A Q&A guide to arbitration law and practice in the United Arab Emirates.
The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts’ willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.
The Dubai International Financial Centre (DIFC) has introduced the DIFC Prescribed Company Regulations 2024 (the 2024 Regulations), replacing the DIFC Prescribed Company Regulations 2019 (as amended in 2020 and 2022) (together the Former Regulations). The 2024 Regulations came into effect on 15 July 2024 and expand the range of applicants eligible to incorporate a so called “prescribed company” in the DIFC.
Evolution of eligibility criteria
Under the Former Regulations, the following could establish a prescribed company in the DIFC:
1.) Qualifying Applicants: entities that could demonstrate an existing nexus to the DIFC, such as already being registered within the DIFC or affiliated with a DIFC-registered entity, or meeting specific criteria (e.g., being an ‘Authorised Firm’ or a ‘Government Entity’).
2.) Qualifying Purpose Applicants: applicants engaged in specific activities such as ‘Structured Financing,’ ‘Aviation,’ or ‘Crowdfunding Structures’.
Key changes
Expanded eligibility
The 2024 Regulations require that an applicant wishing to incorporate or continue a prescribed company in the DIFC must satisfy the DIFC Registrar of Companies of one of the following criteria:
1.) the prescribed company is controlled by:
GCC Persons: individuals who are citizens of a GCC member state, bodies corporate controlled by citizens of a GCC member state, entities with securities listed on a GCC exchange, and so called ‘Government Entities’;
Registered Persons: a body corporate incorporated, registered, or continued within the DIFC, excluding prescribed companies and non-profit organisations incorporated or continued within the DIFC; or
Authorised Firms: any person holding a license granted by the Dubai Financial Services Authority or by a recognised financial regulator within the UAE or certain other jurisdictions.
2.) the prescribed company is established or continued in the DIFC for the purpose of holding legal title to, or controlling, one or more GCC Registrable Assets[1].
3.) the proposed prescribed company is established or continued in the DIFC for a Qualifying Purpose[2].
4.) the prescribed company established or continued in the DIFC has a director who is an employee of a “Corporate Service Provider[3]” and that Corporate Service Provider has an arrangement with the DIFC Registrar of Companies in accordance with Regulation 3.3.2 of the 2024 Regulations.
Employment restriction
The 2024 Regulations have introduced an express prohibition on a prescribed company employing staff. This restriction does not extend to the appointment of directors.
Conclusion
The 2024 Regulations mark a significant shift in the DIFC regulatory landscape, making it more inclusive and flexible for a wider range of applicants and purposes. We anticipate that the 2024 Regulations will make the DIFC prescribed company more attractive for use in corporate structuring. ■
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[1] A GCC Registrable Asset is defined in the 2024 Regulations as: an asset or property interest that must registered with a GCC Authority to establish legal ownership, secure rights, or encumbrances against it, and to provide public notice of such interests, including: (a) land and real property; (b) shares in companies; (c) partnership interests; (d) intellectual property; and (e) aircraft and Maritime Vessels.
[2] A Qualifying Purpose is defined in the 2024 Regulations as being any of the following: (a) an “Aviation Structure”; (b) a “Crowdfunding Structure”; (c) an “Intellectual Property Structure”; (d) a “Maritime Structure”; (e) a “Structured Financing.
[3] A Corporate Service Provider is defined in the 2024 Regulations as: a person registered with the DFSA as a Designated Non-Financial Business or Professional that undertakes corporate services business in the DIFC.
This Q&A provides a high-level overview of the key matters to consider when doing business in the United Arab Emirates, including legal systems, foreign investment, business vehicles, environment, employment, competition, intellectual property, marketing agreements, e-commerce, advertising, data protection, product liability and regulatory authorities.
On 29 July 2024, the UAE enacted Federal Decree Law 9 of 2024 (the Amendment) introducing some significant changes to Federal Decree Law 33 of 2021 (the Labour Law), UAE’s principal legislation on employment. The Amendment replaces Article 54 of the Labour Law pertaining to individual labour disputes, and, Article 60 of the same law which sets out the penalties applicable for certain violations by employers. The Amendment comes into force on 31 August 2024.
The key amendments are as follows:
Article 54 (individual labour disputes)
Article 60 (penalties)
Enhanced penalties for violations.
The penalties applicable to employers under this provision for certain violations have been substantially enhanced under the Amendment. The previous penalty ceiling of AED 200,000, for these violations, has been raised to AED 1 million under the Amendment. Accordingly, employers should take note that once the Amendment becomes effective, they may be exposed to penalties ranging between AED 100,000 and AED 1 million for the following violations:
a)Employing an employee without obtaining a work permit;
b) Recruiting an employee and not providing work;
c) Misusing work permits for purposes other than those for which they were issued;
d) Closing an establishment or suspending its activities without settling workers’ rights or entitlements; and
e) Employing a minor in violation of the Labour Law.
Penalty for engaging in fictitious employment.
Significantly, the Amendment also imposes an identical penalty (between AED 100,000 and AED 1 million) for fictitious recruitment of employees. The Amendment specifies that this penalty is multiplied depending on the number of employees who are employed fictitiously.
The Amendment also provides that the Ministry of Human Resources and Emiratisation may institute criminal proceedings against employers for fictitious recruitment of employees.
This stringent fine is intended to deter employers and employees from subverting government policies and public benefit measures, such as the Emiratisation programme.
The award-winning dispute resolution team at Afridi & Angell has significant expertise in UAE employment law and are well positioned to advise on employment disputes and risk mitigation. ■
This multi-jurisdictional reference guide features a UAE chapter and provides insights into the prevailing conditions in the global restructuring market. It examines the most significant recent legal and commercial developments and provides an overview of the restructuring and insolvency legal framework in each jurisdiction.
The UAE recently amended its legal framework on abortion to expand the circumstances under which abortions are permitted and ease the rules regarding the circumstances under which abortions are permissible. Cabinet Decision No. 44/2024 (the Decision) came into effect on 21 June 2024 and progressively changed UAE’s law on abortion.
Prior to the Decision, abortions were only allowed in two cases: if the pregnant woman’s life was at risk (Case 1), or if the foetus had a severe deformity (Case 2). Article 4 of the Decision recognises three additional cases where abortions are permissible:
Non-consensual Pregnancy – This includes a pregnancy that occurs because of an act committed against the woman’s will, without her consent, or through coercion, such as rape (Case 3).
Incestuous Pregnancy – In cases where pregnancy is a result of incest (Case 4).
Spousal Request – If both spouses request an abortion, which is subject to approval by a specialised medical committee (Case 5). This is considered to be the most significant change introduced by the Decision.
The Decision applies to both Emiratis and expatriates. However, an expatriate woman seeking an abortion must have legally resided in the UAE for at least one year before making a request for an abortion. The Decision also sets conditions and certain controls for performing abortions, including:
The Decision requires the formation of a committee at the level of each Health Authority in the UAE, which must include three doctors and a member of the Public Prosecution Department. The approval of a committee is required prior to performing an abortion.
Nevertheless, the Decision does not set out the criteria to be considered by the committee in making its decisions. It is expected that this will be addressed by the legislature in due course. ■
In addition to the UAE, which we have contributed for the third year, this guide covers a broad range of common issues in fintech laws and regulations in 41 jurisdictions. Areas covered in the guide include the fintech landscape, funding for fintech, fintech regulation, other regulatory regimes / non-financial regulation, accessing talent, and technology.
This globally relevant Q&A of Lexology, Panoramic, focuses on key questions centered around Shipping in the United Arab Emirates. Some topics covered include; shipping registration and mortgages, limitation of liability, ship arrest, judicial sale of vessels and many more.
This article, published by Lexis Nexis, discusses the impact of extreme weather conditions on contracting parties and where the burden will fall under UAE law.
Read the full edition here.
The Q&A gives a high-level overview of real estate investment structures; restrictions on foreign ownership; title; tenure; sale of real estate; real estate tax; real estate finance; leases; and planning law in the United Arab Emirates.
This Q&A is part of the global guide to corporate real estate law.
