|Oxford Combined Court Centre|
Author Kaishu Tai
Creative Commons Licence
According to such web forums as the Consumer Action Group, Getoutofdebtfree, LegalBeagles and World Law Direct, banks and other financial institutions in Dubai have been chasing returning expatriates in this country for unpaid bank loans, credit card balances and other debts that they are alleged to have incurred in the Emirates. Much of the advice that is posted to those forums is helpful but some of it is not. One or two posts are downright dangerous. Here are some tips for handling such claims.
1. Foreign debts can be pursued here
As a general rule the courts in England and Wales will enforce foreign debts and other causes of action. Those courts will apply the law of the place where the debt or other cause of action occurred. Thus, if you have borrowed money from a Dubai bank or credit card company the court will construe and enforce the loan or credit card agreement in accordance with UAE and Dubai law rather than that of England and Wales. There are a number of exceptions. For example, the English courts will rarely entertain a claim where the parties have agreed to resolve their dispute in the courts of some other country or by arbitration. However, that would not prevent the English courts from enforcing a foreign judgment or arbitration award.
2. Foreign Limitations Periods
Every legal system sets a time limit for bringing a claim. That is known as "the limitation period." In England and Wales the limitation period for most other claims is 6 years. In the United Arab Emirates it is much longer. Art 473 of the Civil Code provides:
"A right shall not expire by the passage of time but no claim shall be heard if denied after the lapse of fifteen years without lawful excuse, but having regard to any special provisions relating thereto."For many years the English courts applied the English limitation period even if the law of the place where the contract was made provided a different limitation period but our law was changed by the Foreign Limitation Periods Act 1984. S.1 (1) of that Act provides:
"Subject to the following provisions of this Act, where in any action or proceedings in a court in England and Wales the law of any other country falls (in accordance with rules of private international law applicable by any such court) to be taken into account in the determination of any matter—However, that section is subject to s.2 (1) and (2) of the Act:
(a) the law of that other country relating to limitation shall apply in respect of that matter for the purposes of the action or proceedings subject to section 1A; and
(b) except where that matter falls within subsection (2) below, the law of England and Wales relating to limitation shall not so apply."
"(1) In any case in which the application of section 1 above would to any extent conflict (whether under subsection (2) below or otherwise) with public policy, that section shall not apply to the extent that its application would so conflict.There have been cases where very short foreign limitation periods have been overridden on the ground that they are contrary to public policy in that they cause undue hardship to the claimant but I have found no case where an exceedingly long limitation period has been overridden by an English court. However, it is at least arguable that s.2 (1) and (2) were inserted to enable the English courts to consider lengthy limitation periods like that of the UAE and to override them if need be. I am aware of at least one recent case where an application for summary judgment by a foreign creditor was dismissed on that ground.
(2) the application of section 1 above in relation to any action or proceedings shall conflict with public policy to the extent that its application would cause undue hardship to a person who is, or might be made, a party to the action or proceedings."
Try to settle quickly
Because costs can mount up quickly for all parties the sooner you settle your dispute the better. The longer you leave it the more expensive settlement will become because you will have to take account of your own and probably the other side's costs.
Practice Direction - Pre-Action Conduct and Protocols
Paragraph 3 of the Practice Direction - Pre-Action Conduct and Protocols provides:
"Before commencing proceedings, the court will expect the parties to have exchanged sufficient information to—The first step is for the creditor's solicitors to write a letter before claim. It is imperative to acknowledge that letter at once. It is unlikely to be a try on even if it is the first communication you have received from the other side in many years. You then have a very short time in which to seek legal advice in order to answer the letter before claim in full.
(a) understand each other’s position;
(b) make decisions about how to proceed;
(c) try to settle the issues without proceedings;
(d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement;
(e) support the efficient management of those proceedings; and
(f) reduce the costs of resolving the dispute."
Getting the Right Legal Advice
Claims by foreign creditors to enforce foreign contracts involve difficult points of foreign as well as English law and not every law firm or barrister has experience of this kind of litigation. Consumer advice services and websites are even less likely to have all the answers. Ask your legal advisor whether he or she has experience of the sort of claim that you are facing and how such previous claims were resolved. Specialist legal advice does not come cheap but it is a lot less expensive than litigation which is likely to result from bad advice or no advice at all. Remember that there are lots of deals that can be done to reduce or spread the cost of legal advice.
Be prepared for Hard Bargaining
The other side are likely to be represented by law firms with years of experience of this kind of litigation and they can be expected to drive a very hard bargain. There is nothing personal in this. They are just doing their job. The best way to deal with them is to follow the Practice Direction and seek and follow the best advice that is available to you.
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