UAE Trends and Developments Contributed by: Ibrahim Al Qassim, Mohammed Ibrahim Al Qassim and Abdulla Ibrahim Al Qassim, Ibrahim Al Qassim & Partners
rule, the creditor must establish that the debtor has the ability to pay, is concealing assets, or owns suffi - cient assets to satisfy the debt. However, the provision and the relevant judicial guidance recognise specific circumstances in which the requirement to establish solvency may be assessed differently, including where the debtor has failed to comply with an instalment arrangement approved by the court, where the debtor acts as a guarantor, where the obligation arises from a settlement or notarised acknowledgment, or where the debtor’s income or financial capacity has already been independently established. In such cases, detention is not automatic. The execu - tion judge remains required to conduct a brief assess - ment of the debtor’s actual financial position and the circumstances of non-compliance before issuing a detention order. The decision also addressed an important issue for practitioners advising corporate debtors subject to enforcement proceedings under Article 322. Where the debtor is a legal person, detention may be directed against its legal representative only where the failure to comply with enforcement obligations is attributable to that individual personally. The mere fact of holding the position of director, with nothing more, is insuf - ficient to justify detention. However, the director, as the person responsible for managing and represent - ing the company, may remain subject to procedural measures aimed at facilitating enforcement, including orders to disclose the company’s assets, where per - mitted by law. Precautionary Attachments: Threshold and Proportionality Article 247 of the Civil Procedure Code governs pre - cautionary attachment, which has been one of the most actively litigated areas of UAE enforcement practice. UAE courts require creditors to demonstrate not only the legal basis of the claim but also a genuine risk of asset dissipation. Applications based solely on assertions, without supporting evidence, are increas - ingly unlikely to succeed. Courts have also addressed the proportionality of attachment orders that extend beyond what is nec - essary to secure a monetary claim. The right to obtain
security does not permit the immobilisation of a debt - or’s entire business where narrower measures would achieve the same purpose. This principle was examined in a matter involving an ex parte attachment order freezing assets exceeding AED60 million, including operational bank accounts of a Chinese infrastructure group. On appeal, the scope of the attachment was narrowed to non-liquid assets after the proportionality of the original order was chal - lenged. The position is relevant to both creditors and debtors: creditors should tailor attachment applications to the value and circumstances of the claim rather than seek the broadest available measures, while debtors fac - ing excessive freezes may seek to have such orders narrowed. Recent Developments in the DIFC Courts A key feature reinforced by the recent legislative devel - opments is the role of the DIFC Courts as a conduit jurisdiction. The DIFC Courts have developed a practi - cal mechanism through which foreign judgments may be recognised and subsequently enforced through the Dubai Courts, without the enforcement court recon - sidering the merits of the underlying dispute. This mechanism has particular significance because it may be available even where the underlying dispute and the debtor’s assets have no direct connection with the DIFC. Combined with the memorandum of guidance between the DIFC Courts and the Commer - cial Court of England and Wales, as well as the judicial co-ordination mechanisms established with the Dubai Courts, the DIFC Courts’ recognition and enforcement framework has acquired practical significance extend - ing beyond the DIFC’s own jurisdictional boundaries. For creditors holding foreign judgments, the DIFC Courts may therefore provide an additional enforce - ment route within the UAE, forming part of the broader development of the UAE’s multi-jurisdictional enforce - ment landscape.
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