31 Oct 2021

2021 Amendments to UAE Civil Procedure: Debt Recovery and Payment Orders, Dispute Resolution

Authored by: Mohammed Abbas and Ahmed Hasan Al Zaabi

In Brief:

  1. UAE legislation implemented in September 2021 will apparently modify many central aspects of the court procedure applied by the UAE Courts. One of the most impactful amendments relates to the process of seeking expedited debt recovery judgments, commonly referred to as payment orders.

  2. The new Cabinet Resolution 75 of 2021 (the “2021 Executive Regulation”) seeks to remove the risk of creditors having claims rejected in respect of filing a traditional civil claim where a payment order expedited process is required.

  3. Moreover, the 2021 Executive Regulations have the potential to significantly expedite ordinary civil cases by providing a supervising case management judge in first instance proceedings with authority to issue a payment order in the midst of proceedings.

Background

One of the major effects of a predecessor of the 2021 Executive Regulations, Cabinet Resolution 57 of 2018 (the “2018 Executive Regulations”), was that it clarified that the UAE Court was willing to issue payment orders.

In reviving the payment order process, the 2018 Executive Regulations had a significant impact on the legal strategy applicable to debt recovery in the UAE. As payment orders are far quicker than ordinary civil proceedings, taking days as opposed to months to be resolved, they quickly become the first port of call for creditors seeking relief in the UAE.

Notwithstanding the utility of the payment order as a Civil Law alternative to summary judgment, there remained some ambiguities in respect of their implementation following the 2018 Executive Regulations. The availability of the process of payment orders meant that an ordinary claim could be rejected where a judge hearing the matter considered that a payment order could be sought instead. Even more concerning, in some instances a subsequent payment order judge would find that the requirements of a payment order had not been met even though a creditor may have had a claim rejected in ordinary proceedings due to the purported availability of a payment order.

The 2021 Executive Regulations

The 2021 Executive Regulations have to a great extent addressed the ambiguities referred to above. Article 17(8) of the 2021 Executive Regulations states that a payment order can be issued during the case management phase of ordinary civil proceedings where the conditions of a payment order have been met and the supervising case management judge has the authority to issue such an order. These changes may assist creditors significantly by concluding proceedings positively at the case management stage before substantial legal fees are incurred and a significant litigation period is expended.

Moreover, the 2021 Executive Regulations now provide that judges in ordinary civil proceedings can issue judgements notwithstanding the availability of a payment order. Accordingly, creditors should no longer risk having their claims rejected in traditional court proceedings merely due to the potential availability of payment orders.

While the above amendments go a long way to addressing the risk of claimants falling between a payment order and a traditional civil case, there are still minor issues that may need to be addressed. Where a case management judge has no authority to issue a payment order, the matter can be referred to a payment order judge. However, the new law does not seem to provide the court considering the payment order case with definitive authority to elect to refer the matter back to the traditional civil court proceedings.

Concluding Thoughts

The 2021 Executive Regulations appear to represent an acceptance of the availability of payment orders for creditors and represents a positive step towards increasing their utility in harmony with the traditional court process.

If you would like more information on payment orders and debt recovery, please contact Mohammed Abbas, Associate and Ahmed Hasan Al Zaabi, Advocate, Dispute Resolution