Lexis Middle East Law Alert - May/June 2013 by LexisNexis

PROFILE transportation

Hassan Bouadar of FedEx Express

PROFILE conglomerate

Nizamuddin Siddiqui of Bin Zayed Group in the UAE

contract WatCh May/June 2013

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Consumer contracts

A round-up of legal, finance and tax developments across the middle east

I'VE GOT THE POWER Regulating new energy discoveries and initiatives in the region

Published in conjunction with the Corporate Counsel Middle East Group

Peer Recognition Elias Hayek The Lexis Middle East Law Alert magazine is produced by the Lexis Middle East Law online legal and business research service. To find out if you qualify to be added to our regular circulation go to: www.lexismiddleeastlaw.ae Follow us on Twitter:

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orking as an in-house lawyer, you can sometimes feel like an unsung hero. You can’t predict what you will be asked to deal with as one of our features in this issue, about a legal counsel who had to respond to the operational challenge of the recent regional unrest, graphically shows. This is why events such as the Corporate Counsel Middle East Awards 2013, hosted by the CCME and Legal Week on 16th May, are so important to the legal community. The Awards brought together 300 leading legal professionals from across the Middle East to recognise achievement, excellence and innovation at a glittering ceremony at the Westin Mina Seyahi hotel in Dubai. We have been delighted by the response and enthusiasm for the Corporate Counsel Middle East Awards 2013, now in only their second year and already a key fixture in the Middle East legal sector calendar. The number of entries this year exceeded all expectations, up over 20% on last year, and the competition to make it just to the shortlists was intense. This year’s winners have demonstrated exceptional achievement and show that in-house legal teams and their external advisers in the Middle East continue to drive growth and innovation, develop new partnerships and complete complex deals in very challenging market conditions. My congratulations to all the winners (listed on page 19) including Al Tamimi & Company , China State Construction Engineering Corp, Allen & Overy, Ashurst, Hadef & Partners, Dentons, Shearman & Sterling, and Angel Wesley, general counsel and corporate secretary at Al Dhabi Investment PJSC and founder of Abu Dhabi based charity Labor of Love UAE. The Corporate Counsel Middle East Awards 2013 is also supporting Oxfam’s Syria Appeal and a donation from the co-hosts of $10,000 was presented at the ceremony. The charity page on the Awards website is http:// www.corporatecounselmiddleeastawards.com/static/oxfam-syria-crisisappeal and the URL for potential donations is www.oxfam.org.uk/syriaappeal Elias Hayek - Chairman & President of the Corporate Counsel Middle East Group

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CoNtENTs

FEATURE: I've Got The Power

New energy discoveries and initiatives in the GCC and MENA

FEATURE: Helping Hands With Patent plans p10 The extension of the Abu Dhabi Takamul Scheme

Legal ROUND-UP

...including DIFC best practice guide for lawyers

Tax and Finance ROUND-UP

...including Islamic Finance change plans in Dubai

in-house Profile Hassan Bouadar>FedEx Express

p13

A Lead Legal Counsel's experience of recent regional unrest

Nizamuddin Siddiqui>Bin Zayed Group

p15

A Group Chief Financial Officer discusses work in a fast growing company

Movers and Shakers

p17

Round-up of the big moves across the region

Contract Watch

p20

Consumer contracts | Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

TREND Focus

I’ve Got Th There’s been a recent rush of stories about new energy discoveries and initiatives in the region. Ziad Obeid of Obeid law firm and Iain Elder a partner in Shearman and Sterling LLP’s Project Development and Finance Group look at changing positions in Libya, the Levant and GCC. What’s happening in the Levant? In 2010, a Geological Survey estimated the Levant Basin contained around 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of recoverable gas. “Initial surveys indicate Lebanon is potentially sitting on more than 20 to 25 trillion cubic feet of gas, but most experts believe the actual size of its reserves is much bigger than earlier estimates. If fully realised, these reserves could satisfy the country’s energy needs for many decades to come.” says Ziad Obeid, “This find, along with those in Cyprus and Israel, are the first major ones in the East Mediterranean.”

How will licensing work? “The Offshore Petroleum Law which was passed in 2010 was to be followed by a number of complementary decrees. In February 2013, the pre-qualification round, along with a confirmation of the timeline for Lebanon’s first ever offshore licensing round were announced, in line with the Council of Ministers’ prior Decision no.41 of 27/12/2012. Companies from all over the world applied for pre-qualification (54 applicants in total, of which 16 applied to pre-qualify as operators). The plan was for successful pre-qualified applicants to be

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

announced on 18 April 2013, the bidding round opened on 2 May 2013 as scheduled for a six month period until November 2013, and by February 2014 the first exploration and production agreements between the Lebanese government and successful bidders would be signed” explains Ziad. "There have been some questions surrounding this timeline since the Lebanese Prime Minister resigned in March and at the time of writing the country is being led by a caretaker government which has limited powers. This has delayed the enactment of decrees providing for the model exploration and production agreement (the model EPA) and the official delineation of the blocks. Nonetheless, it is known that a draft decree providing for the division of the Lebanese EEZ into ten blocks was put before the Council of Ministers shortly before its resignation. A specific decree providing for an advantageous tax regime is also expected. From what we are seeing on the ground, all efforts are being made to stick to the current timetable. The Petroleum Administration (nominated for a six year term) remains in place to ensure continuity of the process.” “There was an announcement of the successful pre-qualified applicants on 18 April 2013 as planned: 12 applicants were pre-qualified as Right-Holders

TREND Focus

e Power Operators and 34 as Right-Holders Non-operators,” explains Obeid. “Following the successful completion of the pre-qualification phase, the Lebanese Minister of Energy & Water and all six members of the Petroleum Administration announced on 30 April 2013 the launch of the first Lebanese Offshore Bidding round, opened on 2 May 2013 as scheduled. A number of issues were addressed at the launch, including the provision of information on the model EPA, a more detailed timeline of interim steps (and pertinent caveats) and a projected target date for signing the EPAs with successful bidders by February-March 2014.” "Going back to the pre-qualification process, bidders needed to satisfy various legal, financial, technical and QHSE requirements. In summary, total assets of at least $10 billion and $500 million were needed from right-holder operators and right-holder non-operators respectively,” says Ziad. “Furthermore, under the Offshore Petroleum Resources Law, Exploration and Production Agreements can only be awarded to pre-qualified joint stock companies or the equivalent under local law. Joint stock companies conducting petroleum activities have had to supply various pieces of documentary evidence showing things like their identity and capital stock and proof of good standing. Finally, right-holder operators had to have operated at least one petroleum development in water depths over 500m and right-holder non-operators had to have established petroleum production.” “It was the failure to fulfill these criteria that led to eight of the 54 applicants having their pre-qualification

rElated Legislation

Federal Decree No. 32/2012 On 8 April 2012 this decree on the ratification of the Protocol to Amend the Vienna Convention on civil liability for nuclear damage was issued by the UAE. (Source: Lexis Middle East Law)

applications rejected. So at this point, we are waiting to see which of these 46 companies will join efforts in the context of the bidding process.” “Generally, the Offshore Petroleum Law provides that unincorporated joint ventures consisting of at least three pre-qualified companies and including one company qualified as an operator will be able to negotiate for a license for one of the blocks. Under Article 12 of the Offshore Petroleum Law exploration and production will cover an exploration phase of not more than ten years, and a production phase not more than 30 years.”

What’s happening in Libya? “It was reported Libya is holding its own corruption review of Gaddafi-era oil contracts. The National Transitional Council (NTC) announced it was setting up an Oil Committee with power to end, amend or renegotiate current contracts if corruption is discovered. However, the NTC has emphasised all agreements and contracts signed with the old regime would be ‘respected’ and it has no intention of ‘nationalising or doing anything radical’. It also stated if contracts were found to be ‘unfair’ Libyan authorities

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

TREND Focus 600 trillion cubic feet of shale gas which could become a game changer for Saudi and world oil markets. " “Accessing shale gas is a top government priority. Unlike Europe, Saudi does not have regulatory barriers Renewal Energy Across the preventing the use of fracking but this method would MENA Region require significant power and water desalination LNB News 28/02/2013 51 capacity investment. Shale gas drilling is also very water In Libya the Government intensive which could be a problem in Saudi Arabia.“ announced in January a 650 “The General Environment Law, issued by Royal What’s new in the GCC? MW solar plant would be built Decree No. 34 dated 16/10/2001 includes an objective “In the Gulf countries, Saudi Arabia in Obari. to conserve and develop natural resources including and the UAE are leading the way water but we are not aware of any suggestion fracking in promoting renewable energy In Jordan following the could violate this. Interestingly this law also provides resources. Bahrain and Kuwait also promulgation of the project finance loans from lending agencies must have solar energy projects and Renewable Energy and Energy include, as a condition precedent, an obligation on the targets for increasing renewable Efficiency law in 2012, new borrower to commit to the environmental energy. Qatar will be using projects have included a protection regulations and standards.” renewable energy at all photovoltaic solar power plant "Saudi Arabia has reportedly earmarked World Cup stadiums, fan and wind farm with 117MW over $109 billion to develop a solar power zones and training facilities. capacity. network. The King Abudulaziz City for It is also constructing a Science and Technology (KACST) has been plant which will initially engaged in solar energy research since produce enough polysilicon Ziad Obeid 1977 and has signed two major cooperation to produce solar energy for Partner agreements with the USA’s Soleras, and the 240,000 homes a year,” says Elder. Obeid Law Firm German HYSOLAR. It has also established “There is a Gulf Cooperation Council a solar village and plans to develop solar Centre of Excellence in Renewable Energy powered desalination plants. " Research set up in 2009 but this has more of a research than rule making function. The region has high levels of energy Over in the UAE consumption. Rising oil and gas prices and "However, Saudi’s recently inaugurated increasing domestic power requirements 3.5 MW photovoltaic plant is dwarfed are the main reasons GCC governments are by the UAE’s new 100MW Shams-1 solar Iain Elder doing this. " power plant. The UAE was the first major Partner oil producing country to ratify the Kyoto Shearman & Sterling Protocol to Change and aims to produce 7% The Saudi Position of its electricity from renewable sources by “Saudi Arabia is probably most affected. 2020," says Elder. Over a third of its oil is used to meet rising domestic "In addition, Masdar City a sustainable community demand. They are also keen to use natural resources due to complete in 2020 and led by the Abu like gas as the catalyst for developing a more diverse Dhabi Future Energy Company aims to advance domestic downstream oil and gas industry, particularly development, commercialisation and deployment of in the petchems sector and related tertiary industries renewable energy solutions and clean technologies. like car manufacturing.” It plans to help establish 1,500 renewable energy “In Saudi the focus has been on renewable and companies." nuclear energy. The new King Abdullah City for Atomic "The UAE is also leading the regional way with its and Renewable Energy has been established with a city nuclear energy programme, governed by the Emirates charter stating nuclear and renewable energies would Nuclear Energy Corporation. A law establishing a be developed to ensure continued supplies of drinking Federal Authority of Nuclear Regulation and prohibiting water and electricity. The city has also published uranium enrichment was signed in 2009 as part of a white paper on the Kingdom’s renewable energy the legal infrastructure required by the International procurement processes, which focuses on ensuring Atomic Energy Agency." competition and local content. The programme will "The UAE plans to begin producing nuclear be open to new renewable generating facilities and power by 2017 via four reactors in Braka, making it expansions of existing facilities. The paper talks about the first Arab country to do so. It has joined the World renewable wind, solar, geothermal and waste to energy. Association of Nuclear Operators (WANO) to benefit The paper also mentions there will be pre-packaged from its peer review process and ensure high safety deals selected by K.A. Care for the introductory bidding standards. Other Middle Eastern countries, including round, which we expect to be identified soon,” says Iain Jordan and Saudi Arabia, have since embarked on their Elder. own nuclear energy plans." “Another change in Saudi is the recent discovery of

ENergy Stories

would work with the counter-parties to achieve an agreed solution,” says Iain Elder. "The interim government chose to maintain contracts based on EPSA-IV terms and the new government looks set to do the same in the near future.”

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

Legal ROUND-UP Legal Round-up

Covering Recent key LEgal developments – Region-Wide UAE

Direct Debits The Central Bank has announced it will introduce a new direct debit system from 15 June 2013, which will allow customers to make regular, automatic payments from their bank accounts to pay off mortgage loans, credit card payments or personal loans. The service will be launched with all banks and finance companies in the UAE. The aim is to help eliminate the need for clients to supply banks and finance companies with several post-dated cheques.

Skype Rumours Denied The UAE’s Telecommunications Regulatory Authority has rebutted various local media reports which suggested a ban on using Skype in the country had been lifted. In a statement the Authority said the Telecommunications Law and the TRA’s own VoIP regulatory policy only allowed Etisalat and du to provide telecommunications services in the UAE including VOIP services. They added the policy has not been amended and if Etisalat had lifted the ban on Skype it had done so without their consent. It was earlier reported that Saudi Arabia would ban Skype if the company would not provide authorities with necessary services to monitor Skype’s encrypted technology.

in 2009. It covers contentious and non-contentious work.

New Food Code Dubai’s Municipality has introduced a new food code to ensure all food consumed in the Emirate is properly stored, handled, prepared and served. The restaurant sector in Dubai has been expanding at 6-8% per year. The code combines rules issued by the Dubai Municipality, the Emirates Authority for Standardisation and Metrology and international guidelines adopted in other countries. The new code will be applied in various phases across all the food industry, including imports and exports and production and processing. It will also be periodically reviewed with revisions issued as supplements.

Help on Green Building The Dubai Municipality has introduced a training programme, entitled 'Be Educated on Green Buildings' aimed at manufacturers, contractors, consultants and developers ahead of the Emirate’s mandatory sustainable construction rules for all buildings, which are being introduced in 2014. Currently those involved in construction of private buildings can opt into any of the rules they choose. Details of the green rules and specifications are now available on the Municipality’s website. Queries can be sent to greenbuilding@dm.gov.ae.

Qatar

Work Zone Guide Qatar’s Public Works Authority, Ashghal, has launched a work zones traffic management guide to help the country’s construction industry as the sector grows rapidly ahead of the 2022 FIFA World Cup. The new guide will replace the existing traffic control and road works manual and has been launched by Ashghal officials, the Interior Ministry’s Traffic Department, Qatar’s General Electricity and Water Corporation (Kahramaa), the Supreme Education Council, the Municipal Affairs and Urban Planning Ministry, Ooredoo and construction industry officials. The guide is intended to substantially reduce construction workers’ exposure to traffic hazards and offer consistent guidance to road users in the country’s different work zones.

Easier licensing The Shoura Council has approved draft public industry and shop laws, designed to make licensing processes simpler. Some 2005 commercial registration law provisions are amended to enable license applications to be considered on the day of submission and licenses to be issued for one year and subsequently renewed. A 2007 law on commercial dispute settlement procedures has also been amended.

Dubai

Best Practice Guide The DIFC Courts have produced a new best legal professional practice code. The code will set professional conduct standards for all lawyers operating in the DIFC regardless of whether they are authorised to appear as advocates before the DIFC Courts or generally conduct business in the DIFC itself. It covers conflict of interest, confidentiality and advocacy as well as all client relations aspects. The new Code will complement the existing and mandatory Code of Conduct, which was introduced

Gazette Watch Dubai Official Gazette No. 366–Issued February 2013 included Dubai Decree No. 4/2013 appending land to the Dubai Technology and Media Freezone. UAE Federal Gazette No 546 (Bis) – Issued February 2013 included Federal Law No. 1/2013 on the Emirates' Identity Authority. UAE Federal Gazette No. 547 – Issued March 2013 included Federal Decree No. 15/2013 establishing a new financial freezone in Abu Dhabi. Abu Dhabi Official Gazette No. 2 – Issued February 2013 included an administrative decision on the regulation of private schools.

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

(Source: Lexis Middle East Law Official Gazette Index)

Legal ROUND-UP Saudi Arabia

Employment Crackdowns Small and Medium sized firms classified as in the 'Red zone' or as having made no effort to comply with the Nitaqat Saudisation scheme introduced in 2011, were given notice that they had until 27 March 2013 to employ at least one Saudi citizen. Those who did not comply were told their existing employees’ work permits may not be renewed. Services and licenses could also be denied to these companies. According to newspaper reports 250,000 firms fell into this category. The Labour Ministry also announced a crackdown on private firms who were not transferring new employees’ sponsorship. The move has come after some ex patriate workers complained they were facing increasing difficulties in getting their sponsorship transferred. The Ministry has reiterated employers need to submit the appropriate sponsorship transfer documentation, including a letter from the new sponsor certified by the local Chamber of Commerce and Industry; a copy of the original residence permit; and a copy of the passport. Foreign employees must also fill in a form at the Labour Office and pay a fee of 2,000 Saudi Riyals. However, the King has instructed the Interior and Labour Ministries to give illegal foreigners three months to rectify their employment statuses or face punishment.

Law Firm Structure Developments It has been reported that Clifford Chance has received regulatory approval to become the first international firm to take advantage of the opportunity to set up a mixed partnership of foreign and Saudi lawyers in Saudi Arabia. Rules permit up to 75% of a law firm operating in Saudi to be owned by a foreign person or organisation.

Confidential Case Saudi Arabia’s Aramco has won a claim for breach of confidential information against three Saudis in Riyadh’s Summary Court. The three

Saudis were given custodial sentences after replacing of the hard drives of several Saudi Aramco employee computers with fake ones during computer maintenance work. The disks contained important and confidential information about the company.

Bahrain

Penal Code Amended Bahrain’s Shoura Council has approved amendments to the Penal Code which would see anyone who unintentionally kills another person spared jail if they settle out of court with the victim’s family. Amendments would see those convicted of assault; causing accidental injury; dishonesty; or manslaughter avoid prison. They would allow judges to cancel these criminal cases at any stage, including after a verdict had been delivered, if the victims or their families agreed.

Telco Auction Halted Bahrain’s Telecommunications Regulatory Authority halted a proposed auction for radio spectrum for next-generation telecom networks on 31 March, after it was sued by Menatelecom for allegedly excluding it from bidding to offer 4G services in the Kingdom. The Cabinet had approved plans to introduce 4G technology. However, Menatelecom filed a case against the Authority at the Urgent Matters Court ahead of the auction deadline. The auction winners were originally intended to be announced in mid April.

Oman

New Weekend Oman’s Council of Ministers announced the country’s weekend will move to Friday and Saturday from 1 May, bringing it into line with most other Gulf countries. Previously, the Omani weekend had been Thursday and Friday, like Saudi Arabia. In addition, for the first time, religious and national holidays for the private and public sectors will be standardised.

REGULATORY ROUND-UP Dubai: The Dubai Health Authority will require workers to pay AED 60 for sick leave confirmations... UAE: The draft media law approved by the Council of Ministers and National Assembly in 2009 has been sent back for further review... Sharjah: The Real Estate Registration Department is considering amending Sharjah’s 1981 real estate brokers law on intermediary brokers... Sharjah: The Municipal Council has announced grocery stores near to residential buildings and schools will not be able to sell cigarettes... Sharjah: The Municipal Council has proposed to regulate car washing via operating licences in streets, malls and petrol stations... Oman: Amendments have been proposed to the 2010 Mining law which would see exploration licenses issued for one year. In addition, renewals of these licenses will be subject to review... Oman: The Council of Ministers have consented to raise the private sector minimum wage to 25 Riyals and 100 Riyals in allowances... Oman: The Sultan has issued the country's first ever Civil Transactions Law in Oman Sultani Decree No. 29/2013... Bahrain: A new civil aviation law has been approved which could see planes without the necessary certificates being banned from flying... Egypt: A draft Freedom of Association law which would allow Egyptians to form independent trade unions is being considered... Kuwait: The Prime Minister has offered to scap the new criticised Unified Media law which is not yet approved by Parliament ... Qatar: The Qatar Chamber and Qatar International Center for Conciliation and Arbitration has signed a new arbitration agreement with Australia’s Centre for International Commercial Arbitration... Saudi: The Housing Minister has warned those with vacant land it may be seized by the Government in order to build residential properties... Jordan: The Senate has approved draft amendments to the Narcotics Law which would allow those arrested for drug abuse for the first time to be referred to the Anti-Narcotics Department’s rehabilitation centre for treatment rather than to the judiciary...

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

Tax and Finance round-up Tax and Finance Round-up

Covering Recent key Tax And FinaNce developments – Region-Wide Dubai

DFSA Warning The Dubai Financial Services Authority (DFSA) has issued an alert about fraudsters using a false fund transfer approval document which it was alleged came from them. The forged documents which contained the DFSA logo stated the DFSA had approved the transfer of $8.8 million through a UAE-based bank to the intended victims. The documents also falsely claimed to be signed by the DFSA’s current and former Chairman. The fraudsters offer to transfer a large sum of money to the victim in exchange for the payment of a transfer fee to facilitate the transfer. The victim is then provided with a false fund transfer approval document to legitimise the fraud. The DFSA do not issue letters or certificates approving the transfer of funds or ask for fee payments in these circumstances. The DFSA have also warned of a company called the Hazza Bin Saif Investment Group who have been falsely claiming to be authorised by them.

Centralised Islamic Framework Sami Al Qamzi, a member of Dubai’s Islamic Economy Higher Committee and Director General of the Economic Development Department, has announced Islamic finance legislation and bodies to certify Islamic products in the Emirate will be introduced by the end of 2013. Organisations will be able to opt into, or out of, these certification bodies, which will aim to enhance the credibility and quality of Islamic finance products. A Decree was issued in January to establish a committee which would oversee Islamic finance development in Dubai. Dubai’s Financial Market has also been looking at introducing more detailed Islamic bond standards. Mabid Ali Al-Jarhi, a member of the board overseeing Islamic business at the Financial Market has explained existing standards such as the Bahrainbased Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)’s standards were

issued before the global market had developed so focus on classifying sukuk types, rather than whether they conform to religious principles.

First New Trade The Dubai government-owned Multi Commodities Centre’s Sharia-compliant platform has hosted its first trade between Noor Islamic Bank and Dubai’s Commercial Bank. The trade was valued at 50 million AED and comes as Dubai aims to challenge the use of the London Metal Exchange when structuring short-term funding deals. The Multi Commodities Centre already had a Tradeflow platform which allowed warehouse receipts, which represent ownership of commodities stored at warehouses, to be traded. As Sharia law prohibits use of conventional inter-bank money markets because of an interest ban, banks were struggling with a shortage of instruments to manage liquidity. The new platform is designed to permit Islamic banks and other institutions to manage their liquidity needs. Commodity ownership can be tracked assuring investors a ‘true sale’ of assets has occurred.

UAE

FATCA in UAE The UAE Central Bank ran a seminar on the USA’s Foreign Account Tax Compliance Act (FATCA) compliance, at which experts advised those impacted to sign a model 1 IGA with the US. US officials have announced they hope to start negotiations with the UAE on an agreement to implement FATCA effectively and efficiently in the country.

Kuwait

Money Laundering Law Approved The National Assembly has approved the report on the Anti-Money Laundering and Financing

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

Terrorism Bill and it has been referred to the Executive Authority for implementation. The law will include general rules on penalties, details of which authority in which jurisdiction, has a mandate to investigate these crimes and precautionary measures. The bill is based on a number of international agreements signed by Kuwait.

Oman

Personal Finance Changes Oman’s Central Bank has announced personal lending limits in the Sultanate are going to be reduced from 40% to 35%. However, the Bank is also considering increasing housing loan limits from 10% to 15%. It has been reported the Central Bank wishes to curtail personal loans being used for luxury items like holidays. However, as yet no information has been given on when the new rules will be implemented or how long banks will be given to comply with the provisions.

CApital Markets RULEs The Capital Market Authority has announced amendments to Articles 156 and 301 of the Capital Market Law. Article 156 on the organisation of securities traded by companies clarifies what company accounts have to disclose. Rules on insider dealing with securities trading have also been amended.

Qatar

Foreign Investment Encouraged The Cabinet in Qatar have approved changes to the country’s income tax law which are designed to encourage foreign investment. Foreign investors will be exempt from paying income tax on some of their share dividend profits, and from sale of securities in either companies or

Tax and Finance ROUND-up funds which are registered on the Qatar Exchange.

Bahrain

TAX TREATY UPDATE UAE: A double taxation treaty has been signed with Benin which grants investment tax incentives for UAE government entities...

Voluntary Liquidation Challenged

UAE: A tax information agreement has been signed by the UAE Finance Ministry and the Jebel Ali Freezone on exchange of information for tax purposes...

Following the voluntary liquidation of Bahrain Air in February, a logistics company, Almoayed Wilhelmsen has filed a case at Bahrain’s High Court arguing the decision should be annulled and the company declared bankrupt. The airline had claimed political instability had caused it financial losses and it was impacted by Government demands it immediately repay past debts. Almoayed Wilhelmsen claims it is owed 25,000 Dinars but experts have said the airline owes as much as 4 million Dinars to various companies. If the attempt is successful, Bahrain Air may be forced to open its financial books and if found to be bankrupt, its management could face criminal investigations. The hearing was secured for April. The Bahrain Government are taking steps to assist its former workers. In addition, in Bahrain Arcapita the first Gulf entity to file for US Chapter 11 bankruptcy has had its disclosure statement approved so creditors can vote on their revised restructuring plan.

Qatar: A tax treaty with Mexico came into force on 9 March 2013 and is effective from 1 January 2014...

Egypt

Stock Market Transaction Tax In March the Egyptian Tax Authorities announced a 10% capital gains tax levy on shareholders and investment funds who made capital gains from the Qatar National Bank’s takeover of the National Societie Generale. The authorities sent a formal letter to the Egyptian Exchange announcing the deal would be subject to the 10% tax in line with Article 65 of Egypt Law No. 101/2012. In December 2012, plans had also been announced to introduce a 10% tax on major stock market transactions, including IPOs and takeovers. However, at that time no date for the change was given. The announcement caught investors off-guard and after some warned the move could scare off foreign investors, the Finance Ministry

UAE: A final double income tax agreement has been signed with Hungary...

Qatar: A double taxation agreement has been signed with Guernsey as more Middle Eastern firms set up on the island... Qatar: Article 27 of the tax treaty with Malaysia has been amended changing information exchange rules...

announced the December 2012 plans to introduce the dividends and share gains tax would be scrapped.

Stamp Duty Changes The Shoura Council has approved a draft law amending the 1980 Stamp Duty law. The draft law covers annual advance, credit and loan facilities taxes granted by banks which are to be paid within one week of the end of each quarter. It also applies to advertising taxes which will increase from 15% to 20% with a differentiation between billboard, newspaper, radio and television advertisements. Advertisements relaying public authority orders or prompting elections would be exempt from the tax.

Draft Customs Law The President of Egypt’s Customs Department, has completed a new draft customs law to combat smuggling and simplify customs procedures. The proposal has been sent to the Ministry of Finance, and awaits legislative approval. The new Customs Law will amend Egypt Law No. 186/1986. The Customs Department is also studying a possible 25% reduction in the current customs duties for vehicles powered by gas or electricity.

Bank Deal Challenged Stakeholders in Egypt’s National Development Bank have brought a case to the Administrative Court, calling for a 2007 deal selling the bank to Abu Dhabi’s Islamic Bank to be revoked. In 2007, Abu Dhabi’s Islamic Bank and its shareholders offered to buy Egypt’s

National Development Bank for 11 billion Egyptian Pounds. At the time the bank’s total value was put at 38.5 billion Egyptian Pounds. Bank employees and shareholders accused the government of selling the company for below market value, in breach of the country’s mergers and acquisitions law. It is claimed under the Finance Market Law and Purchase Offer Rules, mergers and acquisitions must be based on a company’s average market value over a six-month period.

SAUDI ARABIA

ACCountancy CHECKS The Saudi Commission for Certified Accountants (SCCA) is to introduce a certified test for accountants to ensure all those in the country are properly licensed. SCCA is believed to have begun work with appropriate Government departments on the test. Experts believe that ex patriate and most certified accountants will have no problem passing the proposed test, which aims primarily to uncover those working as certified accountants without proper qualifications.

FinAncIAl Activity License The Saudi Arabia's Monetary Agency (SAMA) has published license application forms and guidance for those wishing to undertake financial activities under the Supervision of Finance Companies law. Applications must be made not only by new finance companies but also by existing companies and banks wishing to practice real estate financial activities.

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

Helping HandS with Patent Plans

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

regulatory Focus

The Takamul overseas patent scheme, overseen by the Abu Dhabi Technology Development Committee, has recently been extended, making it available to all UAE inventors, universities and private industry. Latham and Watkins’ Larry Cohen, examines the likely impact on the UAE’s technology profile.

“

Before 2010 and the introduction of the Takamul patent programme in Abu Dhabi, UAE-based inventors had nowhere convenient to turn to help them to obtain patent protection nationally or even regionally via the Riyadh-based GCC Patent Office,” says Larry Cohen. “The Takamul programme was introduced in 2010 to overcome this and ensure UAE-originated patent applications got properly filed. This is part of the Abu Dhabi’s planned change detailed in the Abu Dhabi Policy Agenda and Economic Vision 2030 to move from a project-managed economy to a technologybased economy. The programme is run by Abu Dhabi’s Technology Development Committee (TDC), which was established by Abu Dhabi Executive Council Decision No. 19/2009 to oversee the development of science and technology in the Emirate. In its first two years, the scheme underwrote over 20 patent applications.”

What is the Takamul programme? The Takamul programme, (which means mathematical integration in Arabic), provides financial and advisory support to national inventors, academic institutions and private companies who wish to apply for overseas patents for ‘home-grown’ innovations. It is recognised that countries with vibrant technological and scientific innovation and investment in such innovation, achieve significant economic benefits. Up until now, other efforts of this kind had been typically restricted to university technology offices either funding their own patent applications or in collaboration with private sector companies who had commissioned the research.

What’s the change? Initially the programme was restricted to UAE nationals or individuals and academic institutions and companies based in Abu Dhabi. At first it only provided support to such individuals and entities wishing to file and prosecute utility patent applications at the US Patent Trademark Office. However, following on from some early successes in supporting these categories of innovators, the Technology Development Committee announced in March 2013 that the programme would be extended nationwide to institutions and companies in all the individual Emirates not just Abu Dhabi. By extending

RELATED LEGISLATION According to Article 37 of Cabinet Decision No. 11/1993 "The Administration shall receive applications for international patents (being considered as an office for receiving applications, designated office or elected office) in accordance with the Patents Cooperation Treaty in force in this State."

(Source: Lexis Middle East Law)

the Takamul programme, the only one of its type in the UAE, it is hoped the country will benefit from innovation that is occurring across the nation. In addition, to this change in eligibility, the programme is also being extended to provide financial support for international patent applications under Chapter 1 of the Patent Co-Operation Treaty (PCT), within 12 months of Filing the Supported Patent at the US Patent Trademark Office. This is a system which allows a single application to be made, (currently designating up to 146 member countries or regional groupings) which is filed through a World Intellectual Property Organisation designated patent office. Using the PCT system has advantages, including allowing certain steps to be taken during the international phase (the initial phase after filing and before national applications are pursued, based on the international application) such as search and examination. In addition, it allows inventors and applicants to more fully develop and test potential markets for their inventions before committing to expensive national prosecution procedures. The regional GCC patent system is outside the PCT system, but the UAE country patent is within it. However, it is important to note that filing a patent application does not actually result in a patent being granted in any or all the designated states and prosecution of applications on a national basis must still must be done, with the consequent costs associated with this. It is also a common misconception that filing of a patent application provides an immediate right to sue for infringement. Although, filing of an application establishes certain rights, the right to sue for infringement is only actually enforceable once a patent is granted. “The expansion of the well-researched, wellexecuted programme is the most significant change,” says Cohen “and there is no reason why it should not

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

regulatory Focus IP STORIES Organic Trade Marks LNB News 29/05/2012 18 Ministerial Resolution No. 103/2012 was issued in the UAE to cover the trademarking of organic inputs and products UAE Customs Seizure System Launched LNB News 19/06/2012 11 The Federal Customs Authority launched a seizures information exchange including intellectual property infringements

serve as a template for the other GCC states, or countries in the wider region, like Iraq and Jordan as the operational costs of the programme should not exceed 10 million Dollars annually per state. However in countries like Iraq and Jordan the institutional foundations would need to first be put into place.”

Who is eligible?

financial cap of 48,000 AED on filing and 20,000 AED on prosecution. For commercial organisations who wholly own an invention the subsidy proportion is up to 50% with the filing cap set at 26,500 AED. There are two rates for academic institutions of 75% and 60% respectively. Percentages and rates for part-owned inventions vary with the ownership proportion. For example, an eligible commercial organisation which has 50% ownership of an invention could potentially be given a subsidy of 25%. Financial subsidies cover costs of drafting, filing and prosecuting US and subsequent PCT applications. Potential applicants should be aware the subsidies which are available are unlikely to cover the cost of full patenting process, particularly if protection in multiple countries is required.

UAE based academic institutions, UAE based companies and Emirati nationals living in the UAE are all eligible to apply. There is no size restriction What else TO think of? on eligible companies. “As well as bearing the subsidy caps in However, to be eligible, mind, inventors should also ask themselves a company must be what it is they are looking to patent as there registered in the UAE in line with UAE Federal are real budgeting issues to consider. You Companies Law (Federal Law No. 8/1984, need to work with your advisers to fully Larry Cohen Concerning Commercial Companies as understand the cost of securing patents in Partner amended) or established in line with the all the territories you are interested in,” says Latham & Watkins regulations of a free zone established under Cohen. the UAE laws. However, the committee has discretion “If the product being patented is a basic to offer support to a commercial organisation, pharmaceutical product, it will likely need to be established outside the UAE, with a branch or a patented in most countries. If, on the other hand, the representative office in the country. The committee product is a non-pharmaceutical product, greater also has discretion to provide financial support to discretion should be exercised and it is likely the commercial organisations who no longer employ the product will only be patented in key jurisdictions inventor or person who contributed to the research. globally. For example a component for a smartphone Where an eligible individual or entity part owns an may be patented in only the US, Europe (Germany, invention, the committee may provide financial France, UK), China, India, Japan and Korea to obtain support for that person’s share in the invention. commercially effective cover. In part, the benefit in taking a non-drugs patent infringement case in a particular jurisdiction will come down a pure numbers How does application work? game. It is more worthwhile taking an infringement case In order to apply for support under the scheme you in a country with a bigger population as product sales need to fill out an application form with a high level are usually proportional to population for developed description of your invention. The form should be and advanced developing countries. As a result, completed by the inventor or owner of the invention, there have been only about ten patent infringement or their authorised representative. At this initial cases per year taken in Singapore which has a similar stage there is no need to provide detailed drawings demographic breakdown to the UAE but however many or specifications just sufficient information for the developed countries the product is patented in, the Technology Development Committee to understand cost of patenting in each is now likely to be similar.” the invention’s basic principles and benefits. The “Countries with less developed patent systems Technology Development Committee then evaluates including the UAE are often more expensive and slower applications to ensure eligibility and completeness. to bring a patent to grant because of translation costs This can include an in-person interview with the and delays in examining the application.” inventor or inventors. If the application is approved, the Committee communicates the approval decision to the applicant including next steps for the patent What’s next? filing process. Supported patents must be filed no later “Taking moves to help with the financial cost of patent than three months from the date the inventor receives applications is a very positive first step for the country,” written approval from the committee. says Cohen . “However, a next step might be taking steps to facilitate the establishment of investment partnerships between inventors and companies. At What are the subsidy rates? this stage there is no reason to suppose this should Individuals who wholly own an invention can get prove difficult.” subsidies of up to 90% on filing or prosecution - with a

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

in-house PROFILE

in-house Profile

Lead Legal Counsel – express Transportation

Being responsive Having won the Middle East in-house Lawyer of the Year Award in 2012 and ahead of his return to France to accept a temporary legal management assignment at the FedEx Express Paris office, Hassan Bouadar, Lead Legal Counsel for FedEx Express, Europe, Middle East, Indian Subcontinent and Africa talks about the effect of the recent social unrest on the regional business.

What’s Your Background? I joined FedEx’s Dubai-based Middle East and Africa operations in 2010. Since then, I have played a major role in overseeing FedEx’s regional growth. Our regional business now spans from Bangladesh in the east to Morocco in the west. I'm a French citizen of Moroccan origin and have a Masters degree in International Transportation and Business Law, and a Masters Degree in Business and Corporate Law from Université des sciences sociales in Toulouse, France. I began my career in law practising as an Assistant Attorney in Nakache law firm, where I specialised in civil, criminal, corporate, insurance and administrative law. I then moved on from the private practice as I wanted to help people throughout the whole legal process. Since joining FedEx in 2005, I’ve had the chance to experience various legal roles in France and the UAE. Like many in-house counsels in the Middle East, there is no such thing as an ordinary day. I usually meet with Directors first thing, review contracts, attend project meetings and provide appropriate advice on litigation and ensure compliance. I also have to deal with specific regional legal challenges. For example, following the imposition of regional regulatory business restrictions in some Middle Eastern countries, I have to ensure policies comply with the local evolving legal systems.

ABOUT YOUR BUSINESS FedEx has recently celebrated its 40th anniversary. The company is the world’s largest express transportation company, providing fast and reliable delivery to more than 220 countries and territories. We use a global air and ground network to speed delivery of time-sensitive shipments that range from envelopes to heavyweight cargo.

WINNING THE AWARD The Legal Department of FedEx in the region has one in-house counsel that manages the company’s Legal and Regulatory affairs. With very limited resources, our legal department has negotiated, drafted and revised 72 contracts and amendments for 32 different service agents in the 69 countries covering our geographical scope. Along with the Middle East and Africa teams from other FedEx departments, I’ve also travelled around the region to train our partners and contractors on areas like anti-bribery compliance, corporate

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

in-house Profile Practitioner perspective The Arab Spring left many Inhouse lawyers tackling legal and practical issues, including employee evacuation. Clyde & Co partner, Rebecca Ford, looks at the legal lessons. While no business can prepare for every eventuality, recent extraordinary events have raised Rebecca Ford a vital legal question - what are employers’ obligations to their Partner employees in times of trouble and Clyde & Co how far do those obligations go? In a recent novel case in the Scottish Court of Sessions, a exam boss who worked for the Scottish Qualification Authority claimed £150,000 in damages for post-traumatic stress after travelling on business to Lebanon, Egypt and Saudi Arabia (during trouble in Bahrain) and helping evacuate other employees. In times of unrest or other extraordinary events, employers must consider both legal and practical implications. The main legal implication is an employer's duty of care to their employees. In the UAE, an employer’s obligations to their employees are primarily governed by Federal Law No. 8/1980, as amended, although additional obligations are imposed in some sectors, e.g. construction, as well as in the Emirate of Abu Dhabi. Employers owe a duty of care to their employees during the course of their work, which includes travelling to and from work and business trips. An employer must provide adequate means of protection for the employee from workplace injuries or vocational diseases, as well as hazards like fire and those arising from the use of machinery and other tools. If an employee is injured in a work related accident, employers are responsible for paying their medical treatment costs which will cover the initial treatment costs and consequential time off work (up to certain prescribed limitations). If employees die, employers must pay the deceased’s family their basic salary for two years, subject to certain caps. Compensation is also awarded for any injury or disability caused by workplace accidents. The practical implications which may arise in the case of civil unrest or other extraordinary events are equally important. Ideally, companies should have in place risk assessments relevant to the local jurisdictions they operate in, and consider emergency response planning and communication systems with employees. For example,

companies may consider questions like do you have contingency plans in place for your employees to work from home so they aren't out on the streets during trouble? Have you backed up data appropriately and securely in another location away from the head office or main working environment. Employers should also undertake an audit of their workforce so they can distinguish between international assignees and local employees. In extreme circumstances, such as the Arab Spring, employers may opt to return international assignees to their home country. As ensuring the safety of employees is an ongoing obligation, the exact point at which a company starts removing its employees is a judgment call and decisions need to be made on a case-by-case basis.

Contract versus Employee Balancing employee safety against commercial contractual obligations is another consideration. How a company meets the contractual needs of clients during extraordinary events like civil unrest, will depend on the type of business undertaken, the specific circumstances of the event and the contractual obligations, e.g. does the contract allow for delays in delivering the service due to unforeseen events? From an HR perspective, the focus is primarily on managing the employee-employer relationship and so whether or not there is an extraordinary event policy tends to depend on the type of company you are. Many companies do not yet have specific policies in place, whereas oil and gas companies, or security companies operating in places such as Afghanistan and Iraq, are likely to have already addressed emergency response and contingency planning. Whether or not policies should be put in place is likely to be largely left to the discretion of the employer and moral and PR factors will be taken into account as well as legal issues. Whilst the recent turmoil in the Middle East and North Africa may accelerate reform and review of the existing legal regimes, civil unrest or other extraordinary events are unlikely to be addressed in employment legislation, particularly where such action is outlawed in the relevant country's penal codes or regulations.

governance and business ethics. In addition, the Legal Department drafted and negotiated a major lease agreement for the Jebel Ali free-zone (JAFZA) authority. Our new station in JAFZA has helped FedEx Middle East improve its services and presence in UAE, and gain incremental revenue. Another area which required a great legal focus was the launch of a new intercontinental flight, operated by a B777, from Northern America to United Arab Emirates. We worked tirelessly to get the authorities' approvals, amend existing contracts, draft new vendor contracts

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

and review the marketing campaign’s material.

The recent unrest in the region The Legal Department also played a key role in monitoring and managing the impact that might have resulted from the recent social unrest in the Middle East and Africa. These incidents required daily support, including the development of contingency plans, reactive statements, amending service provider contracts, suspending services and monitoring regulatory sanctions in various countries.

in-house PROFILE

in-house Profile

ChieF FINANCIAL OFFICER – CONGLOMERATE

Going for growth Nizamuddin Siddiqui, Chief Financial Officer at the Bin Zayed Group talks about the challenges of working in an amazingly diverse company which has grown from 25 to 2,500 employees in 25 years.

What’s your background? In 1994, I joined the Bin Zayed Group, which is a UAE based conglomerate, founded by H.E. Sheikh Khaled Bin Zayed S. Al Nehayan. At that time the Group, which had been originally established in 1988 with just 25 employees, operated in the construction and real estate markets on residential, commercial and hotel developments. However, today the limited liability company is a global operation incorporating 22 companies, spanning multiple sectors and employing over 2,500 people. In my current role, I have been involved in numerous projects including a AED 1.6 billion listing, associated initial public offering and rights issue of two Dubai Financial listed companies and cherry picked investments worldwide through private placement and IPO. I have also managed and implemented the roll-out of the group’s Enterprise Resource Planning System. I am a member of Bin Zayed’s Executive and Investment committees, and as an investment committee member help the Group identify how and what to invest across the globe. Before joining Bin Zayed Group, I had worked both for my father's manufacturing and trading business in India and the Chartered Accountants firm Goel & Pandey, where I was a Manager in the Audit & Accounts Division. I'm a member of the Institute of Chartered Accountants of India having served my articleship at Ajay A Goel & Company. I also have a Certified Management Accountancy qualification from the Institute of Management Accountants, USA and a Masters in Business Administration from Indira Gandhi National Open University, Dubai.

How has your company grown? In 1995, we began to diversify when we established Katilink LLC along with its subsidiaries, which allowed the company to enter the pharmaceuticals, interior design & furniture, aluminium & cladding, and building materials sectors. This was followed by establishment of GTFS-Clientsoft which is an IT consultancy and solutions provider, specialising in workflow applications, BPO, ICT, Software development and Business Solution (ERP, CRM etc.) which operates throughout the Gulf including Saudi Arabia. GTFS was

the first Y2K Solution provider in the Gulf region. Then in 2003 we founded Duboats which offers sailing and power boats for family cruising, sport fishing and power racing to GCC clients. Today our business is divided into construction & energy, trading & industrial, real estate & technology and investment groups and our corporate portfolio includes Bin Zayed Contracting LLC Abu Dhabi and Dubai. Our interests cover everything from real estate, construction, investments to hospitality. We have recently added 24 Degrees and Brave Urban Warriors, to our business portfolio. 24 Degrees and Brave Urban Warriors specialise in providing MICE and leisure services to corporate clients worldwide.

What’s next? As a business we are always looking to evolve and challenge the status quo within a changing regulatory environment. Despite the corporate changes and financial difficulties of the last few years, we expect Dubai and our presence in the construction, real estate, pharmaceutical, hospitality and IT industries to remain at the heart of our business. Our immediate priority is to complete a strategic restructuring which we hope will be finalised within the next two to three months. We hope the muchanticipated new UAE Companies Law will assist us with more favourable foreign investor provisions. Like any business, our focus remains firmly on ensuring we stand out by retaining our competitive edge and constantly ask ourselves how good we are at providing services to our clients.

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

in-house Profile Practitioner perspective David Stark, Reorganisation Services Managing Director with Deloitte Corporate Finance Limited in the Middle East looks at why restructuring can be seen as an opportunity. In jurisdictions across Europe, restructuring is seen as part of the David Stark normal course of economic activity Managing Director and a good opportunity to reallocate scarce resources. The concept is less Deloitte Corporate developed in the Middle East where Finance Limited restructuring has been viewed less positively although attitudes are changing rapidly. To date, there have been high profile restructurings, including Dubai World which, enabled companies to be rehabilitated and provided a stable platform for the debt obligations to be repaid over longer periods. To facilitate a consensual restructuring of Dubai World a special decree was enacted (Dubai Decree No. 57/2009) to ensure there was an effective 'Plan B' if the consensual discussions failed â&#x20AC;&#x201C; ultimately, it was not needed. Since 2009 Dubai World, Dubai Investment Capital and Nakheel have been able to have a fresh start, build momentum, recover and build value. Whilst in Bahrain, Arcapita and in Kuwait, Global Investment House have used US and UK processes respectively to restructure.

Why reSTRUCTURE? When looking at the need to restructure companies typically adopt one of two approaches â&#x20AC;&#x201C; either an aggressive and early approach or wait and see and hope things recover themselves. My experience is the former approach is usually the most effective in the longer term. In the UK, after the 2008/09 downturn, some more forward looking housebuilders (and those who remembered previous crashes) sought to sell their stock of completed property very quickly, enabling them to de-leverage their balance sheets before the full impact of falling house prices. Once the market had stabilised, some of these housebuilders were able to undertake rights issues, enabling them to recapitalise their balance sheets and had the fire power to make land acquisitions at relatively cheap prices. This contrasts with the second approach which may ultimately require a deeper restructuring if the hoped for market recovery does not happen. This was the issue Dubai World was not alone in facing after the US subprime market crisis.

WhAT ARE THE KEY CONSIDERATIONS? The key thing is the cash and liabilities position. You must understand your liquidity position to ensure you are on the front foot in any restructuring â&#x20AC;&#x201C; you need clarity on if and when cash is going to run out and how you can manage the cash position. You must understand the relationship between profits in the profit and loss account and cash profit. If profits are not translating into cash this indicates potential problems needing addressing. Making profits is sometimes the easy part but managing working capital can be difficult, particularly when your customers are also facing pressure and trying to delay

payments. Then you need to ensure you have a 'sensible' or 'bankable' business plan which can be used to work out how much and what type of debt can be supported before starting on any actual refinancing discussions with banks. On the whole, with no corporation or VAT regimes in the region, tax considerations become less of a priority when reorganising. This contrasts with Europe, where debt write offs or debt for equity swaps can have significant tax implications. However, tax cannot be ignored here. There are areas to consider, e.g. in Saudi Arabia things are complicated by the need to make zakat payments. Companies who operate internationally must review their asset portfolios to ensure they have taken appropriate advice on holding real estate or other assets, or operating overseas as there are many tax implications that could arise in different jurisdictions. It's key to understand the full implications of where you operate and your activities. For Gulf-based entities looking to expand into international markets, there is no right answer on what makes a good corporate structure or robust business plan. Companies should review each situation on a case-by-case basis. The types of businesses looking to increase their international footprint could be quite diverse and range from private equity vehicles, sovereign wealth funds or family businesses. Any business looking at this needs to undertake proper due diligence to fully understand local legislation and if entering a joint venture have a good insight on any joint venture or investment partner as these will typically be long term relationships. Companies should consider the corporate regime of the jurisdiction they want to enter, as there may be operational restrictions and they may need a local partner to operate on the ground. They should also ensure the real estate strategy of the business is appropriate as over recent years there has been considerable real estate speculation and subsequent issues as the real estate bubble burst in many regions. Companies should check they have suitable finance in place including ensuring appropriate debt which matches the likely asset stream that will be used to repay it. I experienced a lot of companies having issues during the financial crisis who took advantage of relatively cheap short term debt to finance long term assets, which meant there was a significant asset liability mismatch when short term debt liquidity dried up. Finally, ensure the financial reporting including management accounts, KPIs and liquidity management is robust and timely. It is critical the management team understands when performance is going off plan so earlier action can be taken. If issues are not dealt with quickly this will cause significant value erosion and as time passes the available options will decrease as the company becomes more stressed. However, having said that in the UAE now there is a much more positive economic environment as new projects and investments are being announced as investor appetite returns.

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

Movers and Shakers

Movers and shakers

A round-up of The top appointments and promotions New DIFC Appointment The DIFC Courts have appointed Maha Al Mehairi as their third Emirati Judicial Officer. Maha who worked as a Case Progression Officer in the DIFC Courts since 2012, will work alongside Nassir Al Nasser, who was appointed as the Courts’ second Judicial Officer in December 2012. Maha and Nassir will provide judicial support to the Courts’ bench by undertaking legal research, sitting on DIFC Courts’ Small Claims Tribunal proceedings and attending Case Management conferences

and application hearings. Maha Al Mehairi recently became the first Emirati woman to qualify as an accredited mediator of the Royal Institution of Chartered Surveyors (RICS). She expects to use these new skills in handling property-related hearings in the Small Claims Tribunal. Prior to joining the Courts’ team, she worked as a Legal Consultant at Emirates Advocates in Dubai.

New Role for Dr Habib Al Mulla

Abu Dhabi Addition for Norton Rose

Baker & McKenzie have become the first global law firm to join forces with one of the UAE’s leading firms. Subject to UAE regulatory approval a merged UAE entity known as Baker & McKenzie Habib Al Mulla will be formed with effect from 1 July. Baker & McKenzie began operating in the region in 1979 with an associate office in Riyadh. Dr Habib Al Mulla the architect of the UAE Financial Freezone framework which led to the creation of the DIFC will co-lead the new team as Chairman and Co-managing Partner, alongside Borys Dackiw Baker & McKenzie’s Managing Partner-Gulf Region. In addition, over 40 Arab and internationally qualified lawyers from Habib Al Mulla will join the new firm.

Paul Mansouri, a banking and projects lawyer based in Norton Rose’s Abu Dhabi office was among 33 global partner promotions announced by the firm. Paul’s experience includes the water, waste, transport and infrastructure sectors advising sponsors, lenders and Governments. The firm’s other promotions were in Europe, Asia, Australia, North and South America and Africa.

Ninth Gulf Partner

CCME ACTIVITIES Forthcoming Events Joint Venture Agreements: The Do's and Dont's, 3 June - Hosted by Fulbright & Jaworski Pre-Ramadan Social , TBC July - Co-hosted by the CCME and the Universal Group

For further details of all these events contact manager@corporatecounsel.me

Past Events

Stephen Kelly has become King & Spalding’s ninth partner in the Gulf, as they expand their real estate practice. Kelly previously worked for Clyde & Co. and in the past has represented master developers, sub-developers, hotel operators and service providers on various property issues. His previous deals have included high-profile projects ,e.g. the Burj Khalifa, Saadiyat Island, Dubai Pearl and the Wave Muscat.

UAE Competition Law Seminar

The CCME and SNR Denton co-hosted a workshop on the new UAE Competition Law in the Signature Dining Room in the DIFC, Dubai in March. The event included a briefing of just under an hour, followed by an extensive Q&A session and a reception.

Islamic Finance Expert at Lathams Amar Meher has joined the Law Office of Salman M. Al-Sudairi in association with Latham

& Watkins in Riyadh as counsel in the Finance Department. Meher’s work includes conventional and Islamic finance, debt restructurings, debt capital markets, and Shari’ah-compliant structured products, most notably Shari’ahcompliant investment funds. He has worked extensively in the Middle East, Asia, Australia and the UK. His past experience includes working in a range of areas including telecoms, shipping, financial services and real estate. Meher who studied law and accounting at the University of Sydney joins Lathams from Vinson Elkins LLP.

Oil and Gas Addition Hilda Mulock Houwer has joined KPMG Lower Gulf’s Market Group as an Oil and Gas sector specialist partner. Hilda previously worked with KPMG in Cape Town and Moscow and is a qualified member of the South African Institute of Chartered Accountants. She will be based in Abu Dhabi and will oversee business engagements in the UAE, Oman, Bahrain and Qatar and the global firm’s oil and gas leadership. She has over 21 years’ experience in consulting and auditing clients in oil, gas and mining.

Board Appointment Malcom McKinnon former Deputy General Counsel of Abu Dhabi’s International Petroleum Investment

| Lexis Middle East Law Alert | May/June 2013 | lexismiddleeastlaw.ae

Movers and shakers

QFC Regulatory Authority: Othello R Sturino who was appointed Chief Operating Officer at the QFC Regulatory Authority in 2012 will expand his remit to include finance. He replaces Jay Permual, the Authority’s former Chief Financial Officer who has retired.

In addition, the firm has also appointed Dominic O'Neil, the resident Managing Partner in their Bahrain office to the role of International Managing Partner.

Gulf Finance Corporation: Jonathan Swann has been appointed the Corporation's Chief Financial Officer.

Inhouse Move for Brundenall

Other Job Swaps

Company has joined the board of Alizz Islamic Bank (SAOG). Mr McKinnon an experienced legal counsel replaces Mohamed Badawy Al Husseiny. It was the combination of McKinnion’s experience in executing and managing large investments and past partnerships with leading companies, combined with his legal background which attracted his new employers.

Oman Firm Link Up Duane Morris, a leading law firm based in Philadelphia, US has joined up with Oman-based Al Mashaikhi to set up its first regional office in Muscat. The new joint venture firm, will be known as Dr Said Al Mashaikhi and Partner Law Firm - A GCC representative office of Duane Morris. The Omani firm was founded by named partner Dr Said Al Mashaikhi, and Duane Morris partner Jeffrey Rodwell, formerly based in Duane Morris’ London office, has relocated to Muscat to serve as the managing director. Dr Al Mashaikhi has over 15 years of experience practicing law in Oman and surrounding GCC countries. His past projects have included legal work for banking and financial services clients, construction projects, foreign investment and claims work.

Promotion for Cheryl Dubai construction lawyer Cheryl Cairns was promoted alongside six others in London and Manchester to Partner at Trowers & Hamlins. Cairns specialises in UAE domestic and international contentious and non-contentious construction law. She has experience of conducting arbitrations following a range of rules including the rules of DIAC.

Former Lawrence Graham technology partner Peter Brundenall has joined the inhouse team at the Abu Dhabi Investment Authority. Brundenall previously co-ordinated LG’s technology, outsourcing and data protection practice in London. He will work in the Authority’s technology department which has a team of 12 lawyers. In addition to Lawrence Graham, Brundenall has worked for Hunton & Williams and Simmons & Simmons.

KPMG to Linklaters Switch KPMG global Islamic finance head, Neil Miller has joined Linklaters as their new global Islamic finance head, based in Dubai. Prior to working for KPMG, Miller who has over 20 year’s experience in Islamic Finance worked at Norton Rose both in Dubai and Bahrain.

Healthcare Lead Former Director of Commercial Policy at the Department of Health in the UK, Andrea Longhi has joined Ernst & Young as their new Middle East and North African Advisory Healthcare leader. He has 21 years of consulting experience and prior to working at the Department of Health advised global pharmaceutical companies on commercial effectiveness.

SNR Denton Link Up Jamal Ahmed Al-Shehab who recently retired from a post in the Kuwaiti Government has returned to private practice where he is to enter into an

association with SNR Denton. The new firm will be called the Law Office of Al-Shehab and Partners in association with SNR Denton. Stuart Caveat who was appointed Kuwait Managing Partner for SNR Denton in 2012 will continue his role as Office Managing Partner. Previously, SNR Denton who have had an office in Kuwait since 2008 had an association with International Legal Group.

Curtis Appoints Simon Ward Simon Ward has joined Curtis Mallet-Prevost Oman as a Counsel in their disputes department. Simon was recently appointed to the Oman Court of Appeal Roll of Arbitrators and has previously acted both as arbitrator and lead counsel before the Omani Courts. He also has experience of carrying out domestic and international arbitrations, including under the auspices of the ICC and the London Court of Arbitration.

Agha returns DLA Piper’s US firm Holland & Knight has appointed Oliver Agha, who was previously DLA Piper’s global head of Islamic finance, as a partner. Agha will head their Islamic finance and Middle East and North Africa practices. For the last three years Agha has run his own Middle East, Islamic finance boutique firm, Agha & Shamsi in Dubai which has won a number of Islamic finance awards. The firm, included four associate attorneys who will also join Holland & Knight.

Arabtec Gets New CFO Arabtec has appointed Iyad Abdelrahim as Chief Financial Officer of the company’s construction firms in Asia and the Middle East. Iyad Abdelrahim will be based in Abu Dhabi. Iyad previously worked as Chief Financial Officer at Dubai Property Group and has 20 year’s experience in the banking, real estate and contracting industries.

Send Us Your News If you have news of an appointment or promotion within the legal or financial professions you would like to see reported in Lexis Middle East Law, please send details to: daniel.emmett-gulliver@lexisnexis.co.uk

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

CORPORATE

COUNSEL

MIDDLE EAST AWARDS 2013

Congratulations to the Corporate Counsel Middle East Awards 2013 winners

THE WINNERS: Achievement Award Angel Wesley General Counsel of the Year Sponsored by Eversheds Afshan Akhtar, Aluminium Bahrain Legal Department of the Year (Large team) Sponsored by Bird & Bird The Emirates Group

International Law Firm of the Year Sponsored by JLegal Allen & Overy Middle East Law Firm of the Year Al Tamimi & Company Litigation & Dispute Resolution Team of the Year Shearman & Sterling Banking, Finance and Restructuring Team of the Year Clifford Chance

Legal Department of the Year (Small team) Sponsored by Footprintlegal China State Construction Engineering Corp.

Transportation, Energy and Infrastructure Team of the Year Sponsored by Fox Rodney Search Ashurst

Legal Counsel of the Year Wafa Derouiche, Pentair

Corporate Team of the Year Allen & Overy

Innovation Award China State Construction Engineering Corp.

Property and Construction Team of the Year Hadef & Partners

CSR Award Clifford Chance

Commercial Team of the Year Dentons

Contract Watch Consumer Contracts

transaction's conclusion (often when payment is made). Many regional countries have adopted specific e-commerce laws which generally require consumers actively indicate they have read and agree to any general terms and conditions (e.g. they be asked to “tick a box”).

Judicial Discretion

he past 10 to 15 years have seen many Middle Eastern countries adopting consumer protection legislation, including Oman in 2002, the UAE in 2006 and Qatar in 2008. Jordan is also enacting legislation. But how does this impact contracts? Consumer legislation broadly imposes basic requirements on suppliers in areas like labelling, misleading advertising, safety warnings, pricing, warranty protections and replacing defective goods. The UAE Economy Ministry has pursued various consumer protection initiatives since the consumer protection law was introduced, including working with local authorities to raise consumer awareness of rights. (In Dubai many shops have yellow signs promoting a consumer protection website and complaints hotline) and are working with the car industry on a standardised vehicle sales contract. Saudi Arabia, does not have a specific consumer protection law, but the Commerce & Industry Ministry circulates consumer protection rules. They have issued circulars making it clear shops can not refuse to provide refunds for products with defects or not complying with mandatory standards and have clear price marking.

The GCC Standardisation Organisation was established in 2001 by the GCC countries to unify their product standards’ regulations. However, even before this, many consumer protection concepts were found in Middle East countries’ Civil Codes, e.g. rights to cancel contracts in misrepresentation cases, the right to reject defective goods and reclaim the price paid or sue for the good’s resulting reduction in value, and rights to inspect goods subject to contract before accepting them. Contract law principles in the region are similar to those in common law jurisdictions. For example, offer and acceptance is required and contracts can arise verbally or because of the parties' conduct, if the essential elements are clear. However, in the UAE and elsewhere in the region there is no need for consideration. Although these concepts are embodied in many countries' Civil Codes, the local courts place significant emphasis on documentary evidence. Ideally, suppliers should include any standard terms and conditions on documents supplied to consumers and ask they are specifically signed as acknowledgement of acceptance. In the absence of formal signed acceptance, terms and conditions should be made available before the

lexismiddleeastlaw.ae | May/June 2013 | Lexis Middle East Law Alert |

Regional judges have more opportunity than common law judges to exercise their discretion and deviate from contracts’ specific terms. For example, Article 390(2) of the UAE Civil Code, Federal Law No. 5/1985 gives judges discretion to overrule any clause purporting to fix the amount of damages one party may claim from another in specified cases (i.e. a liquidated damages clause upon either parties), and award what the judge determines is the actual loss suffered by either party. This cannot be contracted out of. Another key issue is whether foreign governing law clauses are effective. Local courts, hearing a dispute, almost always apply local laws regardless of the inclusion of foreign governing law clauses. A number of Middle East countries are also signatories to the New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards so, as a general rule, local courts in those countries should refuse to hear contract cases where the parties have agreed to arbitrate (and the arbitrator should apply any governing law chosen by the parties in the contract). Care is needed with consumer contracts as consumer protection laws apply regardless of contract provisions to the contrary, even where contracts include an arbitration clause. This is seen as a public policy issue and consumer protection laws cannot be contracted out of. So, suppliers must be aware of the impact of local consumer protection laws on their business dealings. Contributor Marcus Wallman, Partner at Al Tamimi & Company

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