Liability of the guarantor toward creditors in the UAE

Dear Questioner,

The Civil Code, in relation to guarantees, provides that:

1. The obligation of a guarantor is incidental to the obligation of the principal debtor. Any discharge of the principal debtor’s obligations may, therefore, result in the guarantee no longer being valid;

2. If the principal debtor becomes bankrupt, the creditor must prove its debt in the bankruptcy, failing which it will lose its right to claim against the guarantor to the extent of any sums which the creditor might have received had it proved such debt in the bankruptcy; and

3. Upon the discharge of the relevant debt, the creditor must deliver to the guarantor all necessary papers to enable the guarantor to exercise its right of recourse against the principal debtor.

Also, please note that there is a limitation period as well.

Article 1092 of the Civil Code provides that "If a debt is due, the creditor should claim the debt within six months from the date on which it fell due, otherwise the guarantor shall be deemed to have been discharged."

In your matter, I would like to know when the bank filed a case against you, when it was due and details pertaining to the transaction as well.

Hope the above explanation gives you some clarity on the concern raised.

Thank you.

Dear Questioner,

We have to know if it is an LLC company. However, it seems that the court has already passed the judgment. As a guarantor, one is obliged to pay but if it is an LLC company, the liability is on the company.

If there is a court order, then he should appeal and if the period of appeal is already over, then there will be an execution proceeding. Failure to pay might end up in a jail sentence so before it is too late, an appeal should be preferred.

Please feel free to contact us through jana@alketbilaw.com and we shall call you the same day.

Best regards,

Khalifa Bin Huwaidan Advocates and Legal Consultants