The Abu Dhabi Global Market (ADGM) has announced the establishment of the ADGM Arbitration Centre, which will include the Middle East and North Africa representative office of the International Chamber of Commerce International Court of Arbitration. The centre is forecast to be fully operational by January 2018. This marks an important development for arbitration in the region and provides users of arbitration in the Middle East with greater choice.
Decree 19/2016 established a judicial committee tasked with resolving conflicts of jurisdiction between the Dubai courts and the Dubai International Finance Centre (DIFC) courts. Just over six months after the issuance of Decree 19/2016, the committee rendered its first decisions, which have made it clear that an arbitral award rendered onshore in Dubai cannot be enforced in the DIFC courts where proceedings in respect of the same award have been commenced before the Dubai courts.
The Ministry of Economy recently issued Ministerial Resolution 694/2016, which waives the requirement for limited liability companies, joint liability companies and limited partnerships to amend their memoranda of association, as per the new Companies Law. That said, it is advisable for exempt companies to amend their memoranda of association in due course for ease of reference.
Clients often ask how to conduct legal due diligence or background checks on another party in the United Arab Emirates. Unfortunately, there is no straightforward answer. With no centralised company register, and over 40 different free zones, obtaining basic information about UAE free zone companies may pose a daunting challenge. Even so, there are still effective tools available to uncover the necessary information.
The competition law regime established by Federal Law 4/2012 and Resolution 37/2014 has been criticised – in particular, for being ambiguous in relation to merger control, making the law unenforceable in practice. Most notably, the regime lacked defined thresholds for the application of merger control provisions. These issues were recently addressed through two cabinet resolutions. However, considerable ambiguity remains in the interpretation and application of the UAE competition law regime.
As a result of the economy experiencing an upswing over the past year, there was an increase in transactions and deal values in the first half of 2017. Further, because the United Arab Emirates put its plans to diversify its economy away from a dependency on oil into action, M&A activity outside the oil sector has been bolstered. In particular, there has been growth in the healthcare, education and retail sectors.
The UAE authorities have been focusing on the development and modernisation of the employment law landscape over the past 12 months and look set to continue to do so in 2019. Of particular note is that 2019 has been declared the 'Year of Tolerance', with a particular focus on establishing the United Arab Emirates as a global reference point for a tolerant culture. Further, the authorities are expected to continue to consult on legislation to support women in the workplace in the short to medium term.
In collaboration with the courts, the Abu Dhabi Ministry of Human Resources and Emiratisation recently launched a summary court to complement the One Day Labour Court. The new court is designed to speed up the process of litigating labour-related matters, including issues relating to the return of a passport or an emirates ID card, health insurance, accommodation and the cancellation of work visas. However, this fast-track system is designed to consider straightforward disputes only.
Non-cash employee benefits can create a value added tax (VAT) headache for businesses. Even fully taxable businesses in the United Arab Emirates may find that VAT recovery is blocked for certain activities. Further, even if input VAT is recoverable on the cost of the benefit, providing it to employees may trigger an obligation to account for VAT on the deemed supply of the benefit to the employee. For many benefits, the VAT treatment will vary depending on the circumstances.
The Dubai International Financial Centre (DIFC) has been reviewing and undertaking consultation on an entirely new Employment Law throughout most of 2018. The proposed amendments are likely to have a significant impact on key elements of the existing Employment Law and on employment relationships within the DIFC in general.
The gig economy is developing and expanding worldwide and has already had an impact on the UAE regulatory framework. Moreover, it is likely to become more central to the landscape of employee and workforce relationships within the next five to 10 years. It is certainly an area that in-house legal teams, HR professionals and senior managers should pay close attention to in the short to medium term.