2021: A Year in Review

Major developments have been carried out throughout the UAE in the previous 12 months.  Legislators and regulators have ongoing to refine nearby legislation to boost and employ international finest follow across the UAE.  We have highlighted some of the important developments along with a assortment of predicted alterations. 

Work Legislation

UAE Labour Law 

In November 2021, the UAE Cabinet authorized the Federal Law No. 33 of 2021 (the New Labour Regulation) which will be powerful as of 2 February 2022. The New Labour Legislation delivers a radical overhaul of the latest UAE Labour Legislation which will implement across the 7 emirates as very well as the free of charge zones, other than for DIFC and ADGM. 

The New Labour Legislation provides changes to work contracts as preset phrase contracts, versatile operating preparations, amendments to termination provisions, end of services gratuity and prohibits discrimination and harassment alongside with a number of other improvements. 

Implementing Laws are referenced through the New Labour Law and these Rules are yet to be issued by the Ministry of Human Sources and Emiratisation.  It is expected that these Rules will present even further detail as to the intended operation of the New Labour Legislation.  Although it is not obvious when these Polices will be issued, we anticipate that they will be issued on, or shortly prior to, the productive date, 2 February 2022. 

Doing work Week 

Not long ago it was declared that from 1 January 2022, all UAE federal authorities entities will go to a 4 and a half day functioning 7 days.  In addition, the doing work week would get started on Monday and conclude on Friday. Importantly, all faculties will also transform to a Monday to Friday working 7 days.  In light-weight of these alterations, it is inescapable that personal sector providers, both of those onshore and offshore, will mirror these variations and move to a Saturday and Sunday weekend. 

Businesses that intend to adjust the doing work 7 days need to be certain that their workers are properly knowledgeable of any proposed adjustments.  In addition, work contracts and policies should really be reviewed, and consideration should be taken as to the arrangement for workers who want to attend Friday prayers. 

Amendments to the DIFC Work Law 

Early into 2021, the DIFC Authority announced a session time period on the DIFC Regulation No. 2 of 2019 (as amended by DIFC No. 4 of 2020).  On 21 September 2021, the amendments ended up mirrored in just DIFC Law No. 4 of 2021 (the New DIFC Regulation) together with the Work Laws 2021. 

The essential facet of the amendments was to make sure that the DIFC Employment Legislation operated as it was meant and to limit any likely abuse of the rules.  As this sort of, the New DIFC Legislation narrowed the scope of the “Additional Payments” definition to make certain that only these payments could be excluded from the calculation of the DEWS contribution and that any settlement to restrict the employee’s regular wage would be null and void. 

An additional essential modify was that the New DIFC Regulation extended safeguards to secondees as nicely as brief-expression staff members supplying them with security from discrimination and harassment. 

ARBITRATION 

Dubai Arbitration Reforms  

This calendar year brought important alterations to the Dubai Arbitration Centres.  

In January the new DIFC-LCIA Arbitration principles had been posted but by September the introduction of the Decree No. 34 of 2021 regarding the Dubai Global Arbitration Centre (the Decree) altered the landscape for arbitrations in Dubai.  

The Decree abolished the Emirates Maritime Arbitration Centre (EMAC) as nicely as the Dubai Global Finance Centre Arbitration Institute (the DAI). 

The DAI delivered the administration for the area principle of the London Court docket of International Arbitration, the DIFC-LCIA Arbitration Centre.  The DIFC-LCIA operated beneath the DIFC-LCIA Arbitration Regulations which mainly mirrored the LCIA’s. 

The objective of the Decree was to create a one consolidated arbitration centre in Dubai regarded as the Dubai International Arbitration Centre (DIAC).  Although the dissolution of the EMAC and the DAI was efficient as 20 September 2021, Short article 9 of the Decree offers DIAC with a six-month grace period to regulate the centre in accordance with the new Decree.  Short article 2 of the Decree supplies that the headquarters shall be situated onshore in Dubai with a department inside of the DIFC (offshore). 

These changes are of unique relevance for events at present included in arbitration but also to all those with agreements to take care of disputes less than the regulations of both DIFC-LCIA or EMAC. 

As this kind of, it is expected that new DIAC Procedures shall be revealed in accordance with the Decree and shall update the latest 2007 DIAC Principles. 

LITIGATION

Dubai Courts: Relevant Interest 

The right to claim fascination was recognised in 1993 under the Federal Legislation No. 18 of 1993 setting up the Industrial Transactions Regulation.  In the absence of a contractually agreed interest fee, Short article 76 of the Industrial Transaction Legislation provided that a creditor could declare up to 12% curiosity for every annum right up until whole settlement was received.

In exercise, the onshore courts have used fascination at a fee of 9% for each annum in which functions were being not sure by a mutually agreed contractual rate.  

On 9 June 2021, the Courtroom of Cassation issued a unanimous conclusion to revise its longstanding apply.  Resolution No. 1 of 2021 (the Resolution) was issued, binding the Dubai Courts to use an curiosity amount of 5% per annum where by events were not certain by an agreed rate.  Although this Resolution applies to the Dubai Courts only, we can expect that the Courts of the other emirates will apply a identical fascination price. 

Payment Order 

2021 has clarified the scope for creditors to recover money owed via a rapid-keep track of process acknowledged as a payment get.  This enables creditors to obtain a monetary judgment as opposed to raising a substantive assert at the Dubai Courts.  

This 12 months, the Court of Cassation clarified that such promises required to be supported by written evidence confirming that the credit card debt had been approved, or acknowledged, as staying due by the debtor.  

In addition, the UAE Civil Technique Code was amended in August 2021 to offer that the Dubai Court experienced jurisdiction to listen to a credit card debt case, even if the situations for issuing a payment get have been achieved.  This removed the threat of the Courtroom dismissing the circumstance and presented reassurance to litigants.  

UAE Penal Code

A new UAE Penal Code is expected in the new 12 months which will form component of quite a few new reforms launched in 2022.  

The new UAE Penal Code shall modernise the latest laws.  A selection of amendments relate to bounced cheques which is a prison offence in the UAE.  The Federal Decree No. 14 of 2020 amended the Professional Transaction Legislation No. 18 of 1993 and the new amendments shall be successful as of January 2022.  

The amendments largely target on the decriminalisation of bounced cheques and partial payment of a cheque.  These amendments provide a restricted standards for a bounced cheque to carry a prison sanction and will lessen the vast variety of steps at the legal court.  In addition, a payee can give consent in writing for the bank to problem any sum obtainable to the drawer of a cheque where there are inadequate funds.  In essence, this supplies consent that the harmony is thanks and a civil motion could be lifted for the stability. 

Company & COMMERCIAL 

The New Companies Legislation

In an effort to establish the nation’s authorized framework, the UAE govt has issued Federal Legislation No 32 of 2021 (the New Companies Regulation) which is to occur into pressure on 2 January 2022. The New Corporations Legislation replaces Federal Law No. 2 of 2015 (the 2015 Providers Law) which has been the main legislation guiding business transactions considering that its inception.

The New Corporations Regulation will consolidate and repeal the 2015 Providers Law and its amendments, as nicely as apply critical changes in business governance and transactions. To provide a quick summary of the expected modifications, the New Organizations Legislation addresses mergers and acquisition transactions with the recognition of two new corporate autos, (i) the specific intent acquisition organization, and (ii) the special reason motor vehicle. The New Companies Law also offers for a lot of governance and management provisions relating to Restricted Liability Corporations and Public Joint Stock Organizations.

Applying rules and even more steering are predicted to be issued in the new yr.

The New Factoring and Assignment Law

Federal Law No. 16 of 2021 on Factoring and Transfer of Accounts Receivables (the Factoring Regulation) which was entered into pressure on 8 December 2021, gives the initial regulatory framework to tackle particular transactions regarding factoring and assignment of receivables. Beforehand, the only advice available for these transactions was Federal Regulation No. 5 of 1985 on Civil Transactions Law which addressed areas of governing the assignment of personal debt, and Federal Law No. 4 of 2020 on Securing Curiosity with Moveable House which resolved aspects of assignments above receivables taken by way of protection. 

The implementation of this regulation unifies the restrictions which utilize to assignments in the UAE and features a foundation for the growth of a new legal routine. The Factoring Regulation addresses the requirements for assignments and transfers of receivables in the region, as effectively as offers steerage on how to ascertain the validity and priority of competing promises above assigned receivables.

SUMMARY

2021 has seen sweeping changes across quite a few sectors effecting the UAE and freezones as reforms align to worldwide requirements.  The rate of authorized and regulatory modify will continue properly into 2022 with further reforms and polices envisioned.  It will be intriguing to see how these variations unfold in follow throughout 2022. 

For even more data, or to explore in more depth any of the above changes, please make contact with Joanna Stewart ([email protected]) or on 04 343 8897 where by our team will be delighted to help you.

December 2021