Tag: DIFC – Dubai International Financial Centre

The new DIFC Employment Law: key changes

On 12 June 2019, the Dubai International Financial Centre (the DIFC) announced the enactment of DIFC Law 2 of 2019 (the New DIFC Employment Law) to replace the existing DIFC Law 4 of 2005 (the Old DIFC Employment Law). The New DIFC Employment Law is to come into force on 28 August 2019 and will directly affect almost 24,000 employees based in the DIFC.

 

As the leading regional financial centre, the DIFC’s employment law is a fundamental piece of legislation which is key in ensuring a balance between an employer’s business interests and employee rights within the DIFC. After an extensive consultation process, the New DIFC Employment Law has introduced a number of changes which focus on this balance.

 

The repeal of the Old DIFC Employment Law 

 

The New DIFC Employment Law “repeals and replaces” the Old DIFC Employment Law in its entirety. However, the transitionary provisions (i.e. provisions which clarify the effect of the new law on any rights accrued under the old law) set out in Article 1 have ensured that any “right, remedy, debt or obligation which has accrued” under the previous law would not be prejudiced by the enactment of the new law, subject to a few exceptions.

 

Essentially, the New DIFC Employment Law has no retrospective effect and proceedings already before the DIFC Court (including appeals) would continue to be based on the provisions of the old law.

 

Conditions of employment, probation and part-time employment 

 

Article 17 of the new law now makes provisions with regard to the employment of part-time employees (a concept not recognised under the old law). A part-time employee is defined as an employee whose employment contract either stipulates: (a) less than eight working hours per work day, inclusive of any rest, nursing or prayer breaks; (b) less than five work days per work week; or (c) terms of employment which do not constitute full time employment.   All  provisions  of  the  new law  apply  to  part-time employees except for leave entitlements which are to be calculated on a pro rata basis as provided for in Article 17(2).

 

Other changes to conditions of employment include the expansion of maternity leave benefits for female employees who adopt a child less than five years old (Article 37(3)), introduction of up to five days of paternity leave for male employees to be taken within a month of the child being born (Article 39) and a reduction of sick pay (Article 35) as follows:

 

a) hundred per cent of the employees daily wage for the first ten work days of sick leave taken;

b) fifty per cent of the employees daily wage for the next 20 work days of sick leave taken; and

c) no further pay for the remaining maximum sick leave entitlement (60 work days per year).

 

In terms of Article 11(2), the conditions of employment set out in the New DIFC Employment Law are “minimum requirements” and cannot be waived even by express agreement by the employer and the employee unless such waiver is specifically allowed under the new law. It is possible to agree on conditions that are more favorable to the employee in an employment contract.

 

One such instance where an employer may change the minimum requirements by express written agreement is the maximum weekly working time of an employee. In terms of Article 22, the employee’s maximum working time is 48 hours per week. However, Article 22 allows an employer to increase this limit if the employee consents in writing. Taking into account the mandatory daily rest period (11 hours per day) and the weekly rest period (24 hours per week), an employer may increase the weekly working time up to 78 hours if the employee consents to such increase in writing.

 

The New DIFC Employment Law has also formally recognised the concept of probation (not specifically recognised under the old law). In terms of Article 14(2)(l), the maximum period of probation which a new employee may be subject to is six months. Furthermore, an employee terminated during a probation period is not entitled to a minimum notice period as specified in Article 62(2) and it appears that the New DIFC Employment Law has impliedly recognised that an employee may be terminated without notice during the probation period if such provisions are specifically made in the employment contract.

 

According to Article 14(3), any amendments to an employment contract must now be in writing and signed by both the employer and employee unless such amendment is of an administrative nature. In case of such an administrative amendment, the employer is required to record the amendment in writing and to give written notice to the employee prior to the amendment taking effect.

 

 Non-discrimination and non-victimisation 

 

The New DIFC Employment Law makes extensive provisions relating to non-discrimination and non-victimisation of employees and remedies for discrimination. Article 59 defines discrimination in wide terms to include both direct and indirect discrimination. New grounds of discrimination introduced under Article 59 of the new law are age, pregnancy and maternity.

 

Furthermore, Article 60 of the new law prevents an employer from victimising an employee for committing a “protected act”. Protected acts include bringing legal proceedings for discrimination against an employer, giving evidence against an employer in a claim for discrimination (whether in an employee’s own claim or a third party employee’s claim) and making allegations that the employer has committed acts of discrimination or victimisation.

 

In terms of Article 61, an employee is entitled to bring proceedings against an employer for victimisation or discrimination within six months of such an act taking place. The burden of proof in proving discrimination is on the employee and the court may (a) make a declaration as to the rights of the employee; (b) award compensation which could include compensation for “injured feelings”, subject to a maximum amount equivalent to the employee’s annual wage; (c) make appropriate recommendations; or (d) order a combination of such remedies.

 

Termination of employment and settlements 

 

While termination with notice is largely unchanged from the old law, the New DIFC Employment Law has made a major change to an employee’s entitlements upon termination for cause (i.e. termination without notice for misconduct). In terms of Article 63(2) of the new law, an employee terminated for cause would still be entitled to gratuity payments which could have been withheld under the old law. Accordingly, the only retention that an employer could make when terminating an employee for cause is notice pay.

 

The New DIFC Employment Law does not expressly recognise the concepts of constructive termination (termination where an employee is forced to resign) or unfair dismissal (termination with notice for unfair reasons) and the DIFC Court has previously held that it would not intervene to introduce these concepts by judicial intervention unless statute specifically makes appropriate provisions in that regard.

 

Furthermore, the new law appears to have expressly recognised the ability to enter into employment settlement agreements. In terms of Article 11(2)(b), an employee may waive any right, remedy, obligation, claim or action under the new law by entering into a written agreement with their employer to terminate their employment or resolve any dispute. In entering into such agreements, the employee must warrant that the employee was given an opportunity to receive independent legal advice on the terms and effect of the agreement from a legal practitioner registered as a Part 1 or Part II practitioner in the DIFC Academy of Law’s register of legal practitioners.

 

Article 18 penalties

 

Another change which the New DIFC Employment Law has introduced, perhaps to balance the benefit granted to employees in awarding of gratuity when terminating an employee for cause, is the limitation of Article 18 penalties under the old law. In terms of Article 18(2) of the old law, an employer was liable to pay an employee a penalty equivalent to the last daily wage for each day the employer is in arrears or any amount (even one dirham) owing to an employee upon his termination.

 

Practically, the Article 18 penalties were applied inconsistently by the DIFC Courts in claims by employees challenging termination for cause (where the employer withholds gratuity and notice pay) leading to judgements where Article 18 penalties amounted to a substantial portion of the judgement amount. In certain cases, the court applied Article 18 penalties for the entire period from the date of termination of the employee to the date of judgement, without considering that (a) an employee had waited for a substantial period of time before bringing a claim; or (b) Court proceedings often took many months to complete.

 

In terms of Article 19(4) of the new law, in awarding Article 18 penalties (now Article 19 penalties), the court must discount (a) the time period in which a dispute is pending before a Court; and (b) the employee’s unreasonable conduct which is the material cause of the employee failing to receive any amounts due from the employee. Afridi & Angell is currently canvassing an appeal from a decision of the DIFC Small Claims Tribunal where Article 18 penalties were applied to almost an eight-month period. The appeal is based on the unfairness caused to employers by such an application of penalties which has now been recognised by the changes made to the new law.

 

Furthermore, Article 19 penalties cannot be awarded if the amount withheld by the employer as held by the court is not in excess of the employee’s weekly wage.

 

Recruitment costs

 

In terms of Article 21(2) of the New DIFC Employment Law, an employer is prevented from recouping any costs or expenses incurred in employing an employee from such employee during the course of employment. However, according to Article 21(3), an employer may now recoup such costs from an employee if an employee terminates their employment contract (ex. by resignation), within a period of six months from the employee’s date of commencement of employment.

 

Accordingly, an employee may now be liable to repay the employer for any fees charged by a recruitment firm or head-hunter (common in the DIFC) if the conditions set out in Article 21(3) are met.

 

Time limitation for employment claims

 

Yet another important and timely change brought about by Article 10 of the New DIFC Employment Law is the introduction of a six-month time limitation for employment claims starting from the date of termination of an employee. This time limitation comes into effect on 28 August 2019.

 

The introduction of a time limitation for employment claims will bring comfort to many DIFC employers. There have been cases before the DIFC Courts where ex-employees have made claims over twelve months after a termination occurred, exposing the employer to heavy penalties under the Old DIFC Employment Law.

 

Application of the New DIFC Employment Law and secondment 

 

Article 4 of the New DIFC Employment Law does not, unlike the Old Employment Law, limit its application to employees based within or ordinarily working within or from the DIFC. In terms of Article 4(1)(b)(ii), an employer who has a place of business in the DIFC (including a branch), may employ an employee under an employment contract subject to the New DIFC Employment Law even if such employee is not based within the DIFC.

 

Furthermore, Article 4(2)(1) of the New DIFC Employment Law also allows for a seconded employee to be subject to a law other than the New DIFC Employment Law despite such employee being based in the DIFC. For the purposes of this section, the secondment should be recognised by the DIFCA and should be for a temporary basis not longer than 12 months (or other period approved by the DIFCA on exceptional grounds).

 

Conclusion

 

The changes introduced by the New DIFC Employment Law have enhanced the balance between a DIFC employer’s legitimate requirements and the need to ensure global employment standards for DIFC employees. Changes to payments upon termination are likely to reduce employment claims proceeding to Court since an employer would not have a real incentive to risk litigation by terminating an employee for cause when the employee could be terminated with notice, especially since the employer can no longer withhold gratuity when terminating for cause. The new enhanced non-discrimination provisions are progressive, yet the practical effects of such provisions are yet to be tested by the courts. ■

Keeping up with the Trend: The New Dubai International Financial Centre Insolvency Law

This article explores the reformation of the insolvency regime by the DIFC which had been motivated by the need to provide more efficient and practical insolvency and restructuring mechanisms to debtors as well as creditors. This article provides an understanding of the new Dubai International Financial Centre (‘DIFC’) insolvency law; DIFC Law 1 of 2019.

Directors’ duties in DIFC

Introduction 

 

On 12 November 2018, the Dubai International Financial Centre (DIFC) introduced a suite of new legislation concerning companies operating in or from the DIFC. This consists of DIFC Law 5 of 2018 (the Companies Law), DIFC Law 7 of 2018, the Companies Regulations and the Operating Regulations.

 

The Companies Law has amplified the duties of directors of DIFC companies by enacting a set of directors’ duties, largely following the standard contained in the UK Companies Act 2006.

 

This inBrief briefly outlines the particular duties that directors of bodies corporate in the DIFC should be aware of.

 

Directors’ Duties

 

Directors’ duties are owed to the company. This means that it will in the first instance be the company, rather than the shareholders, that are entitled to enforce them.

 

Companies are permitted to go further than the statutory duties provided by placing more onerous requirements on their directors in their articles of association, or by virtue of a director’s terms of appointment.

 

The Companies Law sets out the following directors’ duties (though there may also be additional duties that are relevant to a director, for example, a duty to prepare and deliver accounts) although directors of public limited companies or financial services providers licensed by the Dubai Financial Services Authority may be subject to additional duties:

 

• duty to act within powers: directors are confined to exercising their powers in accordance with the company’s articles of association and for the purposes for which those powers have been conferred;

 

• duty to promote the success of the company: directors must act in the manner they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole. In doing so, directors must consider, amongst others, the interests of the company’s employees, likely consequences of any decision in the long run and the impact of the company’s operations on the community and the environment;

 

• duty to exercise independent judgement: directors must generally exercise their powers independently. As an example, directors may not agree to vote at a board meeting in a certain way if instructed by a third party (i.e. shareholder);

 

• duty to exercise reasonable care, skill and diligence: a director must act as a reasonably diligent person would at all times. A director must display the general knowledge, skill and experience to carry out the functions that are required by the director. An individual should not take on a directorship unless they are appropriately qualified or experienced to be able to perform the functions that they may reasonably be expected to carry out;

 

• duty to avoid conflicts of interest: directors must avoid scenarios in which they have or can have a direct or indirect interest that conflicts with, or may conflict with the company’s interest;

 

• duty not to accept benefits from third parties: directors must not accept any benefit from a third party which is conferred because of him being in the position as a director of the company, or for him doing (or not doing) anything in his position as director, unless the acceptance of such benefit cannot reasonably be regarded as likely to give rise to a conflict of interest. “Benefit” has not been defined in the Companies Law, but it is likely that a court considering the matter would interpret this term to have its ordinary meaning;

 

• duty to declare interest in a proposed transaction or arrangement: directors must declare, before entering into the relevant transaction or arrangement, to the other directors the nature and extent of any interest (direct or indirect) in a proposed transaction or arrangement with the company. As the legislation provides for indirect interest, the director need not be a party to the transaction for the duty to apply and directors should apply their mind to potential parties who may be regarded as connected persons;

 

• duty to declare interest in existing transaction or arrangement: directors must declare, as soon as practicable after the director became aware of the circumstances, the nature and extent of any interest (direct or indirect) in a transaction or arrangement with the company or by a subsidiary which, to a material extent, conflicts or may conflict with the interests of the company.

 

Consequences of breach

 

The consequences for directors breaching their statutory duties can be severe and may include personal civil liability, fines or payment of damages to the company. A breach of duty may also be grounds for disqualification from the position as a director.

 

Conclusion

 

Directors should familiarize themselves with the statutory duties outlined in the Companies Law (and other relevant legislation) before accepting a position as a director of a DIFC company. Individuals should assess whether they have the necessary qualifications, experience, knowledge and capabilities to perform the tasks which may be expected of the director. Directors or potential directors who are uncertain of what may be expected of them in their role as directors should seek legal advice. ■

Ultimate Beneficial Ownership Regulations (DIFC)

The DIFC Authority has issued the Ultimate Beneficial Ownership (UBO) Regulations, which took effect on 12 November 2018 (the Regulations).

 

The Regulations require entities currently registered with, or to be registered with, the DIFC Authority to keep and maintain a UBO Register and (if applicable) a Register of Nominee Directors, setting out the details of the UBO and Nominee Directors respectively.

 

In this inBrief, we highlight the key items that DIFC entities need to be aware of in creating and maintaining their UBO Register and Register of Nominee Directors and in issuing the associated notifications to the DIFC Registrar of Companies.

 

Who are the Nominee Director and the UBO?

 

For the purposes of the Regulations, a Nominee Director is a director who is obligated to act in accordance with the directions and instructions of another person.

 

An ultimate beneficial owner is a natural person who:

 

– in relation to a DIFC company, owns or controls directly or indirectly:

o 25% of shares, ownership interests or voting rights in the DIFC entity; or

o has the right to appoint or remove the majority of the directors of the DIFC entity.

 

– in relation to a DIFC partnership, exercises significant control over the activities of the partnership;

 

– in relation to a DIFC foundation, exercises significant control over the council of the foundation; and

 

– in relation to a DIFC non-profit incorporated organisation, exercises significant control over the board.

 

If, after applying the foregoing rules, no natural person can be identified as an ultimate beneficial owner of the DIFC entity, anyone who exercises significant control over the DIFC entity (or its governing body) shall be required to be notified as an ultimate beneficial owner of the DIFC entity. If there is no such person, then members of the governing body of the DIFC entity shall be required to be notified as ultimate beneficial owners of the DIFC entity.

 

Obligation of DIFC entities

 

The obligations of the DIFC entities vary slightly depending on when they were registered with the DIFC Authority.

 

– DIFC entities registered prior to 12 November 2018 were required to establish a UBO Register and Register of Nominee Directors, and notify the details of the Nominee Directors and the ultimate beneficial owner to the DIFC Authority through the DIFC portal by 12 February 2019 (the DIFC Authority granted an additional penalty free grace period of 30 days, meaning that the final deadline for compliance was 14 March 2019).

 

– DIFC entities registered after 12 November 2018 were also required to comply with the deadline of 14 March 2019 to establish a UBO Register. For the Register of Nominee Directors, the deadline is 30 days of the later of the registration date of the DIFC entity or the Nominee Director becoming a director of the DIFC entity.

 

– Entities in the process of being registered with the DIFC Authority are required to establish a UBO Register 30 days following the date of registration with the DIFC Authority.

 

The latter two categories of entities need not notify the DIFC Authority of the UBO details, as they are deemed to have provided such details as part of the registration process.

 

Changes to the UBO Register

 

DIFC entities must record any changes to the UBO Register and Register of Nominee Directors, and notify the DIFC Authority of the same through the DIFC Portal, within 30 days of becoming aware of such change.

 

Penalties

 

Failing to keep and maintain the UBO Register and the Register of Nominee Directors will result in a fine of USD 25,000. If the DIFC entity fails to comply with any requirement, or notice issued, under the Regulations, the DIFC Registrar may strike the DIFC entity off the Public Register.

 

Exempt Entities

 

The Regulations set out DIFC entities that are exempt from keeping and maintaining a UBO Register and Register of Nominee Directors. These are DIFC entities that:

 

– have their securities listed or traded on an exchange recognised by the DIFC Authority;

 

– or regulated by the DFSA or any other financial services regulator recognised by the DIFC Authority;

 

– constitute a company, foundation or partnership which the DIFC Authority recognises as being subject to equivalent international standards with adequate transparency of ownership information in its home jurisdiction;

 

– are a non-profit incorporated organisation which does not, as its primary function, engage in raising or disbursing funds for charitable, religious, cultural, educational, social, fraternal or similar purposes;

 

– are wholly owned by a government or governmental agency of the UAE and any other jurisdiction which the DIFC Authority may determine from time to time; or

 

– are established under UAE law to perform governmental functions.

 

DIFC entities that fall under one of the abovementioned categories will be required to request a formal exemption.

 

Partially Exempt DIFC Entities

 

Additionally, the Regulations set out the requirements for a partially exempt DIFC entity, which is a DIFC entity that is at least 25% owned by a corporate person that falls under one of the abovementioned categories (Exempt Owner). Such DIFC entity is subject to the obligations set out in Section 4, however with respect to the Exempt Owner, instead of tracing the ownership details of the Exempt Owner, the details of the Exempt Owner are inserted in the UBO Register instead. ■

Big brother is watching

The DIFC Court has confirmed that businesses in the DIFC can listen in and make use of telephone conversations made by their employees. His Excellency Justice Omar Al Muhairi issued an order to this effect on 31 October in the case of ED&F Man Capital Markets MENA Ltd and RJ O’Brien MENA Capital Ltd (and others). Afridi & Angell are representing ED&F Man Capital Markets MENA Ltd in this matter. Lawyers for the defendants had sought to exclude evidence introduced by ED&F which consisted of transcripts of telephone conversations made by ED&F employees. Defendants’ counsel claimed that such recordings were a breach of the UAE Penal Code, and therefore should be inadmissible in the DIFC Court proceedings. Justice Al Muhairi rejected this argument on two grounds. Firstly, on the basis that the individuals involved in the telephone conversations had provided consent to the recordings, and secondly on the basis that the Dubai Financial Services Authority mandates the recording of communications relating to transactions. ■

DIFC special purpose companies and exempt activities: a special purpose

The special purpose company (SPC) regime in the Dubai International Financial Centre (the DIFC) offers a vehicle that is convenient for use in many types of corporate finance transactions. A DIFC SPC is relatively quick and easy to establish and inexpensive to maintain on an ongoing basis as compared to a DIFC company limited by shares.

 

All SPCs are governed by and subject to the DIFC Special Purpose Company Regulations (the SPCoR).  Importantly, the SPCoR stipulates that an SPC can only be used for an “Exempt Activity”. In summary, the SPCoR requires that an SPC be used only where some form of financing, debt or capital markets transaction is contemplated.

 

Those that seek to use an SPC in their corporate structures must take this limitation into account. The DIFC Registrar of Companies is granted the right to review the status of a DIFC SPC, and to revoke the privileges and exemptions granted to an SPC by the SPCoR, should an SPC undertake any activity which is not an Exempt Activity. Specifically, this means that an SPC should not be used merely as a holding company, where there is no genuine financing element that would qualify as an Exempt Activity under the SPCoR. We are aware that the DIFC authorities have recently stepped up enforcement activity in an effort to ensure that all SPCs are adhering to the restrictions set forth in the SPCoR in letter and spirit.  This approach could affect the viability of using an SPC as a mere holding vehicle in new structures, and could also affect existing structures if the DIFC authorities choose to examine the stated versus actual activities of existing SPCs. ■

The right to be forgotten

Afridi & Angell has recently successfully assisted two individuals in becoming forgotten. Put another way, we were able to convince the Dubai Financial Services Authority (the DFSA) that the names of the individuals should be removed from public documents available on the DFSA website. These included published regulatory actions (in the form of enforceable undertakings) and DFSA media releases.

 

The individuals had been associated with a regulated company in the Dubai International Financial Centre (the DIFC). The company had operated in the DIFC for several years, but in 2008 had the unhappy distinction of becoming the first business in the DIFC to be essentially closed down by the DFSA as a result of various regulatory concerns.

 

Afridi & Angell assisted the company throughout the DFSA investigation and enforcement process. We also assisted in the negotiation of the enforceable undertakings eventually provided by various individuals in late 2008.

 

The precise terms of the undertakings varied amongst the individuals, but included obligations such as the payment of fines to the DFSA, and the need to refrain from undertaking any sort of licensed activity in the DIFC for a period of time.

 

In the years following 2008 the individuals complied with the terms of their undertakings, and following the closure of the business, most left the UAE. Such is the nature of the internet, however, that details of the problems in the business, and of the roles of the individuals, followed them wherever they went, and for years afterwards.

 

The fact that the individuals were still suffering negative consequences in 2017, nearly a decade after the incidents that led to the DFSA’s regulatory concerns, prompted the individuals to seek a solution. The negative consequences included social stigma, such as when one of the individuals attempted to enroll his child in a new school, and found that the application was suspended until he could provide the principal with the details regarding the events in 2008. There were also more significant financial consequences, such as when one of the individuals failed to secure a particular professional position in part due to concerns over the 2008 events.

 

By virtue of being on the DFSA website, the undertakings and media releases were public documents.

 

These ongoing negative consequences were not proportional to the areas of concern that led to the giving of the undertakings in 2008. For this reason, we asked that the DFSA consider removing the undertakings from the DFSA’s website. As an alternative, we asked that the DFSA consider replacing the undertakings with a redacted version in which the individuals’ names were not disclosed.

 

Many countries have legislation aimed at the rehabilitation of offenders. Such legislation typically enables some criminal convictions to be ignored after a rehabilitation period. The intention is to prevent people from being punished indefinitely because of a relatively minor offence in their past. Here in the UAE there is a process by which some convicted criminals can apply to the police for their records to be sealed.

 

In addition to the widespread rehabilitation-of-offenders legislation, the “Right to Erasure” or the “Right to be Forgotten” is a developing legal concept in a number of jurisdictions. The nature of the internet means that information remains readily accessible for far longer than has been the historic norm. It is encouraging to see that the DFSA is willing to take notice of the evolving jurisprudence in this area. ■

Do I need a DIFC will?

The Wills and Probate Registry in the Dubai International Financial Centre (the “Registry”) opened in late April of this year. It is now possible to register a will in Dubai, and to have a high degree of confidence that it will be enforced in accordance with its terms. Prior to the establishment of the Registry, it hadn’t been possible to be so confident that foreign wills would be enforced in the United Arab Emirates. There were concerns that Shari’a law would be applied to the estates of non-Muslims, particularly with respect to real property (land and buildings).

 

In summary therefore, the establishment of the Registry is a welcome initiative, and if you have assets in Dubai then you should almost certainly register a will with the Registry.

 

A few points to note right from the beginning: firstly, only non-Muslims may lodge their wills with the Registry. At the time of registering the will the testator (the person making the will) must confirm that they are not a Muslim, nor have ever been a Muslim. If this confirmation is later proved to be inaccurate then the will becomes void. Secondly, testators must be at least 22 years old. Thirdly, the will can only relate to assets in the Emirate of Dubai. Finally, the value of the Dubai assets must be balanced with the costs of using the Registry. There are a number of fees payable, some reasonably significant for many people. (The cost of registering a will is currently AED 10,000.)

 

Prior to the introduction of the Registry, a multitude of approaches were taken in respect to estate planning by Dubai residents. Many people, of various faiths, made no will at all. For those people who were aware of the applicable inheritance and intestacy rules, this was (and continues to be) a perfectly sensible choice. If your family structure is straightforward, and you understand and are comfortable with how your assets will be distributed where there is no will, then there is no reason to make one.

 

Historically, a variety of solutions were offered to those people who were not sure how their assets would be treated if there was no will, and who wished to create one. Some were told that it was necessary to register a Dubai will with a local notary. Others were told to make a will in their home country, have it translated into Arabic, and then registered locally. Others were told that it was sufficient to sign the will and have it witnessed by a staff member at their home country consulate in Dubai. In short, there was no consensus as to the most appropriate method of creating a will in the UAE, or of ensuring that it would be enforced in accordance with its terms.

 

The DIFC Registry seeks to resolve these concerns. Wills are reviewed by Registry staff prior to being accepted for registration. This review is anticipated to prevent the registration of wills with blatantly unacceptable terms (ie “. . . and finally, I leave the balance of my estate for the funding of international terrorism, and general crimes against the state”). More significantly, the review ensures that the will formalities are properly attended to (that the will is correctly witnessed, and so forth).

 

Once registered, the intention is that the terms of the will can be given effect to by the DIFC Court if necessary. Decisions of the DIFC Court must, as a matter of UAE law, be enforced by the Dubai Courts. It is then anticipated that other relevant Dubai governmental entities (such as the Economic Department in respect of assets such as company shares, or the Lands Department in respect of real property) would automatically abide by orders issued by the Dubai Courts (or even by the DIFC Court directly).

 

This process appears robust, but a small note of caution must be sounded. This is a new, and so far untested, system. It remains to be seen whether the relevant government departments will indeed recognize DIFC wills. We anticipate that this point will be resolved relatively soon, as there appears to be a significant number of individuals eager to make use of the Registry. Furthermore, we have no reason to believe that the system will not work as it should. On that basis, we welcome this beneficial addition to the legal landscape of the Emirate of Dubai. ■

 

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Afridi & Angell can assist with the drafting and registration of DIFC wills. Please contact Stuart Walker if you wish to arrange an appointment to discuss any of the issues mentioned in this note.