Man unable to repay loan in UAE receives 'threats'

Question: Three years ago, I took a loan from a person at an interest of 30 per cent annually. Six months ago, I paid what was equivalent to more than the principal value of the loan.

Since then, I have stopped paying due to my financial inability. Currently, I am being threatened with a court case and the person who lent the money is not only demanding the rest of the interest, but also compensation for the delay in payment. He has also kept my passport as a guarantee for the loan. What is the position of the law on this matter?

Answer: The appropriate action to take against the person is to file a case in the court for the return of your passport because no one is eligible to hold your passport for any reason.

Regarding the interest, the creditor cannot file a case against you to request this interest with the compensation for the delay in payment and in case he does, then his case will be rejected, because such interest between ‘natural people’ is considered a criminal act.

In case you file a criminal case against him, he will be punished according to Article 458 of Federal Law Decree No. (31) of 2021 Promulgating the Crimes and Penalties which states that a penalty of incarceration for a period not less than one year and a fine not less than Dh50,000 shall be imposed on any ‘natural person’ who deals with another ‘natural person’ by usury interest in any kind of civil or commercial transaction, whether such interest is express or latent.

Latent interest shall include any commission or benefit stipulated by a creditor, if such a commission or benefit has no corresponding real legal benefit or service provided by the creditor as a consideration.

A principal debt and latent interest may be proved by all means available. If the perpetrator takes advantage of the debtor’s need, weakness or passion to commit the crime stipulated in this article, this shall be considered as aggravating circumstances.