• Legal Update

    13 sectors eligible for up to 100% foreign ownership within the UAE announced

    foreign ownership

    Following the announcement of new law in November 2018 in which the UAE Cabinet approved plans to allow for up to 100% foreign ownership of certain onshore companies registered in the UAE, a total of 122 economic activities expanding across 13 sectors have now been announced as eligible.

    1. Administrative and support services;
    2. Agriculture;
    3. Art and entertainment;
    4. Construction;
    5. Educational activities;
    6. Healthcare;
    7. Hospitality and food services;
    8. Information and communication;
    9. Manufacturing industry;
    10. Professional, scientific and technical activities;
    11. Renewable energy;
    12. Space; and
    13. Transport and storage.

    Companies which fall out with the approved sectors and economic activities will remain subject to the current law requiring a 51% local shareholding.

    The intention behind the new law is part of the UAE’s plan to attract further foreign investments and boost the local economy. The UAE cabinet has also announced that local governments at an Emirate level will have the authority to decide on the percentage of foreign ownership for each sector and activity.

    For further information on how our team at Davidson & Co can assist you with your business set up please contact us on +971 343 8897.

  • Legal Update

    Andrew Young – Ranked Band 1 for Private Wealth Law in the UAE within Chambers High Net Worth 2019 Guide

    Andrew Young-partner

    Davidson & Co are delighted to announce that Andrew Young, head of our Private Client Department, has once again been recognised by Chambers and Partners in their prestigious Chambers High Net Worth 2019 guide.

    Andrew is one of only three lawyers to be ranked Band 1 for Private Wealth Law in the UAE, and is awarded recognition for being “very likeable, very results-driven and excellent on governance matters”, whilst also having the ability “to explain very complicated matters and to simplify them so clients understand”.

    Andrew’s full listing can be viewed here https://chambers.com/lawyer/andrew-young-high-net-worth-21:25561451

    Andrew has over 30 years’ experience advising wealthy individuals, families and family offices in relation to both personal and business assets, and our team at Davidson & Co are one of a limited number of firms in the region offering international high net worth private client expertise including; international estate planning, asset protection, offshore trust structuring, family governance and family office advisory.

    For further information on how our team at Davidson & Co can assist with your estate planning and asset protection, please contact us on +971 343 8897.

  • Legal Update/ Wills

    New DIFC Wills and Probate Registry Rules now in effect

    Probate Registry Rules

    The DIFC Wills and Probate Registry (“DIFC WPR”) have announced the release of new Rules which will significantly widen the scope and applicability of the DIFC WPR’s services.

    The new Rules, which come into effect as of today (30th June 2019), allow a non-Muslim testator over the age of 21 to register a Full DIFC Will to provide not only for assets held in all seven Emirates (“UAE Estate”), but also worldwide assets. This is a significant expansion from the previous rules, which limited a testator to assets held in the Emirates of Dubai and/or Ras al Khaimah only.

    Individuals who wish to continue to register Full Wills limited only to their Dubai and/or Ras Al Khaimah assets may continue to do so, and Guardianship Wills and provisions will continue to apply only to minor children (under the age of 21) who are habitually resident within these two Emirates.

    The remaining 3 available DIFC WPR Wills; Property Will, Business Owners Will, and Financial Assets Will, will apply to a testator’s “UAE Estate”.

    Individuals who have already registered a DIFC Will, but wish to extend the jurisdiction under the Will to include assets across the UAE or worldwide, will be able to do so at no additional cost up until 29th August 2019 by appointment only.

    For further information on the new Rules and/or how Davidson & Co can assist you with amending the jurisdiction of an existing DIFC registered Will, please contact Victoria Smylie or Finlay Donaldson on +971 343 8897 or vsmylie@davidsoncolaw.com / fdonaldson@davidsoncolaw.com.

  • Legal Update

    Dubai International Financial Centre has introduced a new Insolvency Law


    The Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE has introduced a new Insolvency Law, Law No.1 of 2019, for companies operating within the DIFC.

    The new law, which is intended to come into effect from the 28th August 2019, was announced via a statement released on His Highness’s website and is expected to introduce a more “efficient and effective bankruptcy restructuring regime”.

    The statement further added that the new law introduces “a new debtor in possession bankruptcy regime in line with best practice globally which will also place the DIFC at the forefront of complicated debt restructurings”. The legislation will also provide for a new administration process in circumstances where there is evidence of mismanagement or misconduct.

    Law No.1 of 2019, which was legislated following extensive research, and in light of the high-profile collapse of Abraaj Group, will also incorporate the UNCITRAL Model Law (the UN Commission on International Trade Law) in cases involving cross border insolvency, which reflects current best practice in the area. Incorporating these internationally recognised model laws will encourage existing and potential investors in the region, and will increase the chance of retaining commercial value and rescuing businesses that are suffering financial hardship.

    For further information in relation to the DIFC or the new insolvency rules, please contact caschipperton@davidsoncolaw.com

  • Legal Update

    ADGM issues new rules permitting litigation funding


    The Abu Dhabi Global Market (“ADGM”) Courts have recently issued legislation which expressly allows for third-party litigation funding in what they describe as a “first” in the Middle East and North Africa (“MENA”) region.  The introduction of the “Litigation Funding Rules 2019” follows a public consultation and review of existing frameworks in jurisdictions such as the United States, England and Wales, and Hong Kong.

    Litigation Funding is a process which enables third parties to bear the costs of litigation in exchange for an agreed proportion of the eventual recovered sum. Litigation Funding Agreements (“LFA”) share certain similarities with Conditional Fee Agreements (“CFA”) or ‘no-win-no-fee’ arrangements. Both an LFA and CFA ensure that the Litigant does not bear certain upfront and/or ongoing costs in respect of the litigation, in exchange for the Litigant agreeing to part with a sum or percentage of their final payout. The main difference between a CFA and LFA is that under an LFA, a third party to the litigation (the Funder) covers the agreed upfront costs and/or ongoing costs.

    The Chief Justice of the ADGM Courts commented that the legislation aims “to strike a balance between litigants’ needs for the financing of their proceedings to ensure access to justice, the legitimate commercial interests of Funders, and promoting transparency of the Funder’s role for the benefit of consumers of these resources.” The new rules do so by providing for the minimum terms to be included in an LFA such as liability to pay insurance premiums, the amount of funding and its scope, and timings with regards to the advance of tranches. The legislation contains provisions which also regulate settlement of funds, LFA termination procedures and provide that the ADGM is the correct forum and jurisdiction for disputes arising from AGDM LFAs.

    The new framework is yet another progression in the UAE legal sector, following the DIFC Courts’ Practice Direction No. 2 of 2017 which established a framework for funding claims in the DIFC Courts, and the long-awaited amendment to DIAC Arbitration Rules, which will acknowledge third party funding.

    For further information in relation to the ADGM or the new rules permitting litigation funding, please contact caschipperton@davidsoncolaw.com

  • Employment/ Legal Update

    All UAE workers entitled to 14 public holidays in 2019 and 2020

    uae worker

    The UAE government has taken the decision to remove the distinction between private sector and public sector in terms of public and national holidays. Previously the public sector had been granted more public holiday than the private sector every year, and the decision is seen as one designed to encourage more Emiratis to enter into the private sector.

    All workers in the UAE for the next 2 years are therefore entitled to 14 days public and national holiday.

  • Legal Update

    Middle East Legal Awards 2019


    Davidson & Co are delighted to announce that two of our lawyers have been shortlisted for awards at the Middle East Legal Awards 2019.

    Scottish duo Yousif Ahmed (‘Rising Star’ category) and Victoria Smylie (‘Most Promising Newcomer’ category) have been recognised for their outstanding legal work and contribution over the last year.

    The firm’s founding partner, Jonathon Davidson commented “For two of our lawyers to receive nominations and be shortlisted for awards at such a prestigious ceremony is a testament to the quality of our team as a whole. Well done to our nominees and to all those in the firm who have supported them. Congratulations, as well, to all of the other firms and individuals involved!

    The awards ceremony will be taking place on Thursday 18 April 2019 at the Ritz-Carlton in JBR, Dubai.

  • Federal Law/ Legal Update

    Arbitration Law Update – Federal Law No. 6 of 2018

    Arbitration Law Update

    The much-anticipated Federal Law No. 6 of 2018 (the “New Federal Law”), which broadly aligns the UAE federal law with the United Nations Commission on International Trade Law (UNICITRAL) Model Law on International Commercial Arbitration, was implemented in mid-2018 in an attempt to secure the UAE’s position as an international hub for arbitration disputes. The New Federal Law, which is seen as a radical overhaul, has repealed Articles 203 to 218 of the UAE Civil Procedure Code (Federal Law No. 11 of 1992 (as amended)), and was earmarked to increase the scope of application of federal arbitration law, to clarify procedural issues stemming from capacity to enter arbitration agreements, and to empower tribunals to order interim remedies.

    What is Arbitration?
    Arbitration is a popular form of dispute resolution whereby arbitrators, as opposed to judges, render an arbitration award that is legally binding on both parties. Arbitration is attractive in commercial disputes, as parties can agree the procedure that a tribunal must follow, as well as nominating arbitrators with the relevant expertise to comprise the tribunal, rather than an expert of law (judge).

    Scope of Application
    The New Federal Law potentially extends the scope of the law to apply to international arbitrations (those seated outside the UAE) where the governing law is UAE law. This interpretation is ambitious, and it remains to be seen whether extraterritorial application will be accepted in other seats.

    Arbitration Agreements
    The New Federal Law still contains express provisions relating to the authority to enter arbitration agreements, though the requirements have been somewhat watered down. Incorporation by reference, in line with the UNICCITRAL Model Law, is now deemed acceptable, as is a party’s request to refer a dispute subject to court proceedings to arbitration where it is alleged the parties agreed to arbitrate. These changes are designed to reduce the all-too-common procedural delay tactics whereby one party challenges the signatory’s capacity to enter the arbitration agreement.

    Interim Remedies
    In a much anticipated and welcomed step forward, the New Federal Law expressly recognises the tribunal’s authority to order interim or conservatory measures as it considers necessary. This will allow for preservation and maintenance of evidence and assets, and is undoubtedly one of the highlights on the new legislation.

    For further information in relation to Federal Law No. 6 of 2018 and arbitration in the UAE, please contact caschipperton@davidsoncolegal.com

  • Legal Update

    UAE set to introduce ‘Good Samaritan’ law in 2019

    Good Samaritan law 2019

    The Rescuer Protection Law, recently approved by the UAE Ministry of Health and Prevention, will allow bystanders to offer aid in medical emergencies without fear of legal punishments.

    With Abu Dhabi Police previously stating that it is an offence to provide assistance without being trained in first aid, medical professionals in the UAE have advised that the general public are often reluctant to intervene in emergency situations for fear of prosecution. It is therefore hoped the law will boost survival rates and encourage the public to provide assistance in life-threatening situations.

    A large public campaign to raise awareness of the new law is expected and community services centres will be introduced to train UAE residents in providing lifesaving assistance in emergencies.

    The law will be sent to the UAE Cabinet for final approval within the next two weeks and is expected to be introduced shortly after.

  • Employment/ Legal Update

    Terminating an unlimited term contract under Article 117

    Terminating an unlimited term contract under Article 117

    Federal Law number 8 of 1980 (as amended), colloquially known as the UAE Labour Law, regulates all employment contracts in the UAE, with the exception of certain ‘offshore’ jurisdictions such as the Dubai International Financial Centre or Abu Dhabi Global Market. It is therefore a fundamental piece of legislation, the understanding of which is essential to both employees and employers alike.

    The UAE Labour Law distinguishes between two types of employment contracts; limited term and unlimited term. In their basic forms, the contracts are as the name suggests; limited term contracts specify a fixed term and an end date, and unlimited term contracts are open ended and therefore seen as more flexible. Different articles relate to the termination of the two separate contract types, and for the purposes of this commentary, we will review one of these articles – article 117 – one of the two main ways in which an employer may lawfully terminate an employee’s unlimited term contact.

    Article 117 stipulates that there must be ‘valid grounds’ by which either an employer or employee can terminate an unlimited contract. These ‘valid grounds’ are not defined, although the UAE Labour Law does specify that they must be work related when seeking to be relied upon by the employer, and from previous judgments, the Labour Courts have been willing to accept poor performance or misconduct as a ‘valid reason’. Where an employee is terminated for a valid reason, they are entitled to their full end of service gratuity and other entitlements under the law.

    Where a company fails to comply with the UAE Labour Law provisions regarding termination, they may be found to have arbitrarily dismissed the employee, and subject to a penalty of between 1-3 months compensation based on an employee’s full final salary. The penalty is at the court’s discretion, usually having regard to the specifics of each case; eg. length of employment, seniority etc.

    Under the terms of article 117, a minimum mandatory notice period of thirty days is also prescribed, during which an employee is entitled to their full pay and benefits, and are still bound by the terms of their employment contract. Failure to abide by the notice period, by the employer or employee, opens up the possibility for a payment in lieu of notice. Whether the employer wishes the employee to remain an active part of the business during the notice period, or decides that gardening leave is more appropriate, is a matter of company policy. The requirements of an employee on notice should be set out clearly so as to avoid dispute, and should ensure that handover, and any other company requirements, happen during the notice period and specifically while the employee is still contracted with the company.

    The legal obligations on an employer do not end once article 117 has been satisfied, but having a coherent and well-drafted company policy that expands upon what ‘valid grounds’ are, provides for company work standards and details procedure on termination, can ensure that the termination process is as straightforward as possible. The best outcome in any termination is one whereby both the employer and employee know the process, and are committed to it.

    Where an employer is looking to rely on article 117 to terminate an employee, it is extremely important that the correct procedure is followed and the necessary paperwork is in place.

    For further information on article 117 or any other employment advice

    Christopher Chipperton
    +971 4 343 8897