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New DIFC laws enacted

DUBAI — His Highness Shaikh Maktoum bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, yesterday enacted five laws and a set of regulations dealing with legal obligations, employment, security interests and companies matters within the Dubai International Financial Centre (DIFC).

These laws and regulations are among the body of legislation dealing with non-regulated activities which Dubai International Financial Centre Authority (DIFCA) is charged with administering under Law No. 9 of 2004. The Dubai Financial Services Authority (DFSA) is charged under Dubai Law No. 9 of 2004 with administering all DIFC legislation concerning the regulation of financial and ancillary services.

DIFCA is the core body established by the Dubai Decree that issues all the laws and regulations for all the non-financial entities who will operate in the DIFC, and houses the Companies and Security Registries. The DIFCA is also the marketing arm of the DIFC and has the mandate to attract financial and non-financial entities to set up in the DIFC.

DFSA is the independent regulator of all financial and related ancillary services conducted in or from the DIFC. Prior to the submission of the laws to the DIFCA board of directors, the draft laws and regulations were posted on the DIFCA web site to solicit comment from the international financial and legal community. In accordance with Dubai Law No. 9 of 2004, these laws and regulations were developed by the DIFCA legislature, acting through its legislative committee, in consultation with the DFSA Employment Law No. 4 of 2005 of the new legislations provides for minimum employment practices comparable to established international standards, so as to promote fair treatment of employees and employers.

The second law among the new package of legislations, i.e. the Law of Obligations No. 5 of 2005, creates a framework for claimants to seek recovery for non-contractual claims and sets out the rules as to when obligations arise and how disputes involving them are resolved.

'The implied terms in contract and unfair terms Law No. 6 of 2005' provides for fairness and certainty in contracts governed by the laws of the DIFC by providing terms and conditions not normally included in contracts and assures the necessary framework for their enforcement 'the law of damages and remedies No. 7 of 2005' creates the structures necessary to assure the recovery of damages and other forms of relief to claimants within the DIFC.

The fifth law is the Security Law No. 9 of 2005, which defines various forms of security interests as collateral for repayment of debts and prescribes the process for their perfection and enforcement. The regulations consist of the DIFC companies regulations, which are issued by the board of directors of the DIFCA pursuant to the authority given to the board by Law No. 9 of 2004. These regulations prescribe the processes and procedures to be followed for compliance with DIFC Companies Law No. 2 of 2004 with respect to the formation and administration of legal entities registered in the DIFC, the transfer of incorporation of legal entities to and from the DIFC, and set out the fees and other costs associated with such formalities.

Commenting on the issuance of these laws and regulations, Dr Omar bin Sulaiman, DIFCA Director-General, said: "The DIFC is a distinct legal jurisdiction. This is a critical component of the overall offering of the DIFC and a major factor in the decisions of the numerous financial institutions that have applied for and received licenses to operate here. In the development of this legal system we have sought input from the world’s leading capital markets so as to ensure that we provide the world’s financial communities with the legal certainty they require.

The issuance of these laws and regulations confirms our commitment to the continuing development of a framework which they will understand and within which they will feel comfortable operating. This legal framework was set in motion with the passage of the first set of laws in september of 2004 and the process is on-going. Other laws are planned for passage later this year in keeping with the DIFC’s promise of providing the best-in-class legislation addressing the full breadth of operations permitted to be carried out in and from the DIFC."

The Dubai International Financial Centre was established as part of the goal to position Dubai as a universally recognised hub for institutional finance and as the regional gateway for capital and investment to the Middle East. The DIFC Authority is the core body established by the Dubai decree that issues all the laws and regulations for all the non-financial entities who will operate in the DIFC, and houses the companies and security registries. The DIFCA is also the marketing arm of the DIFC and has the mandate to attract financial and non-financial entities to set up in the DIFC.