How to File a Complaint Against Someone Who Owes You Money in UAE?

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How to File a Complaint Against Someone Who Owes You Money in UAE? 1

Dealing with individuals who owe you money can be a daunting task. This article aims to provide a comprehensive guide on how to file a complaint against someone who owes you money in the United Arab Emirates (UAE). It will focus on the legal recourse available to creditors, particularly the option of lodging a civil complaint at the Centre for Amicable Settlement of Disputes at Dubai Court. This option is particularly beneficial for cases involving amounts less than Dh50,000.

Lending money to someone, whether it’s a friend, family member, or business associate, can sometimes lead to disputes if the borrower fails to repay the debt. In the United Arab Emirates, creditors have legal avenues to recover their money and seek justice. This article outlines the process of filing a complaint against someone who owes you money in the UAE, primarily focusing on the option of initiating a civil complaint through the Centre for Amicable Settlement of Disputes at Dubai Court for debts or claims amounting to less than Dh50,000.

Gathering Evidence: A Prerequisite

Before proceeding with any legal action, it is essential to gather substantial evidence to support your claim. This evidence will play a crucial role in proving the legitimacy of your case. Some key pieces of evidence to collect include:

Documentation of the Borrowing or Lending

Any written agreements or documents that outline the terms of the loan, including the amount, repayment schedule, and any interest rates.

Communication Records

Messages, emails, or other correspondence between you and the borrower that discuss the loan, repayment, or any promises made regarding the debt.

Financial Records

Bank statements or transaction records that can substantiate the transfer of funds from you to the borrower.

Witness Statements

If there were witnesses present during the loan agreement or any subsequent discussions, their statements can strengthen your case.

Once you have gathered the necessary evidence, you can proceed to file a complaint against the borrower.

Filing a Civil Complaint at the Centre for Amicable Settlement of Disputes:

If the amount owed to you is less than Dh50,000, one effective way to seek resolution is by filing a civil complaint at the Centre for Amicable Settlement of Disputes at Dubai Court. Here are the steps you should follow:

Step 1: Prepare Your Complaint

Your complaint should include all the details specified in Article 42 of Federal Law No. (11) of 1992 regarding Civil Procedures Law of the UAE. This includes:

  • Your personal details: Name, title, ID number (if any), profession, domicile, workplace, phone number, and your representative’s information if applicable.
  • The borrower’s details: Name, title, ID number (if any), profession, domicile, workplace, phone number, and their representative’s information if applicable.
  • A clear description of the subject matter of the lawsuit, your requests, and the grounds for your claim.
  • The date of submission of the lawsuit to the case management office.
  • The court before which you are filing the lawsuit.
  • Your signature or the signature of your representative.
  • Ensure that your complaint is clear, concise, and well-documented. Attach all relevant evidence to support your claim.

Step 2: Submit Your Complaint

Take your prepared complaint and evidence to the Centre for Amicable Settlement of Disputes at Dubai Court. Provide all necessary details and documents to the case management office.

After submitting your complaint, the legal process will commence. The Centre for Amicable Settlement of Disputes will review your case and attempt to facilitate a resolution through mediation or negotiation. If an amicable settlement is reached, a settlement agreement will be drafted and signed by both parties.

Step 4: Enforcement of the Settlement Agreement

If an amicable settlement is reached and documented in a settlement agreement, the agreement becomes legally binding. Both parties must adhere to the terms of the settlement. If the borrower fails to comply with the agreement, you can take legal action to enforce it.

Alternative Option: Filing a Police Complaint

In certain cases where the borrower’s actions constitute a criminal offense, you may consider filing a police complaint. This is in accordance with Article 404 of the Federal Law No. 3 of 1987 on the issuance of the Penal Code in the UAE. It states:

“Whoever embezzles, uses, or wastes funds, securities, or any other movable property with the intention to prejudice the interest of the due right’s owners, if it is delivered to him as a deposit, rent, pledge, loan for use, or proxy, shall be punished by detention or by a fine.”

This provision applies to situations where the borrower has intentionally misappropriated the funds or property entrusted to them, with the intent to harm the rightful owner. This can be a viable option when other legal avenues have been exhausted, or when there is clear evidence of criminal intent.

Friendly loans, although seemingly straightforward, require careful consideration to protect the interests of both the lender and the borrower. In Dubai, as in many other jurisdictions, friendly loans are typically informal arrangements made among friends, family, or known acquaintances. While these loans may lack the formality of legal documentation, they are not exempt from legal regulations. This article explores the legal aspects of friendly loans in Dubai, focusing on the nature of such loans, the legal recourse available, and best practices for both lenders and borrowers.

Understanding Friendly Loans in UAE

A friendly loan is a financial agreement between individuals with an existing relationship. These agreements, often verbal, involve the exchange of money without the inclusion of extensive legal documentation. While these loans are based on trust and mutual understanding, they are not devoid of legal considerations.

To comprehend the legal aspects of friendly loans in Dubai, it is essential to refer to the pertinent articles in Federal Law No. (5) of 1985 On the Civil Transactions Law. This law addresses critical aspects, including the lender’s right to reclaim their money and the subsequent steps available to them.

Under the Civil Transactions Law, “money” is broadly defined as anything that can be physically or morally acquired and used legitimately. This definition encompasses various forms of assets, from currency (such as the dirham) to tangible assets like cars, and even intangible assets such as ideas. However, claiming the return of money involves establishing a “source of obligation.”

Article 124 of the Civil Transactions Act outlines the accepted “sources of obligation” that grant legal rights to individuals to make claims. To substantiate a claim for the return of a friendly loan, the claimant must provide proof of the money transfer. Such proof can be established through various means, including written documentation, witnesses, acknowledgments, contextual evidence, expert testimony, or a legally recognized right. Notably, electronic communications, such as WhatsApp messages, can serve as written proof, admissible under the Evidence Act and supported by legal precedents set by the Court of Cassation.

In cases where the borrower defaults on a friendly loan, the lender has legal options available. The lender must first notify the borrower of the refund within a minimum period of 15 days. Subsequently, they can prepare a memorandum detailing the specifics of the loan and proceed to a civil court to claim their rights. The UAE’s judiciary offers accessible and convenient court services. A court fee, amounting to six percent of the claim value, must be paid, with the possibility of recovery during the execution stage. Importantly, the court fee is capped at a maximum of Dh40,000.

Police Authorities and Friendly Loans:

It is important to note that friendly loans are distinct from cases of theft or breach of trust. Therefore, police authorities cannot enforce actions for recovery in friendly loan cases. The nature of the money transfer in friendly loans is voluntary and not coerced, aligning with the borrower’s will.

Interest on Friendly Loans in UAE

One crucial aspect to consider is that interest cannot be charged on friendly loans in the UAE. Charging interest is not permissible, as the lender must be registered with the UAE Central Bank to levy interest on granted loans. Additionally, interest in private transactions contradicts public policy in the UAE. This restriction gives rise to the concept of “friendly loans,” which allows parties to extend loans to each other solely on a principal-only basis.

Best Practices for Lenders and Borrowers in UAE

To safeguard their rights and interests, both lenders and borrowers should adhere to best practices:

Dos and Don’ts Before Giving a Loan in UAE:

  • Do not charge interest on a friendly loan.
  • Document the agreement, including loan amount, repayment terms, return date, governing law, and security arrangements.
  • Avoid cash payments; use methods like checks or bank transfers.
  • Obtain a security check from the borrower.
  • Never sign a blank check; fill in the date and amount.
  • Consider having a third party witness the agreement.

Dos and Don’ts After Giving a Loan:

  • Adhere to payment deadlines.
  • Collect any provided security checks after repayment.
  • Obtain a clearance letter from the lender confirming repayment.

In conclusion, friendly loans in Dubai are subject to legal regulations, and it is crucial for both lenders and borrowers to be aware of their rights and responsibilities. Legal recourse is available in case of defaults, but adhering to best practices and maintaining clear documentation can help prevent disputes and protect the interests of all parties involved. It is advisable to seek legal guidance for specific transactions to ensure compliance with UAE law.

Debt Collection Practices in Dubai

The term “debt” often carries negative connotations, but in reality, debt is simply a financial obligation incurred by individuals or organizations in exchange for goods, services, loans, or other liabilities with monetary value. It only becomes problematic when it is not paid as per the original agreement.

When you are owed money by someone in Dubai, the first step is typically to attempt an out-of-court resolution. Recovering outstanding debts in the UAE can be challenging due to the absence of specialized debt recovery courts. In Dubai, cases often end up before the Federal Supreme Court or the Court of Cessation, both of which are governed by civil law.

Non-Judicial Debt Collection

Engaging in judicial proceedings is not a preferred method of debt recovery in the UAE, a sentiment shared by many countries worldwide. Instead, creditors often turn to out-of-court debt collection agencies for assistance. This approach offers several advantages, including:

  • Speed: Resolving matters swiftly.
  • Affordability: Avoiding costly legal procedures.
  • Responsiveness: Quick and effective communication with debtors.
  • Reputation Protection: Avoiding public legal disputes.

Debt collection agencies typically initiate contact with debtors through emails or telephone calls, reminding them of their outstanding obligations. To build a robust case, these agencies also gather all pertinent information related to the debt, such as documents, receipts, written contracts, or debt acknowledgments.

Ethical Debt Collection

In Dubai, a reputable debt collection agency should investigate the reasons behind a loan or debt default. They analyze why the debtor could not fulfill their payment obligations, review their payment history (if any), assess their level of cooperation, and evaluate their current financial situation.

Taking these factors into account, an agency can then identify potential avenues for debt recovery.

A responsible collection agency plays a dual role, acting as a facilitator for both the creditor and the debtor. They strive to educate the debtor about the legal consequences of non-payment. In this capacity, the agency may also serve as a mediator and arbitrator, facilitating a realistic and mutually agreeable resolution.

It’s important to note that not all debtors intentionally evade their obligations. Some individuals genuinely want to repay their debts but may face financial difficulties. The debt collection process in the UAE can involve offering support to debtors in repaying their loans. Federal laws governing insolvency in the UAE provide mechanisms for debt relief, including placing debtors on a three-year repayment plan to assist them in clearing their debts. These laws also encourage debtors to take proactive steps to avoid legal actions against them.

When someone owes you money in the United Arab Emirates, it’s essential to know your legal options for seeking repayment. The Centre for Amicable Settlement of Disputes at Dubai Court provides a practical and cost-effective way to resolve disputes involving amounts less than Dh50,000.

By gathering evidence, filing a well-prepared civil complaint, and, if necessary, exploring the option of a police complaint, you can pursue justice and recover the money owed to you. It is advisable to consult with legal professionals or experts in UAE law to navigate these processes effectively and ensure your rights are protected throughout the proceedings.

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