Lender has right to hold debtor’s passport: court

A creditor has the right to hold the passports of people whom he lend money to in order to prevent them from absconding.

Dubai Court of Cassation issued the legal principle in the case of a foreigner who works as a Director at a real estate brokerage firm, which prevented him from travelling, after he allegedly embezzled Dh14 million.

The investor had filed a lawsuit before the Dubai Court of First Instance, requesting it to allow him to hold the director's passport.

The investor claimed that he had handed over two cheques worth Dh14m to the company manager in return for booking a real estate unit in a tower. But he was surprised to learn that the real estate brokerage company sold that unit to another investor.

After several rounds of discussions, it was agreed between the parties that the manager of the company (the defendant) pledged to refund the amount. However, he did not comply with the deal, the investor told the court.

Meanwhile, the investor moved the court to grant him the right to with hold the passport of the defendant so that he did not leave the UAE.

The Court of First Instance ruled in favour of the investor but the director moved the Court of Appeal against the verdict, which also rejected his plea.

The defendant then approached the Court of Cassation challenging the two lower courts' verdict to let the investor take his passport.

The defendant claimed that the real estate brokerage company is being run by him and that it is a limited liability company and, therefore, he need not surrender his passport to the investor.

The Court of Cassation didn’t accept the justification and refused to accept the director's appeal. And based on the Federal Civil Law No. 11 of 1992, it ruled that the a creditor can request the judge to book the debtor’s passport to prevent him from travelling, if he fears the debtor would escape.

Also Article 330 of the same law prevents the debtor from traveling until the expiry of the cause of prevention - payment of a debt.
 

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