing the debtor from absconding and transferring money outside the UAE. This is especially important in cases where debtors do not abide by an installment payment plan approved by the Judge. 

Accordingly, and against the background of the Decision, the Circular represents the UAE’s considered approach to strike equity between the interests of debtors and creditors, and to facilitate the means through which a debtor is empowered to settle debt, thereby bringing benefit to both the debtor and the creditor. 

Undoubtedly, the changes enacted through the Circular will certainly come to the relief of many debtors, and will alleviate amongst others, the financial and procedural burdens previously faced by debtors.


This article was written by litigation lawyer Mohammed Nedal Dajani. He highlights that Dubai Courts' recent Circular No. 2 of 2024 aims to streamline the debt settlement process, providing debtors with more accessible means to settle their debts through installment plans while maintaining a balance that protects creditors' rights.

BSA is a regional Law Firm in the Middle East with offices in the UAE, Oman and Saudi Arabia. As a full-service law firm our practice areas include litigation, arbitration and corporate services, including M&A, banking & finance, Intellectual Property, TMT, Fintech, employment and insurance.

Published on 2 July, 2024.

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