Does non-payment of civil claims lead up to imprisonment?

21 Mar, 2021
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Hari Wadhwana

Associate, OGH LEGAL

Introduction

Lawyers are often posed with the question by clients as to what happens subsequent to their success in a civil claim. Particularly, a common question is what actions can be taken against a defendant (Individual) who does not pay even after the court's judgment requires them to do so; can a defendant be jailed for non-payment in a civil case, after all, other legal avenues have been exhausted? 

This article discusses what happens after a final civil court judgment orders a defendant to pay a fixed amount and the options available to successful claimants to enforce a monetary judgment against a defendant, including potential imprisonment.  

What happens after a final civil court judgement?

The general procedures for the execution of judgments are set out in Articles 69 – 190 of the Federal Civil Procedure Law and its amendments[1]. Once the civil court issues a final and binding judgment, the Claimant can approach the Execution Court to proceed with the enforcement of the judgment. The Execution court is equipped with powers to inspect and attach the assets and compel the Defendant to pay the judgement amount. This Court will then serve a notice upon the defendant to make payment within at least 15 days from the date of the service of the notice.

If the Defendant fails to make the payment within 15 days:

Assuming the Defendant fails to make the payment, then the execution court can take the following measures against the Defendant:

● Attachment and sale of the Defendant's property (movables).

● Attachment of stocks, bonds and shares.

● Attachment and sale of land/ property.

● Bankruptcy proceedings (this is unusual, but with the recent adoption of a new Bankruptcy Law, there may be more bankruptcy proceedings being filed).

●     In exceptional circumstances, imprisonment of the defaulting debtor (detention of the debtor and/or travel ban)

Under what circumstances can civil imprisonment/detention take place?

The Execution court has the power to grant an order for imprisonment of a Defendant who has failed to execute the writ of execution against it. According to Article 183(1), an execution judge can issue an order to imprison a Defendant if they have failed to execute the writ of execution, and the debtor is not insolvent. The debtor shall not be considered solvent if it is proved that he owns only funds that may not be seized or sold (Article 106).

Upon the request of the Claimant, the Execution judge can order the detention of the Defendant for a renewable period of one month that can be extended up to three years. Prior to issuing such an order, the Execution judge will undertake an investigation of the defendant's financial situation if the documents supporting this request by the Claimant are not sufficient. The Execution judge may also grant the Defendant a period of six consecutive months at most to pay off the debt, or grant the Defendant to pay the amount for which the execution has been imposed, in appropriate instalments for a period not exceeding three years with precautionary measures set by the judge (travel bans) should the judge fear the Defendant's escapes from the country.  (Article 188 of both Cabinet Resolution 57 of 2018 and Cabinet Resolution of 33 of 2020)

That being said, there are conditions to when such detention will not be ordered. According to Article 185, the detention of a debtor may not be issued in case the debt subject of execution is less than AED 10000, (unless it is a fine, a prescribed alimony or a work remuneration, or a work obligation or omission of an act); the debtor provides a bank guarantee or a solvent surety accepted by the execution judge to pay the debt on time; the debtor is under 18 or older than 70has a child under 15 years and his spouse is deceased; if the debtor suffers from an incurable chronic disease or a temporary disease that does not tolerate imprisonment; or if the debtor is pregnant.

After the three-year imprisonment period is over, the judgment debt stands extinguished. Additionally, the extinction of such a detention order can be allowed if the creditor has accepted its extinction; if the debtor's obligation in satisfaction of which this order has been issued has expired for any reason; or if any of the impediments in Article 185 has arisen. (Article 187 of Cabinet Resolution 57)

Conclusion

It is evident that the imprisonment of the debtor is a possible legal avenue that the Execution Judge can order in exceptional circumstances. The basic requirement to order a debtor's imprisonment is proven to have not executed the writ of execution and is shown as not insolvent. This leaves an Execution with considerable discretionary room to impose such a measure, keeping in mind the conditions in which such imprisonment is not allowed. (Article 185)

[1] Federal Law No. 11 of 1992, Cabinet Decision No. 57 of 2018 and Cabinet Decision No. 33 of 2020

 

Hari Wadhwana    

Associate

OGH LEGAL

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