Local UAE banks can chase home loan defaulters in foreign countries

Enforcing UAE judgement is possible in nations with which the UAE has signed treaties

There is no safe haven if you are home loan defaulter from the UAE!

Local UAE banks have the right to possibly enforce a UAE judgement against them in countries with which the emirate has already signed bilateral agreements or treaties, legal experts say.

This might be the case when the bank, despite selling the asset (apartment), fails to recover all its dues and seeks to recover its money by selling the defaulters assets in a foreign country.

But, in cases where there is no bilateral agreement signed (England and the USA), a local UAE bank will have to bring new proceedings against the defaulter.

An investor, on conditions of anonymity, told 'Emirates24|7' that he had been paying his monthly home loan installments on time, but defaulted after losing his job in the emirate.

“I returned back to Europe without informing the bank. I still owe them a lot, but I am not in a position to pay any money to them,” he said without giving any details of the bank he is dealing with.

When contacted, Christopher Mills, Partner, Dispute Resolution, Clyde & Co, told this website there is nothing, in principle, preventing a UAE lender from pursuing a defaulting borrower wherever it may find him.

“In countries where there are no reciprocal agreements or conventions, the creditor will have to bring new proceedings and the UAE judgement probably would be adduced as evidence in those proceedings.”

In those jurisdictions, it might also be possible to obtain some sort of injunctive relief to prevent dissipation prior to that foreign court's judgement. After judgement, the creditor will be left to enforce under the procedural laws of the country in which enforcement is sought. A judgement of that court would be enforceable in that jurisdiction and in any other jurisdiction with which that country has a bilateral agreement or a Treaty obligation, he added.

Mills mentioned that enforcing a UAE judgement is possible in some countries (India, France and Riyadh Convention countries), but is not enforceable, as of right, in others (eg England, USA).

“Each case will differ on its facts and specific advice should be sought,” he added.

Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, however, believes it is highly unlikely that a local UAE bank has a right to pursue a defaulting borrower in a foreign country over a property located in the UAE.

“If there is any ground for the bank to do so, it will have to file a court action in that foreign country to pursue its claim.”

This website had reported in January 2010 that some of home mortgage companies and banks  had appointed debt collection agencies in foreign countries to track absconders.

“While the legality of such actions depends on the laws of each country, in most countries such practices and the authority of the collection agencies to enforce such claims are questionable at the very best,” Yamalova said.

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