A broad-ranging, multinational view of domestic governments’ powers to control and block foreign investment. Expert local insight in jurisdictions worldwide, covering: an overview of law and policy towards oversight of foreign investment, powers of the regulators to intervene on national interest grounds and threshold issues, procedure: notification and filing submissions, timelines for clearance, regulatory guidance, lobbying, assessment: tests for clearance, interagency and international consultation, remedies and appeals and detailed analysis of recent leading case law.
The new commercial transactions law (Federal Decree Law 50/2022), which abrogated Federal Law 18/1993, has significantly reduced the period of limitation for initiating action relating to commercial transactions between ‘merchants’ from ten years to five years.
Application of the new commercial transactions law
The new commercial transactions law applies to merchants and all forms of commercial activities. The new commercial transactions law has broadened its ambit to include virtual commercial activities as well, i.e., commercial activities carried out by any person (even if the person is not a trader) through modern mediums of technology or in the technological sphere. The term ‘merchants’ is broadly defined and includes every person performing acts of commerce, and every company engaging in commercial activity in a form specified by Federal Decree Law 32/2021 on Commercial Companies.
The period of limitation
Under the now-repealed 1993 commercial transactions law, parties could bring actions relating to the commercial obligations of merchants within ten years from the breach of a contractual obligation (Old Period of Limitation). However, the new commercial transactions law prescribes that parties must initiate action within five years from the date the cause of action arises (New Period of Limitation). It is pertinent to note that the New Period of Limitation is shorter than the limitation period prescribed by the laws of England and Wales, which is six years from the date the cause of action arises.
What effect does the new limitation period have on a cause of action that arose before the new law?
An important question that would arise is, what would happen to those transactions where the cause of action arose prior to the effective date of the new commercial transactions law? The answer may be found in Articles 6 and 7 of the UAE Civil Code:
a) If the application of the New Period of Limitation would result in the expiry of a party’s right to commence action prior to the new commercial transactions law coming into force (2 January 2023), the Old Period of Limitation will be applied. For example, if the cause of action arose in 2014, in accordance with the Old Period of Limitation, the party would have the right to institute action until 2024. On the other hand, if the New Period of Limitation were to be applied, the party’s right would have lapsed in 2019 (prior to the new commercial transactions law coming into force). In such circumstances, the Old Period of Limitation will be applicable in order to prevent prejudice being caused to such party
b) If, on the effective date of the new commercial transactions law, the duration of a party’s right to commence action is longer than the New Period of Limitation, the duration of such right will be reduced in accordance with the New Period of Limitation. For instance, if on 2 January 2023, a party has the right to bring an action within eight years, such right will be reduced to five years.
c) If, on the effective date of the new commercial transactions law, a party has the right to commence an action within three years (shorter than the New Period of Limitation), the period of three years will continue to apply. ■
This Q&A gives an overview of the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The Q&A also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.
This volume will prove to be a useful guide to the tax rules in the jurisdictions where clients conduct their businesses. This chapter provides topical and current insights on the tax issues and opportunities in the UAE. While specific tax advice is always essential, it is also necessary to have a broad understanding of the nature of the potential issues and advantages that lie ahead; this book provides a guide to these.
Social enterprises have a vital role to play in bridging the gap between government and business efforts for social change. Although social enterprises can be found in all corners of the world, most jurisdictions suffer from a multitude of laws and policies that support them, and in some cases, requirements that may be an actual hindrance to their proliferation.
Afridi & Angell is proud to help contribute to a social enterprise law and policy report to identify legal structures and policies that nations can adopt to catalyze the advancement of social enterprises around the world. The Lex Mundi Pro Bono Foundation and Lex Mundi network’s unmatched global footprint make this report truly global in nature.
The Government of the UAE made another milestone announcement on 30 January 2021, announcing a procedure for the granting of citizenship to foreign nationals in a bid to retain talent in critical sectors and to expand and diversify the economy.
Nationality and citizenship in the UAE are governed by Federal Law No. 17 of 1972 Concerning Nationality and Passports, as amended by Federal Law No. 10 of 1975 and Federal Decree-Law No. 16 of 2017 (the Nationality Law), pursuant to which UAE nationality may be obtained by law, citizenship or naturalisation.
The recent announcement, as reported, would amend the Nationality Law to make the following categories of individuals eligible for UAE nationality by naturalisation:
• Leading artists and intellectuals;
• Doctors and specialists in unique scientific fields with significant contributions and experience of at least 10 years;
• Investors who own property in the UAE;
• Inventors who have been granted at least one patent approved by the UAE Ministry of Economy;
• Scientists with at least 10 years of experience who are active researchers and have made substantial progress in science as recognised by prestigious scientific awards or funding; and
• Members of the immediate family (i.e., spouse and children) of a person who is naturalised under one of the foregoing provisions.
The process of naturalisation would begin with a nomination by the Federal Cabinet or by the Ruler’s Office or Executive Council in an Emirate. Letters of recommendation are also required for nominations in most categories. The detailed criteria for each category have yet to be announced. Reports indicate that a person who acquires nationality under the new rules will not be required to renounce his or her earlier citizenship, but instead may remain a dual national; this is a departure from the previous rules for acquiring nationality under the Nationality Law.
This is the latest in a series of recent measures that aim to attract and retain talent. Others include the introduction of the “golden visa,” the “retirement visa,” and the “remote working visa.” Another new visa category is the “student family visa,” whereby a foreign student in the UAE may obtain a residence visa while also sponsoring residence visas for family members. ■
Following the announcement of the Abraham Accord with Israel, President His Highness Sheikh Khalifa bin Zayed Al Nahyan issued Federal Decree Law 4 of 2020, repealing Federal Law 15 of 1972 (the Boycott Law).
Brief overview of the Boycott Law
Pursuant to the Boycott Law, the United Arab Emirates (UAE) joined the Arab League boycott of Israel (the Boycott).
Under the Boycott Law, the following activities were prohibited:
- entering into any agreements, directly or indirectly, with individuals or bodies corporate in Israel or those having Israeli nationality; and
- trading of any nature of goods produced in Israel, wholly or partially, or manufactured using any Israeli material.
The UAE Boycott Law applied to all companies incorporated or operating in the UAE (including companies in the free zones of the UAE).
The UAE Boycott Law implemented a primary, secondary and tertiary boycott of Israel. The terms “primary,” “secondary” and “tertiary” were not used in the UAE Boycott Law. However, the primary boycott was generally viewed as a boycott by the UAE against Israeli products, services, nationals and companies and on direct trade with Israel. The secondary boycott was generally viewed as a boycott against parties that do business with Israel (who are placed on a blacklist), and the tertiary boycott was generally viewed as a boycott of parties that do business with blacklisted parties.
The policy of the UAE with regard to the Boycott was formally amended pursuant to Cabinet Resolution 462/17M of 1995 dated 20 November 1995 (the Resolution). Through the Resolution, the UAE Federal Cabinet declared that the UAE would no longer enforce the secondary and tertiary aspects of the Boycott.
Repeal of the Boycott Law
The repeal of the Boycott law will allow individuals and companies in the UAE to enter into agreements with parties in Israel, to transact business and to import and trade in Israeli goods and products. ■
“Legal Aspects of Doing Business in the Middle East” provides comprehensive coverage on the requirements for doing business, prepared by local practitioners with expertise in business transactions. In this chapter, practical insights, commentary and analysis are offered on: regulation for business, forms of doing business, free zones, licensing of business by the Emirates, labour and immigration regulations and many needful topics you need to know for doing business in the UAE.
After much media coverage, Cabinet Decision 56 of 2018 (the Decision) has been gazetted which introduces new long term residency visas to, amongst others, the following four categories of persons in the UAE:
3. individuals with specialised talents and researchers in various fields of science and knowledge; and
4. honours students with promising scientific potential.
The Decision is an important development in the UAE and it is expected to have a positive impact on the real estate market in conjunction with the run up to the Dubai World Expo 2020 and as part of the broader UAE vision 2021.
In this InBrief we look at the conditions that the Decision requires a person to satisfy in order to apply to the Federal Authority for Identity and Citizenship (the Authority) for a long term residence visa.
Investor Visas – Real Estate
A five year residency visa may be applied for by investors in real estate in the UAE if the following conditions are met:
1. the investor must have invested in one or more properties in the UAE with a total value of no less than AED 5 million;
2. the amount invested must not be derived from the proceeds of a loan. Consequently, it will not be possible for there to be a mortgage over the property if this visa is to be applied for;
3. the property must be owned by the investor for at least three years from the date of issuance of the residency visa;
4. the investor must not be financially liable for any claims or civil judgments which reduce his financial solvency below AED 10 million; and
5. the investor must have a comprehensive health insurance policy covering himself and his family members,
(conditions 2-5 above being hereinafter referred to as the Conditions)
An “investor” is defined in Article 1 of the Decision as an “Alien who spends his/her capital for financial gain or returns, in accordance with the controls referred to in this Decision.”
Investor Visas – Public Investments
A ten year residency visa may be applied for by investors in public investments if:
1. one of the following conditions are met:
a. the investor must have a deposit of no less than AED 10 million in an investment fund within the UAE. Note that the Decision does not define what constitutes an “investment fund”; or
b. the investor must establish a company in the UAE with a capital of no less than AED 10 million or be a partner in an existing or new company with a financial share of no less than AED 10 million; or
c. the investor must have investments in the UAE with a total value of no less than AED 10 million (provided that the non-real estate part of such investment constitutes no less than 60% of the total investment);
2. all of the Conditions must be met.
A five year renewable residency permit may be applied for by entrepreneurs if all of the following conditions are met:
1. the entrepreneur must own a “former successful project” with a minimum value of AED 500,000 in an approved area. Again, there is no guidance in the Decision as to what constitutes a “former successful project”;
2. the entrepreneur must have obtained the approval of a business incubator accredited in the UAE to establish the proposed activity in the UAE; and
3. the entrepreneur must have a comprehensive health insurance policy for himself and his family members.
An “entrepreneur” is defined in Article 1 of the Decision as an “Alien who has an economic project of a technical or future nature based on risk and innovation, in accordance with the controls referred to in the present Decision.”
Specialised Talent Visas
A ten year renewable residency permit may be applied for by “Individuals with Specialised Talents” under the categories listed below subject to certain conditions set out in Article 8 of the Decision being met. Note, an “Individual with Specialised Talent” is defined in Article 1 of the Decision as an “Alien who is excellent or skilful, or a leader, or competent performer or has an outstanding talent in any field of science and knowledge, in accordance with the controls referred to in the present Decision.”
The categories of “Individuals with Specialised Talents” are as follows:
1. medical doctors and specialists;
3. creative individuals in the field of culture and art;
5. elite individuals;
6. executive directors; and
7. specialists in educational areas of priority.
Honours Student Visas
A five year renewable residency visa may be applied for by honours students (and their families) if all of the following conditions are met:
1. the student must have a grade of excellence or at least 95% in the General Certificate of Secondary Education or its equivalent;
2. the student must be enrolled in any of the accredited universities in the UAE and must have a grade point average as set out in the Decision in selected scientific specialties;
3. the student must have obtained the approval of a committee established by the Decision for the purpose of examining such applications;
4. the student must submit proof of registration at a university or institute accredited in the UAE; and
5. the student must hold a comprehensive health insurance policy for himself and his family members.
The new law is a welcome development in the UAE.
The Authority has reported that applications for such permits will be accepted from 3 February 2019 and already a total of 20 visas have been granted to recent honourees of the Mohammed Bin Rashid Award for Scientific Excellence. ■
The term “dawn raid” refers to an unanticipated visit to commercial premises by a regulatory authority. Examples of this could include a squad of policemen entering a warehouse, a team from a financial-services regulator checking trading records at a bank, or an official from the UAE Ministry of Human Resources and Emiratisation entering your office to check the work permits of all employees present there (an increasingly common practice).
If your business is subject to a dawn raid, it generally means something has already gone wrong. Regulators only have limited resources, and they typically don’t engage in random inspections. If they are visiting you there is almost certainly a good reason for it. How you handle the raid itself will have a significant impact on the discussions and negotiations that are sure to follow.
A calm, professional and pragmatic interaction with the regulators will serve your organisation much better than a disorganised and panicked response. Having a written policy in place provides your team with a script to follow, and prevents inappropriate behaviour by untrained staff. Unfortunately, dawn-raid policies used in other parts of the world are often fatally flawed when reviewed in the context of the UAE.
All dawn-raid policies should include training of your receptionists, with specific directions for the contact people who must be immediately informed of the raid. These might include the manager of the office, the compliance officer (if any) and the organisation’s lawyers (internal and/or external). The receptionists will almost certainly be the first people that the regulators come into contact with.
The organisation’s lead representative should then attempt to agree an approach with the raiding authority. The aim is to allow the search to take place in a manner which minimises the inevitable disruption to normal business activity. If possible, you will also want to agree the extent of the search and to place limits on the types of materials that the raiding authority can inspect. Much will rely upon the charm and negotiating ability of your lead representative at this stage. Many regulators will resist efforts to curtail the scope of the inspection.
The policy should document the fact that, in the event of a raid, documents must not be destroyed or amended. Normal document-destruction procedures should be suspended. An ill-guided attempt to hide evidence from inspectors will make a bad situation much worse. The policy should also specify that all employees receive regular training on this point. In the event that someone does destroy a document, it may help the organisation if you can point to the policy and the training and thereby state that you had told employees not to do this.
The policy should also include a communications plan. This would deal with both internal communication to employees, plus external communication to the general media, other industry regulators, and competitors. Employees will need to be reminded that they should keep details of the investigation confidential. The amount of detail disclosed externally needs to be carefully considered. Too little information suggests that the company is trying to hide a problem. Too much (or too early) will prejudice your ability to reach a negotiated settlement with the regulator.
The reason that dawn-raid policies from other parts of the world are fatally flawed when used in a UAE context is due to the concept of legal privilege. The concept of legal privilege is engrained in many legal systems, and is often seen as a fundamental principle of justice. It grants a protection from disclosing evidence. A key issue in dawn raids in other parts of the world is therefore identifying which documents are protected by legal privilege, and therefore need not be disclosed to regulators. A client must be confident that his discussions with his lawyer are confidential. This means that all correspondence between a client and his lawyer (in many parts of the world) is protected by legal privilege.
The situation is somewhat different in the UAE. Lawyers owe a duty of confidentiality to their client, but this falls short of being legal privilege, which is a right enjoyed by the client. In the context of a UAE dawn raid, you risk antagonising a regulator (and increasing the disruption to the business) if you attempt to argue that certain documents need not be disclosed as they are protected by legal privilege. There is a danger of this happening if you adopt a dawn-raid policy developed overseas and do not amend it to accord with local conditions. Please contact us if you would like us to review your dawn-raid policies, or to assist you in developing a new policy. ■