frequently
asked questions

Yes it is, provided that the credit agreement between bank and customer contains a ‘non-exclusive jurisdiction clause’; so where the bank has reserved a contractual right to use any court of its choice across the globe.  The UK courts also have ‘bankruptcy’ jurisdiction over bank customers who have been resident in the UK for over 6 months and where there is no legitimate dispute about the underlying debt.  This bankruptcy jurisdiction is in place regardless of whether a ‘non-exclusive jurisdiction clause’ is present within the credit agreement between bank and customer.

If you provided a ‘security cheque’ to the bank when you obtained your credit card, the bank (from 1 January 2022) has the right to present that cheque for the full amount of the credit card debt and, to the extent there are insufficient funds in the customer’s account, the bank can seek to enforce any ‘unsatisfied’ amount against assets held by the customer in the UAE. If this method of civil enforcement still leaves an unpaid debt, the bank can register a travel ban which will prevent the customer from leaving the UAE until the debt has been paid.  The default will also be registered with the UAE’s Credit Bureaux which is likely to prevent the customer from obtaining credit elsewhere.  If the customer has left the UAE for his/her home country, the bank will appoint a third party debt collection agency (including IDR for debts incurred by UK residents) to seek the repayment of the debt in the customer’s home country.

If attempts by IDR to negotiate an affordable payment plan with the customer fail,  then the bank can instruct IDR to pursue the recovery of the debt through the UK court system provided the credit agreement between the customer and bank contains a ‘non-exclusive jurisdiction clause’.

Because of the travel ban system described above, it is quite difficult to leave the UAE in debt to a bank, but possible.  In almost every UAE credit agreement we see at IDR, leaving the UAE without settling a debt creates an immediate breach of the credit agreement, which means the entire debt becomes immediately due and payable (and not just the minimum monthly payment due as at the date of departure).

It affects your credit record in the UAE, and the default is also shared with credit reference agencies throughout the Gulf Cooperation Council (“GCC”).  A UAE debt does not affect your credit record in the UK unless or until the bank obtains a County Court Judgment (“CCJ”).  If a CCJ is not paid in full within 28 days, it will be recorded by the UK credit reference agencies, so it will affect your ability to obtain credit in the UK.

Debts incurred in the UAE are governed by UAE law, rather than English law.  In the UAE, consumer debts owed to banks only become ‘statute barred’ (meaning uncollectable through the Court system) ten years after the default.  This is four years longer than the period which applies under English law.  As it is under English law, the ‘UAE’ period of limitation (ten years) is extended by an admission that the debt is owed by a customer and/or a partial repayment of the debt.  The UK courts will apply UAE law and not English law when determining whether debts are ‘statute barred’.

The Limitation Act 1980 is English law.  It does not apply to credit agreements governed by the laws of Dubai or the UAE.  In the UAE there is a ten year period of limitation, as opposed to six years.

At the beginning of 2022, the criminality attaching to dishonoured or ‘bounced’ cheques was abolished in the UAE.  Instead, bouncing a security cheque gives rise to a new civil enforcement procedure (as set out above) and not a criminal procedure resulting in potential imprisonment. NOTWITHSTANDING THIS CHANGE, CUSTOMERS ARE URGED TO PROCEED WITH EXTREME CAUTION BEFORE TRAVELLING TO OR THROUGH THE UAE OR ANY OTHER GCC COUNTRY.  AT THE MOMENT, WITH THOUSANDS OF OLD POLICE CASES STILL FILED AND WITH CRIMINALITY PRESERVED FOR SOME LIMITED EXCEPTIONS (RELATING TO CASES OF DISHONESTY/FRAUD) ARRESTS AND DETENTIONS ARE STILL AN EVERYDAY OCCURANCE AT DUBAI INTERNTIONAL AIRPORT.  THIS RISK SHOULD FALL AWAY OVER TIME, BUT THE TRANSITION FROM A CRIMINAL TO CIVIL REGIME HAS NOT BEEN AS SMOOTH AS WE ALL HOPED AND EXPECTED.  PLEASE BE VERY CAREFUL BEFORE MAKING TRAVEL ARRANGEMENTS IF YOU ARE INDEBTED TO ANY BANK IN THE GCC.

You can negotiate an affordable repayment plan with your account manager at IDR.  Discounted settlements (through lump sum payments and/or instalments over time) might be available to you, depending on circumstances.  Please ask your account manager at IDR about all available settlement options.  When a settlement agreement has been implemented, your IDR account manager will obtain a Clearance Letter for you from the bank and ensure (where applicable) that any old police filings are removed from your travel records in the UAE.

Yes it will, but only when the settlement terms have been implemented in full.  Please be aware that a bank can only release police/travel filings in relation to its own accounts.  A Clearance Letter from one bank will not release you from any travel restrictions imposed by a different bank to whom a debt is still owed.

UK bankruptcy law is not recognised as ‘binding’ in the UAE.  So whilst the effect of a UK bankruptcy order is to have all UK debts written off (to the extent that the bankrupt’s assets are insufficient to meet his or her total liabilities) this does not extend to debts incurred in the UAE.  Whilst a UK bankruptcy order prevents a UAE bank from suing in the UK, there are no such restrictions if the bankrupt customer returns to the UAE.  Within its own jurisdiction, any debt owed pre-bankruptcy is still owed post-bankruptcy.  The travel warning made above should therefore be heeded by all customers, regardless of whether a bankruptcy order has been made in the UK.

No you don’t.  Our account managers are very used to negotiating settlements with customers directly.  That said, it would definitely be wise to take independent legal advice if your account is not settled by agreement and, instead, legal proceedings are commenced by a UAE bank, using the UK court system.