Yes, and No. Unpaid UAE credit card debts can lead to a number of legal consequences, including travel restrictions and arrest in some cases. However, whether or not an individual can be arrested in the home country specifically for unpaid UAE credit card debts depends on the details of the situation and the cooperation between the two countries.

Say for example, in the United Kingdom, many individuals in the past used to work abroad, particularly in Dubai in the Middle East, but as the work market declined, they returned to the UK. Unfortunately, a significant number of these individuals left behind debts in Dubai. It is important to note that the banks in the UK have a limitation period of six years for chasing debts, but in Dubai, it is 15 years.

This means that even though the limitation period in the UK for chasing debts is only six years, under Dubai law, those 15 year debts can still be enforced in the UK. This is due to the foreign limitation act, which allows debts incurred in foreign countries to be pursued in the UK.

“Debts may have a time limit in one country, but under foreign limitation acts, they can transcend borders and be enforced years later in another country.”

— Sara Al Khatib, Immigration Attorney

Similarly, Indian loan defaulters who have fled the UAE have been facing difficult situations. At least nine banks from the United Arab Emirates (UAE) are said to have taken legal steps against individuals or entities in India who have failed to repay their debts. These banks are taking this action in an effort to retrieve approximately $6.9 billion in owed funds. These individuals have sought refuge in other countries in an attempt to avoid paying back their outstanding loans. However, the UAE has been working to enforce stricter measures to track down these defaulters and retrieve their owed debts.

Can Unpaid UAE credit card debt get you arrested in the UK? Read the 2023 Update.

Can UAE Credit Card Debt get you arrested in the GCC?

The UAE is a signatory to the Riyadh Arab Convention on Judicial Cooperation is a convention between the Arab countries aimed at promoting and enhancing judicial cooperation between the Arab countries. The convention sets out the rules for mutual legal assistance in civil and commercial matters, criminal matters, and the recognition and enforcement of judicial decisions. The purpose of the convention is to simplify and harmonize the legal procedures between the Arab countries, and to encourage cooperation between the judicial authorities in the Arab countries.

In 2019, an Egyptian national was taken into custody in the United Arab Emirates (UAE) for an outstanding UAE credit card debt that had been incurred 21 years prior. The man had failed to repay the debt and had been on the run for over two decades. The case served as a warning to those who may be considering failing to repay their debts, as authorities are cracking down on financial crimes and are making efforts to bring those responsible to justice.

The case was no different for Engineer Brian Glendinning ,a British National, who got arrested in Iraq and extradited to Qatar for owing a debt to Qatar National Bank.

Since 2022, the UAE has been able to access a wider network of countries to share financial and legal information with, making it easier to locate these defaulters. This means that it will be more difficult for them to escape their financial obligations and avoid paying back their debts.

The issue of UAE Credit Card Debts

Credit card debt has been a persistent problem in many countries, including the United Arab Emirates (UAE). In recent years, the issue has become even more serious, leading to travel bans on individuals who are unable to pay their debts. This has led to widespread concern and criticism among the public, as well as calls for action to address the issue.

READ ABOUT THE NEW UAE CIVIL PROCEDURE LAW IN 2023 THAT REINFORCES THE STATURE OF BOUNCED CHEQUES

UAE Credit card debt results from the use of credit cards for personal expenses, such as shopping, dining, and travel. The problem arises when individuals are unable to repay the debt, leading to increasing interest rates, penalties, and fees. This can quickly spiral out of control, leading to a situation where an individual is unable to pay the debt and is faced with travel restrictions.

Travel Bans and UAE credit card debt

In the UAE, travel bans are being imposed on individuals who are unable to pay their UAE credit card debt. This is done to prevent individuals from leaving the country and evading their financial obligations. The travel ban is imposed by the government through the immigration authorities and is based on a list provided by the credit card companies. This list contains the names of individuals who have failed to pay their debts and are considered high-risk.

The travel ban has serious consequences for individuals who are affected. It restricts their freedom of movement and can lead to job loss and financial hardship. In addition, the ban can have a negative impact on their credit score, making it difficult for them to access credit in the future. This can result in a vicious cycle of debt and financial hardship.

The travel ban has also been criticized for being unfair, as it punishes individuals who are unable to pay their debts, regardless of the reasons behind their financial situation. Some argue that the ban should only be imposed on individuals who have deliberately failed to pay their debts, and not on those who are unable to pay due to unforeseen circumstances, such as job loss or medical expenses.

The issue of UAE credit card debt and travel bans in the UAE has attracted the attention of human rights organizations and the media. There have been calls for the government to review its policies and provide support for individuals who are facing financial difficulties. Some have suggested that the government should provide debt counselling services, as well as legal and financial assistance, to help individuals get out of debt and avoid the travel ban.

Consequences of UAE credit card debt

Individuals or companies who default on their debts or intentionally evade their obligations will face legal repercussions, including prosecution, court lawsuits, and other legal measures taken by banks or their attorneys in Dubai or abroad.

Additionally, if there is a default, an Interpol red alert may also be issued. There are also instances where individuals cannot return to Dubai due to unexpected family or domestic issues, being informed of job loss while abroad, or extended medical treatment. These “unintentional defaulters” want to resolve their debts with banks and hope to return to the UAE to secure their future and employment.

In the United Arab Emirates, it is quite common for lenders to have a level of skepticism and mistrust, regardless of their type or identity. This includes individuals who offer loans, as well as corporations, institutions, and even the sovereign government. This caution is deemed to be reasonable and justifiable by loan specialists. Consumer debt has become a growing problem in the United Arab Emirates (UAE) as people struggle to keep up with their financial obligations. In recent years, many individuals have been living beyond their means and taking on loans that they cannot afford to repay. This has led to a massive increase in consumer debt and has become a major concern for both the government and the banking sector.

Reasons for UAE credit Card Debt

Limited understanding of the UAE laws and regulations, lack of language or procedural knowledge, inexperience in negotiating skills, unreasonable and untimely pressures from collection agents, coupled with lack of security deter or prevent the unintentional defaulters from settling their matters in a timely manner.

It is vital to be conversant with the local laws, understanding your legal rights, obtaining the proper set of settlement documents, knowledge of penalty and interest charges that can be imposed, the return of security documents, grasping the precise process besides ensuring fair negotiations as they are all very important in such process. A default is also overlooked by a bank as serious and grave offence which often compromises communication between the parties leading to a dead-lock, thereby preventing the defaulter from re-entering the UAE. 

Dishonor of cheques and travel ban?

In most situations of default in loan and credit card payments, one simply hands over blank signed cheques as a guarantee to the banks and/or their agents for quick imbursement of loans or acquiring a credit card, which now is the trump card held against the debtor in a bank settlement by the bank. These cheques are used by the creditors as a weapon against the debtors by bounding the cheque and proceeding towards immediate criminal complaints followed by a travel ban.

In addition to criminal action, the banks may additionally evaluate and opt for other remedies such as civil claim or consider other steps that their counsels may deem expedient in the best interest of their client, the bank.

Jail Terms for UAE Credit card debts

That said, it is imperative to understand that in line with a criminal order being Decision Number (1) of 2017 (Emirate of Dubai), Decision Number (119) of 2019 by the UAE Chief of Public Prosecution (for United Arab Emirates) as well as Decision Number (2) of 2018 (Emirate of Ras al Khaimah), cheques amounting up to AED 200,000 (UAE Dirhams two hundred thousand) can be subject to a jail term towards any cheque bounce or for small claims which is upon the discretion of the Prosecutor to forward the matter to the courts of UAE or not. Banks can, however, present these claims before the authorities, wherein the defaulters will be subject to a fine (without undergoing any court order or prosecution).

The events which may constitute a default in loan agreement includes, but is not limited to:

• Evasion of judicial judgement;
• Bankruptcy or insolvency proceedings against the borrower;
• Significantly opposing change;
• Breach of warranties, covenants and representations;
• Force majeure.

What are Bounced Cheques in the UAE?

A bounced check, also known as a “dishonored” or “returned” check, is a check that is not honored by the bank on which it is drawn due to insufficient funds in the account of the person who wrote the check. In the United Arab Emirates, bounced checks are a criminal offense, and the writer of a bounced check can face serious legal consequences, including imprisonment and fines.

In the UAE, bounced checks are governed by Federal Law No. (3) of 1987, which outlines the procedures for handling bounced checks and the punishments for those who write them. According to the law, if a check is returned due to insufficient funds, the person who wrote the check must pay the amount of the check plus any fees within 15 days. If the writer fails to pay, the recipient of the check can file a criminal complaint with the local police.

It is important to note that in the UAE, writing a bounced check can have serious consequences, including tarnishing one’s reputation and making it difficult to obtain credit in the future.

Key reasons for bounced cheques in the UAE

• Due to insufficient funds in the account of the drawer on the date of issuance of the cheque;
• Bank receives an order from the issuer to refrain the payment;
• A technical error such as faulty signatures not matching the previous records of the bank;
• Closure of bank account before encashment of the cheque.

As suggested by the Commercial Transaction law under Article 617, the cheque should be presented on or after the date written on the cheque, not before. Also, it must be encashed within six months from the date mentioned on the cheque (Article 618). Dubai Criminal Lawyers will highlight the liabilities you can incur if you submit a cheque with insufficient balance or submit a cheque knowingly that it will be dishonored.

Liability from Bounced Cheques

The cheque is an instrument contingent to the accessibility of funds, through the drawee’s (referred to as the recipient of the cheque) acknowledgement to pay the cheque issued by the drawer (one who issues the cheque). Accordingly, Article 632 of the Commercial Transaction Law entitles the drawee to have civil or criminal recourse against the drawer, should there be a default in releasing the money. In lieu of the foregoing, inability to pay might be set up by a statement from the drawee bank. The drawer can only refrain the drawee to withdraw the cash through cheque from to the date mentioned in the cheque.

In the event, where the drawee holds a dishonored cheque, the failure to pay due to any reasons will be supported by the bank through a bank statement; the drawee can seek three days of extension in order to contact the drawer for possible payment. If the drawee fails to contact the drawer within the prescribed period, he may seek legal recourse, either through civil court or criminal court. Through this article, we will guide our readers the procedure to initiate criminal proceedings against the drawer and the consequences of the same on the drawer.

At the point when an account holder defaults, the creditor will have the privilege to record a criminal complaint about the dishonored cheque alongside a civil case for recuperation. In spite of the fact that, as referred, this methodology provides the creditors with a sense of security in recovering their outstanding amount. It further has the extra result of taking into consideration disciplinary measures against non-payment. It simultaneously puts extra weight on UAE’s criminal legislature and its authorities because of the number of cheque bounce cases that have been filed.

1. Police Complaint
   A beneficiary or drawee of the cheque has to lodge a police complaint before the nearest police station of the concerned Emirate. Upon receiving the complaint and relevant documents, the police authority will contract the drawer and will order his presence. Wherein, the drawer can settle the matter by paying the amount or can seek further time to settle by submitting his passport. Considering a criminal charge, an arrest warrant will be automatically issued against the drawer, which can be released post the settlement of the matter or after serving the imprisonment.
   
2. The complaint before Public Prosecutor
   On the off chance that the parties fail to resolve the cheque bounce case at the police station, the police at that point transfer the case to the protestation for further investigations. After that, the public prosecutor upon receiving both party contentions make his report.
   
   In view of the proof displayed in the court, the decision could be a safeguard either by paying the estimation of the cheque or by keeping the passport of the defaulter or a guarantor. In the event, if the bail is denied the accused will be kept in custody until final order.
   
3. Criminal Court
   The criminal court will post receiving the report of the public prosecutor will dig deep into the case facts and arguments and upon the basis of evidence submitted by the parties will pass its judgment. The judgment will either entail fine ranging from AED 1,000 until AED 30,000 and punishment by way of imprisonment varying from one year to three years (Article 401 of UAE Penal Code)

Recent Developments

In order to address the seriousness of the punishments in small claim amount, the government has made laws to address small claims, such as one day court and has amended the conditions in which certain bounce cheque attracts punishment by detention. In reference to one-day court, the laws have been sanctioned which give that petty offence) ought to be managed practically and a decision must be issued within 24 hours.

These courts have been built up in the Emirates of Abu Dhabi, Dubai and Ras Al Khaimah and seem to have been effective in altogether reducing the heap on the Criminal Courts which will have the effect of enabling those increasingly serious offences to move along. Also, the Emirate of Dubai has presented another law concerning “Criminal Orders”.

This law enables the Dubai Public Prosecution to issue criminal requests to sentence wrongdoers of certain “simple violations” to just fines. Objections might be recorded to challenge such requests within seven days. Through such request the matter will be transferred to the criminal court. The cheque below AED 200,000 will be categorized under simple offence with a penalty of around AED 5,000 – AED 10,000.

General Clauses in Loan Agreement

Certain clauses that are generally integrated within a loan agreement include:

1. Waiver: This is where the lender agrees to waive the breach or the event which gives rise to the occurrence of a default;
2. Forbearance: This is where the banks concur not to announce an occasion of default to practice any cures;

Negotiate through an expert

It is in difficult situations like these wherein banking experts specializing in bank negotiation and loan settlements come in the picture. Yes in a land of expats there are multiple changes in one’s living standards and financial situations which at times leads to default in loan, but does not make someone a wilful defaulter.

Specialized lawyers in bank settlements will examine the situation along with the facts post which shall represent you before the disturbing debt recovery agents and the respective loan recovery bank associates. Having a specialized lawyer in UAE shall give the debtor a consolidated chance to have a flexible payment plan or a concession on your interest amount at times along with the principle and shall provide you the cushion to plan your finances.

A bank settlement expert helps to mentally secure the debtors for the outstanding amount, who are now post their involvement looking forward to a logical loan settlement rather than chasing a defaulter.  The services provided by the banking lawyers shall include drafting and responding to legal notices, corresponding via telephone, email and letters with the creditors and banks, as well as attending settlement meeting on behalf of the creditor.  

One of the principle reasons cheques are generally trusted and utilized in the UAE is the way that such cheques are criminally ensured with potential confinement (or a fine). This constrains cheque drawers to endeavor to respect their cheques upon their development. Since dishonored cheques worth AED 200,000 (or less) are not punishable by imprisonment in the Emirate of Dubai. To keep up this power as advised by Criminal Lawyers in Dubai to ask business partners to submit cheque with an amount higher than AED 200,000 to keep up the potential detainment sentences justified to bounced cheques.

The impact of consumer debt on the economy of the UAE is significant. With so many people unable to repay their loans, banks have been forced to write off large amounts of debt, leading to a decline in their profits. This has also had a knock-on effect on the overall economy, as banks are unable to lend as much money to other businesses, causing a slowdown in the growth of the country.

The government of the UAE is aware of the growing problem of consumer debt and has taken steps to address the issue. It has introduced measures such as stricter loan requirements, increased transparency and more education on the dangers of taking on too much debt. Additionally, the government has set up debt counselling services to help