Corporate facilities in the United Arab Emirates require a guarantee contract or a personal guarantee to be executed by the principal partner of the debtor company, obliging the guarantor to repay the full or part of the facility granted in case the company that has been granted the banking facilities fails to pay.
In the event that the company defaults in payment banks resort to expedited judiciary procedures and request a travel ban against the personal guarantor, especially if the personal guarantor is not a citizen of the UAE and hence there is a fear of exiting the country. This usually occurs before any other action is taken; such as lodging a claim against the outstanding amount. Without a doubt, imposition of a travel ban is a useful method of pressuring the guarantor into settling the debt.
However, the provisions of the Dubai Court of Cassation have established that to issue a travel ban it is not sufficient to establish that a debt exists and that the guarantor is a foreign national. The creditor must prove that there are serious reasons for the debtor to flee as stipulated in Article 329 of the Civil Procedures Law, which requires that the petition submitted to the Courts state reasons justifying that there is risk of the guarantor fleeing, such as selling all or part of his property, liquidating or closing the company that received the facility, or other evidence to the effect that the guarantor is ending his stay in the UAE in preparation to flee/leave the country.