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17 Aug 2020

‘Top tips’ for effective debt recovery


Cash flow is essential for business continuity but this is even more critical amidst COVID-19 and its associated impact on the global economy. Creditors, and particularly those in the hardest hit sectors, such as aviation, construction, hospitality and retail need to consider when and how to approach debtors for outstanding payments. We therefore summarise below some ‘top tips’ for debt recovery, which should assist creditors in maximising their prospects of recovering overdue payments and avoiding protracted litigation.


Contractual notices

Most contracts set out how notices for outstanding payments should be issued. Creditors should ensure they are familiar with these contractual provisions and serve debt notices as soon as possible. In some standard form contracts, such as FIDIC and NEC, notices must be issued within a stipulated amount of time. In any event, the notice should set out the key contractual payment terms, total amount due and historical payment date(s). 

If recovering debt up the contractual chain from employers, subcontractors and main contractors should, if possible, work together (sharing documents and information) to strengthen the debt claims. Main contractors may wish to use this opportunity to have a subcontractor agree to an amendment to the terms of the subcontract so that the subcontractors’ debt is tied to the success of the main contractor's claim against the employer; that is if the subcontract does not already provide for this.

Letters of demand

If contractual notices are ignored, creditors should consider instructing external counsel to serve demand letters on their behalf. Such letters should be concise and factual and refer to the relevant contractual provisions concerning performance (or lack thereof), payment, the alleged breach and set out what the recipient is required to do (e.g. make payment within a certain period of time, failing which proceedings may be issued against them).

If the UAE Courts have jurisdiction, creditors have the option of issuing a dual English/Arabic letter of demand that is attested and notarised by the Notary Public.

For more information, please see our bulletin on ‘Debt recovery: How to avoid protracted Court proceedings’.

Asset tracing

Creditors should avoid “throwing good money after bad”. Instructing an asset tracing company to identify what assets the debtor has and where such assets are located can enable creditors to make informed decisions about whether a debtor is worth suing and whether there are factors, other than the pure legal merits of a claim, which could influence whether or not proceedings are initiated.

“Cash is king” and the success of recovery depends on the value of the debtor’s assets being sufficient to satisfy a judgment or award and the ease by which those assets can be seized in the relevant jurisdiction. Getting ahead of these issues at the outset of a potential dispute can save significant amounts of time and money.  

Interim relief

Once the creditor is aware of the debtor’s assets (which should be of sufficient value to satisfy the amount owed), interim relief can be sought from a court or tribunal before or during proceedings to prevent the dissipation of those assets, pending resolution of the substantive dispute.

Types of interim relief include freezing injunctions and attachment orders over physical assets, e.g., machinery, vehicles, property and bank accounts.


Deploying the above measures can be highly effective. However, some disputes are inevitable. In the event that a dispute arises, we set out below the process for recovery via the onshore UAE Courts and DIFC Court by way of example. Similar relief (or variants of it) is available in the majority of regional courts.    

UAE Courts

  • The claim is filed in Arabic;
  • An expert may be appointed. If it is a simple debt claim that is not contested, a judgment may be issued relatively quickly (particularly if the Payment Order method is used);
  • Once the judgment is obtained, the Execution Department will be instructed to recover the debt;
  • The Execution Department will write to various UAE government departments to establish what assets (if any) the debtor has in the UAE. Any asset tracing report obtained prior to litigation will assist in this regard; and
  • Once the assets are identified, the Execution Department will work with the relevant authorities to recover the debt and may take steps to seize the debtor’s assets.

DIFC Court

  • The claim is filed in English in the DIFC Court;
  • The DIFC Court will provide a procedural timetable up to a hearing, including the filing of any witness statements and expert reports;
  • Following a hearing and once a judgment is obtained, a creditor can enforce any DIFC Court judgment in the DIFC or onshore in the UAE;
  • To enforce a DIFC judgment in Dubai, the DIFC judgment must be enforced via the Dubai Court as follows:
    • The DIFC Court issues an execution letter addressed to the Chief Justice of the Dubai First Instance Court to carry out the execution process;
    • The creditor must then present the application for enforcement to the execution judge at the Dubai Court, accompanied by the execution letter and an Arabic translation of the DIFC Court judgment; and
    • The DIFC Court judgment is then effectively converted into a Dubai Court judgment, after which, the execution steps highlighted above will be initiated to recover the debt.
  • If the DIFC judgment is being enforced outside of Dubai (but within the UAE), it can be referred directly to the relevant local competent court within the UAE for enforcement without going via the Dubai Court first.

Other considerations


The costs associated with debt recovery (and certainly formal litigation or arbitration) need to be weighed against the total amount owed. In practice, this means that the time and cost associated with any recovery should not be disproportionate to the value of the claim. Ideally, the cost of a simple debt recovery case should not exceed 10% to 20% of the amount owed to the creditor.


Negotiating a settlement may be more cost effective than litigation or arbitration. When engaging in settlement discussions, parties should ensure that any verbal or written communications are expressed to be ‘without prejudice’.

In the DIFC, the concept of ‘without prejudice’ communication is upheld and relied on by parties and is generally accepted to extend to any dispute whether the subject of litigation, arbitration or mediation. 

However, it is important to note that the concept of ‘without prejudice’ communication is not recognised by many civil law jurisdictions (including the onshore UAE Courts or arbitrations seated in the mainland).

For more information, please see our bulletin on ‘COVID-19: ‘Top Tips’ for Effective Contract Management’.

Any agreement reached between the parties (e.g. to pay a debt in instalments) should be recorded in a formal settlement agreement.

Record keeping

Creditors should preserve all documentation associated with the outstanding debt due (emails, notices, invoices, calculations, etc.) in case such evidence is required to be used to support court/arbitration proceedings.

Any amendments, variations, suspensions, delays and terminations must be recorded in writing and be made in accordance with any formal requirements under the contract.


In summary, creditors should:

  • preserve all documentation associated with the outstanding debt;
  • consider early settlement and exhaust the pre-litigation steps outlined above to maximise their prospects of recovery without recourse to litigation or arbitration;
  • have a clear understanding of the costs incurred in recovering outstanding debt and ensure that the costs are proportionate to the value of any claim should proceedings need to be issued; and
  • understand the value of the debtor’s assets and where these are located at the outset, and particularly ahead of any enforcement action.