• November 26, 2019

    Commercial Judgment

    Al Suwaidi & Company has recently succeeded in a judgment of commercial dispute before The Dubai Court of Appeal, which has become final and has not been challenged and it is now under implementation. The case relates to a cancellation of a contract for sale of a boat (Yacht) and to return the situation to what it was before the contract with compensation, we have filed the case on behalf of our client against a free zone company affiliated to Dubai Multi Commodities Center (DMCC), one of the shareholders of the company and company director. The shareholder-the second respondent-has filed a claim of lack of capacity in confrontation as a shareholder shall not be questioned to the company’s limited liability obligations and is not liable to fulfill its obligations of his own funds, in accordance to the principle of separation of the two liabilities. The Court of first instance, supported by the Court of Appeal, rejected this claim, according to that it is clear from the first respondent company’s trade license it is a free zone company affiliated with the DMCC and that the provision in Article 12 of Regulation No. 4 of 2002 on the Organizing Operations at the Dubai Commodities and Metals Centre which has been changed to Dubai Multi Commodities Center (DMCC) by virtue of Resolution No. (2) of 2006 states that each limited liability company incorporated in accordance with Article 10 of this Law shall mention in all its activities, contracts, advertisements, invoices, correspondence and publications along with its name the following: It was incorporated under this system and it is a limited liability. It’s a company in the center. In the event of omission of what has been mentioned in Clause A and/ or B of this Article, the owner or owners of the company shall be held liable in all their funds for the company’s obligations. Article 13 of the same law stipulates that the Dubai Courts shall apply the laws pertaining to the Center when considering any dispute related to the acts carried out therein. When the court found that the invoice issued by the first respondent company and the correspondence issued by it is free from any mention of the data referred to in Article 12 above, the court has decided to oblige the second respondent along with the first respondent in the amount of the indebtedness and has rejected the claim of lack of capacity. This result is a good example of protecting investors’ funds from being wasted by people who always manipulate under the guise of limiting liability by setting up limited liability companies without complying with the requirements of the law.

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  • November 26, 2019

    Arbitration Judgment

    “Al Suwaidi & Company has successfully represented their client in a ruling by the Federal Supreme Court on 15 January 2019 on the enforcement and recognition of an arbitral award.”. In the said ruling, the Federal Supreme Court overturned a refusal by the Khor Fakkan Court of Appeal to recognize and enforce a foreign arbitral award which had been issued under the Rules of the London Court of International Arbitration (LCIA) in London, on the basis that it had not been granted exequatur by the English Court before being enforced in the UAE. The Federal Supreme Court held that the basis on which the lower court rejected the recognition and enforcement of the mentioned award in that it was not granted exequatur in the country where it was issued was unlawful. The Federal Supreme Court found that the Court of Appeal’s ruling amounted to a ‘double-exequatur’ requirement which had been abolished by the New York Convention. In view of the foregoing, the term “authentication” as envisaged in Article IV(1)(a) of the New York Convention should be construed as authentication and legalization as required for official documents issued by a foreign country and invoked within the State.”

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  • November 26, 2019

    Spotlight on Recent Developments in UAE

    Long-term Residence Visas   The UAE has launched long-term residence visa programs that aim to attract international talent into the UAE, such as entrepreneurs, investors, scientists and special talents. Availing these long-term residence visas can be described below: 10-year UAE residence visa According to the General Directorate of Residency and Foreigners Affairs, foreign investors may obtain a 10-year UAE residency visa provided the following: Establishing an entity with a minimum total share capital of AED 10 million with at least 60% shareholding of the total company share capital of such investor, make a deposit of at least AED 10 million in an investment fund in the UAE; The invested amount shall not be a loan from any financial/non-financial institutions; and The investment ought to be for 3 years. Further, specific categories are also entitled to apply for 10 years UAE residency visa (i.e. doctors, scientists, creative individual in field of culture and art, etc.), however, applicants must have an employment contract in a field which is identified as a priority for the UAE, in addition of specific conditions vary according to each field. 5-year UAE residency visa In addition to the above-mentioned 10-year UAE residence visa, investors who invest in a property in UAE can apply for a 5 years UAE residency visa. Granting the visa to such investors shall be allowed provided that (i) the property gross value the subject of the investment shall not be less than AED 5 million; (ii) the invested amount shall not be a loan from any financial/non-financial institutions; and (iii) the property must be taken for minimum 3 years. In addition of property invests as mentioned in the previous paragraph, entrepreneurs shall also apply for a 5 years UAE visa, provided to own a project within UAE of a value not less than AED 500,000 with obtaining an approval from an accredited business incubator in UAE. Outstanding students shall be entitled to apply for 5 years UAE visa as long as their score in their secondary school is at least 95% with a distinction of 3.75 GPA upon graduation from any university. Such students may obtain the visa for themselves as well as for their family. Digital Initiative: Spotlight on the Dubai Land Department As the UAE positions itself at the forefront of innovation and adoption of leading-edge technologies globally, it is worth highlighting specific initiatives and regulatory developments made by the UAE government to promote the transition of the UAE economy into one that is more digitally enabled and ready to adapt to the future. The Dubai Land Department (DLD) is one UAE government agency that is leading in the push for innovation and rollout of seamless and efficient customer experiences through digital solutions. The DLD has rolled out blockchain technology to automate and optimize real estate business processes end-to-end. The DLD is employing blockchain across three initiatives: Ownership Verification, Property Sale by the Developer and Smart Leasing. Through the blockchain platform, DLD aims to improve the provision of services, effectiveness of collaboration among all parties involved in the real estate market and enhanced security for real estate properties conducted digitally. The […]

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  • November 26, 2019

    Key Highlights on the UAE Insolvency Law

    The UAE Cabinet recently approved Decree-Law No. (19) of 2019 on the Insolvency of Natural Persons concerning natural person’s inability to pay debts due to insolvency and debt default. This new law is aimed at enhancing the competitiveness of the UAE, ease of doing business and at facilitating more favorable conditions for individuals facing financial difficulties and protecting those unable to meet debt obligations from going bankrupt. As a measure responsive to the needs of the UAE’s citizens and residents, said law shall support individuals who are facing existing or potential financial distress and allow them to settle their debts. Key highlights and changes from prior insolvency regulations involve the new law allowing for the following: Decriminalize the financial obligations of the insolvent person and allow an opportunity to work, be productive and provide for their families Protect the debtors from legal prosecution out of the bad debts incurred Enable debtors to reschedule their debts and give an opportunity to take new concessional loans Coming into force in January 2020, this new law also features the availability of the assistance of one or more experts to be appointed by the court to assist debtors in settling their financial obligations. Also acting as a coordinator between debtors and creditors, the expert/s shall come up with a settlement plan to address all financial liabilities of the debtor to be completed in no more than three years. The new law is different from that of the UAE Bankruptcy Law (Decree-Law No. 9 of 2016) which also addresses the insolvency of a debtor. The debtor in this new law pertains to the natural person who is not engaged in economic activity and does not match to the description of a trader. Nonetheless, both laws are aimed towards aiding and supporting the swift completion of related legal procedures to reduce the fees for rescheduling or restructuring debts with a view of finding a fair compromise for both creditors and debtors. The UAE Ministry of Finance has clarified that bounced cheques would not be decriminalized but that debtors can now turn to the insolvency law to resolve their debts without any jail time or legal action taken against them. We at Al Suwaidi & Company see the approval and implementation of this new law as a key milestone with significant implications throughout the commercial, financial services and consumer finance landscape of the UAE that shall overall improve the UAE’s competitive positioning and sustainability as the Middle East’s premier place to do business and to avail an attractive quality of life for its residents and citizens. Specialized rules and procedures regarding the insolvency of a natural person are expected to enhance transparency on civil debt repayment transactions and increase the general security of financial transactions. Easier access for individuals to obtain loans to help settle debt obligations shall also help in improving collections on bad debts and accelerate the rehabilitation process of debtors. This will improve creditor banks’ confidence in retail lending and ensures the protection of the debtors’ dignity and helps create an opportunity for them to better manage their finances and reduce their financial burdens.

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