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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.

Regulatory Update for the UAE Insurance Authority

The UAE Insurance Authority has recently published new regulatory directions on their website. Sharing a summary of the regulatory guidance.

a. Insurance Authority Resolution No. (49) of 2019 Concerning the Regulations for Life Insurance and Family Takaful Business

Previous editions have highlighted the irregularity in both commissions and payments, particularly in relation to pay-out to intermediaries. It was noted in the previous draft, that the commission cap for pure protection policies would be 10% of the annual premium for each year of the term of the policy. This continues to be retained, with the overall cap of 160% of the annualized premium. As for single premium policies, it remains to be limited to a maximum of 10% of the premium. With any premium changes, the pricing actuary must consider non-recurring changes in the annualized premium, due to add-on coverages, riders or similar options, by using the same method and restrictions as the first-year annualized premiums.

With regards to indemnity commission, the commission paid must be based on the annualized premium collected. In circumstances where the mode of premium payment is semi-annually, quarterly or monthly, the commissions paid can be based on the annualized premium. However, this must be financed by the company and not by the policyholder. Affirmed by the previous draft, the first year of commissions paid on the annualized premium must be capped at 50% of the annualized premium or at 50% of the total commissions payable under the product, depending on whichever is less. In circumstances where it is found that the premium payment is of 20 years or more, the pricing actuary may propose a non-fixed payment plan, subject to prior approval.

b. Insurance Authority Board of Directors’ Decision No. (40) of 2019 Concerning the Amendment of Certain Provisions of the Insurance Authority Board Decision No. (3) of 2010 On the Instructions Concerning the Code of Conduct and Ethics to be Observed by Insurance Companies Operating in the UAE (“the Code of Conduct”).

This decision extends the applicability of the Insurance Authority’s Code of Conduct to “insurance-related professions”. The Code of Conduct provides the various terms and conditions that must be complied with by any entity licensed by the Insurance Authority, including but not limited to guidance on operations, publicity and advertisement, pricing, proposal form, policy wording, claims and renewal. In its original form, the application of the Code of Conduct was limited to only the insurance companies licensed by the Insurance Authority, but following this amendment, the Code of Conduct also applies to all professionals licensed by the Insurance Authority, such as Insurance Agent, Actuary, Insurance Broker, Surveyor or Loss Assessor, Insurance Consultant or any other insurance-related profession regulated by the Insurance Authority.

c. The Insurance Authority Board of Directors’ Decision No. (41) of 2019 Concerning the Supervisory Rules for the Experimental Environment of Financial Technology in the Insurance Industry

This decision issued by the Insurance Authority has laid down the financial technology regulatory framework of the Insurance Authority, which the objective “to define the regulatory framework for the operation and management of the experimental environment of the insurance sector, in order to create an attractive environment for the insurance sector using innovative systems, as well as, making it a platform to interact with FinTech companies, improving the regulatory framework, and contributing to economic growth and risk management.”

The decision is aimed at supporting the Emirati FinTech companies and transforming the UAE insurance market into a smart insurance market. The decision identifies Innovative Solution Owners, FinTech companies licensed in free zones and financial free zones, National fintech companies and Foreign FinTech companies. If the applying entity fulfils all the requirements laid down by the Insurance Authority, they shall be accepted for the pilot phase, which will run between 6 to 12 months, aimed at testing the feasibility of the business. This is a great forward-looking step by the Insurance Authority, which will likely result in the development of indigenous solutions in the insurance sector, and has set a high benchmark for other insurance regulators in the region.

d. The Insurance Authority Board of Directors’ Decision No. (42) of 2019 On the Amendment of Certain Provisions of the Insurance Authority Board of Directors’ Decision No. (13) of 2018 Instructions Concerning Marketing Insurance Policies through Banks (“the Bancassurance Regulations”)

This decision amends certain provisions of the Bancassurance Regulations. The Bancassurance Regulations currently require the Designated Officer of the bank to acquire practical training of no less than two months at any insurance company, which has now been replaced by a training requirement of 30 (thirty) hours.

The requirement for an insurance company to have a branch in the Emirate in which the bank is selling the insurance policies has now been replaced by a requirement to have a “Point of Sale” in such Emirate or “electronic services” that enable customers to communicate with the company to receive their feedback, inquiries and complaints, subject to the terms in the revised provision. This implies that insurance companies can utilize the Bancassurance channel for distribution even in the Emirates where they do not have an Insurance Authority licensed “Branch” if they have either a “Point of Sale” in such Emirate or provide insurance services through electronic means.

e. Administrative Decision No. (140) of 2019 Concerning Exemption of Some Insurance Policies from Arabic Language Drafting Condition

The Administrative Decision (the Decision) issued by the Insurance Authority dated 14 October 2019 has now been published on the Authority’s website. The Decision follows the Administrative Circular No 7 of 2019 relating to Administrative Fine, which laid down the fines applicable if an insurer does not comply with the requirement of issuing the insurance policy in Arabic. Following multiple requests from the Insurers who expressed their inability in translating policies of international nature to Arabic language, the Decision lists down the polices which have been exempted from translation to Arabic, such as marine and aircraft policies, oil and gas related insurance policies, space related insurance policies and other insurance policies of international nature. The Decision further provides a list of documents that need to be submitted to the Authority for approval of the policy wordings, in relation to each life insurance policies and those in relation to general insurance policies. In addition, there is a requirement to provide an undertaking that the product complies with applicable legislations.

If you would like to find out more information, please visit: https://bsabh.com/

UAE Federal Tax Authority publishes new guide

Clarifications are used when there is a question about the VAT Law and how it will apply in a certain case. The main change with the new guide is the extension of the time limit required for receiving a Clarification upon submission of all relevant information and documents to the FTA, from 40 business days to 45 business days.

There is further an additional paragraph which explains that if a case is very complex, for e.g. the FTA may have to consider other legislation or contractual or factual information, then a further 45 business days may be required.

In essence, for complex cases, the FTA may require 90 business days from the date of the initial submission to determine a case.

Download the guide here

ADVISORY EXCELLENCE

Hadef & Partners strengthens Engineering and Construction practice

Leading independent UAE law firm Hadef & Partners welcomes Paul Suckling as a Partner into the Engineering & Construction team. Paul joins following a period as in-house counsel for an International Contractor and has over 16 years’ experience in the Middle East.

A dual-qualified solicitor and quantity surveyor; Paul specialises in construction litigation.

A major facet of Paul’s practice involves acting for clients in a Project Counsel role. This entails being active throughout the Project’s various phases, be it advising on the formulation and negotiation of all contract documentation, contractual and legal issues as they arrive, through to the final account process of a Project, as well as running big ticket arbitrations in the Gulf region.

Sadiq Jafar, Managing Partner of the Dubai office of Hadef & Partners commented:

“We are pleased to further strengthen our Engineering & Construction team with the appointment of Paul. His vast regional experience and his ability to understand both the technical and commercial issues involved in construction matters ensures he provides.

If you would like to get more information about Hadef & Partners, please visit http://www.hadefpartners.com/