The United Arab Emirates (UAE) is considered as one of the most prosperous and advanced countries in the Middle East. Thanks to its visionary leadership, the UAE has climbed the ladders of success in a remarkable speed. The country has attracted substantial amount of foreign investment, on a variety of sectors. Undoubtedly, these achievements would not have been possible without a great leadership and a solid legal system.
Legal System and Judicial Structure
The UAE follows the civil law system. The fundamental principles of its legal framework, traditionally, as in any other Arab country, has been influenced by the Islamic Law, or the Sharia. Today however, the country’s legislation is comprised of a mix of European civil law concepts, in particular, the French, and the Sharia. A strong Egyptian influence is also present, being one of the most comprehensible and modern legislations in the Arab world today. Strangely, though the UAE has a historical link with the Great Britain, its legislation today is much more similar to the European civil laws rather than the British common law system.
The UAE has a federal judicial system with a court of first instance, court of appeal and cassation court. The court structure comprises of three branches – Civil, Criminal and Sharia. Interestingly, certain emirates like, Abu Dhabi, Dubai and Ras Al Khaimah have their own independent judicial systems similar to the federal court structure and the parallel systems co-exist complementing the other.
Litigation before Local Courts
It is important to note that the courts do not recognize precedents (adopting previous judgments as binding), though the higher court’s judgments are usually followed. Further, there are no witness examinations by the lawyers or discovery of documents. The courts rely on the written pleadings submitted by the parties and they play a determining role. In cases involving technicalities, the court may seek an expert’s opinion (courts maintain a panel of experts specialized in various disciplines). The court proceedings are conducted in Arabic and only local lawyers are permitted to appear before the courts.
Alternate Dispute Resolution
The recent years have witnessed a phenomenal growth in alternate dispute resolution, particularly, arbitration. The presence of world class arbitration centres like the Dubai International Arbitration Centre (DIAC) and the Dubai International Financial Centre-London Court of International Arbitration (DIFC-LCIA) are the preferred choices for many investors in the wider Middle East. In order to help investors resolve their disputes in an economical and informal way, certain government departments (for e.g. the Dubai Department of Economic Development) has started mediating its members’ disputes. Further, the DIFC has played a significant role in transforming the legal landscape of the region by introducing common law courts, the first of its kind in the region.
It is commendable that the UAE is taking huge advancements towards modernizing its legal framework. The UAE is keen to provide a legal framework that keeps pace with the country’s business requirements. The new Commercial Companies Law enacted last year and the recently enacted Bankruptcy Law are perfect examples in this regard.
Corporate law developed as a necessity, when it became apparent that the economy needed more sophisticated legal regulations to adapt to the changing business landscape. The burgeoning oil revenue and the business friendly environment encouraged investors to look at the UAE as an attractive investment destination. Also, the UAE became one of the first countries in the region to set up “free trade zones”, further stimulating investments and economic growth. The benefits offered by such free zones – including full foreign ownership and tax exemptions – resulted in large multinational corporations setting up their presence in the UAE.
The UAE is a young country and just a few decades old in terms of real commerce. Further, the indigenous population is less than 15%. All these factors have tested the UAE’s ability to provide a legal system that adapts to the requirements of the ever growing economy. Nevertheless, the UAE has well responded to all the challenges, and is growing in an exemplary way, towards excellence.
Author: Faizal Latheef
Faizal is renowned for his expertise in corporate and commercial law. He represents and advises clients on a wide variety of matters including Foreign Investments, Joint Ventures, Mergers and Acquisitions, Corporate Restructuring, Distribution & Franchising, Anti-Corruption & Compliance, Cross-Border Transactions, Employment and Wills.