In its judgment in (1) Sandra Holding Ltd, (2) Nuri Musaed Al Saleh (together the “Respondents”) v (1) Fawzi Musaed Al Saleh (2) Ahmed Fawzi AL Saleh (3) Yasmine Fawzi AL Saleh (4) Farah El Merabi (together the “Appellants”) [2023] DIFC CA 003, the DIFC Court of Appeal overturned a Worldwide Freezing Order (“WFO”) issued by the DIFC Court of First Instance on the basis that the DIFC Courts did not have jurisdiction to grant the WFO against parties who had no jurisdictional nexus to the DIFC.
The case involved an application by the Appellants to the DIFC Courts for a WFO to prevent the loss of assets pending the determination of ongoing proceedings in Kuwait. In this case, the parties were not licensed in the DIFC, no contracts were performed in the DIFC and there were no assets in the DIFC. The Respondents disputed the DIFC Court’s jurisdiction to issue the WFO.
The DIFC Court of Appeal considered the DIFC Court’s jurisdiction to issue the WFO in such circumstances where the DIFC Courts did not have jurisdiction according to the gateways set out in The Law of the Judicial Authority at Dubai International Financial Centre (Dubai Law No.12 of 2004) (the “Judicial Authority Law”) and whether it was within the Judge’s remit to exercise the powers granted to him under the Rules of the DIFC Courts to impose a WFO against the Appellants.
The DIFC Court of Appeal determined that it did not have jurisdiction over the Appellants, and the WFO must fail and be dismissed. In reaching this decision, the Judge noted that the Appellants “have no assets in the DIFC, and they owe no allegiance to the DIFC Court by way of domicile, residence or some other apparent reasons, nor any other connection with the DIFC Courts upon which the Respondents can claim in personam jurisdiction for the DIFC Court to appropriately grant the WFO”.
The Appellants asserted that even if the Respondents failed to establish that the DIFC Court has jurisdiction, the DIFC Court ought still to consider the proper limits of its jurisdiction when granting extraterritorial orders by reference to international comity. The Judge noted that when the DIFC Court is requested to grant a WFO it needs to take into certain discretionary factors. The issue of discretion will only arise if the DIFC Court is satisfied there is prima facie jurisdiction over the Appellants. Where the jurisdictional threshold is not met, the DIFC Court would consider granting an injunction which extends to foreign assets only in exceptional circumstances. In this case, the DIFC Court was not satisfied that it was just and expedient to grant such a WFO over assets located outside the DIFC Court’s jurisdiction simply on the assumption that the Appellants would take the necessary steps to comply with the order, and therefore it was not appropriate for the DIFC Court to grant the WFO when there was a reasonable prospect that it would not be enforced.The new Competition Law (Federal Decree-Law No. 36 of 2023) introduces modifications to aspects of the UAE’s competition regime with effect from 28 December 2023 and repeals Federal Law No. 4 of 2012.
Anti-competitive agreements, abuse of a dominant position and control of economic concentrations are regulated. The regime also now regulates predatory pricing and abuse of economic dependence. It applies to economic activities (which concept is now broadened to include all activities relating to the production, distribution and provision of goods and products) carried out in the UAE or overseas activities which affect competition in the UAE.
Sector-based exemptions may apply where the relevant regulator for a sector is responsible for regulating competition matters under applicable laws, moving away from the specific sector exemptions under the previous regime. Government-owned entities may still be exempt, but only to the extent they are specifically identified by Cabinet decision. There is no longer an exemption for small and medium sized businesses.
On application, the Minister of Economy has a discretion to grant exceptions to restrictions on anti-competitive agreements, abuse of a dominant position, economic dependency and predatory pricing, where the activity may have a positive economic impact (such as promoting economic development, improving the relevant entity’s performance and competitiveness or benefiting the consumer), on certain conditions including that it does not lead to the exclusion of competition in the relevant market or a significant part of it.
While many aspects of the economic concentration rules remain the same, an application for approval must be made where a proposed economic concentration may affect competition in a relevant market, based on total market share (as under the previous regime) or total annual sales value. Thresholds are to be determined by the Council of Ministers.
There are also new rights for interested parties to file objections to proposed economic concentrations, and the changes to fines that may be imposed as penalties for breach of the law.
According to the new Competition Law, implementing regulations are to be issued within 6 months from the date the new Competition Law comes into force. Implementing regulations made under the existing Competition Law will continue in effect until replaced by new regulations made under the new Competition Law.
The UAE’s new Bankruptcy Law, Federal Law Decree No.51 of 2023 concerning Financial Restructuring and Bankruptcy (the “Bankruptcy Law 2023”) was published in the Official Gazette on 31 October 2023 and is due to come into force on 1 May 2024 (6 months from the date of publication in the Official Gazette). When it comes into force, the Bankruptcy Law 2023 will repeal the previous Bankruptcy Law, Federal Decree-Law No. 9 of 2016 on Bankruptcy. It will apply across all seven emirates comprising the UAE.
The Bankruptcy Law 2023 represents a more rescue-focussed refinement of the outgoing regime set out in the Bankruptcy Law 2016, which was the UAE’s first stand-alone insolvency law enacted amid a global wave of insolvency reform in the wake of the financial crisis.
Under the Bankruptcy Law 2023, there are three main procedures:
There is no longer a common bankruptcy application, as a gateway leading to either restructuring or liquidation. There are new common provisions relating to applications for procedures. There will be more centralised administration of proceedings, with a new Bankruptcy Administration within the headquarters of the Bankruptcy Court and a new Financial Reorganisation and Bankruptcy Unit. Common thresholds for the required majority of creditors who must vote to approve any plans under the procedures will apply.
It is reported that the Dubai Court of Cassation decided in a recent judgment that an English Commercial Court judgment is enforceable in the Dubai Courts (Commercial Appeal No. 847/2023 issued on 7 November 2023).
There is no relevant enforcement treaty in place between the UAE and England & Wales. Among the various conditions to enforce foreign court judgments set out in the Civil Procedures Law (Federal Decree-Law No.42 of 2022), reciprocity is required for the UAE Courts to enforce a foreign court judgment. This case follows the issuance of a letter from the UAE Ministry of Justice (“MOJ”) to the Dubai Courts in which the MoJ instructed the Dubai Courts to consider that English court judgments meet the grounds of reciprocity for enforcement in the onshore UAE Courts. The MOJ letter refers to the decision of the English High Court in Lenkor Energy Trading DMCC v Puri (2020) EWHC 75 (QB) in which it was determined that a Dubai court judgment was capable of being enforced in the English High Court. The MOJ letter is not legally binding, but the Dubai Courts should take this into account when considering applications to recognise and enforce judgments issued by the English courts.
Commercial Appeal No. 847/2023 is the first publicised case in which an English Court judgment has been determined to be enforceable in the UAE, and reports indicate that it referred to the decision of the English High Court in Lenkor Energy Trading DMCC v Puri (2020) EWHC 75 (QB) as to matters of reciprocity.
The UAE is consulting on new sustainability disclosure guidelines for financial institutions in consultation paper “Principles for Sustainable-Related Disclosures for Reporting Entities” published by the UAE Sustainable Working Group in September 2023. The UAE Sustainable Working Group comprises the UAE Central Bank, the Securities and Commodities Authority (SCA) the ADGM’s Financial Services Regulatory Authority (FSRA) and the DIFC’s Dubai Financial Services Authority (DFSA). The consultation paper comprises four principles that are to be treated as a minimum standard for their respective disclosure frameworks in relation to sustainability related matters.
The principles are:
The objective of the disclosure principles is to help prepare relevant entities in the UAE to achieve greater transparency in Environmental, Social and Corporate Governance (ESG)-related reporting and disclosures, to inform investors. This consultation follows the UAE’s first set of Guiding Principles on Sustainable Finance published in January 2020.
You can read more about global ESG developments in our ESG Legal Outlook 2023 and our Sustainable Futures blog.
The General Authority for Competition in Saudi Arabia (“GAC”) introduced changes to the thresholds for economic concentrations that trigger notification requirements.
The GAC will now assess the total annual turnover threshold test for economic concentrations (such as mergers and acquisitions transactions) in more granular detail, taking into account the following three limbs:
The revised turnover thresholds should have the effect of excluding smaller transactions or those which insufficient connection to Saudi Arabia which do not meet the thresholds, from being notifiable to the GAC.
The Government of Saudi Arabia is incentivising multinational companies to relocate their regional headquarters (“RHQ”) to Saudi Arabia, through the Regional Headquarters in the Kingdom of Saudi Arabia programme (“RHQ Programme”). The Council of Ministers introduced new rules which took effect on 1 January 2024 pursuant to Cabinet Decision No.461/1445 on the Approval of the Controls of Contracting between Government Agencies and Companies that Do Not Have a Regional Headquarters in the Kingdom issued on 26 December 2023 (corresponding to 13/6/1445H) (the “RHQ Rules”), replacing Cabinet Decision No.377/144 on the same subject which was issued last year.
The RHQ Programme was established as a joint initiative between the Ministry of Investment (“MISA”) and Royal Commission for Riyadh City (RCRC). Eligible entities may apply for an RHQ licence, which was set out in a new section of the MISA Services Manual issued in 2022. From 1 January 2024, Saudi Arabian government bodies, authorities and public institutions are restricted from entering into contracts with companies that do not have their RHQ in the Kingdom, except in accordance with the limited exceptions set out in the RHQ Rules. Various incentives are offered to multinational companies with an RHQ licence, including new tax incentives recently announced by MISA, the Ministry of Finance and the Zakat, Tax and Customs Authority. Multinational companies that relocate their regional headquarters to Saudi Arabia and obtain an RHQ licence shall be subject to a zero rate of tax (corporation tax and withholding tax) for a period of 30 years from the date on which the RHQ licence is issued.
17 ottobre 2023
The third quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
26 luglio 2023
The second quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
16 maggio 2023
The first quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
2 febbraio 2023
The last quarter of 2022 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). The latest edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.