This article examines how UAE businesses recovering debts from Iraqi customers can coordinate local proceedings with claims against overseas guarantors. A UAE supplier may hold a guarantee from the customer’s foreign parent or shareholder, but the debt and the guarantee may be subject to different laws, forums and conditions. Recovery should preserve every available right while recording payments and settlements consistently.
The Iraqi debt claim is governed mainly by the Civil Code No. 40 of 1951 on obligations, suretyship and interest; the Evidence Law No. 107 of 1979 on documentary proof; the Civil Procedure Law No. 83 of 1969 on court proceedings, including provisional attachment; and the Execution Law No. 45 of 1980 on enforcement. Recognition of foreign judgments is governed by the Law on the Execution of Foreign Judgments No. 30 of 1928, and foreign arbitral awards by Law No. 14 of 2021 on Iraq’s accession to the New York Convention. The overseas guarantee requires separate analysis under its own governing law.
The debt and the guarantee obligation
The underlying claim should establish the contracting debtor, performance and the amount due, supported by signed contracts, delivery records and invoices. Iraqi courts give considerable weight to written evidence, and acknowledgements of debt or signed statements of account can be particularly valuable.
The guarantee should be examined as a separate instrument, including the covered debt, demand conditions, expiry and any limits. A document called a guarantee is not automatically an unconditional payment undertaking. A review of Iraqi commercial obligations should identify whether the debt has been varied, assigned or partly paid, since these events can affect the guarantor’s liability under its terms.
Coordinating notices and proceedings
Each demand should go to the right recipient by the required method. Notice to an Iraqi manager may not count as notice to an overseas guarantor, even within the same group, and evidence of delivery should be kept.
Jurisdiction and arbitration clauses may differ between the supply contract and the guarantee. Parallel claims require advice on procedure, the interaction between decisions and enforcement prospects. A foreign judgment against the guarantor does not give immediate access to Iraqi assets; recognition in Iraq follows its own conditions, including reciprocity and finality, and should be assessed separately.
Interim protection in Iraq
Iraqi courts can order provisional attachment of a debtor’s assets where the creditor shows a likely claim and a risk to recovery, and may require security from the applicant. Any request should identify the respondent’s own assets and meet the legal conditions. Property belonging to other group companies cannot be attached merely because they share ownership with the debtor.
Payments and prevention of duplicate recovery
Each payment should be allocated to the obligation it discharges. Where the debtor pays part of the principal while the guarantor disputes interest or costs, the records should state the remaining balance accurately, with currency conversions and bank charges reconciled across the claims. The Civil Code’s statutory interest rates for commercial debts may differ from the contractual rate, so interest claims need a clear legal basis.
Pursuing several sources of recovery is legitimate; recovering more than the debt is not. Payments and settlements should be communicated to all advisers so that pleadings and demands remain accurate, and recoveries by insurers or other group companies should be reflected in who is entitled to continue each claim.
Settlements and preservation of security
Under the Civil Code, a surety may be discharged where the creditor releases the debtor or materially changes the guaranteed obligation without consent, and similar rules exist in many foreign laws. Changes to payment dates, partial releases or replacement obligations should therefore be reviewed before agreement, and the guarantor’s consent obtained where needed. A reservation of rights is useful but does not cure every consequence of a material variation.
In debt recovery proceedings in Iraq, a settlement should coordinate payment with withdrawal of claims, lifting of attachments and release of other security, and identify which claims are resolved and which remain enforceable at each stage.
Evidence and documents in Iraqi proceedings
Iraqi courts rely heavily on written evidence, and foreign documents must generally be legalised and translated into Arabic before they can be relied on. UAE creditors should gather signed contracts, delivery notes, invoices, account statements and correspondence early, and arrange legalisation through the Iraqi consulate in the UAE and the Ministry of Foreign Affairs in Baghdad. Delays in this process can postpone hearings and weaken requests for urgent relief.
Electronic correspondence, such as emails and messaging apps, can support a claim, but its evidential weight depends on authentication and the circumstances. Where possible, creditors should obtain a written acknowledgement of the debt or a signed statement of account from the debtor before proceedings begin, as such documents are highly persuasive and can simplify the court’s task considerably. Settlement discussions should be conducted carefully to avoid inadvertently compromising the claimed amount.
Conclusion & how Etihad Law Firm can help
Local recovery and overseas guarantee claims should be managed as connected but legally distinct rights, so that progress against one does not undermine the other.
Providing Iraq debt recovery for UAE companies, Etihad Law Firm prepares evidence, issues demands, obtains provisional attachments and conducts proceedings before Iraqi courts, working with foreign counsel to coordinate guarantee claims, enforcement and settlements while avoiding unintended releases or inconsistent positions across jurisdictions.