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

On 15 June 2015, the Abu Dhabi Global Market (Global Market), Abu Dhabi’s financial free zone, published the following six new regulations concerning the regulation of non-financial services in the Global Market:

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.

There is a wide range of precautionary attachment options in the UAE which creditors in the region should take into account.

Dubai currently has no effective insolvency law. Try to imagine it: How would creditors recover their entitlements? Does it lead to more arbitration activity? Does it explain why the Dubai International Arbitration Centre received more than 300 new cases last year and why arbitration is increasingly used?

Insolvency Law—Is It Necessary?

Arbitration and insolvency law in Dubai - is there a link?

Try to imagine a legal system without an effective insolvency law, as in Dubai. How would creditors recover their entitlements? Does it lead to more arbitration activity? Does it explain why the Dubai International Arbitration Centre had over 300 new cases last year and why arbitration is increasingly used?

Insolvency law - is it really necessary?

In last month's edition of Middle East Exchange,we looked at the risks for directors of UAE companies in financial difficulties. In this month's edition, we consider the position from the other side of the negotiating table, namely the risks for creditors when a UAE company faces financial difficulties.

In our October 2010 edition of Middle East Exchange, we looked at the general duties which directors and managers of UAE companies owe to their companies and their shareholders. In this edition, we consider the position where the company's financial position deteriorates. As directors or managers struggle with the inevitable commercial and operational pressures, what additional legal responsibilities and potential liabilities does UAE law place upon them?

The UAE is in the process of implementing a new bankruptcy law.

The new bankruptcy law is intended to create a more modern, debtor-friendly regime, with particular emphasis on the rescue of a distressed debtor’s existing business or the restructuring of the debtor’s liabilities, rather than formal liquidation or bankruptcy. The new law will be equivalent of Chapter 11 of US bankruptcy laws. Read more about the UAE’s new bankruptcy law.

The onset of the global financial crisis brought into focus the extent to which the UAE’s business and economic landscape had changed. In order to continue to grow and protect existing investment, whilst also continuing to encourage new investment, the UAE Government recognised that various steps would need to be taken. In particular, legislative reform would be required in certain key areas.