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;

As the Novel coronavirus (COVID-19) pandemic continues to spread across the globe, people and businesses are facing unprecedented challenges, both immediate and strategic. Governments in various jurisdictions have announced various measures to try to alleviate the distress caused by the numerous issues that have arisen and continue to arise, particularly around cashflow and employees.

Following the growing trend of companies participating in acquisitions and corporate restructurings, the rigorous procedure resulting from liquidation becomes incumbent to fully understand before a company’s directors and shareholders propose to walk through this route.

Introducing Liquidation

The current law regarding insolvency in the UAE is not a comprehensive regime, and the present framework is found across three different laws (mainly in the Commercial Companies Law, as well as the Commercial Transactions Law and the Civil Code). Additionally, companies faced harsh penalties in a bankruptcy scenario, and individuals could also face criminal sanctions and penal sentences. In the wake of low oil prices since 2015, and more companies facing distress, a new bankruptcy law drawing from international best practice will come into force in the UAE, from the beginning of 2017.

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

This inBrief examines the latest amendments to the Bankruptcy Law (Federal Decree Law No. 9 of 2016, as amended) introduced under Federal Decree Law No. 35 of 2021 (the New Law) and their impact on the personal liability of the board of directors and managers of bankrupt companies. The New Law came into effect on 1 November 2021.

Introduction of the Bankruptcy Law was a major step forward and was influenced by features of a number of insolvency law regimes in other jurisdictions, as well as international insolvency law trends. On 24 October 2020, the UAE Cabinet announced its decision to amend Federal Law No. 9 of 2016 (the “Bankruptcy Law”) by adding certain provisions covering emergency situations, including pandemics and natural disasters as businesses around the world are facing new and acute challenges in the wake of the COVID-19 pandemic.