Sentences issued by UAE courts can now be executed in India, the South Asian country’s law ministry has said.
In a notification issued this week, the Ministry of Law and Justice said it recognised the UAE as a “reciprocating territory” and would enforce its civil decrees in India.
The move aims to crackdown on cases of people fleeing the UAE after their businesses fail or they commit fraud.
Under the notice, India officially recognised the UAE’s courts and listed the following courts as “superior”: the Federal Supreme Court, the Federal, First Instance and Appeals Court in Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah.
The new rule also applies to local courts such as Abu Dhabi Judicial Department, Dubai Courts, Ras Al Khaimah Judicial Department, Courts of the Abu Dhabi Global Markets and Courts of Dubai International Financial Centre.
Indian Consul General Mr Vipul said the verdicts can be executed by a district court in India.
“If a crime was committed here and the default took place here and if the UAE court’s judgment gets automatically recognised in India, it will inhibit people from committing such things here,” he said.
Details on how this will be put into practice are yet to be revealed.
Mr Vipul said it was yet unclear how family settlement or divorces cases would be dealt with, particularly if only one party was based in the UAE, as the Emirates and India have differing laws.
“We are waiting for guidance from Delhi about the legal implications in India," he said.
"In a civil divorce case, if there is an ex-parte judgment in the UAE when the other party is not present, can this order still be executed in a district court in India?”
“We are waiting for the nitty gritty details on how it will be put into practice.”
Lawyers welcomed orders that could be enforced against people who wilfully defaulted banks by taking large loan amounts and then absconded to India.
“This is a great step that will boost confidence. It is a clear message for the many intentional defaulters who disappear from the UAE that they will be chased to their doorstep in India,” said Ashish Mehta, founder and managing partner of Ashish Mehta & Associates.
"It is much needed step because there are many people who have defaulted on personal, corporate loans and credit cards and have left the UAE. Banks are left with not sufficient security to cover the debt.
“This will greatly help financial institutions in the UAE who felt very frustrated up until now when a borrower left as the legal system prior to this announcement did not allow them to successfully execute judgments issued in the UAE.”
How immediate will be the effect of the Indian government notification is not clear due to India’s overburdened legal system. Judges have far too many cases to handle and proceedings can take years.
A loophole that absconders could use is contending that they were not given a chance to represent themselves before UAE courts.
“These are some lacunae that will be used by Indian lawyers in Indian courts for their clients,” Mr Mehta said.
“If the person is an absconder, how do you trace them? India is a huge country so if a person is not notified of the execution in the UAE, he could argue this before Indian courts. He could say the final judgment was issued in absentia, he was not given a fair chance so the order should not be executed.”
“So we have to see how this new provision is tested before Indian courts also because the Indian judicial system is slow and functions in its own style and pace.”
Another major obstacle that could crop up in enforcing a judgment is if the loan was taken by a UAE company and not by an individual.
“Everything is not hunky-dory because if the loan was given to a corporate in the UAE then the debt has to be repaid by the company and not by its shareholder,” Mr Mehta said.
“So how will a UAE court order issued against a company be enforced in India. The company is still here in the UAE, the shareholder has gone to India. Unless the shareholder has given a personal guarantee for the loan, it is the company’s responsibility to repay the debt. A shareholder is a separate legal entity from the company.”