ABU DHABI, (Pakistan Point News - 19th Nov, 2019) The Ministry of Finance, MoF, stated that issuing Decree-Law No. (19) of 2019 on the Insolvency of Natural Persons affirms the UAE’s leading position in building a legislative and legal system that strengthens the financial and economic stability of the nation.
The ministry added that although important, independent legislation dealing with the insolvency of a natural person through specialised independent legislation is rare.
The confirmation came during a media briefing held by the ministry at its headquarters in Abu Dhabi, in the presence of Younis Haji Al Khoori, Under-Secretary of MoF, during which he assessed the details of the decree-law, its objectives, mechanisms of implementation and expected effects on the economic and investment environment in the country.
Al-Khoori welcomed media representatives, stressing the ministry’s keenness to adhere to the highest standards of transparency in communication with all its strategic partners, especially the media. The latter being at the forefront, as a positive and constructive channel that highlights the sustainable development of the nation with objectivity and professionalism.
The Federal Decree-Law on the Insolvency of Natural Persons addresses the debtor's inability (if the natural person does not fit the description of a trader) to pay their debts due to their insolvency and debt default. The regulation of this case is linked to the Civil Transactions Act, in accordance with a principle called ‘Facilitator’s View’; a principle that is rooted in Islamic jurisprudence, whereby the debtor is granted a reasonable period of time to fulfil their obligation in accordance with their circumstances, provided that such delay does not cause serious harm to the creditor.
The ministry pointed out that this decree-law will increase transparency in civil debts and bolster financial security, thereby enhancing financial stability in the country. This law will also accelerate growth and make it easier for individuals to obtain loans. There are clear rules that are easy to apply to collect bad debts and rehabilitate the debtor financially, which increases creditor banks' confidence in retail lending, and encourages individuals to engage in calculated borrowing. In addition to its economic objectives, this law has other positive aspects. It guarantees the protection of the debtor's dignity as a natural person, helps create an opportunity for them to manage their finances and lessens the burden on them.
He said, "The Ministry of Finance is committed to bolstering financial, social and economic stability in the country through legal frameworks that help individuals repay their debts, and to ensure that institutions receive their financial dues through transparent mechanisms. The Federal Decree-Law on Insolvency of Natural Persons serves these objectives by fostering an advanced and stable business environment that encourages SMEs to drive economic diversification and contribute to achieving the UAE Vision 2021."
He added, "This law creates a safe environment for personal loans to the satisfaction of both the creditor and the debtor, as it provides the balance to ensure the rights of both creditor and debtor. The law thereby encourages increased cash flows and attracts small and medium-sized investments to the state. This supports national efforts to achieve The Sustainable Development Goals, thus ensuring the prosperity, happiness and sustainability of society."
The Decree-Law on the Insolvency of Natural Persons differs from bankruptcy law, which was promulgated by Decree-Law No. 9 of 2016, particularly in the definition of the debtor; The legislation on the insolvency of a natural person applies to a natural person who is not engaged in economic activity and is not a trader. However, the Primary purpose of both laws is united, as both exist to protect the common interests of the creditor and the debtor in a fair and balanced manner, as well as to divide the risks between them in order to remove the debtor from the cycle of financial difficulties and enable them to pay off their debts.
During the briefing, the legal advisor at the Office of the Minister of Finance, Dr. Hussam Al Talhouni, reviewed the ways specified by the decree-law to help debtors overcome their financial difficulties, the documents they must provide to request a settlement of their financial obligations, and the court's procedures for accepting the settlement procedure. Additionally, the details of the proceedings and conditions of declaring insolvency as an individual and the liquidations of assets, and the penal provisions contained in the decree-law, which will come into effect from January 2020 were also iterated. Dr. Talhouni responded to media inquiries regarding the law and its implementation mechanisms.
The Ministry of Finance has developed a comprehensive plan to inform the public about the Decree-Law on the Insolvency of Natural Persons, which includes holding a series of awareness workshops to discuss the law with the target groups. Through this plan, the ministry will engage with federal and local government entities, chambers of commerce and business communities in the country judiciary, law firms, lawyers and legal advisers in the UAE, traditional and digital media, banking institutions, as well as universities and all other relevant entities.