The legal industry in the United Arab Emirates continues to move and change quickly as the Federal and individual emirate legislatures refine and amend the laws, and free zone laws and courts continue to develop.
The three main issues which arose during 2017 were: the implications of the amendments to Article 257 of the Penal Code; the developing influence of the Dubai Joint Judicial Tribunal; and the Dubai Ministerial Resolution No. 972 of 2017 restricting party representation.
Amended in October 2016 by Federal Law No.7 of 2016, Article 257 seemingly now imposes criminal liability on arbitrators, experts and translators who do not comply with their duties of impartiality and neutrality, and caused understandable confusion.
Hughes: More tax lawyers expected in UAE to handle VAT claims.
It is understood that a clarification of Article 257 is to be issued, but until that happens, this remains an issue to which those engaging in arbitration in the region must be alive to.
Secondly, Dubai Decree 19 of 2016 established the Joint Judicial Tribunal of the Dubai and DIFC Courts. In 2017, it became clear that the Tribunal's approach so far is that the DIFC Courts may continue to be treated as a 'conduit' jurisdiction for the enforcement of foreign arbitral awards (and, likely, judgments), but that domestic arbitral awards should be referred to the onshore Dubai, and not DIFC, courts, where enforcement is to take place in onshore Dubai. Although this increasing trend in the rulings provides some certainty and predictability of outcome, the process continues to prolong legal proceedings and is open to abuse by recalcitrant award or judgment debtors.
Thirdly, the Ministerial Resolution No. 972 of 2017 restricting party representation came into force in November and has a potentially concerning interpretation.
One interpretation is that it applies only to UAE-registered lawyers, but the other, more concerning interpretation, is that only UAE nationals registered on the Roll of Practicing Lawyers are permitted to represent clients in arbitration proceedings seated ‘onshore’ in the UAE. The latter interpretation would be a drastic departure from the internationally-accepted position that in arbitration, a party has freedom to choose who can represent them (including non-lawyers).
Looking ahead, the key legal issue in 2018 which all companies and lawyers in the UAE are gearing up for is the introduction of VAT, which came into force on January 1, 2018.
With the new registration, record keeping and return obligations on businesses in the region, it is anticipated that an increasing number of tax lawyers will be required in the UAE not only to assist companies with fully complying with their VAT obligations, but to assist before the Federal Tax Authority investigates when things go wrong.
Overall, the UAE remains an attractive and open jurisdiction with a vibrant legal sector advising clients from all over the world who see the UAE as an entrepreneurial and truly international legal forum for the execution of deals and resolution of disputes.
Paul Hughes is a legal director specialising in dispute resolution at law firm Addleshaw Goddard's Dubai office
© Special Contributions 2018