Pregnant women who are in debt payments default may no longer be jailed under draft laws proposed in the UAE. Terminally ill patients, seniors, and minors under 18 years of age won't also go to jail for defaulting on debts. For illustrative purposes only Image Credit: Rex Features

Abu Dhabi: The UAE will stop jailing terminally ill patients, seniors, pregnant women and minors under 18 years of age for defaulting on debts, Gulf News has learnt.

The relaxation comes as part of changes suggested by the Government in the UAE Civil Procedure Code to be debated by the Federal Council on Tuesday.

The legislation, a copy of which has been obtained by Gulf News, will stop the imprisonment of both Emirati and foreign senior people who are above 70 years old, minors below 18 years of age, terminally sick people with an incurable or irreversible illness and pregnant women until they give birth and the baby is one year old.

Debtors in the UAE are imprisoned for failing to pay their debts, and creditors, mainly banks, are not sympathetic to the debtors once they are in prison.

Under the draft law, which requires the House’s approval before being finally endorsed as law by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, a defaulter would no longer risk a jail term if he or she has a child younger than 15 years, his or her spouse is dead — or jailed — for any reason.

“No prison term will be given to a defaulter if he or she is married to the creditor or a kin thereof, unless the debt is a maintenance or an allowance paid under a court order by one spouse to another,” the draft law suggests.

The changes in the Civil Procedure Code were prompted by the UAE’s low ranking in resolving insolvency and enforcing contracts as shown by the World Bank Doing Business 2014, according to a report made by the FNC Legislative Affairs Committee.

Globally, the UAE stands at 101 in the ranking of 189 economies on the ease of resolving insolvency and ranks 100 on the ease of enforcing contracts, according to the World Bank’s report.

In many countries, defaulters don’t go to prison or are held criminally liable for money owed — as long as the debt is not the result of some criminal scheme or owed as restitution for injuries or damages caused by a crime committed by the person.

The legislation also suggests that a debtor does not risk a jail term if he or she presents a collateral agreement to answer for the debt, or presents a surety which assumes legal responsibility for the fulfilment of the debt.

The draft law would also prohibit the jailing of defaulters for debts less than Dh10,000 — unless the debt is a fine or a maintenance paid by a court order.

Lawyers welcomed the move stressing that justice is inferior to mercy.

Faiza Mousa, an Emirati lawyer, said the rules mean that if a person owes money on a credit card or on some account or note that he or she borrowed on, they can be sued — but not jailed — in the event they cannot pay their debt.

“The changes reflect the kindness and tolerance of Islamic Sharia as enshrined in the UAE laws,” the Abu Dhabi-based lawyer said. “Justice may be required because a good and functioning UAE society requires its presence. Mercy, however, is also required because people in certain humanitarian situations should be given a second chance.”

The same sentiments were echoed by Shaker Ma’atouq, another Emirati lawyer.

He said the move supports families in the UAE, which are perceived as the lynchpin of social cohesion.

“If a spouse is in prison the other partner is left caring for the children and their reactions, the finances, family, schooling — you name it,” Ma’atouq said. “So, the move shows that the country is there to support the family in good and bad times.”

He suggested that panels be set up to look into the reasons for defaulting on debts and explore ways to settle debts out of court.

He welcomed enacting a federal insolvency law featuring provisions common in other jurisdictions, including a moratorium on creditors’ claims.