Debt Collection: Notary Public Declaration Offers Faster, More Cost-effective Option

Collecting debts is a perennial struggle for businesses in the UAE. For many companies, the costs to pursue a debt through the court system are prohibitive, and the time commitment required often makes litigation a less-than-ideal solution. Additionally, though post-dated cheques remain a popular form of payment security, more severe consequences (e.g., arrest and jail time) are only applicable for cheques for AED 200,000 or more.

Declaration of Indebtedness Tantamount to Execution Instrument

Fortunately, UAE law offers a faster, more cost-effective alternative for settling debts that largely avoids the court system. According to Articles 12 and 24 of the Federal Law No. 4/2013 On the Organization of the Notary Profession, debtors and creditors can complete a declaration of debt in writing and have it notarized by the notary public. Later, if necessary, the creditor can request the notary public to stamp the document as a writ of execution, allowing the collection of the debt without the burden of first completing extended legal proceedings. 

Execution and Collection Without Litigation

Upon stamping by the notary public, this declaration akin to an execution writ then also serves as a writ of execution, which is actionable following a quick procedure at the appropriate UAE court. Thus, the creditor avoids time-consuming applications and costly filing fees. The debt is then collected by the creditor through the UAE courts' execution process as if a court issued the writ following litigation.

Because this declaration of debt and notarization by the notary public requires cooperation between creditor and debtor, it's best suited for situations where parties are beginning their commercial relationship or have agreed to a payment plan for existing debt. The declaration document should outline the terms of payment, including amounts and payment dates. Overall, this process gives the debtor flexibility, whilst the ability to convert the declaration into a writ of execution provides the creditor with security.

The Declaration and Writ of Execution Process

Generally, the steps to complete a declaration of debt for sealing as an execution writ by a notary public are as follows:

  1. Finalize a declaration of debt, which is usually drafted by an experienced lawyer in Dubai.
  2. The creditor and debtor sign the declaration in front of the notary public who then notarizes the document.
  3. If the debtor defaults, the creditor can request that the notary stamps the declaration as a writ of execution.
  4. The creditor can present the stamped declaration to the appropriate UAE court for execution.

Want to speak with an experienced legal consultant in Dubai? Please email us at [email protected] or call at +971 4 329 8880.