Legislation Details
- Full Title: Federal Decree by Law Concerning Insolvency
- Law Type: Federal Decree-Law
- Law Number: [no number] of 2019
- Issued Date: 29 Aug 2019
- Effective Date: 29 Nov 2019
- Official Gazette: No. 661
- Sector: Justice and Judiciary
- Status: Active
- Number of Articles: 158
- Chapters/Parts: 0
- Amendments: 0
Summary
This Federal Decree-Law regulates the settlement of financial liabilities and insolvency proceedings for debtors in the UAE. It provides a framework for debtors to apply to the court to settle their debts, as well as procedures for the court to declare a debtor insolvent and liquidate their assets. The law aims to provide a structured process for debtors facing financial difficulties to reach an agreement with creditors or have their assets liquidated in an orderly manner. This is important for businesses and individuals in the UAE to manage insolvency situations and provide legal certainty around debt resolution. (Federal Decree by Law Concerning Insolvency, 2019, Arts. 1-2)
What is the scope and purpose of this law?
The law applies to debtors who are not subject to the provisions of the Federal Decree-Law No. 9 of 2016 on Bankruptcy. It regulates two main procedures: (1) the settlement of a debtor's financial liabilities through a court-supervised scheme, and (2) the declaration of a debtor's insolvency and the liquidation of their assets. The purpose is to provide a legal framework for debtors facing financial difficulties to either reach an agreement with creditors or have their assets liquidated in an orderly manner. (Federal Decree by Law Concerning Insolvency, 2019, Art. 2)
What are the key definitions under this law?
The law provides the following key definitions:
- State: United Arab Emirates
- Ministry: Ministry of Finance
- Minister: Minister of Finance
- Court: The competent court subject to rules of jurisdiction
- Debtor: The natural person who is in insolvency
- Debtor's Debts: Debts due by the debtor prior to the insolvency procedures
- Debtor's Assets: Movable and immovable assets added to the debtor's financial liability
- Cessation of Payment: Inability of the debtor to pay any due debt
- Measures: Necessary actions taken by the court to maintain or manage the debtor's funds
- Expert: The expert recorded in the Experts' Roster
- Trustee: The trustee appointed by the court from the Experts' Roster
- Scheme: The plan to settle the debtor's financial liabilities
- Insolvency: Facing current or potential financial difficulties making the debtor unable to settle debts
(Federal Decree by Law Concerning Insolvency, 2019, Art. 1)
What are the main obligations and requirements?
The law imposes the following key obligations: 1. The debtor must submit an application to the court containing detailed information about their financial position, creditors, assets, and proposals for settling liabilities. (Federal Decree by Law Concerning Insolvency, 2019, Art. 3) 2. The debtor must pay the judicial fees and deposit funds to cover the expert's fees and expected costs of the settlement procedures. (Federal Decree by Law Concerning Insolvency, 2019, Art. 5) 3. The debtor must cooperate with the expert appointed by the court to assist in settling the financial liabilities. (Federal Decree by Law Concerning Insolvency, 2019, Art. 8) 4. The debtor must not make any dispositions of their assets after the commencement of the insolvency procedures without court approval. (Federal Decree by Law Concerning Insolvency, 2019, Art. 50)
What licensing, registration, or approval requirements exist?
The law does not specify any licensing, registration, or approval requirements for debtors. However, it does require the court to appoint an "expert" from the Experts' Roster to assist in the settlement of financial liabilities procedures. (Federal Decree by Law Concerning Insolvency, 2019, Art. 8)
What rights and protections does this law provide?
The law provides the following key rights and protections: 1. The court's decision to commence the financial liabilities settlement procedures suspends the creditor's right to request execution on the debtor's funds or initiate insolvency proceedings. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7) 2. Creditors with guaranteed debts can still request permission from the court to execute on their guarantees when the debt is due. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7) 3. The debtor's forward debts are not made due upon submitting the application for financial liabilities settlement. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7) 4. Certain of the debtor's assets are exempted from the liquidation procedures. (Federal Decree by Law Concerning Insolvency, 2019, Art. 39)
Which authorities or bodies are responsible for enforcement?
The key authorities and bodies responsible under this law are: 1. The competent court, which has jurisdiction over the insolvency and financial liabilities settlement procedures. (Federal Decree by Law Concerning Insolvency, 2019, Arts. 7, 32) 2. The Ministry of Finance, which oversees the implementation of the law. (Federal Decree by Law Concerning Insolvency, 2019, Art. 1) 3. The expert and trustee appointed by the court from the Experts' Roster to assist in the procedures. (Federal Decree by Law Concerning Insolvency, 2019, Arts. 8, 32)
What are the penalties for non-compliance?
The law does not specify any penalties for non-compliance. It focuses on the procedural requirements and does not outline any criminal or administrative sanctions.
What fees, charges, or financial provisions are specified?
The law specifies the following financial provisions: 1. The debtor must pay the judicial fees. (Federal Decree by Law Concerning Insolvency, 2019, Art. 5) 2. The court will estimate the fees of the expert and the costs and expenses expected for the financial settlement procedures, and the debtor must deposit the required amount. (Federal Decree by Law Concerning Insolvency, 2019, Art. 5) 3. The court may, at the debtor's request, postpone the deposit of the required amount if sufficient funds are not available, but the amount must be collected prior to payments to other creditors. (Federal Decree by Law Concerning Insolvency, 2019, Art. 5)
What exemptions or exceptions apply?
The law states that its provisions do not apply to debtors who are subject to the Federal Decree-Law No. 9 of 2016 on Bankruptcy. (Federal Decree by Law Concerning Insolvency, 2019, Art. 2) Beyond this, the law does not specify any other exemptions or exceptions.
How are disputes resolved under this law?
The law does not provide specific details on dispute resolution mechanisms. It states that the court's decision to refuse permission for a creditor to execute on their guarantee can be appealed before the Court of Appeal, and the appeal decision will be final. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7) Beyond this, the law does not outline any other dispute resolution procedures.
What are the key deadlines and time limits?
The law specifies the following key deadlines and time limits: 1. The court must decide on the debtor's application within 5 working days of it being submitted. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7) 2. The expert must publish a summary of the court's decision to commence the financial liabilities settlement procedures within 5 working days of being notified. (Federal Decree by Law Concerning Insolvency, 2019, Art. 8) 3. Creditors must submit their claims and supporting documents to the expert within 20 working days of the publication. (Federal Decree by Law Concerning Insolvency, 2019, Art. 8) 4. The court must decide on a creditor's request to execute on their guarantee within 10 working days. (Federal Decree by Law Concerning Insolvency, 2019, Art. 7)
How does this law interact with other UAE legislation?
The law references and interacts with the following other UAE federal legislation: - Federal Law No. 1 of 1972 on the Competencies of Ministries and Powers of the Ministers - Federal Law No. 5 of 1985 on the Civil Transactions Law - Federal Law No. 3 of 1987 on the Penal Code - Federal Law No. 10 of 1992 on the Law of Evidence in Civil and Commercial Transactions - Federal Law No. 11 of 1992 on the Civil Procedure Code - Federal Law No. 35 of 1992 on the Penal Procedure Code - Federal Law No. 18 of 1993 on the Commercial Transactions Law - Federal Law No. 18 of 1995 on Simple Crafts - Federal Law No. 4 of 2004 on Financial Free Zones - Federal Law No. 1 of 2006 on Electronic Transactions and Commerce - Federal Law No. 7 of 2012 on Regulating the Expertise Profession before Judicial Authorities - Federal Law No. 2 of 2015 on Commercial Companies - Federal Decree-Law No. 9 of 2016 on Bankruptcy - Federal Law No. 13 of 2016 on the Judicial Fees Before Federal Courts - Federal Law No. 20 of 2016 on the Mortgage of Movable Properties - Federal Decree-Law No. 14 of 2018 on the Central Bank & Regulation of Financial Institutions and Activities (Federal Decree by Law Concerning Insolvency, 2019, Preamble)
When did this law come into effect?
This Federal Decree-Law Concerning Insolvency was issued on 29 August 2019 and came into effect on 29 November 2019, as per the Official Gazette No. 661. (Federal Decree by Law Concerning Insolvency, 2019, Issued Date, Effective Date)
Source Documents
This article analyses Federal Decree by Law Concerning Insolvency for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.