Issuu on Google+

FEATURE A QUICK SITE TOUR GCC real estate developments

PROFILE JURISDICTIONAL DIFFERENCE

Cem Genc of British American Tobacco

CONTRACT WATCH October / November 2015 

lexismiddleeastlaw.ae

Distribution agreements

A ROUND-UP OF LEGAL, FINANCE AND TAX DEVELOPMENTS ACROSS THE MIDDLE EAST

UP, UP AND AWAY Business impact of new drone legislation

Published in conjunction with the Association of Corporate Counsel


NEW LAW, NEW THINKING

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

Elias Hayek

Follow us on Twitter:

https://twitter.com/lexismiddleeast

Franklin Breckenridge EDITORIAL Head of Middle East Publishing

Hussain Hadi +44 (0) 20 7400 2679 hussain.hadi@lexisnexis.co.uk Editor

Tamer Nassar

Claire Melvin +44 (0) 20 7347 3521 claire.melvin@lexisnexis.co.uk Deputy Editor

Daniel Emmett-Gulliver +44 (0) 20 7347 3515 daniel.emmett-gulliver@lexisnexis.co.uk

Ziad Zarka

ACCME Board

Elias Hayek Franklin Breckenridge Ziad Zarka Tamer Nassar Khalid Khan Mona Ashour Madi Anneliese Reinhold MIDDLE EAST REGIONAL SALES Tracey Wood +27 (0) 75 2574 8682 tracey.wood@lexisnexis.co.za

Afshan Akhtar

Sana Belaid

PRODUCTION Production Manager

Angela Waterman

T

he introduction of new anti-discrimination legislation in the UAE has understandably led to worldwide praise but also a rush of questions from corporate counsels. As detailed in the Law Monitor section, companies must take concrete steps to reduce the risk of contravening this new law which defines discrimination quite widely. Companies must familiarise themselves with this. There is uncertainy over its scope at this stage and we are waiting for the first case to be heard and for clarification one way or another. When this law first appeared in the press it had not been Gazetted and many corporate counsels wasted time searching for it and trying to confirm its status. In fact this law is a good example of problems those of us working in the region face. It is why we launched the Law Monitor section in this magazine to help people track the progress of key pending legislation across the GCC. This is also the reason the Gazette news alert service provided to our members by Lexis Middle East Law is so important. It allows you to set up email alerts listing the latest gazetted laws by topic and jurisdiction as soon as they have been officially gazetted. I encourage you all to use it to keep up with this and other new areas of legislation. It is also with great pleasure that we welcome Farouk Yala, North Africa Legal Contracts Counsel for Baker Hughes to the ACC Middle East team. He will lead the Oil & Gas sub-committee with the intention of bringing the legal Oil and Gas community closer together whilst coordinating exciting and worthwhile educational and knowledge-sharing forums. Finally, I would like to congratulate the winners of the Corporate Counsel Middle East Corporate awards, particularly Phil Reynolds of Virgin Mobile winner of the General Counsel category; Jason Taylor of Muntajat winner of the Legal Counsel category and the Emirates Group and Travel Port who won the Large team and Small team Legal Department categories respectively. My congratulations also go to Eversheds and Al Tamimi who picked up the awards for International and Middle East law firm of the year.

Advertising Production/Designer

Jack Witherden

Robert Drolet

ENQUIRIES LexisNexis, Quadrant House, Sutton, Surrey, SM2 5AS Tel: +44 (0)20 8686 9141 or Fax: +44 (0)208 212 1988 UAE

LexisNexis Middle East, Reed Exhibitions FZ LLC, PO Box 77899, Park Rotana Complex, Office 1001, TwoFour54 Building, Khalifa Park, Abu Dhabi, UAE. Tel:024917615. Fax: 024917612 Printed by Evoluprint, 31150 Bruguières, France. This product comes from sustainable forest sources. Reproduction, copying or extracting by any means of the whole or part of this publication must not be undertaken without the written permission of the publishers. This publication is intended to be a general guide and cannot be a substitute for professional advice. Neither the authors nor the publisher accept any responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this publication.

Š 2015 Reed Elsevier.

CONTENTS

UK

Elias Hayek - Chairman & President of the Corporate Counsel Middle East Group

FEATURE: UP, UP AND AWAY

p2

Business impact of new drone legislation

FEATURE: KEEPING IT IN THE FAMILY

p12

Challenges for family businesses in the Middle East

FEATURE: A QUICK SITE TOUR

p16

A summary of recent real estate developments in the GCC

LEGAL ROUND-UP

p6

...including a landmark decision on DIFC Courts

TAX AND FINANCE ROUND-UP

p10

....including a landmark debt appeal case in Libya

LAW MONITOR

p8

...including a look at the new UAE anti-discrimination and hatred law

IN-HOUSE PROFILE Cem Genc > Regulatory Challenges

p19

A GCC Legal Counsel talks about specific challenges in the Middle East and Turkey

MOVERS AND SHAKERS

p21

Round-up of the big moves across the region

CONTRACT WATCH

p24

Distribution agreements | Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

1


LAW FOCUS

UP, UP AND AWAY Rob Kinder and Mark Makarem, Associates at Bird & Bird LLP examine the business impact of drone legislation.

WHAT’S HAPPENED?

If your company isn’t currently using drones, they may soon be. The UAE’s General Civil Aviation Authority (GCAA) has recently passed new regulations on the use of unmanned aerial systems (UAS) or ‘drones’ as they are frequently known. Civil Aviation Regulation part VIII, subpart 10 came into effect in April 2015 and has been billed as a ‘regulatory strategy for the utilisation of unmanned aerial systems within UAE airspace’,” Rob Kinder explains.

PRACTICAL USES OF DRONES “Until relatively recently, UAS, or drones, have been primarily used for military purposes. However, due to technological advances in the systems, a wide range of actual and potential commercial uses of UAS have recently emerged. Industries including the healthcare sector, oil industry, telecoms and even agriculture have been finding applications for these. For example a student in the Netherlands has recently developed a prototype of a defibrillator attached to a drone, which could provide medical care to heart attack victims within minutes. DHL and other courier companies

2

also plan to use ‘parcelcopters’ to transport, amongst other things, medication. UAS could also assist police officers in pursuing criminals. They can arrive at crime scenes within minutes and provide a more detailed understanding of events and help with identifying victims and law-breakers. They can be also be used at news scenes, such as natural disasters, more quickly than conventional camera teams and may allow the safe filming of those scenes from better angles. In addition, through the use of remote sensors, drones can identify the health condition of crops and monitor their hydration and growth rates, as well as apply pesticides and fertilizers. They could even be used in the oil industry as they can efficiently monitor pipelines (including surveying, detecting and locating leaks), provide high-definition imagery to improve geological mapping, or inspect sites and oil rigs. UAE telecoms company du has also used UAS, carrying smartphones with its network testing applications, to analyse its phone network. Telco drones can also be used for tower inspections and radio planning. Google even has ambitious plans to use fleets of high-altitude, solarpowered drones to extend internet signals to millions of people without internet,” Kinder says.

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


LAW FOCUS

© iStock/tiero

THE LEGAL PROBLEM

RELATED LEGISLATION

“However, the same features which make the UAS suitable for this variety of commercial functions also create cause for concern. At the beginning of 2015 there were widespread reports that the landing of aircrafts at Dubai Airport had been severely affected by recreational UAS being flown within the airport’s airspace,” Kinder adds.

Article 30 of Qatar Law No. 15/2002 Unmanned aerial vehicles will not fly over State territory without authorisation from the Civil Aviation Authority. (Source: Lexis Middle East Law)

WHY? “UAS are governed by existing aviation laws and regulations, but these laws were not drafted specifically with UAS in mind. The UAE has now responded to a need for greater clarity over the use of UAS with regulations intended to promote the benefits of their use, whilst protecting the interests of the UAE and its citizens,” Mark Makarem states.

KEY CONCERNS “The Regulation aims to govern the use of UAS within UAE airspace. In doing so it sets out measures to tackle concerns about their use, including safety, privacy and their impact on security. The principal worry is that UAS are flown too close to people, their property or other

aircrafts, increasing the risk of collisions or accidents. The new Regulation intends to make UAS operations as safe as manned aircrafts and ensure they do not ‘create a greater hazard to persons, property, vehicles or vessels while in the air or on the ground’. The main privacy concerns stem from the ability to fly UAS close to people and their property and the ease with which they can be equipped with cameras. An individual’s right to private and family life is highly regarded and carefully protected under various UAE laws, such as the Penal Code, Cyber Crimes Law and Copyright Law. It is already the case that, under the UAE’s Civil Aviation Law (Federal Law No. 20/1991), it is illegal for any aircraft (including UAS) to be equipped with an aerial photographic apparatus without authorisation from the civil aviation authorities. Nevertheless, the

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

3


LAW FOCUS RELATED STORY Dubai: Aviation Safety Law Issued LNB News 17/04/2015 85 The UAE's Vice President and Prime Minister and Dubai Ruler, HH Sheikh Mohammed bin Rashid Al Maktoum has issued an aviation safety law in the Emirate. The Authority is also given the power to specify the airspace dedicated for general aviation and the regulations controlling the use of laser, fireworks, light beams and drones. The Authority also reserves the right to inspect towers and helipads. In addition the Authority can inspect and monitor all civil aviation activities and civil aviation workers and define any acts which constitute a risk to aviation facilities, air operations, airplanes, passengers and air traffic.

use of UAS mounted with cameras has become widespread and the new Regulation identifies ‘ethical, privacy and data collection concerns’ arising from the use of UAS for ‘surveillance, monitoring, mapping or video recording’. Security fears arise from the potential to use UAS for unlawful purposes, including illegal surveillance. In extreme cases, UAS can be used to transport weapons or contraband or even be used as weapons themselves,” Makarem notes.

WHAT DOES THE REGULATION COVER?

WHAT’S THE COMMERCIAL IMPACT?

“The good thing is that this encourages the commercial use of UAS in the UAE. Although UAS use for commercial purposes requires specific GCAA approval, some of the more restrictive aspects of the Regulation that apply to personal use do not apply to commercial uses. In fact, the Regulation explicitly states that its purpose is to ‘reap the societal benefits of this innovative technology’ and to ‘set the conditions for creating a strong and competitive manufacturing services industry with the ability to compete in the global market’. This clearly reflects the UAE’s intention to become a significant manufacturer and exporter of UAS in the future as companies in the UAE have already begun manufacturing them. For example, ADCOM Systems, an Abu Dhabi based UAS maker, has been manufacturing systems Rob Kinder for military use for global clients. The office Associate of HH Sheikh Mohammed Bin Rashid Al Bird & Bird Maktoum, Prime Minister and Ruler of Dubai also launched the ‘UAE Drones For Good Award’ last year to promote the design of UAS technology within the UAE, GCC and abroad, with the purpose of improving lives. No doubt the UAE authorities hope that having a more clearly defined regulatory landscape will also Mark Marakem have a positive effect on the commercial development of its domestic UAS industry,” Associate Bird & Bird Makarem explains.

“The Regulation classifies UAS into three categories for operation within UAE civil airspace based on: their mass, their capability (or performance) and the operator (either privately, commercially or state-operated). The Regulation sets out various requirements and restrictions depending on which category/ies a specific UAS falls within.” “There are rules for the practical, non-military use of UAS. Operational restrictions depend on whether they are being used for private or commercial use. All UAS greater than 0.5 kg (and all UAS for commercial use) must be registered with the GCAA’s licensing department. UAS for commercial use also require additional ‘GCAA E-Service UAS Operating Approval’. Although it is not clear from the Regulation, it is possible this requirement may be in addition to any existing registration requirements at Emirate level (e.g. the Dubai Civil Aviation Authority). The Regulation restricts the use of UAS to segregated areas approved by the GCAA, and they are not allowed at any time near to conventionally controlled airspace (like airports)." "In addition, the safety of third parties and their property is protected by restricting the private use of UAS within close proximity to ‘any person, vessel, vehicle or structure’. Operators are responsible for ensuring that all of the system's components are in working order before use and their use is subject to frequency band restrictions. Private use operators must maintain visual line of sight with the UAS at all times and cannot fly them more than 400 feet above ground level. UAS are also only allowed to be used in daylight. Private operators cannot use video or any image capturing devices and commercial operators need prior GCAA authorisation. The Regulation also

4

prohibits flights of private UAS over ‘public or private properties’ (though the meaning of ‘public’ in this context is not clear)," Kinder says.

WHAT’S NEXT? “As in many areas, it remains to be seen how and to what extent these Regulations will be enforced. Many UAS have already been sold in the UAE, so the registration requirements may have to apply retroactively. In addition, the prohibition of cameras on private UAS could be particularly problematic, as it is likely that a high proportion of private UAS owners will want to record (and are already recording) aerial footage of themselves or their surroundings.” “There may also be more regulations on the way. The GCAA has also reported they are currently in the process of drafting regulations for the import and distribution of UAS in the UAE. Although, at this stage, publicly available information on these regulations is very limited. It also looks likely that the UAE will not be the last GCC country to develop regulations in this area. For example, Qatar’s Civil Aviation Authority is currently in the process of drafting regulations to govern the commercial and recreational use of UAS in their airspace. Given the growth of the industry in the region, it seems likely other GCC countries will follow the UAE and Qatar and introduce their own UAS specific regulations,” Kinder notes.

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


LEGAL ROUND-UP LEGAL ROUND-UP

COVERING RECENT KEY LEGAL DEVELOPMENTS – REGION-WIDE UAE

NEW CHILD LAW The Director of the Child Department at the UAE’s Social Affairs Ministry, has announced a new Child Law will be introduced to punish parents who fail to explain the risks of sexual harassment to their children and to those who neglect their children. It was explained that the new law is currently going through legislative channels. Its aim is to protect children by ensuring any loopholes in the existing legislation are addressed. The law will also prevent people with convictions from working with children, even if they have managed to overturn these convictions and prove their innocence.

EU TRAVEL AGREEMENT The EU and the UAE provisionally signed a reciprocal short-term visa waiver agreement on 15 April 2015. The agreement will allow visa-free entry for stays up to 90 days in any 180-day period. In the case of UAE nationals who are travelling to Schengen Area, this period will be calculated separately for stays in Schengen candidate countries and for stays in the countries that fully apply the Schengen Treaty. In return, nationals of countries that apply the Schengen Treaty (including candidates) are eligible to receive a UAE visit visa on arrival which will allow them a maximum stay of 90 days in the 180-day period starting from their first date of entry. The UAE and EU have also issued a joint declaration to encourage non-EU Schengen States to sign similar agreements.

Authority and the Emirates Group, HH Sheikh Ahmed bin Saeed Al Maktoum. As well as the existing members, the Secretary-General of the DFZ Council, the Governor of the DIFC, the Chairman of the Ports, Customs and Free Zone Corporation, the Director General of the Dubai Creative Clusters Authority, the Director General of the Dubai World Trade Centre Authority, the CEO of the Dubai Aviation City Corporation and the Chairman of Meydan City Corporation will also all be members.

LANDMARK LEGAL OPINION Dubai's Supreme Legislation Committee (SLC) has issued a landmark legal opinion which will allow Dubai Government entities to opt-in to the jurisdiction of the DIFC Courts. The SLC found the reference in Article 83 of Dubai Law No. 6/1997 on Contracts of Government Departments to 'Dubai Courts' provided that 'the Dubai Courts shall have the jurisdiction to hear any dispute that arises between a Government entity and customer…' and this was not limited to the Dubai Courts, established under Dubai Law No. 3/1992 (as amended), but extended to all the courts and judicial committees in Dubai under the Emirate’s legislation, regardless of their jurisdiction. In the court’s opinion, as the DIFC Courts is an institution which is considered an integral part of Dubai’s Court system, the scope of its jurisdiction now includes any civil or commercial dispute where the parties involved agree in a clear and express manner that the DIFC Courts shall hear the case.

GCC DUBAI

NEW FREE ZONES COUNCIL

EQUAL MEDICAL TREATMENT

The UAE's Vice President and Prime Minister and Dubai Ruler, HH Sheikh Mohammed bin Rashid Al Maktoum has issued two Decrees establishing the Dubai Free Zones Council. The Council will be chaired by the Chairman of the Emirate’s Civil Aviation

A team of legal experts from GCC Health Ministries have held a meeting to draft Executive Regulations to implement a December 1988 decision to offer equal health treatment to GCC nationals. Under the law, member states will have to give nationals of other GCC

6

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |

states access to their public health services on an equal basis to their own nationals. The meeting follows a January 2014 Health Ministers Commission decision to prepare an explanation of the equal treatment concept referred to in the Council’s original 1988 decision.

SAUDI ARABIA

IQUAMA CARDS TO BE REPLACED Saudi Arabia’s Interior Ministry has announced that from 14 October 2015, new Resident Identity Cards will replace existing Iqama cards. It is expected that Muqeem cards will have no expiry date printed on them. While work and residency permits will have to be renewed annually in line with the existing procedures, Muqeem card holders should not be required to have the actual cards physically re-issued every year.

AVIATION FIRST In a first for a non-EU airline, Saudi Arabian Airlines has been fined 1.6 million US Dollars for breaching EU carbon emission rules. The rules state all airlines must operate with their own airport and pay for carbon emissions. However, Saudi Arabian Airlines refused to comply with these rules along with other countries like Russia and India.

QATAR

WATER CONSUMPTION CHANGE The Shoura Council has approved amendments to the existing law on the rationalisation of water and electricity consumption. The most significant changes involve penalties for violations. Those who violate Article 4(1) of the existing law will be fined up to 20,000 Riyals while those who violate Article 4(2) or 4(3) will be fined up to 10,000 Riyals. Fines will also be doubled for repeat offenders. In addition, Article 7 of the Law has also been amended to give the Chairman the power to make an


LEGAL ROUND-UP agreement with those violating the law before a legal case is filled against them, during a legal case, or before the final court ruling is issued, if the relevant party has paid half of the minimum penalty issued.

EXPATRIATE ENTRY Following extensive discussions, Qatar’s Shoura Council has decided to refer a law regulating the entry and exit of expatriates back to the Interior and Foreign Affairs Commission for re-examination. The new law would require expatriates to obtain work contracts before applying for entry permits. It also requires captains of ships, airplanes and other vehicles to disclose the names of their passengers as soon as they arrive in Qatar. Hotels will also have to supply the relevant departments with details of individuals who have been given permits to enter Qatar from their hotels. The law has received Cabinet approval but the Shoura Council felt it needed to be referred back to the Commission, who are expected to issue a report summarising their findings.

KUWAIT

ENVIRONMENTAL CHANGE According to MP, Majed Mousa, Kuwait’s Public Facilities Commission has amended the Environment Law and referred it to the Cabinet for approval. It has harsher punishments for environmental violations including a 1 million Dinar fine or capital punishment for importing and storing nuclear waste. There is also a 500 Dinar fine or one-year prison sentence for killing wildlife and a 500 Dinar fine for littering streets. Other new fines include a 250 Dinar fine for picking flowers and cutting trees, and a 100 Dinar fine for smoking in public enclosed or semi-enclosed areas.

BAHRAIN

ARBITRATION LAW APPROVED A new Abitration Law has been approved under which the International Trade Law (UNCITRAL) will be applied on all legal arbitration cases

which aim to settle disputes inside or outside Bahrain. Any arbitration proceedings which started before the new law is issued are exempt from its provisions. Non-Bahraini lawyers will be able to represent the arbitrating parties if the arbitration is a commercial one and involves international arbitration but takes place in Bahrain.

LEGAL FEE THRESHOLD The Justice, Islamic Affairs, and Waqf Minister, has said the fees threshold proposed for legal cases will not be limited to financial cases only. Instead, it will be imposed on all legal cases. In addition, the fees maximum threshold will not exceed 2% of the value of damages sought. If an individual is unable to pay their fees before the case starts, they will be able to request postponement of fee payment or a fee exemption from the Labour Minister.

OMAN

NEW POWER GUIDELINES Oman's Authority for Electricity Regulation has published a report on its investigations into the loss of power and water production at the Sohar Power Company’s Sohar 1 Power and Desalination Plant on 5 and 19 May 2015 which resulted in power and water supplies to customers in North Batinah being disrupted. The Authority has said the company must implement all of its recommendations to avoid future incidents. The Authority has also announced it will issue guidelines to other generation and desalination plants and direct the Oman Power and Water Procurement Company to include specific requirements for future projects.

PENDING TRAFFIC FINES Foreign residents leaving Oman temporarily or permanently must clear outstanding traffic fines before they travel. Authorities can prevent those with outstanding traffic fines from crossing a border or boarding a plane. Fines can be paid through the Royal Oman Police website, via mobile applications or directly at border post counters and at ROP traffic departments.

REGULATORY ROUND-UP UAE: The General Directorate of Residency and Foreign Affairs-Dubai has confirmed that GCC residents must make online visa applications before travelling to the UAE from October 2015... UAE: A new law to increase penalties for insults via social networks, like Whatsapp is being considered. Nationals who misuse these applications may have to pay 250,000 AED and expatriates would be deported… UAE: The Health Ministry has announced Interpol has sent a Circular warning about DNP weight loss supplements over fears about risks to consumers… Sharjah: The Ruler has issued two Decisions regarding the Emirate's Education Council and the Protection and Safety Authority… Abu Dhabi: The Chairman of Abu Dhabi’s Executive Council has issued a Decision regarding the hunting of wild animals in the Emirate… Dubai: The Chairman of the Health Authority has announced it is preparing a new programme to provide nationals, who are not covered by any Government health insurance policy, with health insurance… GCC: The member states have agreed to gradually reduce the cost of phone calls and text messages as part of efforts to offer domestic rates for GCC nationals by 2018… Saudi Arabia: A nuclear cooperation agreement has been signed with Russia on the peaceful use of atomic energy… Qatar: The General Directorate for Nationality, Borders and Expatriates’ Affairs at Qatar’s Interior Ministry has announced it will be replacing the old residency permits, which were usually attached to passports, with ones that can be used as identity cards… Qatar: The Interior Ministry has called on residents and nationals to participate in a debate concerning the risks of using mobile phones while driving and to examine whether there is a need to increase penalties… Qatar: Qatar’s municipalities have issued directives to all hairdressers in the country prohibiting them from offering massage services… Kuwait: The numbers of family visit visas issued was cut during Ramadan to reduce begging…

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

7


LAW MONITOR

RECENT LEGAL DEVELOPMENTS IN THE GCC SAUDI ARABIA - MARITIME Two key pieces of legislation have recently been issued approving the Kingdom's accession to the International Convention for the Safety of Life at Sea (SOLAS). They are Saudi Arabia Royal Decree No. M55/1436 and Saudi Arabia Cabinet Decision No. 344/1436. As with the majority of Saudi legislation, the Cabinet Decision contains the main Law, while the Royal Decree effectively only approves it.

BAHRAIN - DISCRIMINATION Bahrain's Cabinet has approved a draft law criminalising contempt of religions, such as insulting divinity, or defaming divine books, prophets, Allah's Messengers, as well as their wives or companions. The law would also criminalise any hate and sectarian discourse which undermines national unity or differentiates between individuals or groups on the basis of religion, creed or sect. At present the new law has been referred to the Ministerial Committee for Legal Affairs.

GAZETTE WATCH UAE Official Gazette Nos 578-582 – These Gazettes include Federal Law No. 8/2015 on the Federal Customs Authority. Saudi Arabian Official Gazettes Nos 4553-4582 – These Gazettes include Saudi Arabia Cabinet Decision No. 415/1436 approving the amendment of Article 8(4) of the Law of Procedure before the Board of Grievances. Kuwait Official Gazette No. 1229-1250 – These Gazettes include Kuwait Law No. 63/2015 on combating IT crimes. Oman Official Gazette No. 1098-1111 – These Gazettes include Oman Sultani Decree No. 32/2015 (issuing the Regulation of the Public Establishment for Industrial Estates (PEIE)). Qatar Official Gazette No. 8-14 of 2015 – These Gazettes include Qatar Financial Markets Authority Decision No. 1/2015 issuing rules for listing real estate investment units. Abu Dhabi Official Gazette No. 3-5 – These Gazettes include Abu Dhabi Circular No. 13/2015 concerning the Communication Policy of the Emirate's Government. Dubai Official Gazette No. 385-389 – These Gazettes include Dubai Decision No. 12/2015 (approving the location, borders and area of Dubai Aviation City). (Source: Lexis Middle East Law Official Gazette Index)

8

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |

QATAR REAL ESTATE Qatar's Cabinet has approved a draft decision which will form committees to settle real estate development disputes and a draft decision on the procedures for examing applications, as well as the rules and procedures to be followed before committees of real estate development dispute settlement. The Cabinet have also approved a draft Ministerial Decision organising a record of real estate developers.


LAW MONITOR

KUWAIT ANTI-TERROR

FEATURED DEVELOPMENT

Kuwait's National Assembly has approved a tougher anti-terror law which will see those who provide online assistance to terror groups or commit money laundering offences, jailed for up to ten years. There will also be fines of between 20,000 and 50,000 Dinars for those who set up a website for terror groups or publish news about them which could be used for raising donations. All online activities, including those on social media are covered by the new legislation. The minimum sentence would be six months' jail and fines of up to 2,000 Dinars for those who illegally use computers which belong to others.

Rebecca Ford and Sara Khoja of Clyde & Co examine the impact of the recent UAE anti-discrimination and hatred law on employers and employees. On 20 July 2015, the UAE adopted Federal Decree-Law No 2/2015 on preventing discrimination and hatred. The law was Gazetted in UAE Federal Official Gazette, issue 582 on 28 July 2015. Although its main aim seems to be to combat religious contempt or intolerance (with a particular emphasis on preventing extremism), it also introduces a definition of discrimination. The law creates a number of new criminal offences and states freedom of expression will not be a defence for actions breaching this law. The offences can be broadly categorised as those which relate to religious contempt, discrimination, hatred, and the incitement or facilitation of these acts. Penalties for committing any of these offences range from fines of between 250,000 and 2,000,000 AED and minimum jail sentences of five to seven years depending on the offence. Committing an act which creates any

form of discrimination, by any means of expression is punishable by a minimum jail sentence of five years and fines of between 500,000 and 1,000,000 AED. Employers should ensure key policies, like those regarding social media, are up to date. Employees must understand they cannot make unauthorised comments (of any nature, but in particular, those which may be considered offensive or breach this law). These if they are carried out, particularly on company telecommunications systems or during work time could be attributed to the organisation as a whole. Internal policies should make clear what is and what isn’t acceptable and employees should be informed of the consequences of breaching the rules. Employers should be mindful of the fact that under the law, anyone who commits an offence under it will be discharged from the penalty if they report the crime before it is detected.

UAE - LITIGATION A Ministerial Decision forming a committee to prepare a Federal draft law on the use of a remote communication technology in criminal proceedings has been issued. The Committee will be chaired by Judge Ibrahim Obeid Al Ali and will include representatives from the Dubai Court of First Instance, Interior Ministry, Chief Prosecutor and the Head of Abu Dhabi Major Prosecution.

OMAN - COMMERCE Two key pieces of legislation have recently been issued on the Duqm Special Economic Zone. Oman Sultani Decree No. 28/2015 promulgates the Law granting concessions to develop, manage and operate Duqm Port whilst Oman Decision No. 322/2015 organises urban planning and building licences there. Finally Oman Decision No. 323/2015 organises the investment environment.

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

9


TAX AND FINANCE ROUND-UP TAX AND FINANCE ROUND-UP

COVERING RECENT KEY TAX AND FINANCE DEVELOPMENTS – REGION-WIDE UAE

NEW DRAFT CORPORATE TAX AND VAT LAWS A senior Finance Ministry official has announced both a draft corporate tax law and VAT law will be finalised by October. The official added the authorities are still evaluating the social and economic impact of these laws, but drafting was expected to be finished ‘very soon’. However the official refused to comment on the proposed tax rates or when they might take effect. The UAE has previously said VAT is unlikely to be introduced in the country before other GCC countries adopt it, as this could damage the state’s competitiveness and it might lead to be an increase in smuggling across borders.

POSSIBLE BANK LAW CHANGE The Governor of the UAE’s Central Bank, has announced that amendments to the country’s Banking Law (Federal Law No 10/1980) are currently being discussed. These changes could give the Central Bank a monetary policy role, reversing the current position where the Government not the Central Bank takes most of the decisions. It was added in the announcement that the country’s credit growth was expected to remain robust and there was excess liquidity in its banking system.

report, for 2014, must be submitted to the US by 30 September 2015.

FOREIGN REMITTANCE LEVY A member of the UAE's Federal National Council has called for a levy on foreign remittances by expatriate workers to be introduced. They have stated and the Council should work with the Finance Ministry to produce a package of measures to boost the country’s revenues. If such a levy on foreign remittances is introduced, a collection system would also have to be established.

DUBAI

DEUTSCHE BANK FINED The Dubai Financial Services Authority (DFSA) has fined Deutsche Bank around $8.4 million. The penalty comes as a result of 'serious contraventions' discovered by the DFSA connected to the bank's wealth management business. The regulator conducted an investigation into the bank’s activities following concerns it was not providing customers with the relevant protection under DFSA rules. The DFSA added the bank had intentionally misled the regulator about its activities.

SAUDI ARABIA

FATCA AGREEMENT

FAIR SHARE PRICES

The US ambassador to the UAE, Barbara Leaf and the Finance Ministry and have signed an agreement to facilitate the Foreign Account Tax Compliance Act (FATCA). FATCA was enacted by the US in 2010 to target non-compliance by US taxpayers using foreign accounts. It requires foreign financial institutions to provide annual reports on account information of customers who are US persons. Failure to comply could see any non-US financial organisation facing a 30% penalty on certain financial returns of its operations in the US. Under the agreement, the first

Saudi Arabia’s Justice Ministry has announced it is to sign an agreement with the Kingdom’s Capital Market Authority (CMA) to sell dealers, who owe outstanding payments to investors’ shares to ensure share prices are fair and provide investors with execution guarantees. The agreement specifies the time limits for declaring, confiscating and executing such orders and the sale of shares after a request has been received by an execution judge. There will also be the possibility of confiscating and selling these shares immediately. The Justice Ministry’s Office

10

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |

for Confiscation and Execution is expected to sign this agreement with the CMA, which will come into effect two weeks after it has been signed.

MOBILY SHARES SUSPENDED Saudi Arabia's Capital Market Authority (CMA) has announced it has suspended trading in Mobily shares, until the company can provide the Authority with a response on the likely impact on their earnings from an initial regulatory report, which examined accounting irregularities. The Authority has been investigating Mobily following accusations of offences including insider trading against a number of the company's current and former employees. As part of the CMA's investigation, investigators carried out site visits, interviewed ‘relevant parties’ and obtained documents before submitting a report on the company's financial statements. Following its investigation, the Authority has recommended that nine current or former Mobily officials be prosecuted for range of violations including insider trading.

OMAN

TAX EXEMPTIONS Oman's Duqm Special Economic Zone Authority has signed a Decision involving tax exemptions within the zone. Income tax exemption is available for qualifying entities for a 30-year period or the period of their lease contract or the Usufruct agreement, whichever is the shorter time. In addition, the exemption period can be extended. However, banks, financial institutions, insurance and reinsurance companies and telecommunication service companies are excluded from these new tax incentives. There are also other exemptions, for example, profits carried out through non-licensed activities or outside the zone do not qualify for these tax exemptions. However, qualifying entities can also be wholly owned by


TAX AND FINANCE ROUND-UP non-Omanis. There are also no minimum capital investment or foreign exchange requirements. Goods which are manufactured or assembled within the Zone will also be considered to be domestically produced goods.

TAX TREATY UPDATE Bahrain: A tax agreement between the Kingdom and Belgium came into effect on 1 January 2015. Saudi Arabia: A tax agreement between the Kingdom and Hungary which was signed on 23 March 2014, came into force on 1 May 2015 and will come into effect on 1 January 2016.

EGYPT

CAPITAL GAINS TAX SUSPENSION Egypt's Prime Minister, Ibrahim Mahlab and its Investment Minister, Ashraf Sulieman have announced a two-year suspension of capital gains tax. The aim of this measure is to incentivise domestic and foreign investment following the departure of some shareholders from the Egyptian market after capital gains tax was introduced in June 2014. Mahlab has also confirmed that the Cabinet will meet shortly to issue a Decision to enable this tax change to happen.

FOLLOWING DAY SALES Egypt’s Financial Supervisory Authority has agreed to allow investors in the Egyptian bourse to sell shares the day after they have purchased them. The move follows public consultations and discussions on the subject by the Egyptian Exchange’s Investment Commission. The Authority’s Chairman, Sami Sharif explained that the following day sale of shares will be optional and will be implemented alongside the existing two days sale (T+2). The aim of this move is to increase liquidity and decrease risks.

SUEZ CANAL INVESTMENT Egypt's Ministry of Transitional Justice is reviewing draft legislation on investment in the Suez Canal area before sending it to the President for approval. Following a consultation with key stakeholders, this legislation is intended to transform the Suez Canal area into a Special Economic Zone (SEZ). In addition, companies operating in SEZs will benefit from lower taxation and

regulation. Corporate tax rates are fixed at 10% and the license application process is made easier. The Minister of Investment has confirmed the law is expected to be finalised and approved shortly.

TAX DECLARATIONS From 11 June 2015, employers sponsoring work permits for foreign nationals must submit a tax declaration document to the Egyptian Tax Authority, according to a change in policy by the Manpower and Migration Ministry. Copies of the declaration must be included in new work permit and residence permit applications, as well as renewal applications submitted following the expiration of the initial six-month period.

PROPERTY TAX LAW The Finance Ministry has announced new measures to ease the application of the property tax law and remove discrepancies between the banking and tax laws. Under these new measures, when the ownership of a property is transferred to a bank under a settlement scheme covering debts owed by a bank’s customers, banks will also be obliged to settle the tax due on properties held by them on behalf of their customers. However, banks will then be able to later claim reimbursement of the taxes paid from the customer who is the ultimate owner of the property.

LEBANON

NEW TAX INCENTIVES Lebanon’s Finance Minister issued a new Decision providing new rules on the implementation of tax incentives which were introduced last year. Under these measures, industrial export profits

qualify for a 50% income tax exemption. Only profits derived from exports of Lebanese originated industrial products qualify for the incentives. A country of origin certificate should be presented to prove products were actually manufactured in Lebanon. The scope of these tax incentives do not cover activities involving the import of products which are merely packed in Lebanon and then re-exported elsewhere. Exports of services including expertise, consulting and administration services are also excluded from the incentives. In addition, the export of extracted hydrocarbon resources and natural resources are also exempt from these measures.

LIBYA

DEBT CASE APPEAL Libya’s Investment Authority has been granted permission to appeal a UK bankruptcy court decision rejecting its action against British real estate mogul Glenn Maud for over £20 million to the Court of Appeal. The UK bankruptcy court ruled last month that Maud does not have to repay a loan he received from the Authority to help finance his 50% acquisition of Banco Santander's global headquarters in Madrid in 2008. The loan was granted to Maud before United Nation sanctions were imposed against Libya in March 2011.The sanctions regime means Libya cannot recover unpaid debts and all assets held outside the state are frozen. The judge did not dispute Maud owed the money, but ruled its repayment would amount to a breach of sanctions. The judge went on to say anyone who made a payment to the Authority in breach of the sanctions would face criminal penalties and it would be unjust to require a debtor to make repayments in these circumstances.

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

11


regulatory FOCUS

© iStock/Yuri_Arcurs

Damian Crosse and Osama Hassan of Pinsent Masons explain the challenges GCC family businesses can face, potential solutions and related developments. IMPORTANCE

Family businesses are the backbone of the GCC economy and account for 70 to 80% of the private sector and more than 80% of the non-oil gross domestic product in the region. Some were founded in the early part of the 20th century by the region's old merchant dynasties. While others began as small family-owned entrepreneurial projects in the early 1960s and 1970s and over the years have grown and diversified to create some of the region's most successful commercial organisations. Their importance and influence can extend beyond pure economic considerations into areas, ranging from education, the arts and charitable giving,” says Damian Crosse. “However, many of these family businesses are now at a stage in their development where they have

12

already recently undergone a generational ownership change or are about to do so in the near future. The way in which this change is handled is of course of fundamental interest to the family itself but it is also vital to the region's continued economic growth,” Osama Hassan adds.

SUSTAINABILITY “Statistics on the sustainability of family businesses in the region show this is a delicate area. It is estimated only 30% of family businesses survive to the second generation, 12% to the third generation and only 3% to the fourth generation and beyond. Of course some of this change is strategic and planned but there is no doubt a lack of planning and in particular, the lack of a suitable structure are two primary reasons why

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


Get the answers you need with Lexis Middle East Law Practical Guidance Created with input from corporate counsels working in the region, Lexis Middle East Law Practical Guidance contains answers to the commonly asked questions covering a variety of topics. Existing country coverage includes all GCC states plus Egypt, Iraq, Turkey, Jordan, Libya, Lebanon. Current coverage includes: • Anti-corruption • Companies • Corporate Immigration • Insolvency • Labour & Employment • Oil & Gas • Public Procurement • Shipping

• Arbitration • Construction • Family Business • Intellectual Property • Money Laundering • Project Finance • Real Estate • Wills & Probate

Recent additions: Oman Construction Coming soon: Jordan Public Procurement, Bahrain Oil & Gas, Bahrain Data Protection, Jordan Environment, Jordan Companies, Qatar Shipping

To find out more or to request a free trial contact middle.east@lexisnexis.co.uk or call +97150 672 7532


regulatory FOCUS RELATED LEGISLATION Article 2 of Saudi Arabia Ministerial Decision No. 181/1435 Family members of an employer, who work in family businesses where they are the only workers will be excluded from the provisions of the Kingdom's Social Insurance Law. (Source: Lexis Middle East Law)

families find it difficult to take their businesses forward through generational change. Whereas founders command complete ownership and control of the family business, as the number of stakeholders increase decision-making can become more complex, consensus becomes difficult and does not always result in the best decisions. As a result, many family businesses are left with legal and financial difficulties which would never have been the founders’ wishes.”

Damian Crosse Partner Pinsent Masons

OWNERSHIP AND OTHER ISSUES “As a result it is important to understand how family businesses can transfer ownership and control to the next generation and ensure their positive legacies continue. This is far from straightforward. Each family business needs to be considered separately based on their unique circumstances. However as a general rule succession planning for family businesses involves the introduction of sound corporate governance arrangements, underpinned by enforceable legal structures and a family constitution which itself has been carefully prepared following inclusive consultation. The most appropriate corporate structure to be adopted will depend on a number of factors, including the nature and diversity of the business activities, geographic location and the presence and location of its assets and the family members themselves. However, one of the key challenges is adopting a structure which looks to support the family's desire to retain ownership within the bloodline of the family. This is often a key objective but achieving it is not easy.”

SHARIA IMPACT “In the Gulf and other Islamic countries where Sharia law forms the basis of jurisprudence, the legal framework does not easily accommodate some of the more sophisticated shareholder arrangements families may require. For example, Sharia inheritance rules automatically apply a formula for the distribution of inherited assets. This applies in the same way to commercial assets, like shares in family business, as it would to personal assets. In the UAE this is reflected in Federal Law No. 28/2005 (the Personal Affairs Law),” Hassan adds. “As a result, the principles of Sharia to conserve and distribute wealth fairly across the generations may actually conflict with a family's desired succession arrangements, as they are reflected in the company constitution, and which would allow ownership of the family business to be retained within the family’s

14

bloodline. In line with Sharia inheritance law, a will or testament, will only be applied and be valid to a Osama Hassan certain portion of the total estate and to specific Head of Corporate people. In essence if a will is contrary to Sharia law, it cannot be legally enforced. As a result, arrangements Pinsent Masons which try to interfere with the passing of shares between family generations and in particular retain shares within the bloodline of the family are likely to be open to challenge. This can create uncertainty when considering the most appropriate legal structures. For example, in the unfortunate event of the death of a second generation family member and shareholder in the family business their shares would pass by Sharia to their spouse who would not be a bloodline family member and who could in turn re-marry or have children creating more complicated scenarios. As a result, shares can quite realistically and quickly pass outside of the family. In these circumstances and to avoid these scenarios, share buy-back provisions can be introduced into the Articles of the company which would mean the shares would have to be sold back to the bloodline family members at ‘fair value’ in such cases. However, whilst seemingly financially fair this effectively cuts across the intent of Sharia inheritance and so these provisions are almost certainly unenforceable in the onshore courts. Indeed, and no doubt to reflect the onshore legal position, the standard form of constitution for an onshore company is straightforward and it is very difficult to introduce bespoke provisions even though they may suit the requirements and interests of a family business and its family member shareholders. It is largely because of the lack of flexibility in the onshore laws and regulations that families increasingly consider managing their businesses or locating investment assets offshore. However, this can create

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


regulatory FOCUS RELATED STORY

© iStock/Yuri_Arcurs

administrative difficulties too and is not appealing for obvious reasons for many proud GCC nationals. As an alternative, an increasingly attractive middle ground solution is perhaps the DIFC jurisdiction. Here reasonably complex company constitutions can be established containing the type of provisions families would like to see in their family companies. These provisions can include enforceable buy-back provisions where family shares fall outside the family through Sharia inheritance. Structures taking advantage of the DIFC jurisdiction can include putting its holding company in the DIFC but having onshore operational companies, fully owned by the holding company, acting as separate units. Whilst this type of structure is still not common it can go a long way towards meeting the requirements of many families dealing with generational change and may provide the best solution to these sort of problems at this moment in time,” Hassan concludes.

WHAT ELSE HAS BEEN HAPPENING? “The GCC Family Business Network has recently published a legal white paper assessing the legal structures available to family businesses in the region and looking at succession planning. These include both the trust legal framework in DIFC and the recognised Islamic concept of waqf or endowment, which has been explored as a succession planning tool by some GCC countries, including Saudi Arabia. This is important as it is understood a draft law could soon to be submitted to Gulf policymakers, which will include rules governing concepts like Islamic family trusts and family ownership. If this happens, hopefully it will tackle some of the fundamental problems which are currently putting the ongoing and future development of the many highly successful

GCC family businesses, at risk and also impacting wider activities like education, the arts and charitable giving,” Damian Crosse explains.

THE COMMERCIAL COMPANIES LAW IMPACT

Middle East: New Succession Rules for Family Businesses Should be Introduced LNB News 29/04/2015 13 One of the UAE's most prominent businessmen, Abdulaziz al-Ghurair has joined calls for new succession rules for family businesses to be introduced to make transferring ownership of family businesses after their founder’s death easier. According to PwC, family businesses account for more than 80% of the Gulf’s non-oil GDP. The current succession rules can get bogged down if there is a family disagreement. Ghurair also called for Shariacompliant wills and trusts to be introduced to help pass control of family businesses over. He added a draft law is expected to be submitted to Gulf policymakers later this year which will include rules governing concepts like Islamic family trusts and family ownership. Many family businesses in the region currently choose to register their companies in places like the Cayman Islands because of legal and regulatory weaknesses in their own countries.

“Onshore, the UAE Commercial Companies law could have been an opportunity to address some of the specific problems facing family businesses. This new legislation has undoubtedly improved corporate governance and transparency but unfortunately there have been no new provisions which will directly assist and protect family interests, in the key areas of succession, management and control and planning and maintaining shareholdings within their bloodline.” “However, the new UAE Commercial Companies law does make it easier for family companies wishing to list their businesses by way of an Initial Public Offering (IPO). For example, it reduces the requisite initial founder shareholder base from ten to five. However, this is not a panacea. IPOs are considered to be the ‘best of the worst’ routes for families planning their succession but it is a way which has been used by some. In the past succession disputes have sometimes led to pressure on family businesses to list by way of IPO. However those wishing to use this route need to be aware that they could leave many uncomfortably exposed to criticism by new shareholders and unwanted scrutiny by regulators,” Hassan adds.

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

15


REGULATORY FOCUS

A QUICK Mohammed Kawasmi, Partner and Sonia Harvey a Senior Associate at Al Tamimi & Company give a quick round up of recent regulatory developments likely to impact the property and construction sectors in the GCC. ABU DHABI

Abu Dhabi’s property market should see considerable growth in the coming years and its legislators are also expected to publish a new law soon to better regulate the real estate sector there. This law has been under consultation and review for more than seven years. However, it is hoped it will be a positive step towards attracting increased real estate investment in both Abu Dhabi and the UAE more widely, as it tackles many concerns which have been raised by investors in the past,” Mohammed Kawasmi explains. “Lessons learnt from the global financial crisis have had an impact on its development,” Kawasmi notes. “There are many encouraging provisions in this new law including those on licensing, registering off-plan developments, restrictions on developers collecting registration fees, setting up owners’ associations for jointly owned property, mortgages and dealing with delays in construction. It will come into force six months from the date of publication in the Official Gazette, so it will be important all those involved in real estate are aware of the wide ranging changes it is likely to bring in before then and start preparing for the winds

Mohammed Kawasmi Partner Al Tamimi & Company

Sonia Harvey Senior Associate Al Tamimi & Company

RELATED LEGISLATION Article 43 of Saudi Arabia Cabinet Decision No. 257/1433 A mortgagor may request the redemption of the mortgage on the expiry of the duration of the debt lawsuit in which the mortgage is documented as stipulated in other laws.  (Source: Lexis Middle East Law)

16

of change which are about to sweep the Abu Dhabi real estate market and stimulate investors’ appetite. One of the trickier parts is likely to be implementation. Having one authority, the Department of Municipal Affairs (DMA), in charge of developing the real estate market will be beneficial. However, the DMA will need to be completely ready to regulate and supervise the market in Abu Dhabi if those changes are to be effective. Reassuringly, the DMA does seem ready and has taken appropriate steps to prepare effectively for the law’s successful implementation. Another recent change in Abu Dhabi has been the publication by the Abu Dhabi Global Market (ADGM) of a range of regulations that apply to all those operating and owning property on Al Maryah Island, Abu Dhabi. These include Real Property Regulations and Strata Title Regulations. With effect from their publication on 14 June 2015, the new Property Regulations and the Strata Regulations govern property matters in ADGM to the exclusion of Abu Dhabi’s real estate laws. The new regulations cover legal regulation of freehold and leasehold interests, strata title, mortgages, easements, covenants, statutory charges, caveats and registration formalities and are significantly different to the property laws which apply elsewhere in Abu Dhabi, as they introduce many new concepts to the UAE even if they are familiar to those used to dealing with property matters in common law jurisdictions. The reason for this is ADGM is trying to position itself as a major UAE financial centre and implement comprehensive real property regulations to bolster investor confidence and encourage activity in the real estate sector there,” Kawasmi says.

DIFC “In Dubai, the DIFC recently announced aggressive plans to at least double the amount of leasable real estate by 2024. It has, however, stated it is not planning to open up sites for development by foreign investors this time. Instead it intends to construct the majority of new projects itself and not rely on this approach. It is thought the DIFC is concerned that opening up new sites for development by foreign investors could

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


REGULATORY FOCUS

SITE TOUR detract from its goals and investors may not share its objectives. Many foreign investor projects in the past have been divided using DIFC’s strata title laws which allow for the sale of individual floors and units within buildings. A disadvantage of this sub-division of buildings has been that ownership of floors is frequently split between multiple owners. This then makes leasing large areas to single occupiers difficult. It is hoped, therefore, that DIFC’s intention to carry out the next phase of its development itself will enable whole buildings and whole floors within them to remain in single ownership and this will deliver the larger leasable spaces which many occupiers demand,” Sonia Harvey says.

BAHRAIN “Meanwhile in Bahrain, Bahrain Law No. 27/2014 issuing the Property Lease Law which was published on 7 August 2014 came into force on 7 February 2015. This law introduces a new legislative framework for real property leases in the Kingdom and repeals many laws that previously applied in this area. It applies to both new leases and leases which existed when the law came into force. This regime introduces a number of new requirements for lessors and lessees, including the need to register their leases. However, it should end the conflicts between the previous laws and the Civil Code, and the resulting disputes between lessees and lessors. New rules on lease renewals will also be a welcome relief to lessors. A number of lease conditions are prescribed but the law also allows some flexibility by giving the parties the option to agree to provisions in their leases that are contrary to some of the prescribed conditions, which will be particularly beneficial commercially. Parties contemplating entering into new leases or reviewing their existing leases in Bahrain should obtain legal advice on the application of the new law. Last year, we also saw the much-anticipated publication of the Development Law (Bahrain Law No. 28/2014) and Stalled Projects Law (Bahrain Law No. 66/2014), which aimed to regulate real estate development, provide greater protection to investors and increase confidence in Bahrain’s real estate sector. Regulations giving more

© iStock/Muralinath/ronniechua/portishead1

details for implementation have been published. In particular, an implementing regulation for the Real Estate Development Law was issued Abu Dhabi: Real Estate in the Official Gazette on 14 May 2014. Registration Fee Decision Issued The regulation deals with licensing LNB News 23/06/2015 105 developers, including the process Abu Dhabi’s Crown Prince and and the qualifications they must hold. Executive Council Chairman has It also imposes a requirement that issued a Decision on real estate each development undertaken by a registration fees and exemptions licensed developer must be licensed. in the Emirate. The transactions Then, on 28 May 2015, the Central exempted from registration fees Bank of Bahrain issued Resolution include subsequent provisions No. 28/2015, which requires each regarding the registration of development to have a segregated inheritance and the division of project account into which all project real estate in first registration, income is paid and from which all registration of charitable land project costs are met. This account is and real estate for the benefit of to be managed by a project account competent charity endowments manager, which must be a retail in Abu Dhabi. bank licensed by the Central Bank of Bahrain and which must have no other involvement with the relevant development. The other interesting development is Bahrain Resolution No. 1/2015 which has made an important clarification of what a ‘Stalled Project’ is as the new Stalled Projects Law applies to them,” Harvey adds.

RELATED STORY

SAUDI ARABIA “In Saudi Arabia the big property story has been the issuing of a decision imposing tax on vacant urban lands (or 'white lands') by the Council of Ministers. It is anticipated once this new land tax is implemented, more urban land will be made available for development. The details of this new land tax are not yet known, though the implementing regulations are currently being drafted and are expected to be available in 2016. It is likely the tax will be based on either plot size or value (or a combination of both). In expectation of the introduction of the new land tax, the numbers of joint ventures developing vacant land in the Kingdom have increased,” Kawasmi concludes.

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

17


THINK GULF

THINK JLEGAL

IN-HOUSE AND PRIVATE PRACTICE

OPPORTUNITIES IN DOHA, MUSCAT AND DUBAI Insolvency & Debt Recovery Lawyer Dubai 2 to 6 years PQE, Financial (In-House), £100K+ (REM-PM-3898) Our client, one of the fastest growing financial institutions in the region is looking for an insolvency lawyer to manage a broad range of insolvency and restructuring matters. The ideal candidate will have extensive legal experience and will ideally be already be working in the region and have good all-round knowledge of UAE laws. This is a broad and varied role – the work includes matters relating to financial restructuring, insolvency and distressed investments.

Corporate Lawyer Oman 5 years+ PQE, International Firm, £90K+ (MXY-PM-3932) This international law firm is seeking a senior associate to join its corporate practice in Oman. You will be a senior corporate lawyer with all round general corporate/commercial skills, currently practising in a strong, international law firm and fully committed to move to Oman. The firm offers well-established client relationships and room for progression whilst Oman offers an enviable lifestyle, even by the high standards of the Gulf.

Banking & Finance Lawyer Dubai 1 to 3 years PQE, US Firm, £120K+ (REM-PM-3942) Our client, a US firm with a very large and successful finance practice, is looking for a junior banking lawyer for their DIFC office. They are looking for a solid candidate with general banking and finance experience and the work on offer will be a good mix of lending transactions. The successful candidate will have gained experience in an international firm or large regional practice and ideally be based in the region already.

Compliance Officer Qatar 8 years experience, Financial (In-House), £100K+ (JRS-IL-3740) The company is seeking a Compliance Officer to focus on AntiMoney Laundering and KYC work. Answering to the Head of Compliance, this role is part of the Legal Department and Compliance Unit. Applicants must have at least 8 years’ compliance experience gained in a banking/ financial services environment gained in the London or New York market.

Construction Arbitration Lawyer Dubai NQ to 5 years PQE, International Firm, £70K+ (MXY-PM-3945) This successful international firm is now inviting applications from construction lawyers to join its well-established team in Dubai. You will hold a clear post-qualification track record of undertaking back-end construction matters and specifically, complex arbitration. Those coming from a more mainstream disputes background who wish to focus on construction matters are welcome to apply.

Senior Corporate Counsel Qatar 8 years+ PQE, Financial (In-House), £150K+ (JRS-IM-3774) Our client is a leading investment house. They are looking to hire a senior counsel to join their busy legal team. You will be expected to provide a broad range of advice to senior management regarding their ongoing strategy, projects and operations. Applicants must be NY or UK qualified and have at least 8 years PQE concentrating on corporate law, M&A and private equity in particular.

For more information please contact JLegal Phone: +971 4 455 8419. Alternatively email Richard.mclerie@jlegal.com

UAE

LONDON, UAE, SINGAPORE, HONG KONG, MELBOURNE, SYDNEY & NEW ZEALAND

Boulevard Plaza Tower One, Downtown Dubai, United Arab Emirates

www.jlegal.com Find us on


IN-HOUSE PROFILE

IN-HOUSE PROFILE

GENERAL COUNSEL – TOBACCO

Jurisdictional Difference Cem Genc, GCC Legal Counsel at British American Tobacco talks about the differences in working in the Middle East and Turkey.

ABOUT YOU I am Turkish by origin and can speak both English and Turkish fluently. I got my law degree from Baskent University Law School in Turkey in 2003 and was admitted to the Istanbul Bar Association in December 2004. I started my career as a legal intern at Cargill in Turkey and before joining British American Tobacco in 2008, I worked as an Associate Lawyer for a Turkish law firm in Istanbul where I was involved in various M&A projects, including undertaking the legal due diligence and reporting for a leading global construction company on their Initial Public Offering in Turkey.

British American Tobacco is a public limited company and was founded in 1902. Its headquarters are in London. In 2014 we had a global profit of £5.4 billion and revenue of £14 billion. We are one of the top five largest tobacco companies in the world. In my current role I report to the Middle East Area Head of Legal and External Affairs and am responsible for all legal, regulatory and compliance matters, including for the group’s businesses in the GCC countries, as well as supporting the rest of the Middle East business.

MY CAREER My career at British American Tobacco began as Legal Counsel for Operations and Regulation in Istanbul. Amongst other things, I assisted the company’s integration with the local monopoly (a target entity which was acquired by BAT as a result of a US$ 1.72 billion privatisation project). My role in this was to advise the marketing department on all regulatory matters, including advertising, consumer protection and tobacco specific regulations. From July 2011 to September 2013 I was the company's Iran Head of Legal/ME Area Legal Counsel. This included conducting a detailed review of the overall business structure. As part of this work I reviewed the supply chain for manufacturing, distribution and sales models in light of existing UN and evolving EU, UK and US sanctions). I had to study designated party controls and restrictions around financial transactions involving Iran.

© JAMES BRITTAIN/VIEW/REX

ABOUT YOUR BUSINESS

I drafted local policies on sanctions, set roles and responsibilities of business and support functions to ensure compliance and implemented the policy through training and back checks. While, I was on secondment as support counsel to BAT, I worked closely with non-legal managers. I noticed I was able to play a legal manager role by being part of decision making processes on commercial matters rather than simply be a technical legal advisor. It was this experience which attracted me to in-house life. I think I enjoyed seeing the commercial outcome of decisions made with my involvement and input. Not long after, I applied for an in-house opening at BAT in their Istanbul offices. Although I’ve faced various challenges, including taking part in the team negotiating with the labour union in Turkey over three weeks, where there were continuous meetings on various disputes, it has been my experience in Iran which has given me the greatest challenges. This is partly because of Iran’s market being unique in terms of its domestic regulatory environment and the fact it is one of the most sanctioned countries in the world.

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

19


IN-HOUSE PROFILE PRACTITIONER PERSPECTIVE Ibtissem Lassoued, a partner in Al Tamimi & Company's Financial Crime Department examines the opportunities for doing business in Iran following recent developments. With the signing of the Joint Comprehensive Plan of Action (JCPOA) on 14 July 2015, the Ibtissem Lassoued P5+1, EU and Iran have reached a Partner ‘historic’ understanding. Al Tamimi & Company There are essentially two sides to this deal. First is the curbing of Iran’s nuclear activity, which has been the crux of the problem and the greater of the international community's worries. The JCPOA details the action plan to be followed by Iran to ensure its nuclear activities are strictly for peaceful purposes. The second part of the deal focuses on the sanctions relief to be provided to Iran for complying with the nuclear commitments of the JCPOA.

REGIONAL TRADE In the last few years, Iran has felt the side effects of being cut off from the global economy. In particular, antiquated technology has harmed sectors like aviation and oil and gas. With the lifting of the sanctions, Iran will undoubtedly witness a surge in foreign investments, which will improve the economy. It is, however, important to note that no concessions will be made, unless Iran abides by its nuclear commitments. This remains the position of the JCPOA. Unless the International Atomic Energy Agency (IAEA) verifies Iran has indeed met its nuclear commitments, the sanctions will remain in force. In fact the sanctions will only be lifted on the Implementation Day which is when the IAEA will verify Iran has indeed upheld its key nuclear commitments as defined in the JCPOA. Investors must therefore act with caution and not take any hasty and premature decisions about investments. The JCPOA's scope is restricted to the lifting of international sanctions which are nuclear related. Other sanctions, like the sanctions on Iran because of their use of ballistic missiles, human rights violations and support of terrorism will still be applicable.

SNAP BACK PROVISIONS Another reason to be cautious is the snap back provisions. At any time, if a dispute between the parties cannot be resolved by the dispute resolution mechanism found in the JCPOA, the sanctions can be re-instated.

TERRITORIAL RESTRICTIONS Any entity planning to do business with Iran must carefully consider its territorial restrictions. Legal advice should be sought to understand how the JCPOA will affect individual situations. Meanwhile, internal compliance structures should continue to be strengthened and monitored to ensure they meet various regulatory demands. The JCPOA has many supporters but, simultaneously, many are also sceptical. Even the US is divided on resolution with Iran.

INTERNATIONAL AND REGIONAL DEVELOPMENTS A step forward in the US ratification process was achieved when President Obama secured the minimum number of votes required to establish that his veto against the blocking of the Iran deal by Congress cannot be overridden. From a more local perspective on the Iran deal, the lifting of the sanctions will translate into increased regional economic activity. The UAE and Iran enjoy historic relations. There are approximately 400,000 Iranian expatriates in the UAE and several of these Iranian families have made the UAE their home for decades. Because of their strategic proximity, the UAE and Iran have, over the years leading up to the sanctions and even after, remained loyal trading partners, although the trade may have been affected by the sanctions. Although the Gulf States have largely welcomed the deal, Iran will have to work hard to win the trust of various counterparts. In the months leading up to the implementation of the deal, it will be interesting to see how local Governments react, and particularly how quickly they implement legislative measures to acknowledge the deal with Iran and facilitate business in the relevant financial marketplaces.

REGULATORY LANDSCAPE The illegal trade of tobacco products is a big problem internationally both for manufacturers and Governments. We are therefore particularly interested in the draft customs law amendments currently being considered in the UAE and would welcome more aggressive penalties for those who smuggle goods. Governments in the region are also increasingly regulating the tobacco industry in line with the approach being taken by other Governments around the globe.

20

One of the main challenges I find and it is possibly one faced by other businesses, is that it can sometimes be difficult to provide legal advice to businesses which they can then use to make decisions on because of vaguely worded regulations in some markets. There are few academic and judiciary resources available in this region and this can make knowledge transfer a real problem. It is also the case that the GCC market attracts a large number of expatriate lawyers who usually only stay in the area for a relatively short time, which can mean they have less practical experience of implementation.

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |


MOVERS AND SHAKERS

In association with JLegal

MOVERS AND SHAKERS

A ROUND-UP OF THE TOP APPOINTMENTS AND PROMOTIONS FORMER DFSA BARRISTER MAKES PARTNER AT CLYDE & CO Sally Sfeir-Tait, a barrister with over 10 years of experience, has been appointed as a partner at Clyde & Co, where she will work in the regulatory and compliance team. Sally, who will be based in the Abu Dhabi office, speaks Arabic and has previously worked for a number of Lebanese law firms, including Abouhamad, Merheb, Nohra, Chamoun & Chedid (AMNCC). She has also been Head of Legal and Compliance, and Board Secretary at ADS securities in Abu Dhabi and Senior Counsel at the DFSA. Sally is also the founder and managing director of

NEW PARTNER AT EVERSHEDS The International law firm Eversheds has hired Zeid D Hanania as a corporate partner. Eversheds was the first international player to establish offices in Iraq and currently has local lawyers based in Abu Dhabi, Amman, Doha, Dubai and Riyadh. Zeid D Hanania is a corporate transactional lawyer and has advised clients on cross border M&A, joint ventures, equity capital markets and other investment and divestment transactions across the Middle East and North Africa region, South-East Asia and North America. He studied at the George Washington Law School and will be joining as a corporate partner in Eversheds’ Dubai office. Previously he was at Freshfields Bruckhaus Deringer LLP where he was a Counsel for two years. He also worked as Senior Associate at Allen & Overy in the UAE between 2006 and 2012.

NEW AND IMPROVED Bin Shabib & Associates have changed their name to BSA Ahmad Bin Hezeem & Associates LLP. The firm also has a new senior partner, Dr Ahmad Bin Hezeem and a new shareholding structure. Bin Hezeem studied at the University of Wales and used to be the Director General of the Dubai courts. In addition, he has experience working at the Rulers Court of Dubai, the Dubai Police and the executive office of HH Sheikh Mohammed Bin Rashid Al Maktoum. His time working in the Government sector adds up to almost 24 years. Bin Hezeem

UAE based Market Mosaic Limited. Sally, who is a civil law qualified lawyer, specialises in start-ups, mergers & acquisitions and banking and financial markets, including treasury and investments, wealth management and brokerage. There have also been other changes at Clyde & Co who have strengthened their intellectual property capabilities in the Middle East by setting up a direct filing office in Manama, which will handle trademarks and patent filing. In addition there have been reports the firm is planning on offering domestic service in Dubai and Qatar possibly in the autumn. It has been said that the focus will be domestic dispute resolution.

specialises in litigation. The firm is now the first local and regional law firm with an international equity partnership format.

WINSTON & STRAWN OPEN DUBAI OFFICE Winston & Strawn are opening a new office in the DIFC. It will become the company’s 19th global office and will be headed by Stephen Jurgenson who has 20 years' experience. Jurgenson focuses on power, water, oil and gas, LNG, mining and infrastructure sectors in Europe, the Middle East and Africa. He graduated with an MA from Cambridge then completed his LPC at Nottingham Law School. He will be joined at Winston by a number of others from his former firm Pillsbury Winthrop Shaw Pittman, including Londonbased co-head of energy infrastructure and projects James Simpson.

MORE GROWTH FOR AL TAMIMI

East since 2004. He now heads Al Tamimi’s office in Riyadh. He has over 30 years' experience in the energy and resources sectors, as well as banking and major projects. Ivor McGettigan was educated at University College Dublin and previously worked at Maxwells solicitors, before joining the firm in their Abu Dhabi office. Nick O'Connell, who studied at the University of Otago has joined as a partner in the Technology, Media and Communications team in the UAE, and previously worked as a solicitor for Lovells. However he has been a Senior Associate at Al Tamimi since 2009. Finally, Naief Yahai specialises in dispute resolution and is based in the UAE. He has previously worked at Emirates Advocates and Accord International Advocates and Legal Consultants. In addition to the new partners, it was also announced Husain Hourani will remain Managing Director for another four years. This additional term will begin in 2016.

Al Tamimi & Company has been joined ASSURED EXPERIENCE IN by four new partners from 1 July 2015. Al INSURANCE Tamimi has been growing rapidly in the last Kennedys Law LLP has appointed Simon year, having added Cairo and Jeddah to its Isgar as partner in its Dubai office. The list of offices in March. firm has a presence in over 12 countries As a result it is now the worldwide. biggest law firm in the Middle East with 16 offices across nine countries. The four Eversheds: Al Dhabaan & Partners, Eversheds’ new partners are Grahame associated firm in Saudi Arabia, has hired Fahad Al Nelson, Ivor McGettigan, Dehais as a Partner and Office General Manager from Nick O'Connell and Vinson & Elkins. Naief Yahai. Grahame Decherts: Dechert has expanded its reach in the Nelson graduated from Middle East through an association with Hassan Liverpool University and Mahassni Law Firm in Jeddah, Saudi Arabia. has worked in the Middle

OTHER CHANGES

| Lexis Middle East Law Alert | October / November 2015 | lexismiddleeastlaw.ae

21


MOVERS AND SHAKERS Isgar studied at the Inns of Court School of Law and is a specialist in insurance, corporate and commercial law. He has 12 years’ experience representing stakeholders in international markets. He joins the firm from Everys Legal Consultancy and is the fifth partner Kennedys has in the UAE.

SINGAPORE, INDIA AND QATAR LINKED The Indian law firm SNG, who specialise in providing legal advice to financial institutions, investment banks and private equity houses is to open a new office in Doha. The firm has existing offices in New Delhi and Mumbai. It also works with real estate developers and has previously had clients in Qatar. The Doha office will be located at Qatar’s financial centre, and the firm has incorporated a legal entity called International Law Chambers (ILC) to serve there. Two partners from their New Dehli offices, Rahul Kumar and Aditya Vikran Dua will be moving to the Doha office, where the main focus will be financial services, in particular, in relation to Indian law, Sharia law and local law. Kumar has worked at the firm’s New Delhi office since last year and Dua, who studied at the Institute of Company Secretaries of India, has been a partner at SNG for four years. The firm also plan to recruit an English counsel and a lawyer with experience of local money laundering laws and regulations. Operations at the new office will be overseen by Delhi based partner, Amit Aggarwal, who has been a partner with the firm since 2001. The move comes just one year after SNG set up in Singapore, where they are also currently expanding. SNG are looking to create a unique corridor linking Singapore, India and the Gulf, allowing them to service clients interested in India from both South East Asia and the Middle East.

NEW DFSA GENERAL COUNSEL The DFSA in Dubai has hired Muna Dandan as their General Counsel. Ms Dandan has held a number of senior legal positions in the private sector and has significant experience in legal practice. As General Counsel, she will have overall responsibility for all of the regulator's legal work.

22

NEW COUNSEL FOR SHEARMAN Brendan Hundt has been appointed Counsel at Shearman & Sterling’s Saudi Arabia

offices in Riyadh, Jeddah and Al-Khobar. Brendan was previously based in Sydney and London. However he will also now work at the firm's Abu Dhabi office. His past experience includes work with ADNOC.

ACCME ACTIVITIES RECENT EVENTS Dubai 29 June 2015

Eighty guests gathered at the elegant Al Nafoorah Restaurant in the Jumeirah Emirates Towers for Iftar hosted by Eversheds. Those who attended were treated to a variety of delicious food and enjoyed the opportunity to catch-up with friends and colleagues. Nasser Ali Khasawneh, Middle East Managing Partner, Eversheds and Ben Bruton, UAE Managing Partner, Eversheds welcomed the guests. A similar event was held on 9 July 2015 at the Westin Abu Dhabi Golf Resort & Spa. Qatar 11 June 2015

Al-Ansari & Associates held a workshop on “Insights into Qatar Laws: Wills & Sponsorship”. Around 100 people attended the excellent and interactive event which provided valuable and practical advice and considerations on drafting and enforcing wills in Qatar. Speakers

also provided updates on the current labour and sponsorship laws and potential future changes under consideration for both. Kuwait 31 May 2015

ASAR Al Ruwayeh & partners and the ACC Middle East hosted a session covering recent developments in Kuwaiti Build Operate and Transfer (BOT) practices. ASAR partner Ibrahim Sattout shared with an audience of 20 or so in-house counsel active in Kuwait the changes made to the law and the firm’s recent experiences in advising clients on a recently completed project. He also gave valuable insights into the firm’s expectations, as leading practitioners in this field, of the benefits of this much improved framework for BOT initiatives, a favoured tool in the implementation of the ambitious Kuwait development plan. Managing Partner Ahmed

Barakat contributed his perspective as a litigation and arbitration specialist on dispute resolution in the context of BOTs and extended the session into a lively workshop on the use of various arbitration venues more generally. As many of the attendees were experienced in-house counsel the audience’s questions and observations allowed further explorations of practical issues. Qatar 26 May 2015

Simmons & Simmons held a 'Contract Drafting Refresher' where David Risbridger, Partner at Simmons & Simmons, provided excellent and practical insight and advice on drafting techniques, without compromising the intent of the drafter or creating legal risk. Over seventy people attended the event where the audience was required to use their newly acquired skills in a highly interactive session.

UPCOMING EVENTS For upcoming events please visit http://www.acc.com/chapters/middleeast/index. cfm?eventID=all or email Tam at manager@acc-middleeast.com.

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 | October / November 2015 | Lexis Middle East Law Alert |


Get key business laws, cases, practical guidance and legal news with Lexis Middle East Law’s new Turkish Content New to Lexis Middle East Law, our new Turkish content includes key business laws of Turkey in English and Turkish • L egislative set includes: Turkish Constitution; Code of Obligations; Tax Procedure Code; Code of Enforcement & Bankruptcy; Criminal Procedure Code; Criminal Code; Attorney’s Code; Labour Code; Consumer Protection Code; Intellectual & Artistic Work Code; Public Procurement Code and Code of Public Procurement Contracts; Code of Administrative Procedure; Plus legislation on Work Permits and International Arbitration • Turkish cases – Selected cases from the Turkish Constitutional Court • Turkish legal news • P ractical Guidance on Company Law, Arbitration, Anti-corruption, Intellectual Property, Shipping, Oil & Gas, Public Procurement, Labour & Employment, Construction, Corporate Immigration, Wills & Probate and Arbitration.

To find out more or to request a free trial contact middle.east@lexisnexis.co.uk or call +97150 672 7532


CONTRACT WATCH Distribution agreements

D

istribution arrangements are typically used as a low risk means of expanding business into new markets or territories like the Middle East where the laws governing foreign ownership of companies are complex. One popular option is to appoint a distributor for the region who understands the local market, can exploit contacts and navigate the bureaucratic challenges of doing business in the region. In GCC countries distribution agreements fall under the commercial agency laws of the individual states. These laws define a commercial agency as any arrangement whereby a foreign company is represented by an agent to ‘distribute, sell, offer, or provide goods or services within the jurisdiction for a commission or profit’. The term ‘agent’ extends beyond the traditional western understanding of a commercial agent contracting with third parties. There is no distinction drawn between agency, distribution agreements, franchises and other forms of sales representative relationships.

REQUIREMENTS Commercial agents must be nationals of the relevant GCC country or must be companies incorporated in the jurisdiction and owned entirely by nationals of that GCC country. Commercial agents must be registered with the appropriate authority in the respective GCC country to engage in commercial agency activities. In some jurisdictions the agency agreement must also be registered for the agency relationship to be recognised under law.

24

© iStock/KingWu

RIGHTS Commercial agents are generally entitled to an exclusive territory for the specified products. Territory may be defined as the whole country or state or, as is the case in the UAE and Oman, a particular territory within the country, but it is not possible to have two agents operating in the same territory at the same time for the same product. Registered commercial agents benefit from an enhanced ability to prevent parallel trading of goods and are also given certain protections relating to the termination and renewal of agreements.

TERMINATION Under the commercial agency laws it can be difficult for principals to terminate a registered agency agreement. In order to terminate or refuse to renew the agreement, they must establish a material reason justifying this which can be difficult. In addition, a principal cannot simply rely on the expiry of the term of an agreement in order to end the agency relationship. As a result, failure to address the termination issue satisfactorily in the wording of the agency agreement can leave a principal in the invidious position of having to continue with an agent with whom the commercial relationship has broken down or being unable to proceed with a new agent. In addition, where a dispute occurs with a registered agent it is common for an agent to block imports of the goods because of their status as a registered exclusive agent, for the duration of what can be a lengthy dispute resolution process.

REGISTRATION Not all commercial agency agreements can or will be registered. Where an agreement does not fall within the relevant commercial agency law, either because the law cannot apply or the parties choose not to apply it, the rights and obligations of the parties may be recognised under the civil code.

lexismiddleeastlaw.ae | October / November 2015 | Lexis Middle East Law Alert |

In the UAE for example, distributorships are subject to the general rules governing commercial contracts set out under Chapter II of the Commercial Transactions Law (Federal Law No. 18/1993) which deal with specific types of commercial agency. Under Article 227 of the Commercial Transactions Law a distribution contract, whereby a trader undertakes to promote and distribute the products of an industrial or commercial establishment in a specific area on an exclusive distributorship basis, shall be considered a contracts proxy. It will be governed by the provisions of Articles 220, 225 and 226 of this law. Similarly, even if the agreement is not registered, an agent in the UAE may still be entitled to compensation for termination without a ‘serious and justified’ reason or where no termination notice or ‘inconvenient notice’ is given if the agent can prove they have suffered some loss (Article 214 of the UAE Commercial Transactions Law). Careful consideration needs to be given to whether a distribution agreement should be registered. Parties should also ensure that they are familiar with the registration formalities. It is not unheard of for an agent to agree that an agreement should not be registered, only to subsequently register it unilaterally. However, a principal can guard against this by ensuring either the legal requirements for registration are not met (for example the distribution agreement is non-exclusive); the procedural requirements, such as notarising the agreement, are not fully complied with; or by stipulating in the agreement it should not be registered, although schools of thought differ about the appropriateness of this option. Contributor Sarah Lewis Barrister, Pinsent Masons


Get the latest coverage of the Freezones with Lexis Middle East Law Practical Guidance This source follows the popular question and answer format we have used in our GCC and MENA Corporate Counsel Advisor sources – where a set of frequently asked questions are answered by experts from different jurisdictions. The following freezone jurisdictions from across the region are currently available: Jebel Ali, DIFC, Dubai Silicon Oasis, King Abdullah City, Two Four 54, Abu Dhabi Airport Freezone, Fujairah Creative City, RAK Freezone – with more including TECOM and the DMCC coming shortly. Areas covered include: • Key legislation and regulation clarification • How companies set up • Restrictions on business operations • Leasing and property purchases • Employment and Corporate Immigration considerations • Differences with standard onshore operations

To find out more or to request a free trial contact middle.east@lexisnexis.co.uk or call +97150 672 7532


Lexis Middle East Law Alert - October / November 2015