Legal Overview
Among the most challenging issues facing international companies doing business in the United Arab Emirates (UAE) is the ability to take and perfect security over assets. This is due largely to the developing nature of the country's legal system, requiring businesses to resort to less orthodox methods to reduce risk in the event of default or non-payment.
There is a wide range of precautionary attachment options in the UAE which creditors in the region should take into account.
Facts and Trial
A company operating from 2001 till 2012 was in strong financial standing. After 2012, the company faced financial difficulties and lawsuits and by 2020 had encumbered debts amounting to almost AED 20 million.
Patrick Gearon and Roger Elford, Charles Russell Speechlys
This is an extract from the 2020 edition of GRR's the Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
In summary
On 17th January, 2020, the Republic of India (India) made a remarkable move with the issuance of a Gazette notification which notified the inclusion of the United Arab Emirates (UAE) as a “reciprocating territory” for the enforcement of judgments (Reciprocating Territory Notification). This alert expands on the features of this new development and the potential benefit for individuals, companies (including financial institutions) in the UAE that have default debtors located in India or with assets in India.
In brief:
The potential cost of making or defending a claim is often a concern for anyone involved in litigation or arbitration. AG has since 2008 been at the forefront of sharing the risk with its clients, and the litigation funding market has responded with a variety of different options and opportunities. And it's also a developing topic for the courts. Our Control Update newsletter reports all the latest developments, both commercial and legal.
Litigation funders – extent of their involvement and liability for costs
The ADGM was established in Abu Dhabi in 2013. However, the ADGM has only recently (on 15 June 2015) published its first set of commercial rules and regulations for non-financial services (the Regulations) relating to companies, insolvency, employment and real property and strata title. It is also expected to publish regulations for financial services later this year. ADGM’s intentions are clear.
The new federal decree-law no. 35 of 2021 amending the provisions of federal decree-law no. 9 of 2016 regarding bankruptcy and its amendments has been introduced in the United Arab Emirates (hereinafter referred to as the 'new Decree') to be in effect from 1st November 2021. The new decree brings in a fundamental and crucial change in the position of law that now accords individual liability on the shareholders of the company (subject to further conditions), in the instance the company funds are insufficient to cover even twenty per cent of the company's liabilities.
In the context of the current pandemic and its impact on businesses in the UAE, His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE enacted on 27 September 2020 amendments to Federal Law No 9 of 2016 (“Bankruptcy Law”) pursuant to Federal Decree Law No. 21 of 2020 which modify and supplement certain provisions of the Bankruptcy Law (“Amendments”).
The Amendments will come into force at the time of publication in the official gazette.
The Amendments modify and supplement the existing Bankruptcy Law. Specifically, they;