Regulations Concerning the Payment Orders in UAE Law
Introduction to Arbitration in the UAE
The process set out earlier in the UAE Civil Procedures Law (Federal Law No. 11 of 1992) (“UAE Civil Procedures Law”) to enforce rights of creditors in transactions and facilitate prompt justice had lacunae.
Due to the current Pandemic situation, creditors are facing challenges and looking for a prompt actions that should be taken to approach debtors for payment and protect their positions by taking timely legal recourse for non-payment of their debts through the UAE Courts.
In this context, it is important to note that pursuant to several amendments made to the UAE Civil Procedures Code, the last of which was on 09/12/2018, when the UAE Cabinet issued Resolution No. 57 of 2018 concerning the Executive Regulations of the Civil Procedures Law No. 11 of 1992 (“Executive Regulations”), which came into force on 16/02/2019, the Executive Regulation, among other things, the scope of Payment Orders vis-à-vis claims in relation to admitted debts was enhanced, thereby perfecting the Payment Orders system as one of the simple procedural ways to expedite the litigation process for the creditor to obtain his rights and thus render prompt justice in a shorter time without going through all the litigation process and pleadings.
As an exception to the general rules for the prosecution of any legal action, to start with, the amendments to the relevant provisions of the UAE Civil Procedures Law pertaining to the obtaining of Payment Orders through the courts stipulated that the same shall be applied if the creditor’s right has been confirmed in writing and all that the creditor is claiming is a debt of a fixed amount of money or a movable of a specified type and definite value in terms of money with a confirmed proof in writing of its execution by the debtor.
Since the substantial purport of the process providing for the issue of Payment Orders by courts is to avoid long litigation procedures and to achieve prompt justice through a quick process that can guarantee the creditor’s right provided that the terms and conditions prescribed for the same are complied with.
Under this expedited procedure, for the court to issue the Payment Order, the attendance of the Debtor is not required as long as the creditor’s right has been confirmed in writing in the manner set out above.
Article 144 of the UAE Civil Procedures Code (as amended), provides as follows:
Prior to submitting the application/petition to the competent judge in the debtor’s domicile for issuance of Payment Orders, a notice is required to be issued by the Creditor to the debtor by means of a registered letter with acknowledgment of receipt (“Legal Notice”) giving a grace period of 5 days allowing the Debtor to settle the outstanding debt.
The Hon’ble Court upon scrutiny of the documents submitted by the Creditor along with the application for Payment Order, which should include those prescribed for a normal Lawsuit, the Statement of Accounts related to the subject transaction as well as copy of the Legal Notice issued to the Debtor, the competent judge, in accordance with the amended provisions , may upon being satisfied of the veracity of the contents of such application issue the Payment Order directly to the Debtor, within a period not exceeding 3 days.
If the petition for Payment Order is rejected, the creditor can still proceed with his claim against the debtor, which will then be heard as an ordinary matter in the Court of First Instance.
Means of Challenge against the Payment Order
The Creditor shall notify the Debtor with the Payment Order issued by the competent Court in his domicile or his work place, as set out in Article 146 of the Civil Procedures Law. The Payment Order shall be considered null and void if they have not notified the debtor within six months from the date of issuing the order.
The Debtor upon being notified of the Payment Order may file his complaint against it within 15 days from the date of receiving the notification as set out in Article 147 of the Civil Procedures Law read with the [Article 66 of the Executive Regulations], whereas previously the period prescribed for such challenge was 30 days.
Filing Execution for Enforcing the Payment Order
The rules of ‘immediate enforcement’ will apply to the Payment Order, according to other relevant provisions of the Civil Procedures Law and the Executive Regulations.
According to Article 148 of the UAE Civil Procedures Law, the Creditor has the right to file for Execution of the Payment Order under the circumstances mentioned therein and file for attachment orders against the debtor’s assets and proceed with the usual steps for opening an execution file against the Debtor.
The fundamental principle of the Payment Order is to expedite the procedures of litigation when a payment of a debt has to be made by the Debtor to the Creditor and the same has been set out in a written document that is evidence to prove the same. Therefore, the debt becomes substantive and should, by the simple procedure to expedite the litigation process, obtain the Creditor’s rights and thereby give prompt justice in a shorter time without going through all the litigation process and pleadings.