UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance

Archive for January 4, 2010

Documents Required to Apply for an Industrial Property Right in the UAE

 

1. Two drawings or photographs of the design or photographs of each side if it is three- dimensional and samples. Drawings or photographs of the model are required and the samples themselves will not suffice.   Also submit a detailed and brief description of the invention.

 2. An extract of the Commercial Register or an official extract from the Articles of Association of the Applicant if the Applicant is a company or an organization.

 3. A document confirming the right of the Applicant to the invention, model or design if the Applicant is not the designer or inventor. (Deed of Assignment)

 4. A certified copy of the priority documents to include a copy of the original application and its’ attachments showing the date, number and country of filing if this application is based on a prior application filed in a country, which is also a party to an international agreement or a convention which the United Arab Emirates has acceded to.

 5. A Power of Attorney.

All the above documents must be legally translated into Arabic if the original is in English. However, if the original documents are in another language, the documents must be legally translated into both English and Arabic.

Documents, 2, 3 & 5 must be notarized and legalized at the UAE Embassy or Consulate if executed outside the UAE. If the documents are executed inside the UAE, then they must be notarized by the Court Notary Public.

Document 1 above, must be submitted with the application along with the required fees at the time of filing. The rest of the documents can be filed within 90 days after filing the application, but a written undertaking must be submitted at the time of filing confirming that the remaining documents will be presented within 90 days. If any of the above documents (except document 4 above) are not filed within 90 days of filing the application, the application will be cancelled. If Document 4 is the only document not filed within the grace period of 90 days, the only effect will be that the priority claim may be lost.

Information Required for the Filing of an Industrial Property Right:

1. Name of the invention design or model.

2. The name, address and nationality of the applicant and their representative in the UAE if any.

3. Status of the applicant company (i.e. LLC, LLP).

4. Objects of the applicant’s company as stated in the Articles of Association.

5. Name, address, nationality and selected address of the inventor(s) and their representative in the UAE if any.

6. Number, date and country of prior application if the application is based on a priority claim.

7. Date and number of Temporary Protection Certificate if any.

8. Detailed description of the invention, industrial design, or model along with relevant drawings.

9. A brief description as to the invention, industrial design, or model specifically stating the originality or novelty of the same.

(Information taken from Al Tamimi, Patents, Designs, and Models)

Jumping into the UAE Market as a non-UAE/GCC National

 

 

In these turbulent times, have you thought of either expanding your business into or setting up a new company in a fresh, expanding market such as the Emirate of Dubai or Abu Dhabi or other Emirate in the UAE?  The UAE offers several vehicles for company formation through which foreign nationals can set up a business. The vehicle which you choose may depend on inter alia the business activity, length of time you wish to operate in the UAE, liability and ownership issues, as well as minimum capital and visa requirements.  Furthermore, one might consider whether one wants to operate onshore or offshore for a variety of reasons including activity, asset protection, tax and inheritance considerations as well as the disclosure of shareholder information and other company related matters.  The optimal options for non- UAE and foreign nationals include inter alia the limited liability company or “LLC,” branch of foreign company, professional company, joint-venture, setting up in a free-zone, or forming an offshore company in the Jebel Ali or Ras Al Khaimah Free Zones. 

The Limited Liability Company:

An LLC in the UAE is the preferred company vehicle for those entrepreneurs wishing to develop a long term presence and establish lengthy and fruitful relationships in the local UAE and regional market.  Although there is the seemingly onerous requirement that 51% of the share capital in the LLC must be locally owned, it is possible to distribute the profit in any ratio you desire with your local partner as per agreement and side- agreement.  In fact, it is possible to render your local partner a ‘sleeping partner’ through well drafted side- agreements with ownership basically left in your control.  Further ameliorating what seems to be this burdensome requirement of 51% local ownership, the management of an LLC company can also be vested in the foreign partner or an alternative third party. 

Article 218 of Federal Law No. (8) Concerning Commercial Companies[1] stipulates that the number of partners must be between 2 and 50 in the LLC Company and that each partner is liable up to the extent of his paid- up cash and in kind share capital.  According to Article 227[2] of Federal Law No. (8) Concerning Commercial Companies, the cash capital of the LLC should be comprised of equal shares of a minimum value of one thousand Dirhams each.  Furthermore, the share capital must be fully paid up and deposited with a local bank prior to incorporation and the capital becomes accessible only after the company is incorporated and registered.  The shares of the LLC vehicle are not open to public subscription.  The minimum capital requirement to establish an LLC in the UAE has recently been reduced from 300,000.00 AED in Dubai and 150,000.00 AED in Abu Dhabi to ‘sufficient initial capital to achieve it’s objectives.’[3]

The LLC should have between one and five Managers.  In case the Articles of Association does not specify the managers’ responsibilities, the managers may have the largest scope of powers as allowed under UAE law.  If the Partners number more than seven, a supervisory board must be established.  In addition, it is also required to form a general assembly of all partners and a board of directors.   Keep in mind that restrictions do exist on the type of activity which can be practiced by a foreign company, for instance, only UAE nationals can engage in industries such as inter alia banking, insurance, oil drilling, money investment, and commercial agencies. 

The Branch Company:

A branch company is a viable option for entrepreneurs which already have a company abroad and would like to establish a presence in the UAE through a company vehicle which would allow the incorporator 100% ownership and would like to vest liability with the mother company or a subsidiary of the mother company, depending on how the branch company is registered.   A branch company can be 100% owned by a foreign national or entity, however, the branch company must hire a local service agent and pay the agent on an annual contractual basis a sum to be decided between the two parties, which is not regulated by law.  The role of the service agent is purely administrative and limited to inter alia immigration and labor functions, liaising with government departments, and other administrative matters.  The agent is not permitted to own equity in or participate in the substantive management of the branch company.  This amounts to a very limited local participation requirement as opposed to the LLC vehicle.

The mother company must have been in existence for more than 2 years in the country in which it is registered.  A branch company, although legally regarded as part of its’ parent company, is a viable and fully operational business, capable of performing contracts and conducting the activities specified in its’ trade license within the Emirate of incorporation.  However, as the branch is legally a part of its’ parent company, liability remains with the parent company or a subsidiary of the parent company and the branch company must engage in activities which are the same or similar to the activities listed on the mother company’s trade license.  

Furthermore, the branch company is not allowed to carry on the business of importing the products of the parent company, as that is a function reserved for UAE national trade agents.  For example, a branch office cannot get a license to carry on ‘trading’ activities such as buying and/or importing for resale in the UAE.  Other activities may be restricted on a case- by- case basis or by regulation, for example, real estate activities.  In order to partake in such activity, one must appoint a local commercial trade agent through the establishment of a commercial agency.  The Agency law[4] states that only registered commercial agents are authorized to carry on commercial agency activities, which are defined in Article 5 and 6 of the UAE Commercial Code.[5]  Article 1[6] of the Agency Law defines a registered commercial agency as “the representation of a principal by an agent for the purpose of distributing, selling, offering or providing merchandise or services within the state for a commission or profit.”  Article 1[7] also defines a principal as “the producer or manufacturer or the exclusive accredited exporter or representative of the producer.”[8]  It is important to note that Under Article 25[9] of the Agency Law, ‘registered commercial agents have the exclusive right to import the goods which are the subject matter of the agency agreement.’[10]

Through registration of a branch company, a foreign entity can establish a direct business presence in the UAE with 100% ownership as opposed to 49% ownership through the LLC vehicle.  However, as a branch company, again you are restricted to engaging in the activities which are the same or similar to the mother company’s activities.  If you are looking to branch into new areas of activities, than an LLC would be the preferable vehicle from these two options.  However, operating in the form of a branch company is less risky than through the LLC vehicle as liability rests with the mother company or a subsidiary of the mother company, depending on registration.

In operating an LLC, all partners in the LLC are liable up to the amount of paid up share capital.  However, for branch companies, since there is no legal distinction between the branch company and the mother company, the mother company or subsidiary of the mother company is fully liable for the branch office, depending on registration.  Often times, mother companies register branch offices as branch offices of their subsidiaries to limit the mother company’s legal risk and exposure in the UAE.    The minimum capital requirement for a Branch of Foreign Company in Abu Dhabi is 250,000.00 AED. There is no minimum capital requirement for a Branch of Foreign Company in Dubai.

Professional Company:

Aside from companies that may be formed under the Commercial Companies Law,[11] a professional company may be formed under the Civil Code.[12]  Under the Civil Code,[13] a professional company is defined as ‘a company where two or more persons agree to be bound to carry out work and to be liable thereafter to third parties against payment of consideration, whether they share equally or unequally in the distribution of work, and provided that the work is of a single and inseparable nature’[14] and is unified or carried out simultaneously.   The profit shall be distributed between the parties in the manner agreed upon, which can be in disproportional shares even if it as agreed upon that the work shall be carried out in equal proportion amongst the partners.  The professional company offers another vehicle through which a foreign national can operate under 100% ownership within the UAE.  Similar to the branch company, a local service agent must be hired on the same terms and with the same function as within the branch company.  However, engineering consultancies have been exempted from this requirement.   The professional company vehicle does not offer limited liability to its’ owners as would an LLC nor is there a mother company or subsidiary or mother company to allocate the risk of UAE operation onto.  In a branch of a foreign company, the liability of the branch falls with the mother company or a subsidiary of the mother company, depending on the branch registration.  Therefore, in the case of a branch company, the liability is limited in the sense that the liability does not fall on the partners, rather it falls on the mother company or its’ subsidiary.  Thus, the professional company may be the riskiest vehicle of the three options of LLC, branch, and professional company in terms of liability, however, it offers the most flexibility in terms of 100% ownership and the ability to expand into new areas of operation. 

The firms which are registered as professional companies may only practice specific activities and not extend that to commercial business.  Such allowable activities include inter alia legal practice and consultancy, auditing, accounting, civil engineering and architecture consultancies, managerial and economic consultancies, and medical and educational services.  There is no minimum capital requirement for a professional company in Dubai.

 Joint-Venture (Consortium Company):

The joint-venture is another ‘limited liability’ vehicle with the same ratio of ownership requirements as the LLC through which foreign nationals can partner with UAE nationals to set up a company in order to combine capital and/or expertise in collaboration for various projects within the UAE.  The joint-venture may be a clandestine company as it does not need to be registered with the Ministry of Economy.  According to Article 57[15] of the Companies Law, “The contract of the joint-venture company shall regulate the rights and obligations of the partners and the manner of distribution of the profits and losses among them, but such contract shall not be subject to registration in the Commercial Register or to any publicity requirement.”  Therefore, it is possible for the existence of the joint-venture company to only be known to its partners and those contracting with it.  This type of vehicle is suitable for entrepreneurs who wish to keep their activities in the UAE private and implement a particular project licensed in the name of a local partner and therefore limit their liability to their UAE partner.  As the joint-venture company does not need to be licensed, the license of the local partner will suffice.  However, the joint-venture contract does constitute a legally binding document which legally binds the partners of the agreement.  Therefore, the foreign partner does have legal capacity and liability, however through the joint-venture, the foreign partner operates through the license of the local partner and is therefore limited in liability in this way.  Keep in mind that the joint-venture agreement must be drafted with skill with factors such as profit-sharing and exit in mind. 

Furthermore, the ownership ratio of the joint- venture is similar to the LLC in that 51% of the capital shall be provided by the local partner while 49% by the non-national partner, and the profit- sharing ratio can be in any proportion so desired.  The joint- venture may be a better alternative than the LLC for forming companies between nationals and non-nationals for entrepreneurs who have short-term goals within the UAE or would like to operate clandestinely and/or limit liability through operating on the license of the local partner rather than have liability limited by paid up share capital.  Furthermore, in contrast to the LLC, the joint- venture vehicle does not usually result in the ‘sleeping partner’ syndrome where the real company ownership and objectives are governed through additional side-agreements.  In contrast, the joint-venture, as a clandestine partnership, is governed by the actual clandestine agreement and often involves an active local partner as the joint-venture is operating through the local’s license.  Therefore, when choosing between the LLC and joint-venture vehicle, one should consider whether or not one wants an active or ‘sleeping’ local partner, whether or not one would like to keep their business activities private and unregistered, and how one wants to allocate risk and liability. 

Free Zone Company:

The option of setting up in a free zone is most suitable for entrepreneurs intending to use Dubai as a regional manufacturing or distribution hub from which they intend to export a large portion or all of the company’s products outside of the UAE.  This is due to the fact that for the bulk of the free zones, the free zone company would be limited to transacting business only within the free zone.  If the company wishes to transact business outside the free zone but within the UAE, another license must be obtained.  Therefore, it is economical to incorporate within a free zone mainly for the purpose of manufacture and re-export outside of the UAE unless one is a financial service provider, in which case one may consider incorporating within the Dubai International Finance Center or “DIFC.”  However, the minimum capital requirements for free zone incorporation can be quite high, for instance, in the Jebel Ali Free Zone, the minimum capital requirement for a free zone company is AED 500,000.00 and for a Free Zone Establishment it is AED 1,000,000.00.  Foreign nationals can own their business 100% within the free zones, each free zone has numerous benefits providing incentive for operation, each free zone is governed by its’ own free zone authority therefore streamlining administrative processes, and each free zone offers different vehicles through which to incorporate a free zone company.  Furthermore, many of the free zones are located near airports, ports, and major roadways to facilitate the export of products.

Generally, all UAE free zone companies can operate within the UAE tax free and goods imported into or manufactured within certain free zones are exempt from customs duty.  Again, there are no restrictions on repatriation of capital and foreign investors can own their free zone company 100%.  Generally, a free zone company can be incorporated as a branch company, free zone company, or free zone establishment.  Free zone companies can lease properties from the free zone authority for extended periods of time often up to 50 years and can often own land for up to periods of 99 years.  This is more advantageous for foreign investors than the land leasing and ownership regulations existing within the City of Dubai and may ensure a more profitable and reliable business structure and outcome.  Furthermore, within the free zone, one can employ anyone from any nation as long as he or she is not from an economically boycotted country.  Finally, each free zone comes up with a full service administrative service to facilitate the company incorporation process in contrast to the City of Dubai or other Emirates.  An independent free zone authority governs each free zone, issues regulations for the free zones, and is responsible for licensing and assisting clientele in incorporating, maintaining, and de-registering companies within the free zone according to the free zone regulations.[16]  The free zone authorities can be similar to one stop shops as they handle inter alia licensing, leasing, immigration, labor, and all issues pertaining to the company incorporation, maintenance, and de-registration process.

The free-zone set up for financial and ancillary service providers, the DIFC or Dubai International Financial Center is the only free zone in Dubai which has its’ own legal system equipped with courts and an arbitration center based on the English common law.  However, the entrepreneur should be wary that the UAE criminal law applies entailing that if convicted of criminal activity within the DIFC, the entrepreneur may be forced to serve time in a UAE prison.  What may seem like a minor offence for a foreigner may be punishable within the UAE.  For example, Article 378 of the UAE Penal Code, Federal Law No. 3 of 1987[17] states, “Whoever publishes news, pictures or comments related to the secrets of private or family life of persons even if they are true, shall be punished by detention for a period not exceeding one year and by a fine not exceeding ten thousand Dirhams, or one of these two penalties.”  Sentences can be quite stiff for seemingly minor offences while on the other hand there is no penalty for seemingly quite large and obvious white collar crime.  Opportunity may reside in the loopholes.  All other UAE free zones are subject to UAE civil law.

Offshore Company:

The UAE offers two popular tax-free offshore jurisdictions in the Jebel Ali and Ras Al Khaimah Free Zones, with the exception that the Jebel Ali jurisdiction is tax-free for a period of 50 years from incorporation while Ras Al Khaimah is infinitely tax- free.  Offshore companies in the Jebel Ali offshore jurisdiction can carry on any business except banking and insurance and any other business prohibited by regulation.  There is no restriction on activity on the offshore company in the Ras Al Khaimah Free Zone offshore jurisdiction and entrepreneurs may own their offshore companies 100% in both offshore jurisdictions.  Foreign investors often use offshore companies as a special purpose vehicle (SPV) to hold shares in UAE or overseas joint-ventures, to purchase and own real estate, for tax considerations, or for the purposes including inter alia inheritance.[18]  In general, offshore companies are low cost and low capital vehicles which are easy to administer and have low operational costs as a physical office presence is usually not required.[19]  Furthermore, shareholders are limited in liability to the extent of their share capital in the company thereby reducing the risk associated with operation.

There is no minimum capital requirement in either offshore free zone jurisdiction however the Registrar of the Jebel Ali free zone authority can make it mandatory for the offshore company’s capital to be commensurate with its’ stated objects as stated in the application form.    In the Jebel Ali offshore jurisdiction, all shares issued by an offshore company rank equally with each other, are transferable as according to the Articles of Association, and must be fully paid up at the time of issue.  Furthermore, there are no legal restrictions regarding the right of the company to purchase its own shares.  In the Ras Al Khaimah free zone jurisdiction, there is no paid up capital requirement.  Furthermore, in the Ras Al Khaimah free zone, there is no requirement for reporting or audited accounting.   In contrast, the Jebel Ali offshore jurisdiction has reporting and audited accounting requirements including the requirement of having the financial statement of the annual shareholders meeting prepared and approved by an appointed auditor.  This report along with inter alia the register of shareholders and accounting records must be stored at the registered office of the offshore company.  The accounting records must reveal the financial position of the Jebel Ali offshore company at all times and should be preserved for ten years.  All the records of the offshore company shall be made available for inspection by the competent authorities at anytime. 

Although the Jebel Ali offshore jurisdiction does not offer residence visas to directors nor is it possible to hide the identity of shareholders, it offers a quick and easy incorporation service and easy administration process which may take from 5-7 days from the date of the submission of the application.  On the other hand, in the Ras al Khaimah Free zone offshore jurisdiction, it is possible to hide the identity of shareholders through the use of nominee shareholders and to set up a virtual office through the Free Zone administration, which would come equipped with a secretary, phone, desk, fax, and P.O. Box although no physical presence is required.  In addition, in the Ras Al Khaimah Free Zone offshore jurisdiction, it is possible to avoid the legalization and notarization of documents by the UAE Consulate and Ministry of Foreign Affairs.  Incorporation fees are cheaper in the Ras Al Khaimah Free Zone offshore jurisdiction, however, it is located approximately 90 KM from Dubai in the Emirate of Ras Al Khaimah, while the Jebel Ali Free Zone is situated on the outskirts of the Emirate of Dubai.  However, location is not a top concern if the offshore company is not going to have a physical office presence.  Both free zones are located near airports, major roadways, and ports and it is quite easy to get bank accounts set up for the purposes of offshore incorporation within the UAE.  One may choose to incorporate through an offshore company for inter alia tax considerations, asset acquisition and protection,  inheritance purposes and/or if the entrepreneur chooses to operate clandestinely or through a virtual office or without any office at all.

Other Considerations:

Incorporating a company in the UAE is a more simple process than meets the eye.  For onshore companies, getting the initial approval and the trade name is the first small hurdle to surmount after which you must only submit the fees and application for final approval. This often times includes the lease agreement for the approved office premises.  Once a final approval and license are obtained, it is just a matter of paying all the required fees, having the Articles of Association registered in the required places including inter alia the Ministry of Economy and Chamber of Commerce, and commencing your business activity according to the rules and regulations of the particular Emirate within which you are operating and the Federal law of the UAE. In addition, if so required by the company vehicle, one may have to submit a service agent agreement as well as approval from the relevant regulatory authority.   In regards to offshore incorporation, the process entails submitting a signed application form with the Articles of Association and required fees to the relevant authority together with the required supporting documents of the particular free zone offshore jurisdiction.  The law firm through which you incorporate the offshore company can then serve as the agent through which to administer the offshore company affairs.

Except for free zone and offshore registrations, companies in the UAE are registered and licensed on the Federal and Emirate basis as well as by required special purpose regulatory authorities.  Thus, entities operating in more than one Emirate must be separately registered and licensed in each Emirate in order to conduct business in that Emirate and for each place of business where they operate within the Emirate.  Furthermore, if so required, the company must register with the required relevant special purpose regulatory agency.  Companies must also be registered with, inter alia, the Immigration Department and UAE Ministry of Labor and Social Affairs or the Ministry of Labor.  Basically, Non- GCC nationals may only reside in the UAE with an employment/residency visa secured by the sponsoring employee or a labor card obtained through a sponsored qualified family member.  Non- UAE nationals may only be employed in the UAE after obtaining the labor card.

There are no Federal UAE corporate or individual income taxes.  However, at the Emirate level, most of the Emirates have issued some kind of corporate income tax decrees, however, these tax decrees remain largely unenforced except in the case of income taxes imposed on companies engaging in the production of oil, gas and/or petrochemicals and foreign bank branches.  Further adding to this tax heaven, there are no personal income tax schemes enacted in any of the Emirates as to date, however, this may change in the near future.  Municipal taxes have been placed on things such as hotel services and business and residential property rentals.

Intellectual property in the UAE is protected by various federal laws, ministerial resolutions, international conventions, national ministries, and federal tribunals.  A solid trademarks registration scheme exists in which the categories of goods and services which can be registered within the UAE corresponds with the International Classification of Goods and Services Under the Nice Agreement.[20] Furthermore, the UAE Trademark Law[21] and Federal Law No. 8 of 2002, amending the Federal Law No. 37 of 1992 in respect of Trademarks[22] provides trademark protection for inter alia industrial property such as trademarks, service marks, commercial names, and designations for renewable periods of ten years.  Overall, the trademark law is advanced and well-implemented within the UAE.  Furthermore, both civil and criminal remedies exist for trademark infringement including imprisonment and a minimum fine of AED 5000.00.  

The UAE Patent Laws[23] Federal Law No. 17 of 2002[24] and No. 31 of 2006[25] protect inter alia inventions, industrial designs, drawings, and models resulting from original ideas.  However, for foreigners wishing to protect their patentable inventions, etc. abroad, it is possible to file an International Patent Application or ‘PCT application’ as the UAE is a member of the PCT Treaty.[26]  Protection can be granted anywhere from one to twenty years.

UAE Federal Law No. 7 of 2002 regarding Copyrights, Neighboring Rights, and Its Implementing Decisions[27]  and Copyrights and Neighboring Rights Law No. 32 of 2006 protect the original  author (foreign or national) of works automatically upon creation including inter alia literary work, poems, music, paintings,  computer software, choreographic works, theatrical plays, musicals, and cinematographic works.[28]  The period of protection depends on the type of work, however, the usual period of protection is the life of the author and fifty years therefrom.  Under the Copyright Law, penalties exist for infringing copyright and selling, renting, or offering for circulation a work protected within the law.  The penalty may be imprisonment for at least two months and a fine of at least 10,000.00 AED.[29] 

In addition, within the UAE, intellectual property is protected by Federal Law No. 18 for 1993,[30] the Commercial Transactions Law; and Federal Law No. 4 of 1979,[31] regarding the Prevention of Fraud and Deception in Commercial Transactions.   Furthermore, the UAE is a party to several intellectual property conventions including the WIPO Convention;[32] Paris Convention[33] (Industrial Property); Berne Convention[34] (Literary and Artistic Works); The Patent Cooperation Treaty;[35]  Rome Convention[36] (Performers, Producers of Phonograms and Broadcasting Organizations); WCT[37] (WIPO Copyright Treaty); WPPT[38] (WIPO Performances and Phonograms Treaty); is a Member and Signatory to the WTO TRIPS Agreement,[39] and is a member of the Gulf Cooperation Council.  Three UAE ministries supervise the implementation of the main UAE intellectual property laws.  The Ministry of Economy and Planning supervises the implementation of the Trademark Law, the Ministry of Information and Culture oversees the implementation of the Copyright Law, and the Ministry of Finance and Industry overlooks the Patent and Design Law.  The UAE also has a separate Industrial Property and Copyrights Tribunal to handle disputes related to intellectual property as well as avenues through administrative law to remedy intellectual property disputes.  Intellectual Property is well protected within the realm of the commercial marketplace in the UAE through a combination of domestic and international mechanisms.

However, on the other hand, real estate in the UAE is a risky undertaking as the laws pertaining to real estate change sporadically and in an unpredictable manner.  Further exacerbating the risky undertaking of real estate purchase in the UAE, non-GCC nationals have a restricted right to land ownership within the UAE. Under Dubai Real Estate Law, non-GCC foreign nationals cannot generally hold or register title to land in Dubai on a freehold basis other than in areas designated by and at the sole-discretion of the Ruler of Dubai.   Law No. 7 of 2006,[40] Land Registration in the Emirate of Dubai, stipulates that freehold is limited to UAE and GCC citizens and companies wholly owned by them, as well as public shareholding companies.   However, expatriates have the right to acquire a freehold property or a 99 year lease on property in areas designated by the Dubai Ruler in Law Number 3[41] of 2006, Areas of Properties that can be owned by Non-UAE Nationals.  In Abu Dhabi, only UAE nationals have the right to own land throughout the Emirate. 

Other incentives to investment include restriction free repatriation of capital and currency accounts.  Furthermore, the UAE Dirham has been pegged to the US dollar at the rate of US$1 to Dhs 3.671 providing a stable monetary environment.  In addition, the UAE created its’ first stock exchange, the Dubai Financial Market (DFM) on 26 March 2000, regulated by the Emirates Securities and Commodities Market Authority,  thus, creating a reliable platform through which investors can trade securities in the Emirates. 

 Conclusion:

Although there appear to exist many perks in establishing a company in the UAE such as unlimited opportunity, no or minimal tax, freedom in repatriation of capital, and various beneficial regulations which promote investment, one must weigh in factors such as the political risk of the region, the possibility of ending up in a UAE prison, and the unpredictable and UAE/GCC centric real estate laws.  Furthermore, many entrepreneurs which establish businesses within the UAE do so without familiarizing themselves with UAE law and custom and encounter many unexpected surprises along their corporate UAE journey.  Invest wisely and consider all the pertinent legal and non-legal factors before making the decision to jump with the herd into the market.  An oasis of opportunity in the middle of the desert may be a mirage or it may be real, however it may be difficult to discern until approaching the oasis.  Look closely.


[1] UAE Federal Law No. 8 of 1984 Concerning Commercial Companies as amended by Federal Law No. 1 of 1984,  Federal Law No. 13 of 1988, and Federal Law No. 15 of 1998, Article 218.

[2] Ibid, Article 227.

 [3] Paul de Cordova, Richard A. Dollimore, ‘UAE Corporate Law: Minimum Share Capital Requirements for UAE Limited Liability Companies Abolished’, Corporate Alert, September 8, 2009, http://www.klgates.com/newsstand/detail.aspx?publication=589.

[4] UAE Federal Law No. 18 of 1981 Concerning the Organization of  Commercial Agencies.

[5] See Article 5 and 6 of the UAE Commercial Code.

[6] UAE Federal Law No. 18 of 1981 Concerning the Organization of  Commercial Agencies, Article 1.

[7] Ibid.

[8] Essam Al Tamimi, “Setting Up in Dubai,” Edition 4, Al Tamimi & Company (2006).

[9] UAE Federal Law No. 18 of 1981 Concerning the Organization of  Commercial Agencies, Article 25.

[10] Ibid p. 124.

[11] UAE Federal Law No. 8 of 1984 Concerning Commercial Companies as amended by Federal Law No. 1 of 1984,  Federal Law No. 13 of 1988, and Federal Law No. 15 of 1998.

[12] UAE Civil Procedures Code, Federal Law No. 11 of 1992.

[13] Ibid.

[14] Essam Al Tamimi, “Setting Up in Dubai,” Edition 4, Al Tamimi & Company (2006), p. 143.

 [15]Ibid, Article 57.

 [16] Anna Rimmington, ‘Free Zones in the UAE: Competitive Advantages for Investors and Comparison with Alternative Methods of Setting Up in the UAE,’  UAE Free Zone Investment Guide, Edition 1, Cross Border Legal Publishing FZ  LLC (2005).

[17] UAE Penal Code, Federal Law No. 3 of 1987.

[18] Krauss Amereller Henkenborg & Khasawneh, Legal Consultants, “UAE Free Zone Investment Guide”, Edition 1, Cross Border Legal Publishing FZ  LLC (2005), p. 277. 

[19] Ibid.

[20] Essam Al Tamimi, “Setting Up in Dubai,” Edition 4, Al Tamimi & Company (2006), p. 172.

[21] UAE Federal Law No. 8 of 2002 (issued on 24 July 2002), amending the Federal Law No. 37 of 1992 in respect of Trademarks.

[22] UAE Federal Law No. 37 of 1992 Concerning Trademarks.

[23]Patent and Industrial Design Law No. 17 of 2002.

[24] UAE Federal Law No. 17 of 2002 regarding Industrial Property Rights for Patents, Designs & Models.

[25] UAE Federal Law No. 31 of 2006 regarding Patents & Industrial Design.

[26] Al Sharif Advocates and Legal Consultants, ‘Protection for Intellectual Property in the UAE,’ “UAE Free Zone Investment Guide”, Edition 1, Cross Border Legal Publishing FZ  LLC (2005), p. 281.

[27] UAE Federal Law No. 7 of 2002 regarding Copyrights, Neighboring Rights, and Its Implementing Decisions.

[28] See Article 2 (Scope of Protection) of UAE Federal Law No. 7 of 2002 regarding Copyrights, Neighboring Rights, and Its’ Implementing Decisions.

[29] Al Sharif Advocates and Legal Consultants, ‘Protection for Intellectual Property in the UAE,’ “UAE Free Zone Investment Guide”, Edition 1, Cross Border Legal Publishing FZ  LLC (2005), p. 281.

[30]UAE Federal Law No. 18 of 1993, the Commercial Transactions Law.

[31]UAE Federal Law No. 4 of 1979, Regarding the Prevention of Fraud and Deception in Commercial Transactions.

[32] Convention Establishing the World Intellectual Property Organization (Signed at Stockholm on July 14, 1967 and as amended on September 28, 1979). 

[33] Paris Convention for the Protection of Industrial Property (of March 20, 1883, as revised at Brussels on December 14, 1900, at Washington on June 2, 1911, at The Hague on November 6, 1925, at London on June 2, 1934, at Lisbon on October 31, 1958, and at Stockholm on July 14, 1967, and as amended on September 28, 1979). 

[34] Berne Convention for the Protection of Literary and Artistic Works (of September 9, 1886, completed at Paris on May 4, 1896, revised at Berlin on November 13, 1908, completed at Berne on March 20, 1914, revised at Rome on June 2, 1928, at Brussels on June 26, 1948, at Stockholm on July 14, 1967, and at Paris on July 24, 1971, and amended on September 28, 1979).

[35] The Patent Cooperation Treaty done at Washington on June 19, 1970, amended on September 28, 1979, modified on February 3, 1984, and October 3, 2001 (as in force from April 1, 2002).

[36] International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome, October 26, 1921).

[37] World Intellectual Property Organization Copyright Treaty (Geneva, December 20, 1996).

[38] World Intellectual Property Organization Performances and Phonograms Treaty (Geneva, December 20, 1996).

[39] Trade Related Aspects of Intellectual Property Rights, Annex C1, Marrakesh Agreement Establishing the World Trade Organization (Marrakesh, Morocco, April 15, 1994).

[40] Law No. 7 of 2006, Land Registration in the Emirate of Dubai.

[41] Law Number 3 of 2006, Areas of Properties that can be owned by Non-UAE Nationals.

2009 Protocol of Jurisdiction Between the DIFC and Dubai Courts

 

A  judgment or interim order of the Dubai Courts can be enforced in the DIFC Courts as according to the Summary of the 2009 Protocol of Jurisdiction Between the Dubai and DIFC Courts.[1]  The award must be final and appropriate for enforcement[2] and translated into English by a legal translator as well as  ratified by the Dubai Courts Registry.[3]  The award must be submitted to the DIFC Courts with a letter from the Dubai Courts Registry to the Chief Justice of the DIFC Courts requesting enforcement of the judgment, award, or order[4]  and the applicable fees.[5]

In regards to interim orders, Clause 3 of the Summary of the 2009 Protocol of Jurisdiction Between Dubai and DIFC Courts [6] states:  “Any interim orders issued by either the Dubai Courts or the DIFC Courts shall be enforced by the same method as described in the respective section above.” 

Therefore, if submitting an interim order from the Dubai Courts to the DIFC Courts for enforcement, one must submit the interim order translated into English along with a letter from the Registry of the originating Court requesting enforcement of the interim order and the interim order must be submitted with the applicable fees.  The interim order must be the final and appropriate order for enforcement and the translated copy must be ratified by the Registry of the originating Court. 

As long as the above-mentioned procedural steps are followed in accordance with the Summary of the 2009 Protocol of Enforcement Between the Dubai and DIFC Courts,[7] it is possible to enforce a judgment or interim order, including an order for freezing of assets, issued by the Dubai Courts in the Courts of the DIFC.


[1] Summary of the 2009 Protocol of Enforcement Between the Dubai Courts and DIFC Courts, http://difccourts.complinet.com/net_file_store/new_rulebooks/d/i/DIFCC_enf_protocol_summary.pdf

[2] Ibid, Clause 2(a).

[3] Ibid, Clause 2(b).

[4] Ibid, Clause 2(c).

[5] Ibid, Clause 2(e).

[6] Ibid, Clause 3.

[7] 2009 Protocol of Enforcement Between the Dubai Courts and DIFC Courts, http://difccourts.complinet.com/net_file_store/new_rulebooks/d/i/DIFCC_enf_protocol_summary.pdf

UAE Laws and Islamic Finance

Laws of the UAE and Islamic Finance