The financial landscape in the Middle East has drastically changed since the economic downturn in 2008. Even though the region was not as badly impacted as rest of the world, the companies operating in the Middle East have had a rude awakening in terms of their financial viability. These companies have seen significant financial strain and tightening of liquidity in the market, prompting them to reconsider the way in which they do business. Financing has not been as readily available and has come with a lot more scrutiny than in the pre-downturn era.
In September 2018 the Dubai International Financial Centre Authority (“DIFCA”) announced that it proposes to replace its current insolvency law with a new law to update the insolvency regime in the Dubai International Financial Centre (“DIFC”) and that it has launched a consultation in relation to the same.
Why are changes proposed?
The much-awaited new bankruptcy law in the United Arab Emirates is a complete legal framework designed to help financially troubled companies to avoid collapse. The new law took effect on December 29 2016 after being decreed by President Sheikh Khalifa. It is part of the global wave of insolvency reform referred to as the 'rescue culture' and has been warmly received by local and international stakeholders. Although it has yet to be tested in practice by the courts, it is a move in the right direction.
The UAE government issued a new bankruptcy law, UAE Federal Decree Law No. 9 of 2016 (“Bankruptcy Law”) which came into force on 29 December 2016.
The introduction of the Bankruptcy Law is regarded as an important step towards bringing more clarity to the UAE’s insolvency regime. The Bankruptcy Law outlined a more modernized approach to company restructuring and insolvency management.
A recent decision of a specialist tribunal in Dubai could have far-reaching consequences for the maritime industry. In this article Robert Thomas QC, of Quadrant Chambers, and Robert Lawrence and Leonard Soudagar, of Clyde & Co, examine how it is now possible, in certain circumstances, for a shipowner to set up a limitation fund in the UAE.
January 2017
Practice Group: Banking & Asset Finance
New UAE Insolvency Law
By Simon Mabin
Executive Summary
The new bankruptcy law was published in the Official Gazette dated 29 September 2016 following the issuance of Federal Decree Law No.9 of 2016 on Bankruptcy (the "Bankruptcy Law"). The Bankruptcy Law is expected to become effective in December 2016 / early 2017.
In a noteworthy first decision, the Judicial Tribunal for the Dubai Court and DIFC Court (JT), established to decide conflicts of jurisdiction between the two courts, has ruled on 27 January 2017 that Daman Real Capital Partners Company LLC v. Oger Dubai LLC case should be remitted for trial by the Dubai Court, and that the DIFC Court should cease from entertaining the case entirely.
In a landmark legal development, a judgment of the DIFC Courts has been recognised and enforced for the first time in a Western jurisdiction.
The Supreme Court of New South Wales, Australia, issued an order recognising and enforcing the DIFC Courts judgment issued by Justice Sir Richard Field in Legatum Limited v Arif Salim (CFI 027/2014).
On 14 December 2014 the DIFC Law No. 2 of 2014, or the “Netting Law of 2014” (the “Law”), came into force as a law in the Dubai International Financial Centre (“DIFC”) following its enactment on 7 December 2014 by His Highness Mohammed bin Rashid Al Maktoum, Ruler of Dubai.
Introduction
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.