Can an Insolvency Action be filed in Dubai Despite the Debtor’s Residence in Another Emirate⚖️
Share
Rules of Territorial Jurisdiction in Insolvency Lawsuits: A Reading of Dubai Court of Cassation Rulings Insolvency cases raise fundamental questions regarding the geographical scope of litigation, especially given the economic integration between the Emirates. One of the most prominent questions is: Can a debtor file an insolvency lawsuit before Dubai Courts while residing in another Emirate?
First: A Federal Law... With Caveats! Dr. Alaa Nasr explained that the Insolvency Law in the UAE is a federal law par excellence; its provisions and mandatory effects apply throughout the entire state without exception. However, determining the "competent court in terms of territory" is not left to the personal preference of the litigant. Instead, it is governed by the rules of jurisdiction stipulated in the Civil Procedure Law.
The Dubai Court of Cassation has settled this matter, affirming that jurisdiction is established based on specific legal and factual links, not merely the desire to litigate before a particular court.
Second: Criteria for Establishing Jurisdiction for Dubai Courts According to Dr. Nasr’s vision, the jurisdiction of Dubai Courts is established through two practical scenarios:
1. The Financial Hub Criterion (Creditor’s Domicile) Given that Dubai is a leading financial and banking center, the presence of the creditor’s headquarters, a branch, or their place of business within the Emirate constitutes a sufficient legal link to establish jurisdiction.
Practical Application: This criterion is most evident when the creditor is a bank or a financing institution headquartered in Dubai. This financial centralization provides litigants with relative speed in organizing financial files and significant procedural clarity.
2. The Actual Residence Criterion (Debtor’s Domicile) Dr. Alaa Nasr pointed out another instance where jurisdiction is established: if the debtor takes Dubai as their actual and real residence, even if their original domicile is registered in another Emirate. However, the judiciary has set strict controls for this criterion:
The residence must be real, not fictitious (pro forma).
The debtor must adhere to the principle of good faith, providing full disclosure of their financial status and original domicile.
The standard here is "actual presence" rather than a formal relocation intended to circumvent the law.
Third: Balancing the Interests of the Debtor and Creditor Dr. Alaa Nasr concluded his analysis by emphasizing that the purpose of these strict rules is not restriction, but rather achieving the balance intended by the spirit of the legislation. The objectives are:
Organizing the debtor's financial affairs and alleviating the burden of default.
Protecting the interests of creditors and ensuring the integrity of judicial proceedings.
Dubai Courts have accumulated extensive experience in insolvency and restructuring cases, making them a destination for litigants seeking "procedural clarity" and "speed of adjudication," provided that the legal links justifying such jurisdiction are met.
Conclusion Determining the competent court in insolvency lawsuits is not merely a formality; it is a guarantee of the validity and soundness of the judgment. As demonstrated by Dr. Alaa Nasr, the UAE judiciary combines flexibility in application with precision in adherence to legal texts, thereby safeguarding the rights of all parties within the economic system For more information or to book a legal consultation:
