An important stage towards resolving the lawsuit submitted to the UAE courts is the execution process. Any judgment that a person receives must be carried out within the allotted time limit and in line with the applicable laws and rules. This article prepared by the best lawyers in UAE will shed light on the methods and legal issues that must be understood and examined in order to secure assets and gather proof of fraudulent activity in the United Arab Emirates (UAE) specifically in Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).
Execution proceedings must be initiated by the judgment creditor as soon as the verdict is rendered. As per Article 97 of the cabinet decision 57 of 2018, execution is preceded by writ of execution service. The debtor will receive a notice to pay the debt, and they will have 15 days starting from that date of notice to make payments. These monies must be specifically mentioned with the notice if the execution is based on the delivery of real estate or personal property, or the evacuation of a property. The notice sent to the debtor must also include any scheduled dates for delivery or evacuation. Article 111 of Cabinet Decision 57 of 2018 provides that the court may be asked to temporarily seize the debtor’s property and assets if the judgment creditor has reason to believe, supported by substantial evidence, that the debtor will flee, smuggle, or conceal his funds, robbing the creditor of its guarantee of the right to receive funds. Thereafter, the court, before approving the application for seizure, may make any required inquiries and request statements, evidence, and affidavits for the same.
According to Cabinet Decision 57 of 2018, the creditor may ask the court to impose the following measures as part of the enforcement proceedings in addition to provisionally seizing the debtors’ assets: (a) attachment/seizure of movables or debts of the debtor in the possession of a third party; (b) attachment of stocks, bonds, revenue, and shares; (c) attachment and sale of real estate; and (d) bankruptcy. In accordance with Article 183 of the Cabinet Decision, the judge may also order the debtor’s imprisonment. A travel ban may also be imposed on the debtor in accordance with Article 188 of the Cabinet Decision.
The civil courts in the onshore UAE are less accustomed to the types of remedies that are frequently provided in common law jurisdictions to recover assets or fraud proceeds. For instance, proprietary claims cannot be made in relation to property acquired by fraud, and temporary remedies like search warrants and freezing orders are not permitted. Although this won’t grant a proprietary interest, a precautionary attachment order can be obtained in civil courts to stop dealing with assets (including cash balances in bank accounts) to guarantee they are available to fulfil a judgment. An injunction will not prevent the defendant from dealing with any (unspecified) assets; rather, it is the responsibility of the claimant or applicant to identify the assets that should be attached. According to Article 111 of Cabinet Decision Number 57 of 2018, such an order may only be granted provided the applicant agrees to reimburse the claimant if the order was acquired fraudulently. For instance; If the applicant believes the respondent will flee, smuggle, or conceal its assets, provided that this belief is supported by substantial proof, or if the respondent does not have a permanent presence in the UAE.
Under Article 188 of the same legislation, a fraud victim may be entitled to order a defendant to refrain from travelling, provided that:
A claimant must show that there is a valid claim supported by documentary evidence, as well as that there is a risk that the defendant will fail to pay the amounts due or that the assets will be lost, in order to obtain a precautionary attachment of assets. Additionally, the claimant must be able to specify the assets it wants to attach or at least offer the court a basic idea (i.e., submit to the court a list of up to five banks if the petitioner believes the respondent has funds in a bank account but does not know which bank). In relation to the attachment application, the claimant must give the court an undertaking stating that in the event the attachment application is determined to have been improperly granted, the claimant will pay the defendant for any damages incurred. In our experience, even in situations where grievance applications to set aside attachment orders are successful, such undertakings are never required. Precautionary attachments are considered by the court ex parte, or without the defendant’s knowledge, and a decision is often rendered 24 to 48 hours after an application is filed. If the application is approved and an attachment order is issued, a substantive claim must be submitted within eight days after the order’s enforcement in order to prevent the attachment from being released. The defendant may submit a grievance application after an attachment order has been issued and is being followed in an effort to have the order revoked.
The mechanisms more frequently seen in common law jurisdictions, including as injunctions, freezing orders, and property preservation orders, are available to parties in the DIFC and ADGM courts. A cross-undertaking in damages must be provided by the applicant if they want to obtain a freezing injunction in the DIFC. It is also possible that the DIFC and ADGM would recognize the English common law doctrines of knowing receipt and dishonest assistance, which are essential components of an asset tracer’s arsenal.
Assets and proceeds may be secured under Article 83 of the Penal Code if a criminal offence has been proven to have occurred. After a conviction, the UAE courts have the authority to order the confiscation of property that was the target of the crime or the proceeds of the crime, without affecting any legitimate rights of third parties. The courts may alternatively order payment of a fine equal to the proceeds’ value in cases where confiscation is not practicable because rights to the proceeds have been acquired by lawful third parties. An expert may be asked to estimate this amount.
In Dubai, those who have been found guilty of collecting unlawful or improperly obtained public monies are subject to the Dubai Financial Fraud Law. According to Article 4 of this law, any such person must be given appropriate communication tools while detained if they want to help return the proceeds of their crime or settle with an associated creditor.
Let us study the following statistics to understand the UAE’s stand with regard to the seizure of assets and proceeds:
In the 12 months leading up to the end of July, the UAE seized and confiscated assets worth more than AED 4.73 billion ($1.29bn), as the second-largest economy in the Arab world intensified its fight against money laundering and the financing of terrorism. According to Hamid Al Zaabi, director general of the UAE’s Executive Office of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), assets worth AED 2.54 billion were seized by the authorities during the 12-month period, while assets worth AED 2.19 billion were confiscated. Authorities in the UAE, have prioritized AML/CFT as part of their efforts to fulfil their national strategy goals, and within the same period, assets worth more than AED 13 million have been frozen.
By allowing that party to be included in the proceedings, the onshore courts in the UAE may require a third party to furnish written evidence or data that falls within its control. Similar to this, if the court
determines it is important for the proceedings to continue, it may order an administrative/government organization or authority to submit written documents or material that is in its possession. That stated, it is typical for the court to engage a third-party expert to investigate the facts and to write a report for the court in both onshore civil and criminal actions. This report typically determines how the case will turn out (as regards the facts). The expert may seek documents and schedule meetings with the parties to gather information. The expert could want to visit a party’s location, for instance to verify a piece of property or look into computer system data. In accordance with Article 42(3) of the Civil Evidence Law (Federal Law Number 10 of 1992), the court may fine a person up to AED 2,000 for failing to appear when asked to testify as a witness in civil court, provided that person has a valid justification.
DIFC And ADGM:
There are more options accessible to parties making claims in civil courts in both the DIFC and the ADGM. These courts have the authority to order a defendant to provide details or documents (including as to the location of its assets, if it is or may be the subject of a freezing order).
Under Article 25.1(3)(a) of the DIFC Rules, interim orders for the preservation of evidence may be made if there is a possibility that it will be lost. Rule 71(1)(c)(i) of the ADGM allows for this and also gives courts the authority to issue an order allowing an applicant to see the respondent’s property. Under Rule 25.1(8) of the DIFC Rules and Rule 71(1)(h) of the ADGM Rules, possession orders may be granted, and in both the DIFC and the ADGM, the courts may authorize parties to enter another party’s property to conduct a search in order to preserve assets. An affidavit must be submitted with such an application. Both the DIFC and the ADGM provide for the possibility of third-party disclosure orders, which may be granted following an application with supporting documentation. If a claimant has been the victim of fraud but does not know who committed the fraud, they may file an application for a Norwich Pharmacal order in the DIFC or ADGM courts to compel the disclosure of pertinent information from a third party. In these courts, witnesses may be asked to testify or produce evidence in order to help prove the case. The courts may declare someone in contempt of court if summonses are not followed, which could result in a referral to the UAE’s criminal authorities.
Criminal Courts:
The public prosecutor in the UAE has extensive powers to gather evidence in criminal cases, including the ability to search a defendant’s home for assets connected to the crime and seize those items. This includes the capacity, as described in Article 30 of the Penal Procedures Law (Federal Law Number 35 of 1992), to investigate crimes and gather pertinent data and proof that may be used against third parties. In addition, the courts have the authority to call witnesses to testify, and if they do not appear as ordered, without justification, an arrest warrant may be issued.