DUBAI’S LEGAL SYSTEM CREATING A LEGAL AND
REGULATORY FRAMEWORK
FOR A MODERN SOCIETY
Andrew Tarbuck & Chris Lester
contents Dubai’s legal system 5The UAE federal constitution 7 The foundations of the legal system 7 The court system 8 Free zones 9The DIFC 11Structuring and licensing for international business wishing to do business in Dubai 13T ax 14Corporate governance 15 Enforcement of laws 15Legal reprentation 16Concluding remarks 16
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Dubai’s Legal System
In this uncertain world of globalisation and emerging markets, Dubai’s economic and cultural growth is underpinned by
a legal and regulatory framework, which has developed
sufficiently to encourage significant local and international enterpri in Dubai and is continuing to develop. A recurring theme when deciding where to do business is the suitability of the legal and regulatory framework in the particular local jurisdiction. The willingness of international business to
t up and operate in Dubai, and the success of local Dubai business, is clear testament to Dubai’s robust and dynamic
legal and regulatory framework.
Dubai’s legal system is founded upon civil law principles (most heavily influenced by Egyptian law) and Islamic Shari’a law, the latter constituting the guiding principle and source of law. In Dubai and other civil law jurisdictions, legislation tends to be formulated into a number of major codes providing for general principles of law with a significant amount of subsidiary legislation. The influx of regional
and international commercial enterpris to Dubai and the UAE over the last 30 years has resulted in an expanding and increasingly comprehensive body of federal legislation being established in the form of federal codes of law. There are federal codes of law which apply in Dubai and the other emirates dealing with the most important and fundamental principles of law, including civil, commercial, civil procedure, companies, intellectual property, immigration, maritime, industrial, banking and employment law. In contrast, many of the laws enacted by the Ruler of Dubai relate to matters which are more administrative in nature, such as the establishment and
operation of government affiliated entities. ! The UAE federal constitution ! The foundations of the legal system The United Arab Emirates (the UAE) is a federation of ven emirates comprising Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain and was formed in 1971. The UAE federal constitution provides for an allocation of powers between the federal government and the government of each emirate. Dubai is subject to the federal law of the UAE but retains the right to administer its own internal affairs and enjoys certain other exclusive rights.
Although the UAE federal constitution permits each emirate to have its own judicial authority, all emirates other than Dubai and Ras Al Khaimah have brought their judicial systems into the UAE Federal Judicial Authority. Dubai has retained its own independent courts (and judges), which are not a part of the UAE Federal Judicial Authority. Dubai’s courts will first apply federal laws, such as the Companies Law or the Civil Code, as well as the laws and decrees enacted by the Ruler of Dubai, where federal law is abnt or silent.
Dubai’s courts compri a Court of First Instance, a Court of Appeal and a Court of Cassation. Each of the courts has a civil division, a criminal division and a Shari’a division. The civil division hears most civil claims, the criminal division deals with most criminal cas arising in Dubai and the Shari’a division hears civil matters for Muslims, most of which relate to family matters such as divorce and inheritance.
Non-Muslims are required to respect Shari’a law in Dubai
and should conduct themlves accordingly. Dubai also has a Labour Court, which deals exclusively with disputes between employers and employees, and a Property Court which deals exclusively with real property disputes.
Matters coming before Dubai’s courts are heard by one or more judges. Juries are not ud. Further, unlike in some western jurisdictions, there is no system of precedent in Dubai or the UAE. However, judgements of some higher courts are published, not becau they are binding on lower courts,
but in order to provide uful evidence of future judicial interpretation and practice.
It should also be noted that the Dubai courts conduct themlves in the Arabic language and so legal reprentation not only requires legal advocates who are properly licend
to appear before the courts, but also requires that they are conversant in Arabic.
Any legal or regulatory framework is only as good as its ability to adapt and develop as the world changes and the require-ments of local and international business become more sophisticated. There have been some landmark developments in Dubai in terms of law and regulation, most notably, in
the creation of the many free zones in Dubai which have, to varying degrees, different laws and regulations to non-free zone areas. Some of the more well known free zones in Dubai include the Dubai International Financial Centre (the DIFC), the Jebel Ali Free Zone and Dubai Media City.
Conditions for doing business in free zones are highly attractive with 100 per cent. foreign ownership of companies allowed (compared to 49 per cent. for most companies incorporated outside the free zones), tax concessions, no restrictions on the repatriation of capital and profits and freedom from currency restrictions and import duties.
Free zones have been fundamental in developing Dubai’s reputation as an attractive place to establish a business. Subject to certain exceptions, business wishing to t up
in the free zones are required to establish places of business physically within the geographical boundaries of the particular free zone, which means international enterpris must put
firm roots down in the region which, in turn, encourages sustainability and longevity in terms of commitment to the region. In terms of sophistication, the DIFC is probably the most advanced of the UAE’s free zones.
