Banks that give loan have right to pursue recovery procedures

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Banks that give loan have right to pursue recovery procedures

It would be prudent to first check if the bank has filed a criminal and or civil case against you and if you are blacklisted.

By Ashish Mehta

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Published: Mon 20 Jun 2016, 7:35 AM

Last updated: Mon 20 Jun 2016, 3:19 PM

A friend left the UAE four months ago. He had a loan which he could not clear before he left the country. We assume he has been blacklisted in the UAE, but is now seeking employment in other GCC countries. If he visits other GCC countries in search of jobs, is he liable to face prosecution for his outstanding loans?
Pursuant to your question, the bank that extended the loan to your friend is well within its right to pursue recovery procedures against your friend for default in repayment of loan amount. The Central Bank of the UAE through its notice No. 3692/2012 to all banks and finance companies in the UAE, has provided a format of general terms and conditions to be incorporated in agreements for personal loans, overdrafts and auto loans which has been approved by the Emirates Banks Association. The said formats are in accordance with Article 12 (a) and (b) of the Regulations No. 29/2011 dated 23/02/2011 regarding Bank Loans and Other Services Offered to Individual Customers.
Article 4(4) of the Personal Loan Agreement format approved by Central Bank of UAE states: "The loan elapses and all the installments, interests and any other fees and expenses become due and payable immediately without having to give any notification or any court ruling and without prejudice to any other rights of the bank according to this agreement or in accordance with the law in the event of occurrence that the borrower failed to pay three consecutive installment or six nonconsecutive installments of the monthly installments without approval of the bank."
In view of the aforesaid, the bank may have filed a criminal complaint against your friend due to dishonour of a cheque which your friend may have furnished to the bank at the time of obtaining the loan (it is assumed that your friend provided a security cheque to the bank). The bank may also file a civil claim against your friend for the recovery of the outstanding amount in the event your friend did not provide a cheque to the bank. Further, the bank has the option to enforce a final judgment issued by the courts of competent authority against your friend in the GCC in accordance with Article 1 of the GCC Convention of 1996 which states: "Each of the GCC countries shall execute the final judgments issued by the courts of any member state in civil, commercial and administrative cases and the personal affairs cases in accordance with the procedures as provided under this agreement, provided that the court that issued the judgment has the jurisdiction in accordance with the international jurisdiction as applicable in the member state where the judgment is required to be executed or has the jurisdiction in accordance with the provisions of this agreement."
It would be prudent to first check if the bank has filed a criminal and or civil case against your friend and if your friend is blacklisted. It is advisable that your friend explores all possibilities to settle the outstanding amount owed to the bank and obtains a release and waiver.

Judgment can be contested
I am a UK national and my (former) wife, an Italian. We were married in Scotland in a civil ceremony in 1999. We moved to Dubai in 1999 and she left our family home in 2003. We had no children. We had invested in a property in London and before she left she bought a flat in Dubai.
She then took out proceedings against me in the Dubai Court of personal affairs and was granted a divorce during 11/2009. So while the matter started while I was living in the UAE, it ended while I was no longer a resident of the UAE. So it was granted in absentia of myself. I was never notified of any court dates, hearing or summons despite living in the UAE until July 2009. So it's not that I did not choose to attend the hearings. I knew nothing of the matter. My ex-wife had my contact details and never once sort to contact me.
While she was granted her divorce under UAE law she made no mention of the assets - London and Dubai Flats - and to this date the matters are still left unresolved.
Would the divorce granted to her allow for a decree in the UK courts, that is, is the divorce recognised? Also as she is on the deeds of the flat in London (she bought the flat in Dubai without my knowledge - but while we were living together) can the UK or UAE courts rule on the division of assets?
It is understood that you are a UK national and you were married to an Italian lady, in Scotland in a civil marriage ceremony in 1999. You and your former wife have a jointly owned property in London (it is assumed that London property is jointly owned) and she owns a property in Dubai. Further, your former wife filed for divorce in Dubai Courts and the divorce was granted in the year 2009. We further understand that you were not notified regarding the court proceedings while you were living in UAE until July 2009. But the court granted divorce in your absentia in the month of November 2009. Your ex- wife never contacted you even though she had your contact details.
Pursuant to your questions, we assume that there is no bilateral agreements between UAE and UK and therefore the judgements issued by foreign courts of countries without bilateral treaties are valid in the UK, if the below criteria are met:
(1)  The defendant in the enforcement proceedings in UK was resident in the country of the foreign court which pronounced judgment;
(2)  The defendant to the enforcement proceedings was the plaintiff or counterclaimed in the proceedings in the foreign court;
(3)  The defendant agreed to submit to the jurisdiction of the foreign court;
(4)  The defendant submitted to the jurisdiction of the foreign court (by taking an active step in the proceedings other than in relation to (i) property which had been seized or (ii) disputing the jurisdiction of the foreign court);
(5)  The foreign judgment is final and conclusive;
(6)  The claim in the English proceedings is to enforce a judgment for a definite sum of money (this includes a final order for costs). This does not include taxes, fines or penalties (s1 (2) and sl 11 (1) of the Foreign Judgments (Reciprocal Enforcement) Act 1933);
(7)  The defendant was served with the process of the foreign court and judgment was not obtained by fraud or any cause of action which is contrary to public policy of UK.
In your case, we understand that you were not served notification regarding the process of divorce proceedings in UAE and thereby you did not submit to the jurisdiction of the UAE Court for the divorce applied by your ex-wife, even though the UAE Courts must have followed their procedure correctly. Therefore if you are not satisfied with the judgment issued in absentia by a UAE Court you may contest the judgment before the UK Court of competent jurisdiction. Your ex-wife only sought divorce from the UAE Courts and made no reference to the property in London and the UAE Courts did not rule on the property jointly owned by both of you in London.
In terms of the Dubai property, your ex-wife solely owns it and therefore you may not have any bonafide claim on the Dubai property. We recommend you to consult a lawyer in the United Arab Emirates and the United Kingdom to advice you further.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom, Singapore and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.



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