SITE
NEWS August 20 2020

Successfully Obtaining Payment Orders on Promissory Notes

By Danielle O'Brien, Junior Associate

 

The amendments to the Civil Procedure Law in 2018 attracted a lot of interest, and most notably because of the significant changes to Payment Order applications, Cabinet Decision 33/2020 has further amended procedural aspects to Payment Orders thereby bringing them back into the limelight.  

Payment Orders are an expedited method used to shortcut civil proceedings and are a valuable tool in UAE litigation. While a debtor needs to be notified of a creditor’s intention to apply for a Payment Order, a Payment Order is a mechanism for an immediate ex parte judgment (i.e. the debtor is not afforded an opportunity to defend the claim).

A claimant may apply for a Payment Order if it can evidence that:

1.       a debt is due;

2.       the debt is in writing; and

3.       the debt is for a specified and undisputed amount.

As such, Payment Orders are typically relied upon by banks and financial institutions who depend on cheques and bills of exchange. While legislation expressly states that Payment Orders can be applied for using a promissory note to evidence the creditor’s claim, jurisprudence illustrates that courts have been overly cautious in that regard.

A promissory note is a legal instrument whereby one party promises to pay a determinate sum of money to another, at an ascertainable future date or on demand by the payee (under specific terms).

Notwithstanding legislation’s express provision for promissory notes, successfully obtaining a Payment Order based on a promissory note is extremely rare.

Noteworthy Precedent

It is with great pleasure that Horizons & Co announces that we have recently successfully obtained a Payment Order on behalf of our client, an international bank, against a prominent local group of companies for an amount of AED 588 million using a promissory note.

Pursuant to Article 62 of Cabinet Decision No. 33 of 2020, an application was filed before the Summary Court, who issued a judgment within 3 days.

It is imperative to note that a Payment Order is not an interim measure. Rather, it is a final judgment that is subject to immediate execution proceedings (regardless of whether the debtor files a grievance).

You might also be interested in...
NEWS June 30 2020
Public Prosecution in Dubai
NEWS June 22 2020
Covid-19 & Force Majeure
NEWS June 15 2020
Use of Electronic Signatures
NEWS May 04 2020
Piercing the Corporate Veil
NEWS January 16 2020
Bona Fide Principle Prevails
NEWS September 04 2018
Franchising in the UAE
NEWS November 14 2018
Extradition Requests in the UAE
NEWS April 24 2018
Bankruptcy in the UAE
NEWS February 07 2018
Seminar: UAE Civil Procedures Law
NEWS March 19 2018
Recent Developments at the RDC
NEWS August 01 2018
Charities and Endowments in Dubai
NEWS September 17 2017
Our Litigation Team Award Winners

For better web experience, please use the website in portrait mode