The High Court of England and Wales has made a landmark ruling, enforcing a judgment from the Dubai Courts against a UAE national, Rashed Abdulaziz Almakhawi, who attempted to evade liability by transferring assets to a family member.

This decision signals a breakthrough in legal cooperation between England and the UAE. Emirates NBD Bank had secured a ruling in Dubai Courts against Almakhawi for defaulting on his obligations as a personal guarantor for loans taken by System Construct Dubai, a company where he was a majority shareholder. The Dubai Courts mandated him to pay an estimated £47.5 million plus interest. As Almakhawi had assets in the UK, the bank sought to enforce the judgment in England and Wales.

Adding to the significance, the UK High Court’s ruling follows recent changes in UAE laws regarding personal guarantees. The Central Bank of the UAE has instituted that lending must be backed by ‘adequate security’. This new requirement indicates that a personal guarantee alone is not sufficient and aims to protect personal guarantors.

In a twist, Almakhawi transferred property and funds in the UK to his son. The High Court ruled that this transfer was an attempt to defraud creditors, contravening section 423 of the Insolvency Act 1986. The court held that the intention behind these transfers was not solely for succession planning but also to evade creditors, including Emirates NBD Bank.

The English Court dismissed the argument that the assets still belonged to Almakhawi through a resulting trust. There wasn’t enough evidence to support this claim.

This case sets a precedent for future enforcement actions against foreign nationals’ assets in the UK, particularly those from the UAE. Furthermore, it reflects growing reciprocity between UK and UAE courts. Although there’s no instance of the UAE courts enforcing an English judgment yet, the UAE Ministry of Justice has urged its courts to take into account this High Court’s ruling.

Not only is this development indicative of closer legal cooperation between the UK and UAE but also highlights the need for individuals to exercise caution in cross-border financial transactions and asset transfers.