Indians at great risk of UAE legal abuse after new enforcement agreement with UAE
Indian nationals comprise close to 30% of the population of the United Arab Emirates, and Indian business people are by far the largest entrepreneurial group in the country. It is safe to say that there is not a single development, industrial, or commercial project in the UAE that is not made possible by Indian skills, supplies, and services. Being the largest, and most integral business community in the Emirates, expat Indians are naturally the most exposed to the systemic risks of doing business in the UAE.
When suppliers run late on payments or local partners misuse company funds, Indian business people – like anyone else – may fall behind on loan instalments, or even go into default. Easy lines of credit come with the requirement to submit security cheques which the bank can then present for payment the moment a debtor fails to meet the scheduled instalments. Bounced cheques are a crime in the UAE, and even the most responsible professionals and business owners can abruptly find themselves under arrest and facing substantial prison sentences.
The only option has been for Indian expats to go home, try to carry on their business, and negotiate new plans with their creditors to avoid incarceration and the subsequent impossibility of earning the money necessary to pay back outstanding loans. A new agreement between the UAE and India just eliminated this option.
It was announced this week by the Indian Ministry of Law and Justice that it recognised the UAE as a “reciprocating territory” and would enforce Emirates’ civil decrees in India.
Radha Stirling, CEO of Detained in Dubai, said this policy has extended the de facto jurisdiction of the UAE courts to India, “Bounced cheques and unavoidable loan defaults are branded as ‘fraud’ in the UAE; regardless of mitigating circumstances. Wrongful judgments by UAE courts are now enforceable in India. There is no legal obligation imposed upon banks to renegotiate payments when debtors face difficulties, but are genuinely trying to avoid default. If their business suffers unforeseeable interruptions or problems that temporarily impact their ability to fulfil their agreements with creditors, they will be prosecuted as criminals, now in India just as in the UAE. Indi