A reader recently sent in this comment, which has been modified to protect the reader's privacy:
As an expat living in Dubai, it is quite shocking to see in one hand
UAE authorities promote their yet to be presented Bankruptcy and
Insolvency Law and on the other they openly talk about referring people
(expat of course) to Interpol for defaulting a cheque.
I am sure you know that from Oct. 2012 based on UAE ruler order no UAE
national should be in jail for debt. So, all locals go free while
expats rot in jail for the same crime. Bouncing a cheque is a criminal
offence in UAE, but only for expats.
I would like to add that I was in a very hard financial situation
during 2010-2013 after my company went bankrupt. During April 2014, I
Finally overcome the problem (through forcing myself to make money
illegally). I was lucky not to end up in jail because of bounced
security cheques, although I lost my dignity and myself during the
process of making money.
They do not put you in jail for these issues, only for bouncing a
security cheque related to my credit cards.
Thank you for writing about these issues and I do hope lawyers like you
write more and fight more for people like me.
The reader's comment raises the issue of the need for the UAE's financial institutions to embrace a more reliable system of credit issuance. To be sure, the recent adoption of certain reformatory regulations which would de-criminalize bounced checks is a step in the right direction, even if the relief resulting from those measures does not apply to foreign nationals.
However, a recent report by Andy Sambidge for Arabian business.com indicates that banks in the UAE are not quickly warming up to the notion of ensuring the credit worthiness of their customers. Sambidge writes:
A UAE government platform that will allow financial institutions to check consumers’ creditworthiness before lending to them has reported that just one of the country's 46 banks has submitted data on its clients’ credit history over the last two years and urged the remaining lenders “to follow suit”.
Al Etihad Credit Bureau (AECB), a federal government company specialised in providing UAE-based credit reports and other financial information, said a "large number of banks" have not yet completed the process even though the AECB is ready to launch.
Without a reliable credit background check system in place, the primary means of enforcement of financial obligations for the UAE's financial institutions is currently the threat of jail, which often leads debtors to flee the region instead of attempting to resolve the debt.
Until banks and other financial institutions take seriously the need for credit reform, the economy of the UAE will be more at risk than other, more established economies around the world. And for the 90 percent of the UAE's residents who are foreign nationals, they too will remain at risk of imprisonment for failure to satisfy their financial obligations.