A new dawn

ME PoV Summer 2020 issue

Enforcement of UAE judgments in India opens a new chapter in the UAE’s struggle with recovering non-performing loans

On 17 January 2020, the Government of India issued a new notification recognizing the UAE as a reciprocating territory1. This update to the Code of Civil Procedure 1908 (CPC) marks a new milestone in the UAE’s struggle to enforce legislation around non-performing loans (NPL) as it enables judgments issued by the competent courts in the UAE to be enforced in India, and vice-versa.

The new notification has come at an opportune time, with the UAE banking system expecting an increase in corporate loan defaults2 due to the slowdown in economic activity, in turn due to the double impact of COVID-19 and a drop in oil prices. A survey of business leaders conducted by the Dubai Chamber of Commerce in late April 2020 showed that more than two-thirds of the
respondents saw a moderate-to-high risk of going out of business in the coming
six months. While it is small and medium businesses (SME) that are particularly
affected, there have already been some high-profile cases involving corporate
defaults of Indian-promoted businesses.

In the past, the efforts of UAE financial institutions to recover non-performing loans from Indian-owned business owners, who had guaranteed these loans but had fled the country, were often in vain. With the ability to enforce UAE judgments in India, will it be different this time?



Given the long-standing strong relations between the two countries, the Republic of India and the UAE on 25 October 1999 entered into a bilateral treaty titled “Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgements and Arbitral Awards”3. This treaty was ratified by the Government of India a year later but was never truly enforced. The new notification can be perceived as a crucial and long-awaited addendum to this bilateral judicial arrangement.

According to the new notification, the final judgments, passed by any of the below mentioned competent courts in the UAE, can be executed through the district courts in India without having to file a fresh suit.

  • Federal Supreme Court.
  • Federal, First Instance and Appeals Courts in the Emirates
    of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah.
  • Abu Dhabi Judicial Department.
  • Dubai Courts.
  • Ras Al Khaimah Judicial Department.
  • Courts of Abu Dhabi Global Markets.
  • Courts of Dubai International Financial Centre.


What does this mean in practice?

A decree passed by the aforementioned UAE courts can be executed in India under Section 44A of the CPC4 provided that it meets the following criteria:

  • It must have been pronounced by a Court of competent jurisdiction;
  • It must have been given on the merits of the case;
  • It must be founded on a correct view of international law;
  • It must recognize the law of India in cases in which such law is applicable;
  • It must have complied with the principles of natural justice;
  • It should not have been obtained by fraud;
  • It must not be founded on a breach of any law in force in India.


Cornerstones for successful execution

There are three cornerstones to a successful execution of this notification:

A. Do your homework: Intelligence gathering and asset search exercise
To evaluate the merits of pursuing the execution process in India, it is advisable to conduct thorough intelligence gathering and asset search exercises. These should typically include:

  • Identifying the exact location of the defendant (defaulter);
  • Compiling a comprehensive list of all the assets (both tangible and intangible) owned by the defendants and their close family members, and determining any encumbrances on them;
  • Where possible, acquire relevant documents from the public registry to evidence ownership;
  • Review any statement of wealth provided by the defendant at the time of loan procurement or providing personal guarantee, to check for any potential instances of dissipation of assets or evidence of misstatement.

Such an intelligence gathering exercise should be ongoing throughout the legal process. This will also help when an interim asset freeze order or injunction is obtained before receiving the final execution orders. Any non-disclosure or attempt to dissipate assets by the defaulter, especially after an asset freeze order has been served, can lead to a criminal action, which will further strengthen the claimant’s case.

B. Establish jurisdiction
This is key in order to ensure that appropriate jurisdiction is identified for execution. The notification states that in order to execute the judgments issued by competent courts in the UAE, one must approach the district courts in India for them to issue execution orders. Hence, it is critical to identify the appropriate jurisdiction where either the defendant is residing or has assets in. 

C. Ensure that due process of notification was followed in the UAE
It is critical to prove to the district courts in India that reasonable efforts were taken to notify or serve the defendant at various stages of the legal process in the UAE. This gives the district courts in India the comfort that the defendants had enough opportunity to present their case and all the principles of natural justice were upheld. This is extremely critical especially as most of the final judgments issued from the UAE will be ex-parte.


Possible challenges with the execution process

This new notification is certainly a huge leap forward into a more efficient legal procedure for the execution of UAE judgments in India. The costs of legal recourse against the absconded defaulters should be reduced significantly and the timelines for recovery will be more predictable. However, this process is yet to be tested, and it is not without its own challenges:

  • The defendant may challenge the enforcement in India by appealing through higher courts.
  • If the defendant has assets in multiple locations in India, one needs to approach the respective district courts to get enforcement orders. This will impact the costs and timelines for execution.
  • The district courts can use their discretion to ratify these judgments and issue an execution order.
  • The period of 12 years for execution continues to apply5. So, as of today, judgments older than 2008 do not fall under the purview of this notification.



The ability to enforce UAE judgments in India can help UAE lenders improve the recovery rates on non-performing loans relating to absconded defaulters. The key factors for success will include ensuring that reasonable efforts were taken to notify or serve the defendant at various stages of the legal process in the UAE, a solid evaluation process of significant assets that can be enforced in India and the identification of which district court to file in India. Best outcomes will be achieved through a combination of a strong team of business intelligence professionals, competent lawyers and persistent bankers.

Defaulters, on the other hand, should take this as a serious warning and should consider entering into restructuring or settlement discussions with their respective banks in good faith. Their non-cooperation can result in a severe drain on their already troubled financial position, as well as the social embarrassment and stigma that may come with attachment of their bank accounts or properties and businesses in India as part of the execution process.


by Ralph Stobwasser, Partner and Nikita Vaidya, Assistant Director, Financial Advisory, Deloitte Middle East




  2. Report published by S&P Global Ratings dated 26 March 2020 titled “Outlooks on Five UAE Banks revised to negative on deteriorating operating environment.”
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