According to the 2018 Global Ranking on Debt Collection, the UAE is one of the most challenging places in the world for collecting debt, resulting in more costs, time and stress for many business owners.

However, if you know what to look out for and how to respond effectively when your debtor doesn’t pay, it can be less of a burden.

UAE Unique challenges

In the UAE, many debts can be in the form of a verbal contract, meaning it may not be enclosed in a written document. Although debt collection is a far more complicated process in the UAE and is known for having a complex legal framework.

Based on local payment practices, court proceedings and insolvency proceedings in the UAE scored of 81 out of 100 resulting in being next to bottom in a table of debt collection in 50 countries, with a ‘collection complexity’. Only Saudi Arabia scored worse with 94 out of 100.

The UAE is described as ‘severe’ for difficulty of collecting debt and is almost three times as complex as countries Sweden and Germany, which each score 30.

Below we have put together a guide to dealing with the most important aspects of debt collection in the UAE.

Invoices and security cheques:

It is vital for any business to obtain signed terms and condition (T&C’s) from its customers.
By having written invoice conditions and discussing them with your client you are clearing communicating how you expect to get paid (i.e electronic payment, credit card, etc.), the date in which they have to pay by and the amount they owe to you. Other information which may be in your conditions includes;

• The currency you deal with
• Interest fees for late payment

In the UEA cheques that are either post-dated or undated however, have been traditionally used to secure repayment of debt for services rendered or goods supplied. This allows a business owner to raise a legal case if a client hasn’t paid within the specified timeframe.


It is common to add interest on to an invoice when it has not been paid, but due to Sharia law prohibitions; this is often an area of confusion for contracting parties in the UAE. However, UAE Commercial Code of Practice states in Article 76 that creditors have the right to demand interest on a commercial loan in accordance with the rate stipulated in the contract.

Bounced cheques:

If you receive a bounced cheque from an individual or a company you have the right to file a criminal or police case against both the defaulting client and the authorised signatory on the cheque.

However, it is important that whenever you receive a cheque you should ensure have all documents necessary to file for legal action, including a copy of the signatory’s passport or electronic ID. If you are dealing with a company you should have its trade licence number.

A no objection certificate (NOC) should also be documented as evidence if a different individual signed your T&C, such as a copy of their electronic ID/passport and additional contact details (residence, phone numbers and email addresses). Any police case will result in the person being unable to exit the country, renew visas or open bank accounts.

Payment defaults

If no payment is made then a payment default should be carried out, firstly with a phone call to outline the timescale to pay as well as the requirements, along with an email confirming acceptable methods of payment.

After if you still have not received a payment, you can approach a law firm to issue a legal or ‘demand’ letter on your behalf and/or proceed with a police case against the client.

Amicable Settlement:

An alternative to formal legal proceedings is to settle for an amicable settlement where the claim is extensive and the chances of a favourable decision are good. The collection though amicable settlement improves the possibility of successful recovery and reduces legal costs and delays.

Solvency status:

It is advisable that you establish whether the company is still active before looking in to legal proceedings as it is impossible to enforce a debt once insolvency proceedings have been initiated.

Legal proceedings:

If your company has decided to take on legal proceedings a registered demand letter requesting the debtor to pay the principal amount outstanding would be the first step along with any late payment interest.

However, business disputes can be settled before a Reconciliation and Settlement committee. In Dubai, every dispute below AED 50,000 must be brought before the Centre for Amicable Settlement of Disputes. If this negotiation stage fails, a summary judgment procedure is required under the Civil Procedure Code.


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