UAE
no restrictions on the involvement of internation- al counsel in commercial transactions. However, any firm wishing to establish a practice in the UAE must be licensed and registered in accor- dance with the requirements of the Emirate in which it is based. In Dubai, such requirements comprise licensing and registration by the Ruler’s Court and the Legal Affairs Department (if the firm is to be based in the DIFC, the appropriate DIFC licence must be obtained). In addition, only Emirati lawyers enjoy rights of audience before the local courts (other than the courts of the DIFC, which allow rights of audience to any lawyer who has been duly certified to practice in the DIFC courts).
Lagging laws The UAE has experienced fast-paced growth over the past decade, and its laws have not kept up with this pace of development; they generally require updating to reflect modern commercial realities of conducting business. Several Federal laws of the UAE primarily govern matters relating to corporate and commercial law matters. These are the Civil Code (Federal Law No. 5 of 1985), the Commercial Transactions Law (Federal Law No, 18 of 1993),the Commercial Companies Law (as amended) (Federal Law No. 8 of 1984) and the Commercial Agencies Law (as amended) (Federal law No. 18 of 1981). Some areas of cor- porate law would greatly benefit from modernisa- tion, including laws relating to the creation, regis- tration and enforcement of various forms of secu- rity interests by companies (including rules as to priority of secured and unsecured creditors’ inter- ests), recognition and enforcement of shareholder rights, laws relating to insolvency, bankruptcy and restructuring procedures. Steps are being taken to revise and update the UAE companies and bank- ruptcy laws. In the area of contract law, the UAE generally
recognises the freedom of parties to elect the gov- erning law of their contracts. In contractual arrangements involving UAE-based parties and projects, parties will usually provide for contracts to be governed by the laws of the relevant Emirate together with federal law, as applicable. Contracts of a cross-border nature will usually be governed by foreign law. English law or New York law are frequently chosen in the context of cross-border contracts.
Resolving disputes Dubai is increasingly being chosen as a venue for arbitration; the UAE has signed and ratified (by Federal Decree No. 46 of 2006) the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which in principle makes it easier for foreign investors to enforce for- eign arbitral awards in the UAE. The Dubai International Arbitration Centre and the DIFC- LCIA Arbitration Centre are frequently being turned to by domestic and regional investors as dispute resolution forums for commercial disputes. With regard to the use of courts as dispute res-
olution forums, enforcement of foreign judg- ments in the UAE is done on a mutual recogni- tion basis. In the absence of a mutual judgment recognition and enforcement treaty between the UAE and the jurisdiction from which the judg- ment originates, it is difficult to enforce a foreign court judgment in the UAE. Towards the end of 2011, the jurisdiction of the courts of the DIFC was extended by statute. By an amendment to the law, the jurisdiction was extended to allow parties who have no connection with the DIFC to opt by contract for disputes arising under their contracts to be heard and determined by the DIFC courts. The DIFC’s laws are based on English common law principles and the judges are predominantly drawn from Commonwealth jurisdictions. A sys- tem of judicial precedent and public case report- ing applies in the DIFC courts. As a result, they are often seen as providing more certainty to for- eign investors who are familiar with common law systems. Parties are increasingly choosing the DIFC’s dispute resolution forums for commercial disputes.
Regional links The UAE is a member of the GCC as well as the Arab League, and is also a signatory to the Riyadh Arab Agreement for Judicial Co-operation. The GCC is a regional political and economic
organisation. A GCC common market was estab- lished in 2008. The common market provides for national treatment to all GCC firms and citizens in any other GCC country, thereby reducing bar- riers to regional trade and investment. The GCC also has a common external tariff for customs duty on goods imported into the GCC. Although a GCC customs union was proposed several years
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The UAE generally recognises the freedom of parties to elect the governing law of their contracts
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ago, this has not been implemented in practice. The Arab League (also known as the League of
Arab States) is a regional organisation comprising 22 states. Its principal objective is to deepen ties between the member countries and to safeguard their independence and sovereignty. It is seen as a forum for its members to coordinate policies and to resolve disputes between them. The Riyadh Arab Agreement for Judicial Co-
operation (also known as the Riyadh Convention) was signed by twelve states in 1983: the UAE, Algeria, Bahrain, Iraq, Jordan, Libya, Morocco, Oman, Saudi Arabia, Syria, Tunisia and Yemen. The Convention provides for the recognition and enforcement of court judgments and arbitration awards among the member countries without re- examination of their merits. The Agreement on the Execution of Rulings,
Requests of Legal Assistance and Judicial Notices (known as the GCC Convention) was entered in to in 1995 by the six member states of the GCC. The GCC Convention facilitates the mutual recognition and enforcement of court judgments and arbitration awards between the six GCC countries.
About the author Ian Gaitta is a senior associate at Anjarwalla Collins & Haidermota. He is admitted as an Advocate of the High Court of Kenya. He was previously a senior associate with Anjarwalla & Khanna Advocates, one of Kenya’s leading law firms. His practice focuses on mergers and acquisitions transactions, including share and asset acquisitions and disposals, joint venture transactions and general corporate and commercial law. In addition, Gaitta has been involved in advising on power projects,
financing transactions, construction and EPC contracts, resort development and hotel management contracts, franchise and distribution arrangements and regulatory advisory work in various industry sectors. He has had transactional experience in the UAE, certain other GCC
countries and across the East Africa region. Contact information
Ian Gaitta Anjarwalla Collins & Haidermota Emaar Square, Building 4, Level 2 Unit 206, Downtown Burj, P.O. Box 58553, Dubai. United Arab Emirates T: +971 4 3469890 F: +971 4 3469899 E:
info@ach-legal.com W:
www.ach-legal.com
www.iflr.com IFLR|FOREIGN DIRECT INVESTMENT 039
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