For the country’s prosperity, better bankruptcy laws

In England the first laws on bankruptcy were passed in 1542 in the time of King Henry VIII. But even then the concept was not unknown or unheard of in our region. The second chapter of the Quran includes the provision that an insolvent person should be allowed time to settle his debts.

And in fact, ever since trade was established, it has been common for traders and merchants who have run out of money to flee to foreign countries where their debts could not reach them. In the UAE, we have recently witnessed many instances of a foreign partner or trader running from his creditors to an unknown land without notice, burdening his local partner or sponsor with the liabilities and criminal penalties.

Even in extreme cases there exists significant reluctance to declare bankruptcy though there are 255 distinct provisions in the UAE Federal Commercial Transactions Law No 18 of 1993 that allow individuals and businesses to do so. In addition to these federal laws, DIFC, the region’s largest free trade zone, has its own insolvency laws that are clear, well-drafted and based mainly on the English legal system.