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Civil asset recovery

Parallel proceedings

Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?

United Arab Emirates (UAE) Federal Law No. 35 of 1992, as amended (the Penal Procedures Law), allows a party that is directly harmed by the occurrence of a given crime to claim civil damages against the perpetrator of that crime as a civil claimant in criminal proceedings.

Federal Law No. 5 of 1985 (Civil Code) allows a civil claim for damages to be filed independently of any criminal proceedings. However, in the event that there are parallel civil and criminal proceedings with the same subject matter, the civil matter will be stayed until the criminal matter is irrevocably settled.

Forum

In which court should proceedings be brought?

The general rules of the law stipulate that civil proceedings are to be brought before civil courts, whereas criminal proceedings are to be brought before separate and distinct criminal courts. The exception to this is a claim for civil damages resulting from a crime punishable under the Federal Penal Code. In this case, the aggrieved party can file a civil claim for damages against the perpetrator in the criminal court. Such a claim will be transferred to the civil courts for the purpose of establishing the appropriate quantum in the event of a relevant conviction in criminal proceedings.

In addition to the ‘onshore’ courts in the UAE, Dubai International Financial Centre (DIFC) courts and Abu Dhabi Global Market (ADGM) courts have jurisdiction over civil proceedings in or related to the DIFC and the ADGM respectively. DIFC and ADGM courts operate under the common law system, as opposed to the civil law system in the rest of the UAE. Laws of DIFC and ADGM courts contain similar provisions on interim remedies as those in common law jurisdictions such as England and Wales. However, DIFC and ADGM courts have no criminal jurisdiction, such matters being dealt with by criminal courts, regardless of whether criminal conduct took place within the DIFC or the ADGM. Given the similarity of DIFC and ADGM courts’ provisions to those of common law jurisdictions, there will be no further reference to DIFC or ADGM courts.

Limitation

What are the time limits for starting civil court proceedings?

Civil court proceedings for ‘acts causing harm’ will be time-barred after three years from the date on which the claimant became aware of the harm and the identity of the person responsible for it. However, if the claim arises out of a crime and criminal proceedings are active after the expiry of this three-year period, the claim shall not be time-barred.

Nonetheless, there is a long-stop limitation period of 15 years from the day on which the harmful act took place.

Limitation periods in civil matters are not generally matters of ‘public order’. Therefore, a defendant must raise an affirmative defence that the claim is time-barred in order for the court to consider dismissing the claim as such.

Jurisdiction

In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?

With the exception of actions in rem relating to real property outside the UAE, civil courts have jurisdiction to hear actions brought against UAE nationals and claims brought against non-UAE nationals who have a domicile or place of residence in the UAE.

Further, civil courts have jurisdiction to hear actions against non-UAE nationals who do not have a domicile or place of residence in the UAE if as follows:

  • they have an elected domicile in the UAE;
  • the action relates to property in the UAE or the inheritance of a UAE national or an estate opened therein;
  • the action relates to an obligation entered into or performed or that is stipulated to be performed in the UAE, a contract intended to be notarised therein, an event that occurred therein or a bankruptcy declared in one of its courts;
  • the action is brought by a spouse, having a domicile in the UAE, against the other spouse who had a domicile therein;
  • the action relates to the maintenance of a parent, a spouse, a person under a restriction or a minor, or in connection with the guardianship of property or of a person if the applicant for the maintenance or the spouse, minor or person under a restriction has a domicile in the UAE;
  • the action relates to personal status and the claimant is a UAE national or a non-UAE national having domicile in the UAE, if the defendant has no known domicile abroad or if UAE law is mandatorily applicable in the action; or
  • one of the defendants has a domicile or place of residence in the UAE.

In addition, civil courts have jurisdiction to determine preliminary issues and interim applications in original actions within their jurisdiction. Further, they have jurisdiction to determine any application connected with such original actions, which the proper administration of justice requires to be heard together. Furthermore, they have jurisdiction to make orders for expedited and preservative procedures to be carried out in the UAE, even if they do not have jurisdiction in the original action.

A defendant can challenge jurisdiction in a number of ways, such as by raising the following:

  • lack of local jurisdiction;
  • transfer of the action from one court to another to join an ongoing related case;
  • nullity unconnected with public order;
  • lack of the court’s authority because of the category or value of the action;
  • lack of legal capacity relating to the claim; or
  • the action has been previously determined.

Time frame

What is the usual time frame for a claim to reach trial?

There is no definitive time period within which civil actions must reach trial stage. Trials are scheduled at the discretion of the court and may be adjourned on several subsequent occasions to allow time for parties to file their necessary submissions. The matter will only be considered for judgment by the court once it is satisfied that both parties have been afforded this opportunity and sufficiently pleaded their arguments. As a general guide, where there is no expert evidence, proceedings may take between six to nine months to reach judgment in a court of first instance, a further three to six months for a court of appeal and finally a further four to six months for the Court of Cassation.

Claims can also be delayed by the absence of a defendant, as the court will afford every opportunity to locate him or her before proceeding to trial. If such efforts are unsuccessful, a judgment may still be obtained with the defendant in absentia.

Admissibility of evidence

What rules apply to the admissibility of evidence in civil proceedings?

Federal Law No. 10 of 1992 regarding Evidence in Civil and Commercial Transactions (the Civil Evidence Law) regulates the admissibility of evidence in civil proceedings. In summary:

  • the facts to be proved must relate to the claim and be material to it;
  • the judge is not permitted to make rulings on the basis of his or her personal knowledge;
  • a legal document shall be evidence for all matters recorded in it, if they were undertaken by the official within the limits of his or her capacity, or if the document was signed before him or her by the parties concerned, so long as it is not shown to be forged;
  • a customary document shall be considered to originate from the person signing it provided he or she does not explicitly deny any handwriting, signature, seal or fingerprint pertaining to him or her;
  • traders’ ledgers shall not be evidence with regard to anyone else but them;
  • electronic signatures shall have the same evidential weight as written signatures (if they comply with the provisions prescribed in Federal Law No. 1 of 2006 on Electronic Commerce and Transactions (the Electronic Commerce Law);
  • electronic writing, instruments, registers and documents shall have the same evidential weight as official and customary writing and instruments (if they fulfil the conditions and provisions prescribed in the Electronic Commerce Law); and
  • in certain circumstances, a party may request the court to oblige his or her adversary to present original documents or papers that are in his or her possession.

Witnesses

What powers are available to compel witnesses to give evidence?

Civil proceedings are almost entirely based on written submissions supported by documentary evidence. There are, however, circumstances in which the court will allow witness evidence to be heard.

The Civil Evidence Law provides punitive measures to be applied to witnesses that fail to appear before the court when validly requested to do so. The witness may be fined up to 500 UAE dirhams for failing to appear, increasing to 1,000 UAE dirhams if the case is one of extreme urgency. The court may quash any applicable fines if the witness subsequently presents himself or herself to the court and offers acceptable explanation for his or her absence.

Publicly available information

What sources of information about assets are publicly available?

The law protects the privacy of individuals in accordance with the UAE Constitution and hence does not allow for any private information pertaining to any person to be available publicly. All required information must only be disclosed following an official request from the authorities.

Cooperation with law enforcement agencies

Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?

Law enforcement and regulatory agencies will not provide information or evidence without a court order directing them to do so. The court will only make such an order if the information or evidence sought is relevant to the proceedings.

Third-party disclosure

How can information be obtained from third parties not suspected of wrongdoing?

A party to proceedings may request a court order for third parties to disclose information that is deemed by the court to be relevant to the proceedings.

Interim relief

What interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?

Federal Law No. 11 of 1992 (Civil Procedures Law) allows for attachment orders to be made in respect of assets belonging to any debtor, as long as the preconditions are fulfilled. A creditor may apply to the court that is hearing the action, or to the judge for expedited matters if it is pre-action, to impose a preservatory attachment over the real estate and movable property of his or her opponent.

Attachment orders may also be made over assets that are in the possession of third parties (eg, bank accounts). Creditors may apply to the court, or to the judge for expedited matters, for an attachment over movable property of, or debts owing to, his or her debtor in the hands of third parties, notwithstanding that it may be deferred or subject to a condition. Such an attachment also covers movable property of the debtor that is in the possession of his or her legal representative.

Non-compliance with court orders

How do courts punish failure to comply with court orders?

The Civil Procedures Law allows the court to impose fines on parties who fail to comply with court orders within the timetable set by the court.

In criminal matters, failure to testify when required to do so by a judicial authority, except in cases where there is an acceptable excuse, carries a penalty of imprisonment of up to one year or a fine of up to 5,000 UAE dirhams, or both.

Failure to produce any written instrument or any other evidence where there is a legal obligation to do so, except in cases permitted by law, amounts to the criminal offence of ‘obstructing judicial proceedings’ and is punishable by imprisonment of up to six months or a fine of up to 5,000 UAE dirhams, or both.

Obtaining evidence from other jurisdictions

How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?

A party to civil proceedings would need to persuade the court to order the Ministry of Justice to make a request for mutual legal assistance on the basis of any applicable treaties between the UAE and jurisdiction from where assistance is sought, or on the basis of the principle of reciprocity.

Assisting courts in other jurisdictions

What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?

UAE civil courts may assist foreign courts with, for example, enforcement of court orders or judgments, the provision of information or the questioning of witnesses, subject to applicable treaties with the relevant foreign government, or on the basis of reciprocity.

Foreign court orders or judgments are not executable ipso facto in the UAE. Such proceedings must first be ratified by UAE courts before being executable and thus enforceable, which will require compliance with UAE law on issues such as exclusive jurisdiction and public order.

Causes of action

What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?

Sources of civil obligations are as follows:

  • contracts;
  • unilateral acts;
  • acts causing harm (torts);
  • acts conferring a benefit; and
  • the law (statutory causes of action).

A breach of these obligations would form the cause of action in civil asset recovery claims.

Remedies

What remedies are available in a civil recovery action?

Under the law, a claimant may claim for damages, which can include restoring the parties to a contract to the position they were in prior to the contract being made, making good the harm caused by the defendant and making good the harm resulting from the defendant’s deception of the claimant. In all cases, the compensation shall be assessed on the basis of the amount of harm suffered, together with the loss of profit, provided that it is a natural result of the harmful act.

Further, the right to have damage made good includes moral damage; an infringement of the liberty, dignity, honour, reputation, social standing or financial condition of another shall be regarded as being moral damage.

Judgment without full trial

Can a victim obtain a judgment without the need for a full trial?

There is no provision in UAE law for summary judgment. The court may pass default judgment on the matter if the defendant has been duly served and fails to attend without providing an acceptable excuse.

Post-judgment relief

What post-judgment relief is available to successful claimants?

Various forms of relief are available under the law. In respect of civil asset recovery claims, successful claimants may obtain attachment over the real estate and movable property of the defendant. In the event that the defendant has failed to comply with a final judgment or final order for payment, or if it is feared that he or she will flee the country, the execution judge may make an order, on an application submitted by the judgment creditor, for the detention of the debtor.

Under certain conditions, a travel ban can be requested against the defendant. In practice, the court would need to be satisfied that there is a risk of dissipation; there must be serious reasons giving grounds to fear that the debtor may abscond, and the debt must be not less than 10,000 UAE dirhams.

Enforcement

What methods of enforcement are available?

The main method of enforcement is the attachment and sale through auction of any real estate or movable property a defendant may have.

Funding and costs

What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?

There is no legal restriction on funding litigation by conditional fee agreements, damage-based agreements, after-the-event insurance or third-party funding. However, given the costs regime, most litigation is funded directly by the client, whether on the basis of a damage-based agreement or an arrangement based on a fee estimate unrelated to the claimed amount.

Courts have complete discretion in respect of costs, which are included as part of the award for damages (as opposed to a separate ‘costs award’) and usually only include the court fees and a nominal amount for lawyers’ fees.

Criminal asset recovery

Interim measures

Describe the legal framework in relation to interim measures in your jurisdiction.

The public prosecutor is empowered to take any steps it deems necessary in the process of prosecuting an offender, which may include measures to freeze or seize the proceeds and instrumentalities of a crime.

Proceeds of serious crime

Is an investigation to identify, trace and freeze proceeds automatically initiated when certain serious crimes are detected? If not, what triggers an investigation?

There is no automatic investigation to identify, trace and freeze proceeds in respect of any specific crimes. However, all financial institutions have a duty to report any offences or suspicious transactions that come to their knowledge to the Anti-Money Laundering and Suspicious Cases Unit of the UAE Central Bank, which is the financial intelligence unit for the UAE. The Central Bank may undertake administrative measures against the offender’s assets before forwarding the matter to the public prosecutor.

In respect of offences that do not pass through the Central Bank, the public prosecutor will determine the need for an investigation into the proceeds of crime on a case-by-case basis.

Confiscation – legal framework

Describe the legal framework in relation to confiscation of the proceeds of crime, including how the benefit figure is calculated.

The Federal Penal Code gives the court discretion, upon pronouncing judgment, to confiscate ‘the things caught and connected with’ the offence ‘without prejudice to the rights of any bona fide third party’. The concept of a ‘benefit figure’ is not applied in the UAE and there is, therefore, no mechanism in the law for determining such a figure. Confiscation in the context of UAE law relates to the direct proceeds of an offence and the articles used in its commission.

Confiscation procedure

Describe how confiscation works in practice.

When settling amounts due to the government, such as fines, the public prosecutor must, prior to execution, notify the convicted defendant of the aggregate of these amounts, unless they are assessed in the judgment.

In order to establish what assets are available, the public prosecutor may make enquiries with all bodies that may have assets relating to the defendant (eg, banks or the Land Department). These bodies are obliged to respond to the public prosecutor or risk being charged with obstruction of justice. According to their responses, the public prosecutor may proceed with execution on identified assets.

Agencies

What agencies are responsible for tracing and confiscating the proceeds of crime in your jurisdiction?

The public prosecutor is responsible for tracing and confiscating the proceeds of crime, with the assistance of any other body it deems appropriate, such as the Central Bank or other financial institutions.

Secondary proceeds

Is confiscation of secondary proceeds possible?

Anti-money laundering and counter-terrorism laws of the UAE provide that, where the proceeds of crime have been wholly or partially converted into, or combined with, other property derived from lawful sources, the amount equivalent to the (primary) proceeds may be confiscated from the convicted person.

Third-party ownership

Is it possible to confiscate property acquired by a third party or close relatives?

The Federal Penal Code recognises the rights of a bona fide third party. Therefore, when evidence successfully shows that the ownership was transferred to a third party with the aim of dissipating the proceeds of a crime, such conveyance would be declared a sham, permitting the confiscation of such property.

Expenses

Can the costs of tracing and confiscating assets be recovered by a relevant state agency?

The law does not allow the recovery of the costs of tracing and confiscating assets.

Value-based confiscation

Is value-based confiscation allowed? If yes, how is the value assessment made?

Yes, see question 26. UAE law allows attachment of property, to the value of the proceeds of crime, in order to satisfy the amount specified in the judgment. The valuation of such property will be conducted by a court-appointed expert and the property will be sold at public auction.

Burden of proof

On whom is the burden of proof in a procedure to confiscate the proceeds of crime? Can the burden be reversed?

There is no separate procedure to confiscate the proceeds of crime; the determination as to what constitutes the proceeds of crime will have taken place before the court’s judgment on the trial, which will include a confiscation order of the proceeds and the value thereof. The public prosecutor has the burden of proving the value of the proceeds of crime

Using confiscated property to settle claims

May confiscated property be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction?

Property confiscated under anti-money laundering and counter-terrorism laws may be used in satisfaction of civil claims.

Confiscation of profits

Is it possible to recover the financial advantage or profit obtained through the commission of criminal offences?

The recovery of profit obtained through the commission of a criminal offence is not available as a punishment or punitive measure in the criminal process.

In theory, however, a civil claimant (such as a competing bidder) could claim for loss of profits resulting from a competitor corruptly obtaining a contract. This would require proof that the contract would have been won by the claimant but for the corrupt act of the defendant.

Non-conviction based forfeiture

Can the proceeds of crime be confiscated without a conviction? Describe how the system works and any legal challenges to in rem confiscation.

Under the law, confiscation requires a conviction, as it is a punishment. It is, therefore, not possible to confiscate the proceeds of crime without a conviction.

Management of assets

After the seizure of the assets, how are they managed, and by whom? How does the managing authority deal with the hidden cost of management of the assets? Can the assets be utilised by the managing authority or a government agency as their own?

Seized assets are managed by the public prosecutor, and the Ministry of Justice bears the associated costs.

Assets cannot be utilised by a government agency as its own.

Making requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to request international legal assistance concerning provisional measures in relation to the recovery of assets.

The UAE has signed numerous bilateral and multilateral treaties on mutual judicial cooperation in criminal matters. Where applicable, these treaties will set out the procedure for the request of legal assistance. In cases where the UAE does not have a treaty with the requesting country, domestic law (Federal Law No. 39 of 2006 on International Judicial Cooperation in Criminal Matters) will be applicable.

Requests for assistance under domestic law should be sent from the relevant UAE department to the foreign judicial authority through diplomatic channels. Other routes may be specified in treaties, such as direct communication between ministries of justice.

Complying with requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to meet foreign requests for legal assistance concerning provisional measures in relation to the recovery of assets.

Similar to the situation concerning outgoing requests, the legal framework and procedure to meet foreign requests for legal assistance will be governed by applicable treaties or, in the absence of any treaty, by domestic law (Federal Law No. 39 of 2006).

There is a contingency in domestic law for provisional measures to be undertaken by the competent judicial authority in the UAE in cases of urgency, upon written request from a foreign judicial authority in cases where legal interests are threatened or it is necessary to secure prosecution evidence or documents that are likely to be lost or tampered with.

Treaties

To which international conventions with provisions on asset recovery is your state a signatory?

The UAE is a signatory to major international conventions with provisions on asset recovery, such as the following:

  • the United Nations Convention against Corruption, ratified by the UAE in 2006;
  • the United Nations Convention against Transnational Organized Crime, ratified by the UAE in 2007; and
  • the Riyadh Arab Agreement for Judicial Cooperation, brought into force in the UAE by Federal Decree No. 53 of 1999.

Private prosecutions

Can criminal asset recovery powers be used by private prosecutors?

The legal system does not acknowledge private prosecutions, per se. However, a civil claimant may bring a parallel claim for damages together with his or her criminal complaint. The validity of the claim for damages will be determined by the criminal court in conjunction with the accused’s guilt or innocence. The task of evaluating the damages will then be passed from the criminal to the civil court.

Update and trends

Update and trends

Are there any emerging trends or hot topics in civil and criminal asset recovery in your jurisdiction?

The UAE recently participated in the Terrorist Financing Targeting Center with the United States, targeted at identifying, freezing and deconstructing terrorist financing networks operating through the UAE’s foreign exchange market. This is emblematic of the UAE’s initiative to eradicate money laundering and the financing of terrorism within its jurisdiction.