LEGAL PERSPECTIVE
The shape of things to come Sandeep Puri, Partner and Head of Banking & Finance (UAE) at Baker McKenzie Habib Al Mulla, on the region’s regulatory landscape in 2020 and broader challenges that arise from volatile operating conditions
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here is no question that the past twelve months have been challenging for the regional financial sector. The economic slowdown and downward pricing pressures have made it harder for banks to grow revenues, and whilst a number of them have managed to lower costs (partly through redundancies) and post growth numbers, it would be fair to say there still remains a fair degree of uncertainty for the coming months.
A LEGAL RECOURSE
Sandeep Puri
“GIVEN ITS INFANCY, THE NEW PERSONAL INSOLVENCY LAW IS YET TO BE PUT THROUGH ITS PACES BUT IS CERTAINLY A POSITIVE STEP FOR THE UAE, ADDRESSING AN ISSUE IDENTIFIED BY MANY AS BEING THE DRIVING FORCE BEHIND THE NUMBER OF ABSCONDING DEBTORS IN THE UAE.” — Sandeep Puri
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BANKER MIDDLE EAST | APRIL 2020 | ISSUE 229
Recognising the dynamic economic landscape and the consequential difficulties faced by consumers and corporates alike, the UAE has taken steps to mitigate such pressures by introducing new policies and processes, with two important developments discussed below. The UAE has developed a new insolvency law applicable to individuals (the Federal Decree-Law No. 19 of 2019 on Insolvency), allowing individual debtors to apply to the civil courts to seek a restructuring of their debts. The new law also protects distressed debtors against legal prosecution through the court-mandated appointment of an expert who works to establish a settlement that aims to resolve the debtor's financial constraints. Given its infancy, the new personal insolvency law is yet to be put through its paces but is certainly a positive step for the UAE, addressing an issue identified by many as being the driving force behind the number of absconding debtors in the UAE. Secondly, following consultation with the UAE, in January of this year we saw a declaration issued by the Central Government of India through the Ministry of Law and Justice, whereby the UAE was recognised as a reciprocating territory under Section 44A of the Code of Civil Procedure, 1908. Such recognition allows for a judgement issued by the courts of the UAE to be directly enforceable in India. The effect of this recognition is that UAE court judgements are treated as though they had been issued by the Indian District Court, potentially saving several years of judicial process, with commensurate anticipated cost-savings. Given the potential exposure of UAE financial institutions to corporate debtors backed by Indian individual sponsors, there has been considerable interest in the Indian Gazette notification, and banks and borrowers alike are waiting with
