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Dubai creates Trade Regulator to protect businesses

His Highness sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, ordered setting up of  a trade regulator Joint Commercial Control and Protection Establishment, sole economic regulatory body to develop, regulate and protect its business environment, following a visit to the Department of Economic Development (DED) and Entrepreneur Business Village the new headquarters of the Mohammad Bin Rashid Establishment for Small and Medium Enterprises (SME) Development near the Clock Tower. He was briefed by officials on the respective departments’ strategic growth plans for the next two years.

Sheikh Mohammad instructed Dubai Executive Council to take necessary measures to implement the order.

According to a report, the establishment will develop and protect the business environment in compliance with rules in the emirate and protect individuals and companies from illegal commercial practices by providing advanced solutions that guarantee a safe business environment.

The establishment will become the sole economic regulatory and protection body and will assume full responsibility for local commercial activities in all sectors.

It will also help spread awareness among individuals and companies about their rights and obligations within the business environment, and improve the work atmosphere. It also aims to provide human resources and training solutions to keep employees abreast of the latest developments in commercial systems and consumer protection.

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The Personal Status Law may affect the application of inheritance rights of foreigners

The growth of the UAE expatriate population, coupled with the introduction of the freehold property regime particularly in Dubai, means that increasing numbers of foreigners have bought immovable property in designated “freehold zones”. Coupled with their personal estates, many expatriates have considerable net worth in the UAE.

What happens to the expatriate’s estate on his death depends on three factors:
•  Is the expatriate a Muslim?
•  what is the succession regime of the expatriate’s jurisdiction of nationality/domicile?
•  Has the expatriate made a Will?

All Muslims are subject to the Sharia and the principles of the Sharia have been codified into the law of the UAE. Federal Law No. 5 of 1985 (the Civil Code) and Federal Law No. 28 of 2005 (the Personal Status Law) codify matters of inheritance in the UAE.

So far as Islamic law, the Civil Code and the Personal Status Law are concerned in the UAE, as all Muslims are subject to the Sharia, it makes no difference whether the Muslim is an Emirati or an expatriate. If there is any aspect not covered by civil law or if any question of interpretation arises, then the Sharia should be applied.
 
In the UAE if a will is made locally then it should be attested at the Embassy of the testator’s nationality and upon death must go through the legalisation process, again according to the nationality, before being submitted to the court locally for adjudication. However many advisers feel that it is unnecessary to make a will in the UAE provided that a will, which addresses assets abroad without geographic limitation, has been made in the country of the testator’s nationality. This is because the UAE courts are likely to recognise the foreign will provided the court is satisfied that it is valid in the relevant jurisdiction, pursuant to Article 17 of the Civil Code, and provided it is proved that it was made in accordance with the expatriate’s jurisdiction of nationality. In this way the wishes of the deceased will be followed even if they do not follow the requirements under the Sharia.

But a question mark hangs over the ownership by an expatriate of immovable property in the UAE. While Article 17 of the Civil Code allows assets to pass under the expatriate’s will, Article 18 requires that the disposal of immovable property must follow UAE law. Further, Article 17.1 of the Civil Transactions Law clearly states that the law of the country of the nationality of the testator on his death will be applied to his estate. Therefore, the estate of a non-Muslim who is not a UAE national who dies in the UAE will be subject to the law of the country of his nationality, unless all the beneficiaries agree to apply Islamic Sharia, in which case the court will apply the latter.

In this regard, it should be noted that laws applicable to inheritance make no specific exemption for immovable property and therefore the potential conflict remains.

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New law on setting up the Dubai Export Development Corporation.

The Ministry of Labour (MoL) called for terminated workers to resort to the Ministry or nationwide offices for protection during their layoff periods.

It also urged them not to wait for the no objection certificate from employers and sponsors in order to shift to another employer.
Waiting for such a consent could take long time, making them vulnerable to legal and administrative liability.

Humaid bin Deemas, acting director general of the Ministry, said on Tuesday that employment of foreign workers is highly flexible and gives the worker full freedom to move from one company to another under understandable criteria which are like elsewhere in the world.
“Workers whose temporary contractual relations with their employers were ended should report to the ministry and not stay without work in the country,” he stressed.

The new law is part of Dubai Government’s plans to further develop its legislations to cope with the rapid changes and new developments as well as to comply with the best relevant international practices. The new law aims to further strengthen Dubai’s status as a global economic export and re-export hub. The provisions of Law 34/ 2009 will contribute to building Dubai’s export capabilities, develop its relevant programs, increase its exports, contribute to opening new foreign markets as well as strengthen existing markets to facilitate the access of products and services of companies licensed in Dubai to those markets.

The new law tasks the Dubai Export Development Corporation with the following:
1- Implementing programs and initiatives aimed at increasing and marketing exports.
2- Revising and analyzing the realities of Dubai’s exports as well as determining and tackling barriers to growth.
3- Providing commercial data and technical advise to exporting entities.
4- Developing and implementing initiatives aimed at raising awareness of export sector as well as the developments related to international         trade.
5- Helping companies and entities develop their own capabilities to market their products at foreign markets.

Law No. 34/ 2009 also stipulates the setting up of an export marketing program aimed at increasing Dubai’s exports and market the products and services of licensed companies and entities operating in the emirate.

Shaikh Mohammad also issued Decree No. 58/ 2009 approving the statute of Dubai International Arbitration Centre. The new law replaces the current statute which was approved by Law No. 10/ 2004.

The new decree aims to revise the effective legislations in Dubai so that they keep pace with the new global developments and comply with the best practices adopted by advanced nations in the areas of resolving disputes through alternative approaches.

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UAE set to enact new bankruptcy law

“The government is working on issuing a comprehensive bankruptcy/insolvency law that will protect businesses under financial stress and help them move forward,” Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry said.

A comprehensive bankruptcy protection law is expected to be announced by the UAE Federal Government ‘within months’, which will give adequate legal cover to companies under financial stress, a top Dubai Government official said.

The UAE government is looking at some of the best models of bankruptcy protection laws — including one devised by the United Nations. For a long time, many expatriate businessmen had taken an easy route — flee the UAE, leaving debts behind. Many local banks have pending cases against businesses owing them millions.

The new bankruptcy protection law intends to provide adequate legal cover to companies in the UAE that are under financial stress and help them move forward, according to a Dubai government official.

As the way of doing business evolves in the UAE, so does the need for an updated law that is equipped to handle bankruptcy/insolvency cases arising out of such situations. Many expatriate businessmen, for example, often leave the country for good, leaving debts behind for banks which are forced to track them down in other countries or give up on recovering the money. Many local banks have pending legal cases against businesses owing them millions in debt. So there is a need for a comprehensive law to cover businesses. The new law will also be timely in light of the current economic situation, where companies need to get legal cover to continue businesses and come back strong when the economy is in a better shape.

The government is working to put the law in final shape and it could be issued soon, according to officials. While an exact timeframe is not available, experts say the government began working on the draft even before the global financial crisis impacted businesses in the country, and the law could be in place “in a matter of months”.

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GCC customs law revision to benefit UAE free zone firms

Free zones in the UAE will soon benefit from a duty-free trade with GCC states and other countries with whom the country has free trade agreement.

Goods exported from the free zones are currently treated as foreign goods and are thus not entitled to benefit from the GCC Unified Customs Law, which eliminates customs duties among member states.

Companies in the free zones, except those wholly or at least 51 per cent owned by UAE nationals or GCC nationals, are required to pay five per cent customs duty.

“We fought for the past two years to include the free zones in the free trade agreements and we have won at last because we have the local governments and the ministries, including the foreign ministry, supporting us in this case,” said Ali Al Fayed, Manager, Department of Exports Origin, the Ministry of Economy. “Under the current companies law, a national company is one which is owned 51 per cent by a national but this is being revised in the new company law. Once clauses 85 and 88 of the Unified Law is abolished, all products being exported to the Arab League by national or non-national company will be able to have the same preferential
treatment.”

According to Article 85, goods taken out from the free zones into the customs office are treated as foreign goods even if incorporating local raw materials or articles on which customs duties and taxes have been collected prior to their admission into the free zones.

Article 88 on the other hand says goods imported from the free zones and duty free shops into or exported out of the country shall be treated as foreign goods. “We are trying to do our best to get a quick decision from the GCC as one party,” he said.

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Tribunal to protect creditor rights

In his capacity as the Ruler of Dubai, UAE Vice-President and Prime Minister His Highness Sheikh Mohammed bin Rashid Al Maktoum has issued a decree forming a tribunal to resolve disputes related to Dubai World and its affiliates.

The decree reflects the Government of Dubai’s keenness to preserve the rights of Dubai World’s creditors, as well as its dedication to enhancing the emirate’s role in the global economy by honouring all contractual commitments with creditors.

The move confirms the government’s ability to meet all outstanding obligations, and underlines its position as a robust economy, capable of absorbing the fallout from the global financial crisis with complete transparency. Dubai Government announced a comprehensive legal framework consistent with international standards of transparency and creditor protection that will govern the possible bankruptcy or liquidation of Dubai World, in case it defaults in meeting debt obligation.

The latest move came hours after the government had announced it would repay $4.1 billion (Dh15.07bn) to the holders of Nakheel sukuk maturing yesterday, following a $10bn support from Abu Dhabi Government.

The tribunal has jurisdiction to hear and decide any demand or claim submitted against Dubai World, including hearing and deciding any demand to dissolve or liquidate the corporation; and any person related to the settlement of the financial obligations of the corporation, including the chairman and members of the board of directors, as well as all the employees and workers of the corporation and issue the interim and interlocutory orders and decisions, including injunctions to any person to act or not to act, or other order as the tribunal considers appropriate.

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Terminated Workers Urged to Get Under Ministry Guidelines

The Ministry of Labour (MoL) called for terminated workers to resort to the Ministry or nationwide offices for protection during their layoff periods.

It also urged them not to wait for the no objection certificate from employers and sponsors in order to shift to another employer.

Waiting for such a consent could take long time, making them vulnerable to legal and administrative liability.

Humaid bin Deemas, acting director general of the Ministry, said that employment of foreign workers is highly flexible and gives the worker full freedom to move from one company to another under understandable criteria which are like elsewhere in the world.

“Workers whose temporary contractual relations with their employers were ended should report to the ministry and not stay without work in the country,” he stressed.

“The worker is brought from abroad to join a certain job and should stay in it. Whenever the work relations is over, he should not seek for excuses to stay in the country,” he explained.

He disclosed that the ministry has received applications from workers after their service were terminated since a long time reaching sometimes up to three years. “Allegations of waiting for these long periods to get their rights were not acceptable to the Ministry. Staying for months in the country without reporting to the ministry or following a lawsuit in courts is against the law,” he added.

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Strata Law regulations to boost market

As the Land Department and the Real Estate Regulatory Agency (Rera) put the final touches on implementing regulations to be issued under Law No 27 of 2007 On Ownership of Jointly Owned Properties in the Emirate of Dubai (the Strata Law), it seems an opportune time to reflect on the key features and advantages that a fully operational strata title regime will bring to the Dubai property market.

Although the introduction of the Strata Law has received a reasonable amount of media attention, and many people are now aware of its importance with respect to apartment ownership, further education of owners and those in the development industry is necessary to ensure that the full benefit of the Strata Law is obtained.

The enactment of the Strata Law by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, is an extremely important step in the evolution of the emirate’s property market for a number of reasons. Dubai is currently leading the world with respect to constructing large mixed-use developments on a scale and sophistication rarely seen.

Whilst the Federal Law No 5 of 1985 (as amended) in respect of Civil Transactions for the UAE recognises co-ownership of apartments and establishes some rights and obligations on co-owners, this law has not been sufficient to deal with the nature and sophistication of the development that has occurred in Dubai over the past 15 years.

The introduction of Law No 7 of 2006 Concerning Real Property Registration in the Emirate of Dubai (the Registration Law) was the first step in attempting to bridge the gap between the growth in development and the sophistication of the property law system governing such development by introducing a system of ownership registration to bring it in line with other established world markets.

The introduction of the Strata Law is the next step in the growth of the property law system as it incorporates apartment ownership (and the ownership of other jointly-owned property) within the registration system.

While the Strata Law came into effect on April 1, 2008, the strata title regime is yet to become operational as the implementing regulations necessary to give direction as to the operation of the Strata Law (Regulations) are still to be finalised by the Lands Department and Rera.

Although industry experts recognise the necessity of having a fully operational Strata Law, there has been much lobbying of the Land Department and Rera by industry players seeking to influence the final form of the regulations in an attempt to minimise the impact of the Strata Law upon their current business model.

As such, developers, owners and their legal advisors eagerly await the finalisation and passing of the regulations to fully assess how the Strata Law is to operate and the procedures necessary to effect the registration of a strata scheme with the Land Department and formation of an owners’ association.

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Medical insurance mandatory for Jafza workers

6,000 companies must complete all the medical cover documentation to comply with new regulations by December 1.

Jebel Ali Free Zone Authority (Jafza) has issued a regulation that mandates medical insurance for all employees sponsored by the authority.

A circular was sent out a month ago to all companies based in Jafza stating that group medical insurance (GMI) is mandatory for all company employees. Jafza has given a December 1 deadline to complete all medical cover documentation, according to a circular.

The operations department of the authority said that GMI could be done from any insurance company operating in the UAE.

While some companies based in the free zone would have to modify their insurance policies, others are already in the process of doing it.

The free zone, spread over an area of 48 square kilometres, has over 6,000 companies, including over 150 of the Fortune Global 500 enterprises from across the world.

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New law to protect investor rights

Real estate contributed more than 32 per cent of Dubai’s economy at its peak. The Dubai Government has recently implemented strict measures to protect investors against illegal practices by developers.

The Dubai Land Department is studying a new law to protect the rights of real estate investors. Sultan Bin Mejren, Director-General of Dubai Land Department, said: “The department is working to put in order a law to protect the rights of real estate investors.”

He added that the draft of the law will be ready to send to the Executive Office to get the government’s approval by the first quarter of 2010.

The law would be comprehensive and include all items that seek to protect investors.

“Our ultimate goal is ensure justice and set up proper rules and regulations to regulate the relationship between developers and investors,” Bin Mejren said.

He also said that the Land Department and the Real Estate Regulatory Agency (RERA) are working on the new guidelines, which upon government’s approval, will be implemented early next year.

Dubai government has recently implemented strict measures to protect investors against illegal practices by developers.

The Dubai Government has formed a new judicial committee that will deal with cases involving bounced cheques in the property sector.

The committee will settle cases related to bounced cheques whether issued by a buyer to a developer, or from tenants and beneficiaries of long-term units under the provisions of Law No 7 of 2006 regarding real estate registration in Dubai.

This will help reduce the number of criminal cases due to payment defaults and subsequently help the emirate’s real estate sector.

Bin Mejren said: “Soon we will meet with the Dubai Courts team to draw an outline for the judicial committee to develop mechanisms to deal with the situation.” Members of the committee will be chosen from Dubai Courts and the Land Department to settle the disputes. The UAE’s property sector has witnessed a number of delays and cancellations due to the impact of the global economic slowdown since late last year.

Active projects

Despite the slowdown, new research showed that 3,398 civil building projects worth $1.35 trillion) (Dh4.95 trillion) are currently active in the Gulf region. The figures paint a more positive picture of the regional construction industry which has been battling to shrug off the effects of the global economic crisis.

The UAE leads the way, with 1,853 civil building projects worth a total of $661,44 billion currently under way across
four sectors — commercial and retail, education and healthcare, leisure and entertainment, and residential.

The research carried out by Dubai-based company, which monitors regional construction projects across all industry sectors, showed that overall, a fraction under 75 per cent of all announced projects in the region are still progressing, representing a much more optimistic outlook at the start of an important week for the regional construction industry.

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