View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Tuesday, July 28, 2009

Alarm at High Number of Australians on Wrong Side of UAE Law

Aussie Alarm
People in Australia have recently been learning that more than 90 of their countrymen and women have fallen foul of the UAE law since January 2008.

Many of the charges appear minor but news (27 July 2009) of the six month detention of two property executives in a Dubai prison has highlighted the issue for the Australian public and raised fears that many others will be locked up.

Some journalists are saying that Australians are being unjustly ‘caught in a corruption cleanup’ and quoting business sources who believe Aussies are being used as ‘scapegoats’ for the Dubai property downturn. Several stories are part of the popular Dubai-bashing genre with references to the Dubai ‘mirage’ and the city’s ‘supposed development miracle’.

Insights Arising
One’s heart goes out to people who may be detained or imprisoned unjustly but there are some important issues to note about life in the United Arab Emirates, especially if one chooses to live, work or establish a business in the country.

Through a Glass Darkly
It is difficult to get information in the UAE. In Australia there is a desire and a demand by the people that leaders and authorities be transparent. UAE leaders are not voted in by the people and protesting is illegal. There is a remarkable amount of trust shown by the people who believe that the Sheikhs will do the right thing, make wise decisions and disclose information when they judge it appropriate. Furthermore, it is against the UAE law to criticize the rulers and government authorities. The prevalence of high walls and veils symbolize the cloudiness and lack of clarity that abounds. Michael Palin’s comment about a neighboring country being a ‘land of secrets’, also resonates with life in the UAE.

Lost in Translation
The official language of the UAE is Arabic so when dealing with the police and other officials, non-Arabic speakers will automatically be at a disadvantage and this adds to the uncertainty and lack of clarity as to what is happening.

When in Rome
As a fundamentalist to moderate Islamic country, the UAE follows a version of the Sharia law. The differences between the law in Australia and the UAE are many (check out this summary for starters).

Australian journalists have rightly noted that in the UAE it is common for those facing criminal allegations to be held until charges are laid. This action also applies to many apparent minor breaches of the law. Sometimes when new staff are welcomed by their CEO or Director of the College they will be given his/her mobile phone number “just in case they end up in prison!” They will be told that if they are involved in a car accident they may well be detained in custody until the matter is sorted out or at least their passports will be taken, presumably so they will not flee the country.

Criminal Offences
What is pertinent in the economic downturn is that presenting a bouncing cheque, getting into debt and going bankrupt are often viewed as criminal offences, not commercial matters and these violations may lead to a prison sentence.

Far from being isolated and rare occurrences the official statistics issued in May 2009 and published by Dubai’s Gulf News, indicate “that 544,196 bad cheques were written in the first four months of the year across the UAE. On average, one of every 20 cheques written during that period was sent back by a bank marked ‘Refer to Drawer’ or ‘Insufficient Funds’.”

Zawya news service reports (20 July 2009) that mortgage default rates in the UAE could have gone up by almost 25 per cent in the past six months, according to analysts and that the situation is only expected to get worse in the coming months.

Such is the enormity of the problem that Gulf News has prepared an Interactive to inform people ‘What Happens When a Cheque Bounces in the UAE’, a video interview of a UAE lawyer who explains the consequences of a cheque bouncing and a video interview of a ‘bounced cheque suspect’ who explains his plight on condition of anonymity.

Go to Jail
A report in The National (26 July 2009) entitled, ‘Pay up or Go to Jail, Banks Tell Debtors’ cites some heavy-handed actions by UAE banks to get their money back. Some banks, however, are justifying their action because “the Emirates has no institutional framework, such as a credit bureau or a bankruptcy court, for dealing with bad debts.”

Go Directly to Jail
The threat of jail for non-payment of debts has led to numbers of expatriates leaving their cars at the airports and skipping the country. Defaulting on payments and skipping has in turn created a police crackdown and thus the vicious cycle continues.

Do Not Collect $300
A Gulf News article gives a telling case study of Mark, a British expat who, like many expats, moves to the UAE to make his fortune and overextends himself financially. Instead of skipping the country Mark ends up in prison due to bouncing cheques and debts. “I have no way of paying the money back,” he says. “I'm out [of jail] for the moment, but I can't get any access to funds. I have nothing, I'm living with friends and I'm going to go back in unless I pay it off - which I can't do.”

Online ‘Get out of Debt’ counsellors are working overtime advising expats how they can avoid getting jailed in Dubai for debts and answering queries such as ‘Will Banks in Dubai Hunt Me Down in Canada’ and demand the money or issue a warrant for their arrest.

Review, Honour Promises and Awareness
Judging by the discussion on this subject most people believe that jail is not the right solution and that laws regarding the bouncing of cheques should be reviewed. Most people believe that skipping the country and defaulting on financial agreements is also unacceptable and, whether there are changes or not, individuals and business owners need to be understand and abide by the laws of the land.

Dealing With Debt in Dubai, ETE, 14 February 2009.
Thousand Skip UAE Without Paying Debts While Honest Ones Pay Dearly, ETE, 25 May 2009.
Beware Bouncing Cheques in the UAE, ETE, 5 June 2008.
Australians Falling Foul of UAE Law and Tips for Tourists and Residents, ETE, 15 July 2009.
Essam Al Tamimi, Setting Up in Dubai- a Review, RBM, 26 December 2007.
Bryan Denton, Emily B Hager & Robert F Worth, Reporter’s Notebook: Dubai’s Car Culture on the Block (YouTube Video), The New York Times, 18 February 2009.

Check It Out
Check out the new site America’s Cup in the UAE.

Dr Geoff Pound

Geoff can be contacted by email at geoffpound(at) on Facebook and Twitter.