New Dubai judicial authority to resolve conflicts between Emirate courts
Parties now can refer jurisdictional conflicts and conflicts of judgments arising between the various courts and judicial committees in the Emirate of Dubai to the Judicial Authority for Resolving Jurisdictional Conflicts, established by Decree No. 29 of 2024.
The previous law establishing the Judicial Tribunal for the Dubai Courts and the DIFC Courts, established in 2016 to rule on conflicts of jurisdiction and conflicts of judgments arising solely between the DIFC Courts and the Dubai Courts, has been repealed (Dubai Decree No. 19 of 2016). The scope of the Judicial Authority for Resolving Jurisdictional Conflicts’ authority to determine conflicts is wider than the previous tribunal, as it includes conflicts relating not just to the Dubai Courts and DIFC Courts, but also other judicial bodies, such as the Rental Disputes Resolution Centre, and other specialist judicial committees formed by a decree or a decision of the Ruler.
The Judicial Authority for Resolving Jurisdictional Conflicts may determine the competent court to hear a dispute, which may result in proceedings being transferred between courts. Decisions made by the Judicial Authority are final and cannot be appealed, and the established legal rules by the Judicial Authority become binding “judicial principles" for all courts, including DIFC Courts.
New UAE Sandbox Regulations
The new Sandbox Conditions Regulation, effective from 15 April 2024, creates a controlled environment for fintech startups and established companies to test new and innovative products, services and business models in the financial services sector for a defined duration of six to twelve months. The UAE Central Bank will work with each applicant, on a case-by-case basis, to evaluate the innovative products, services, solutions or business models to identify legal and regulatory obligations, which will be applied throughout the duration of the sandbox. In order to participate in the sandbox, applicants must meet certain minimum eligibility criteria (e.g. the proposal is technologically innovative, to the benefit of consumers and/or the financial services industry and intended to be deployed more widely in the UAE). At the end of the testing period, participants will either be subject to a streamlined procedure to obtain a licence or otherwise be asked to cease all or part of their business.
New UAE Payment Token Services Regulation
The eagerly anticipated UAE Payment Token Services Regulation was published in June 2024 representing a significant advancement in the regulatory framework governing digital payment services in the UAE. The Payment Token Services Regulation sets out a comprehensive framework for licensing and supervising digital payment services, including payment token issuance, payment token conversion and payment token custody and transfer. The Regulation comes into force one month from the date of publication in the Official Gazette, although the regulation introduces a one-year transition period for certain aspects of the regulation. Only companies incorporated in the UAE or free zones (other than DIFC and ADGM) may apply for a licence. Foreign entities (which would include DIFC and ADGM entities) may apply for registration as a foreign payment token issuer. This development also brings certain types of stablecoins within the regulatory perimeter for payment services for the first time in the UAE.
UAE Central Bank issues Open Finance Regulations
The UAE Central Bank has issued an Open Finance Regulation as part of the UAE Central Bank’s open finance vision. The framework goes further than existing open banking initiatives in European jurisdictions and seeks to use customers’ consented financial data to empower greater customer choice and control over their information whilst facilitating competition amongst financial products and services. The Open Finance Framework consists of a Trust Framework, an API Hub and Common Infrastructural Services, which provide Open Finance access for the cross-sectoral sharing of data and the initiation of Transactions on behalf of Users and establishes a new category of regulatory license for providers of Open Finance Services.
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UAE considers adoption of global minimum tax rules
The UAE Government is considering the implementation of the Global Minimum Tax (GMT) or Global Anti-Base Erosion Model Rules (Pillar Two) (the “GloBE Rules”) in the UAE. The GloBE Rules ensure large multinational enterprises pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. The proposals are relevant for all businesses operating in the UAE that are part of a multinational group with global revenue exceeding EUR 750 million. The Ministry of Finance consultation closed in April 2024.
UAE financial regulators announce sustainability disclosure principles
New Principles for Sustainability-Related Disclosures for Reporting Entities were announced in June 2024 by the UAE Sustainable Finance Working Group (SFWG) to address minimum expectations for environmental, social, and governance (ESG) disclosures for financial institutions across the UAE. The principles seek to align with aspects of international best practice in relation to the reporting, transparency, relevance and quality of sustainability-related disclosures. It is expected that financial regulators across the UAE will adopt relevant principles into the disclosure frameworks within their respective jurisdictions following the announcement.
Those operating in the financial services sector in the UAE, DIFC and ADGM should consider the impact of the principles in their reporting and product disclosure practices and be alert to reform proposals by regulators in the UAE flowing from the principles.
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