Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Deterring Moral Hazard: An Analytical Overview of the Criminal Law Protection for Creditors in the UAE

Author(s): Ibrahim Suleiman Al Qatawneh

This article provides a critical review of the protection of creditors’ interests under criminal law in the United Arab Emirates (‘UAE’), particularly in the light of its comprehensive reform of bankruptcy legislation of 2016. The review adopts an analytical doctrinal method, where desk-based research into the blackletter of relevant legal texts is complemented by reasoned doctrinal commentary. The study reveals the pivotal role deterrence plays for guiding the design of criminal law safeguards against moral hazard by distressed debtors. This approach—which is consistent with a longstanding focus on criminal deterrence in Islamic jurisprudence—provides an important rationale for the adoption of a criminal law framework, not just for the benefit of individual creditors, but also for increasing the reliability of the UAE credit market as a whole. While the provisions of the 2016 UAE Bankruptcy Law do much to curtail cavalier behaviour by distressed business debtors, the law engenders segmentation in the credit market by failing to prepare similar safeguards for non-business creditors and debtors. The paper ends with a recommendation for addressing this imbalance.

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