From My Legal Desk
Insolvency Law 2020, in UAE, has brought in a haircut in the debt regime, wherein, with judicial intervention, the repayment plan may include cutting the overall debt to a payable figure in consonance with the law itself and the consent of both- the debtor and the creditor, hence balancing the rights and obligations of the debtors and creditors.
“Commercial
morality, and respect for the rule of law, may be said to constitute the very
bedrock upon which the law of bankruptcy is founded”, expressed, Fletcher,IF ,In his book -The Law of Insolvency. “[i]
The rule of law in just legal systems includes the four universal principles of accountability, just laws, open government, and accessible justice delivery mechanism/impartial dispute mechanism.
Rightly even in UAE, with the objective to accelerate the progressive competitiveness of the UAE market, in line with the rule of law, the UAE Cabinet strategically promulgates the new Insolvency law 2020. The said law will be pivotal move in restructuring of debts of individuals.
The dominant feature of this law is decriminalization of unpaid debts and bringing about a balance between the rights and obligations of both the debtor and the creditor, similar to the US system. The court, upon an application made to it, will intervene in regulating and dispensing judicious settlement of debt through a repayment plan. This will provide an opportunity to the debtor/s to work and repay their debt without being harsh on their dependents.
The judicial procedure will include appointment of a court expert /s to assess and study the case and assist in drawing up a repayment plan to settle the pecuniary liabilities and commitments adumbrated in the plan. Such a plan will spread the repayment arrangement to three years. That would mean the debtor will be provided an opportunity to settle his debts within a span of three years. During the repayment phase no new loans /credit facility would be granted to the debtor.
The judicial procedure involved here would be a summary procedure aiming at swift dispensation of justice and aiding debt clearance, through the devised repayment strategy.
This would certainly mean the loan approval systems by the banks, generally may be tightened, where the credit standing of the applicant for loan vis-a- vis his/ her repayment ability may be thoroughly checked.
What we are now looking forward to is a provision related to establishment of distinct courts to deal with insolvency and bankruptcy instead of it being commonly handled by the civil courts. However, the law will be effectual by itself whether or not a separate court is established for the purpose.
Our professional duties in the legal system is not just confined to practice, consultancy and logomachy, but also to disseminate and publish information in the best interest of the society ,thereby contributing to the roots of the purpose of law and legal science.
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[i] The Law of Insolvency. 3rd Edition. Sweet & Maxwell Ltd, London, 2003, at paragraph 6-03
Henrietta Newton Martin
# LawgicalGroupDubai
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©Henrietta Newton Martin 2020
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From Henrietta Newton Martin's Legal Desk 