A guide to dispute resolution under UAE FDI law

Before implementing a legislative change to the Commercial Companies Law (CCL) , foreign investors could only own up to 49 per cent in a UAE mainland company, where at least 51 per cent shares had to be owned by one or more UAE nationals, or a company which itself was wholly owned by one or more UAE nationals. Now, with a new implementation, CCL will now permit 100 per cent foreign ownership of certain offshore companies. Certain commercial activities such as real estate services, commercial agencies, car rental, agriculture services, fishing, Hajj & Umrah services and labour supply, were reserved exclusively for UAE nationals while foreign investors were restricted from investing in companies that carry out such activities. Now, with the introduction of the Foreign Direct Investment Law, this regime was partially relaxed. The new law has proven to be a game-changer and has helped diversify business and investment landscape within the country by providing unparalleled incentives and securing the rights of foreign investors. DED issued lists of approved activities for foreign shareholders With the following amendments, Departments of Economic Development (DED) in certain emirates have started issuing their lists of approved activities and requirements for foreign shareholders. The Abu Dhabi DED has issued a list of more than 1,100 activities, and the Dubai DED has listed more than 1,000 activities. Both the lists highlight commercial and industrial activities. Dispute resolution as per the new law Disputes are resolved through direct negotiation and settlement between parties, with arbitration, if needed. The UAE’s latest arbitration law Federal Law No. 6 of 2018 has improved the efficiency and finality of the arbitral process while strengthening the country’s position as an arbitration center. As per the new UAE FDI Law, any disputes or claims by a foreign investor will be carefully heard in the UAE's court of law and be fast-tracked and expedited. At this point of time, no further explanations have been given in terms of how a dispute resolution may be expedited and there are also no special processes or courts set up to only manage commercial claims and disputes. All commercial cases are heard by civil courts including the Court of First Instance, the Court of Appeal, and the Court of Cassation. Additionally, under the law, the investor can also pick arbitration in an international court of justice in any one of the 138 member states of the UN convention of which UAE is also a member, to settle disputes. For this, the UAE would need to give its approval and consent. Strategic impact activities The Strategic Impact Resolution has laid down a process for a foreign investor who wishes to carry out one of the ‘strategic impact’ activities, for example security, defence and military-related activities. The investor will have to submit a ‘licensing application’ to the DED in the relevant emirate, who will then pass on the application to the relevant regulatory authority within five working days from the date of receiving the application. Then the relevant regulatory authority will issue its decision within 14 working days from the date of request. The relevant regulatory authority may grant unconditional or conditional approval, or request additional documents/information or may reject the application completely. If you’d like to learn more and find out how you can resolve a dispute under the law or how it impacts your future business plans in the UAE, please reach out to our customer service representative today.

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