“From direct loss of employment due to government restrictions and indefinite closures of businesses, to the inevitability of bounced cheques resulting in criminal prosecutions because of compulsory quarantines and travel prohibitions; we are extremely concerned about the consequences to expats in the Emirates,” says Radha Stirling, CEO of Detained in Dubai and founder of Due Process International, which address the plight of foreigners embroiled in questionable legal systems around the world.
“As of now, the UAE government is discouraging people from going out, advising offices to close, and several high-profile events have been cancelled or indefinitely postponed. The trajectory appears to be in the direction of a potential lockdown. If a business is regarded as nonessential by the government, it may be compelled to suspend its operations.”
Stirling explains, “Obviously, forced work stoppages will delay delivery of contractual obligations, and this can very quickly lead to false accusations of fraud or breach of trust. Furthermore, most companies in the UAE do business with global clients and suppliers; lockdowns being imposed in countries around the world are bound to disrupt their businesses, potentially with devastating effect.”
Stirling warned that normal interruptions and delays that occur in business, and the usual financial ups and downs companies experience, can be catastrophic in the UAE.
“It is a very different culture, and there is almost zero flexibility among lenders, and local business partners and sponsors expect to be paid even if the company is going through difficult times.
“All of these types of issues become criminal cases in the UAE very rapidly, and we have not seen the courts ever take mitigating circumstances into consideration, so the fallout from the Coronavirus measures are likely to be massive, and expats are going to bear the brunt of it.”
Historically, Stirling notes, banks in the UAE respond to global crises by calling in long term loans and abruptly shutting down lines of credit.
“There was a huge spike in civil and criminal cases against expats initiated by banks in the wake of the Global Financial Crisis, because lenders were breaking the agreed upon long term instalment contracts and compelling people to pay off debts immediately in lump sums. Because the UAE requires security cheques as collateral, the banks would cash those cheques when debtors couldn’t pay the total amount all at once; these cheques bounced, and banks filed criminal complaints.
“The economic impact of the Corona Virus is already considerable, and there is every possibility that it may dwarf the crisis of 2009. Anyone with credit cards, bank loans, or other financial instruments from banks in the UAE should anticipate problems.”
Amidst Coronavirus, and the subsequent prevention policies, many expats in the UAE who face job loss or dwindling opportunities, or simply out of concern for loved ones back home, return to their country of origin, potentially leaving behind outstanding debts.
“Even if people have every intention of paying back what they owe once their financial situation stabilises, and even if they maintain constant communication with lenders, they are still likely to be slapped with a criminal complaint, a conviction in absentia, and then reported to Interpol,” Stirling cautions.
“The UAE is one of the world’s top abusers of the Interpol Red Notice system, reporting dozens of debtors per month, despite the fact that these are private financial disputes.
“A Red Notice can ruin someone’s life, seriously impede their careers and the ability to earn money to pay back their debts.
This is why we try to intervene on clients’ behalf before matters escalate to that level; but if they do escalate, we have also been tremendously successful in having these abusive Red Notices removed. It is crucial for expats to understand just how quickly issues like this can spiral out of control in the UAE, and we strongly advise people to secure professional assistance ahead of any legal complications.”
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