The UAE’s Commercial Zones and Legal Jurisdictions. Part Two

05 Feb, 2018 - Services

 Part one of this series can be found here

There are a number of legal jurisdictions in the UAE and people new to the region should make themselves aware early on which jurisdiction their company will be operating in. We strongly recommend seeking legal advice before setting up a business in the UAE and can recommend a number of local firms able to assist.

Onshore Courts

Dubai’s court system is derived from Sharia’a law. Generally in terms of business disputes Dubai Courts is similar to many other court systems and offers a similar suite of services. The challenge international companies have faced historically is that proceedings are undertaken in the Arabic language, including documentation. There are no shortage of Arabic speaking lawyers in the UAE but there are obvious difficulties when a case is between local and international parties. A company established onshore is likely to have cases heard at Dubai Courts as Dubai Courts is the default jurisdiction for companies registered in Dubai.

Similarly to Dubai Courts, the Abu Dhabi Judicial Department offers services to the emirate of Abu Dhabi, RAK Courts to Ras Al Khaimah, Sharjah Courts to Sharjah, and so on.

DIFC Courts

DIFC Courts began operations in 2006 and was established to manage cases relating to companies licensed by the Dubai International Financial Centre (DIFC) Free Zone. DIFC Courts is an English language court based on those operating within the UK’s common law system. Originally set up to manage cases for DIFC companies only, today any company in the UAE can opt-in to use DIFC Courts for legal matters; all that is required is a clause in a new contract or an amendment to an existing one. Differing to onshore courts, DIFC Courts hears cases in English.

In addition to hearing cases between local parties, DIFC Courts can also hear cases from international parties. Thanks to agreements with multiple international courts, judgements made in DIFC Courts can be enforced in overseas jurisdictions, including the UK. This adds an obvious benefit to firms in the UK when doing business with a company in the UAE, or to those with a branch office here. Additionally, DIFC Courts has an agreement with RAK Courts to ensure judgements are enforced without the need for RAK Courts to deputise the case.

DIFC Courts’ agreement with RAK Courts is unique in the UAE as it is the first such agreement between and onshore and an offshore court. It is particularly important because Ras Al Khaimah (RAK) is a popular real estate market with English speaking expats and the RAK FTZ is home to a large number of international companies. Before the agreement, and as is the case with other UAE courts, judgements made in one jurisdiction need to be converted into a judgment from another to be enforced. Since the agreement, judgements made in DIFC Courts are automatically enforceable by RAK Courts and vice versa.

DIFC Courts also offers a companies the ability to have cases heard remotely. The Small Claims Tribunal, hearing cases with a total value of AED 500,000 or less, does not require the use of legal advocates and cases can be conducted digitally. It is possible for a company representative in the UK to use the Small Claims Tribunal without ever setting foot on UAE sand.

The Dubai Rental Disputes Centre

Whilst the Dubai Rental Disputes Centre is limited to hearing cases relating to property, it is worth mentioning as it could be considered a court in its own right. The Centre has the ability to pass judgement on cases without the involvement of Dubai Courts and the judges operating in the Centre do not hear cases elsewhere; meaning cases are heard by specialists in real estate.

ADGM Courts

Similar to the DIFC Courts, the Abu Dhabi General Market Courts supports the financial Free Zone of Abu Dhabi. Whilst the two courts are not identical, both follow a common law framework as opposed to civil law (practised onshore). ADGM Courts has taken elements from English, Scottish, and Australian law to build its own set of regulations.

If your company is considering Middle East expansion or you feel your service has a market in the UAE, please contact us.