The new key laws introduced in the UAE to support businesses

Dubai is in the final countdown for the preparation of the long-awaited Expo 2020, which is set to open a year from now, in October. This is a key event set to take place in Dubai and will be a major focal point of the agenda of most corporations doing business in the emirate or looking to do business in it.

The emirate remains a main attraction for foreign investments especially the ones looking to benefit from its location, business, and legal environment and world-class infrastructure, to access the region. This was further validated by the UAE’s ranking in the ease of doing business, where it was positioned 11th, according to the World Bank annual ratings in 2019. This accomplishment is a reflection of the government’s ongoing work to promote a business environment that is diverse and sustainable.

A number of efforts have been made to diversify away from dependence on oil, creating a very strong services sector – one that fosters a competitive business environment. A major aspect of such an environment is a supportive and effective legal framework for businesses, on par with international standards, hence the recent changes and additions in UAE’s regulatory and corporate sector.

Among major changes that are expected to push the growth and progress of the local economy in Dubai are the implementation of UAE Federal Law No 19 of 2018 on foreign direct investment (the “FDI Law”) and the subsequent positive list of activities issued by the UAE Cabinet.

The FDI Law now allows up to 100% foreign ownership in more than 122 economic activities across 13 sectors including, transport and storage, agriculture, space, manufacturing industry, renewable energy, hospitality and food services, among others. These sectors will offer new economic opportunities for international investors to explore in the UAE, particularly for projects involving e-commerce logistics, research laboratories, advancement in biotechnology, logistics and supply chain, production of solar panels, hybrid powerplants and green technology.

The refreshed list of privileges for companies established under the new FDI Law are extensive and includes treatment as local companies, as well as the removal of restrictions on repatriation of profits and any proceeds from liquidation or sale of a business. Employees of FDI companies can now transfer their salaries, indemnities and entitlements outside the UAE. In addition, FDI companies are guaranteed the confidentiality of technical, economic, financial information, including investment initiatives. There are now no restrictions on the sale of a business, admission of new shareholders or change of legal form and structure.

In addition to the FDI Law, the UAE published two major laws in 2016 that will have a direct impact on the creation of a comprehensive legal and regulatory regime for the operations of corporations. These include the UAE Federal Law No. 9 of 2016 on bankruptcy (the “Bankruptcy Law”) and UAE Federal Law No. 20 of 2016 on the pledge of movable assets as a guarantee for debts (the “Law on Pledge of Movable Assets”).

The Bankruptcy Law deals mainly with the various structures for bankruptcy and liquidation of assets for distressed corporations, including restructuring and composition procedures. Meanwhile, the Law on Pledge of Movable Assets allows the pledge of certain movable assets (such as bank accounts, stocks, trade documents, equipment etc…) by corporations and the establishment of a special register to handle the registration of such pledges in favor of third parties. This law, in particular, is of extreme importance as it gives a lot of flexibility to corporations and allows them to secure proper funds while guaranteeing the financing parties’ rights.

Further and in November 2019, the UAE Cabinet passed a new Federal law No 19 of 2019 on Insolvency of Natural Persons that applies to debtors that are not subject to the Bankruptcy Law. This new law applies to individuals who are in default of payment or facing difficulties in meeting their financial obligations. it is expected that the Insolvency Law will increase transparency in the dealings between financial institutions and individuals and address situations of defaults in a way that will enable all parties to safeguard their rights.

All of the above laws combined have created an overall framework to regulate the environment under which companies in the UAE are operating and have considerably elevated the maturity and complexity of commercial transactions, as well as prospects of new and innovative investments. This will also complement the efforts that are being pursued on other fronts, such as the development of world-class regulations for the protection of intellectual property rights, fighting cybercrime, promoting fintech initiatives and reinforcing the partnership between free zones and local authorities.

There is no doubt that the creation of such a strong legal framework for commercial companies will positively impact the growth of foreign investments in Dubai, helping create an optimal environment that enables the growth of the local economy and supports the diversification of its main contributing sectors.

We wish you a Merry Christmas and a Happy New Year

We would like to thank you for working with Advisory Excellence throughout 2019 and hope you and your colleagues have a wonderful festive break.

Our offices will be closed from 12pm on Saturday 21st December and will re-open on Monday 6th January 2020.

Should you need any urgent help over this period, our helpdesk (+44 (0) 20 3137 6198) will be open as usual.

We look forward to working with you in 2020!

Lack of dredging impacts liquid bulk operations in Santos Port

The operation of liquid bulk in the Port of Santos, in the brazilian state of São Paulo, has been hampared, following the reduction of the operational draft limit in the berths of Alemoa and Barnabé Island. Piers are interdicted, increasing the waiting/queue of vessels. At least 14 cargo ships cancelled calls at the Santos port and proceeded to other ports.

The lack of constant maintenance dredging, combined with the siltation of the channel, forced the reduction of the operational draft limit in three berths intended for operations of liquid bulk. The contract to perform the sediment removal service on the waterway ended in April, but the Companhia Docas of São Paulo (CODESP), company that runs the port, thought there was no risk of restrictions on incoming ships.

Unfortunely, in Alemoa there was a reduction of 70 centimeters in a bething point. From 10.9 meters to 10.2 meters. On Barnabé Island, the berth in which the draft limit was 10.2 meters, suffered a 1.2 meters reduction. The draft is of only 9 meters now. Also, the docking pier that allowed operations of ships withs drafts of up to 10.4 now only receives vessels with 9.5 meters below the waterline.

The berths of Alemoa and Barnabé Island concentrate the liquid bulk operations at the Port of Santos.

The Union of Maritime Navigation Agencies of the State of São Paulo (Sindamar) expressed concern. The main fear revolves around rising demurrage costs, given the longer waiting times for larger ships to berth.

For the President of the Brazilian Association of Liquid Terminals (ABTL), Carlos Kopittke, the situation is complicated and the solution should take some time. According to him, Alemoa pier 1, used by Transpetro (a subsidiary of Petrobras), is limited and only ships up to 230 meters can operate safely. In this case, the solution may take up to 10 months, as it is necessary to hire a company that specializes in the maintenance of dolphins.

Codesp rules out emergency hiring

Codesp said in a statement that the reduction of the operating draft in some berths was ordered due to the identification of depth loss at these points, attested by bathymetries performed by Codesp.

Regarding the defense of the wharfs 1 and 2 of Alemoa, “the recovery has already been contracted and in mobilization for the immediate start of the services, with 15 days to complete the first and another 15 days to complete the second”.

CODESP also announced that, next year, it should start construction of a new pier on Barnabé Island and, with the public bidding of the STS 08 area, the Port will gain two more berths for liquid bulk.

Regulatory review announced will impact Comex and Shipping

Brazilian Comex and Shipping Players know how difficult is to be in compliance with all the rules imposed as a way of “controlling” the activity.

Recently a decree was issued stablishing a revision of federal rules and regulations. The laws currently in force will be repealed, simplified and republished within 18 months.

The measure is being called, behind the scenes, “Revisaço” and aims to reduce costs with unnecessary burocracy and regulations in between 160-200 billion reais.

The review will update, simplify and consolidate the regulations. The idea is to eliminate outdated rules and simplify the regulatory landscape, ensuring greater legal certainty for entrepreneurs and investors.

On Comex, we currently have importers and exporters who must comply with regulations that are published, almost daily, by each of the various agencies involved in foreign trade.

Players are subject to heavy penalties (fine, cargo forfeitur, closure of the company, among others) if they fail to comply with all accessory obligations.

On the other hand, we have the entire Shipping chain that has the obligation to provide numerous information, since the arrival of the ship, operation, departure, port of origin, port of final destination, being required to feed SISCOMEX Cargo and Port without Paper. They are also subject to various penalties. Among them, the fine of R$ 5,000 that worries maritime agents and, although illegal is one of the great reasons for the “Brazilian Cost”!

It is obvious the importance of the public agencies regulation and that the sectors have some kind of control.

However, the great truth is that players in the industry suffer from the numerous obligations created over the years.

Therefore, the “Revisaço” demonstrates the Government’s concern with the players wishes to reduce bureaucracy and the costs of foreign trade.

The final result of the consolidation is expected to come out in 2021. After the end date, taxpayers will no longer be subjected to fines based on outdated rules.

The process of review and consolidation of the rules can be suggested by any interested party, through the Federal Executive Branch Ombudsman System.

Our team will prepare suggestions for revision of the regulation update, especially with regard to the regulations of Brazilian Federal Customs Office and the accessory obligations that shipping players are required to carry out in SISCARGA and ANTAQ’s regulatory framework for shipping and port sectors.

Thus reaffirming our mission to strive for greater legal certainty in the sector.

The New DIFC Intellectual Property Law

The Prime Minister of UAE His Royal Highness Shaikh Mohamed Bin Rashid Al-Maktoum issued law number 4/2019 for Dubai International Financial Center (DIFC) on November 21, 2019, “DIFC IP LAW”.

With the help of this new law, we believe the UAE, and Dubai in particular, has advanced one step more in progressing its regional position as a hub host for e-commerce, e-governance services, knowledge-based economy and strengthen innovation environment. Dubai has been the center point in the Middle East to launch many entities that has later becomes international reputation in e-commerce, mobile applications and online web services providers. The very good examples of “Souq.com” marketplace, acquired by Amazon, and “Maktoob” acquired by Yahoo Inc, “Careem” in process of acquisition by Uber, were all established in the UAE. Because of this unique position, Dubai was the ideal place to hold many routine IP events and meetings for international organisations to promote, discuss and advocate for protection of IP rights and discuss key challenges in this domain within our region.

Dubai International Financial Center (DIFC), or unofficially known as the Wall street of Middle East, was established to be the first district that follows common law system in a civil law country. This area continues to be among the most favorable locations to set up entities of foreign investments, international firms, financial institutes and other western companies that seek presence in the Middle East. As Intellectual property (IP) is one of the key areas of law that is evolving rapidly in UAE, both government and private sectors have begun, in the last few years, paying more attention to applicable laws and regulations that assist them to create, protect, own and enforce their exclusivity on intangible assets.

The majority of IP rights in UAE are regulated by Federal laws that were enacted between 1992 and 2002 and were followed by several amendments. To enhance the protection of IP rights within DIFC and keep the speed with international standards of IP laws, the new DIFC IP law introduces clarity on ambiguous or keys issues that are deregulated in the UAE. In fact, calls were made by professional experts in IP during the past few years to pass a special, developed and enhanced IP piece of regulation in the DIFC that can set out the best practice rules, provide guidance and advanced protection and clarity on IP related inquiries. Hence, this new law does not come as a surprise to those who have been following the advancement of local regulations in the UAE, rather, it reads as a promising step to expand in the protection of IP rights in the region and sets out a good precedent for legislators to regulate, or amend existing laws, on a wider level.

The new DIFC IP law introduces a new era in IP rights protection within our region. It establishes a well-regarded reference to head for a more internationally satisfying IP legal landscape. Whilst we should wait and see the enforcement of this new law before local courts, we anticipate key interesting provisions to be introduced to regulate classical IP rights models, i.e. patents, trade secrets, industrial designs, trademarks, copyrights and trade names. For instance, this law should read in harmony with existing federal laws that are applicable in the UAE and does not determine any new and/or alternative registration systems. The law does not establish or introduce any registration systems for IP rights within DIFC nor will replace or overlap with existing registrations acquired from relevant offices at the UAE Ministry of Economy. On the other hand, it brings an explicit recognition of some new doctrines and principles in the IP field, such as fair use of trademarks and patents, work for hire, parody, classification of economic rights associated with copyrights, factors and advanced measures to determine “well known” trademarks, trade secrets violations and reverse engineering.

Collection Societies is a very interesting topic to see regulated for the first time in an internal law and the new DIFC IP law provides an excellent opportunity for Collection Societies entities to plan and establish its presence in the DIFC. This will help to start the process of enforcement of those delegated copyrights to Collection Societies, bringing this area to a real presence within the UAE. To those who followed this topic, it has been subject to serious debates, discussions and advocacy efforts in the past 10 years, without any material progress. In light of this new law, the Collection Societies are invited to expand their presence and come to the DIFC to use this new legislative platform for its activities in the region. Article 41 of the new law sets out some clarity on performance of Collection Societies and restrictions of some activities, such as applying discriminatory licensing or exploitation to copyrighted work of art. Nevertheless, Collection Societies should know that the DIFC court orders are enforceable within the UAE mainland and, in theory, can be expanded to reach other GCC and/or Arab states, based on applicable treaties and conventions.

Sanctions and penalties in this law are also an important chapter, noting promising ranges of fines that are to be imposed, which seem to be more effective in assisting enforcement actions. With introducing a new Commissioner of IP role, we believe this mechanism will be an indication to see how this new DIFC IP law will be enforced.

A more detailed review for this new law will be released by IP practitioners which will help to add further clarity and explanation to stakeholders, i.e. Intellectual Property rights owners and counsels.

Wave of Transformation in Saudi Arabia

Over the past two years, citizens of the Kingdom of Saudi Arabia (KSA) have witnessed huge legal reforms related to women’s rights. The most anticipated and exiting amendments were recently announced pursuant to Royal Decree number (M/34) dated 27/11/1440 corresponding to 30/07/2019. This decree constituted the amendment of four different laws, granting men and women equal civil rights, as well as freedom of independent movement, while ensuring equality for women in the work place.

The first amendment was made to the travel documents law. The change allows women to now issue, renew, and receive their own passports, instead of restricting this right to male citizens. Prior to this amendment, passports of female citizens used to be issued only after a request submitted by their male guardians, following which, only the guardian was authorised to receive it. In addition, a Saudi woman was required to carry a travel permit issued by her male guardian, through the Saudi immigration directorate, in order to travel outside the country. Following the recent reforms, these restrictions have been lifted, allowing Saudi women over the age of 21 to request the issuance of their own passports and travel outside of KSA without needing permissions from their male legal guardians. Another very important right given to Saudi women, as a result of the Decree, is the right for a divorced or widowed mother, holding the custody of her children, to have the authority to issue their passports and travel permissions.

The recent reforms also include amendments to the Saudi labour law, especially with regards to women’s rights. It began by changing the definition of an ‘employee’, stipulated in article two of the law, to state that ‘an employee is any natural person – male or female – who works for an employer…..’ This amendment is a huge recognition of Saudi women’s role and contribution at the workplace.

The amendments to the labour law also state that work is a right of every citizen, without any discrimination based on sex, disability, age, etc. In addition, it restricts an employer’s right to terminate a female employee’s contract in case of absence resulting from her pregnancy or any illness related thereto, as long as such absence does not exceed 180 days a year, whether consecutive or intermitted. This restriction is expected to safeguard working moms’ interests and rights.

The new Saudi labour law demonstrates perfect equality between the two genders at the workplace, in addition to accommodating special provisions that Saudi women may require in certain situations. The recent changes bring Saudi women closer to equality and recognise their importance to the government and economy as a productive, well-respected member of the society. Witnessing such amendments fills every Saudi women’s heart with pride and a sense of fulfilment. It has been a great year for women in Saudi Arabia and I am proud to be one.