The United Arab Emirates (UAE) has well-maintained business laws. From time to time, they change to bring flexibility to grow businesses with better financial practices. Considering the UAE as a business hub, there are issues with debt recovery as some debtors are dodgy and do not repay creditors promptly. Therefore, the debt laws in the UAE are given much importance in the UAE Corporate Law. Those laws are strict, which may result in debtors going behind bars. However, the debt laws in the UAE ensure the principles for the lenders and borrowers. New changes in the debt laws have strengthened the UAE’s legal framework of debt collection. There are better ways to recover debt than restricting the amount of money. For a further understanding Dubai Lawyers are the potential source to conduct legal talk or gathering the information.
Latest Update on Commercial License in the UAE
However, the debtor has commercial licenses to run a business, which can now be seized if the debtor fails to pay back the financial amount. The recent update on commercial licenses being considered attachable assets in debt recovery has simplified the process for creditors. It has marked a substantial shift in the UAE’s legal framework regarding creditor rights. It has been confirmed that if the debtor cannot repay the loan to the creditor, their commercial license will be seized and considered in debt recovery.
Under Article 391 of the Civil Transactions Law, everything that debt owns as property is considered security to perform their obligatory rights. However, the creditor wants to have security against the debtor; therefore, according to Article 247 of Federal Decree-Law No.42 of 2022, declaring Civil Procedure laws, the general rule for creditors is to get an attachment on the debtor’s property and movable assets to secure their loss from the debtor. It is important to know that the creditor cannot seek attachment of the assets specifically excluded under Article 242 or any other particular law.
The General Assembly Judgement also established that the assets can be evaluated as saleable items to differentiate between transactional and non-transactional assets under Article 98 of the Civil Transactions Law. It has been noted that commercial licenses are considered intangible assets, yet they have a value in the company. Therefore, they can be seized by the creditor in debt recovery. Knowing that the commercial licenses have a sales value, the court has clarified that both federal and local UAE laws have allowed the sale of commercial licenses with official approval of proposed fees and that the commercial license must comply with the commercial activities in the UAE.
Cassation No. 122 of 2018 Overruled
The new change in commercial license overrules the earlier principle from Cassation No.122 of 2018 (Real Estate) as it stated no value to anyone other than the licensee of the commercial license being a personal asset and cannot be seized or transferred.
However, the above facts stated by the General Assembly Judgement invalidate the old rule and advocate for the new legal principle, which states that the company’s license and other intangible assets can have a sales value unless they are non-transactional by nature or by operation of law.
By taking commercial licenses as an asset, the Dubai Court of Cassation has significantly seen a change in the debt recovery process. It has given a choice from a wide range of assets available for debt recovery in case the debtor cannot pay back. Furthermore, it will ensure better strategies for the creditors in the UAE and other jurisdictions.
We Can Assist You
If you are looking for commercial lawyers to understand the business environment in the UAE, we can provide you with the best legal advice for your business. We are a renowned law firm in the UAE, keeping ourselves updated with the changes in the UAE business laws. At Ask the Law, we maintain customer relationships with the latest news and updates in the business world. Our legal experts will ensure that you are guided well about the implications that the General Assembly Judgement has introduced and how it impacts a debtor and the creditor in their business relationships. However, we only announce confirmed news about commercial activities. You will not be disappointed with our debt recovery agents as they are updated with debt recovery techniques.
