criminal law


June 12, 2019



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Would you consider being a guarantor for the loan taken by your company? In this consistently developing commercial world and progressively stringent banking and financing industry, there are times where a business' if positive, albeit unpredictable, future prospects can never again persuade the banks to concede a loan or extend credit. There are times, particularly for small and medium entities, where the shareholders or directors provide his/her own assurance or guarantee for the loan taken by the company.

Such a guarantee is nowadays common among corporations assuring the banks with additional security in case the company defaults in making payment. Corporate Lawyers of Dubai have witnessed innumerable criminal or civil cases against those guarantors. However, the present article is regarding the travel ban which can be imposed on personal guarantors of the loan.

For all our readers who are new to the concept of personal guarantee, it is important for them to comprehend the definition of personal guarantee which is as follows:

"A personal guarantee issued by a guarantor enables the creditor to pursue any action against the guarantor to pay all or some part of the debt as what is agreed."

It is evident from guidelines issued by Central Bank of UAE that corporations are under an obligation to sign a guaranteed contract or provide a guarantee issued by the majority shareholder or any partner of the company as additional security for the creditor bank against the debt in the event the company fails to perform its obligations. If the entity defaults in any instalment, banks may resort to any judicial department and may file an application for a travel ban against the personal guarantor of the loan, especially in cases where the personal guarantor is a foreign national to add up additional security. The creditor banks file an application for travel ban usually prior to any other judicial procedure in order to assure his presence in the country.

Nevertheless, the application of travel ban should establish a clear apprehension before the judicial authority that if necessary action is not taken the personal guarantor will abscond from the country. In addition, the foregoing has been severally confronted by the UAE courts of Cassation that the existence of the debt or the nationality of the personal guarantor is not enough to impose an immediate travel ban. This is in accordance with Article 329 of the Civil Procedure Law, Federal Law number 11 of 1992. The concerned provisions state that the reasons which justify an apprehension shall be proven beyond any reasonable doubt for instance sale of his property, application for liquidation of the company, or any other relevant proof which evidences his intention to leave the country permanently and leaving the creditor bank high and dry in the market. Clearly, failure to submit sufficient evidence or absence any justification will render the application of travel ban void or invalid. Consequently, creditor banks whilst banks submitting an application for travel ban should ensure the presence of all valid reasons evidencing his intention and strong apprehension of him leaving the country. Albeit, the court under the said provision is authorized to conduct an investigation if proper documents are not submitted, considering the nature of the matter, the court generally rejects the application without conducting further investigation.

The UAE judicial authority has confirmed that the evaluation of the accessibility of merit evidencing the peril of the guarantor to leave the country before any execution case is filed is clearly the authority of the first court without referring the matter to Court of Cassation. Accordingly, the court allows the creditor bank eight days period to file the subsequent civil case post receiving the acceptance on the travel ban application pursuant to Article 330 of the Civil Law. This picture can be spotted in Court of Cassation Appeal 119/2005, wherein the court ruled that any restriction on the movement of any individual shall be backed by proper evidence confirming willingness to leave the country and failure to submit such evidence will render the court to invalidate such application.

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I have a travel ban implemented by the bank from where I have taken loan I need to solve this issue with your help
Gopal Naidu
For us to be able to provide you better advise, we need to know what kind of cases are currently registered under your name in the UAE. We can help you get this information by conducting a legal status check on your behalf. We can check with the courts, public prosecution, police, and immigration departments regarding a case registered under your name. If we discover any details or information, we will contact you immediately. Please note that we will inform you about

a) any options available;
b) whether we can take the case or not;
c) the actions you can take;
d) and your chances of success in a concerned lawsuit.

Please feel free to contact us if you have any queries or concerns, we would be happy to revert to you.   Dr. Hassan Elhais

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