Several Indian banks have started the process of initiating legal action against defaulters who are now in India, following the enforcement of the new law earlier this year.
The new notification, passed by the Indian ministry of Law and Justice on January 18, identifies the UAE as a “reciprocating territory” for the mutual enforcement of court judgments.
This means bank loan defaulters in the UAE can now be prosecuted in India.
At least nine banks from the UAE, including Emirates NBD, Mashreq and ADCB have already initiated legal action against defaulters in India to recover around $6.9bn, Indian daily Economic Times reported.
Most of the cases involve corporate loans taken by UAE-based subsidiaries of Indian companies, where the amounts are “huge”, the report quoted sources as saying.
Many of those loans were taken in the past 10 to 15 years.
However, some cases also involve individuals, the report added.
The banks have reportedly approached Indian law firms to complete the legal process or are approaching the National Company Law Tribunal (NCLT), which deals with insolvency cases.
The recent notification is expected to provide greater scope for legal and judicial collaboration between the UAE and India, according to a senior lawyer.
“With the notification facilitating the enforcement of UAE judgments in India, we would expect to see more certainty in commercial dealings as businesses would have a right of recourse against their debtors in India,” said Sally Kotb, counsel, Dispute Resolution – Arbitration at law firm Baker McKenzie Habib Al Mulla.
“This development is especially significant considering the substantial number of trading relations and Indian owned companies in the UAE,” she added.