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Regulatory cohesion will make a great new year - a round up of the legal world in the UAE in 2011

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Summary: As 2012 draws to a close, all things considered it has been a reasonably humdrum year in the legal world in the UAE, with few major new initiatives or announcements made. While the consensus is that we are close to - if not already at - the bottom of the real estate market in terms of values, there remains uncertainty on the future of certain projects and the debate continues on how best to steer the economy along the path of recovery.

This is in part a symptom of the UAE, in common with the rest of the global economy, still looking for a secure route out of the turmoil of recent times, coupled with the regional unrest. It is also, however, reflective of the huge steps taken forward in preceding years, which has meant that fewer new laws have been needed recently.

First, what hasn't happened? The legal and banking communities - along with much of the business world - still await the draft federal insolvency law that was expected this year but which has recently been primed for release early next year.

In Abu Dhabi, the real estate community is expecting the most significant piece of real estate legislation to be issued since it introduced its first real estate laws in 2005. The much anticipated real estate law is expected to introduce measures to support the real estate development market, particularly in the investment zones such as Saadiyat Island, Reem Island and Al Raha Beach.

Escrow stipulations

It would also address issues such as co-ownership and community management (often referred to as ‘strata'), imposing regulatory control through a regulator and a requirement for proceeds from the sale of off-plan property to be placed in escrow. This is similar to measures adopted in the other emirates.

Turning to the steps that have been taken to date, at the end of October (while Dubai played host to about 5,000 international lawyers at the IBA Conference) the Dubai Government announced a new law to widen the jurisdiction of the DIFC Courts to allow parties to agree to have their disputes determined there even if they, or their business activities, are not connected with the DIFC.

This is potentially a very significant development which could add the DIFC (and therefore Dubai) to the list of jurisdictions favoured by the international business community. It might even present a happy compromise in transactions between international and local companies, who can choose UAE law to govern their relationship but have it applied to any disputes in the (English speaking) DIFC courts.

When the law is gazetted it will be interesting to see how the relevant authorities view it fitting within the existing protocol between the DIFC courts and the Dubai courts, treaties to which the UAE is a signatory - for example, the Riyadh convention concerning the recognition and enforcement of arbitral awards - and of course how it is viewed by the Federal courts.

Also in Dubai, there have been significant regulatory developments for lawyers and their firms operating in the emirate. It has been no secret that Dubai has, for some time, not been short of lawyers, which has led to concern about regulation of the legal services industry.

In August, Dubai issued a regulation which requires all individual lawyers to be licensed with the Legal Affairs Department and, once fully implemented, will impose fines and penalties on individuals operating in violation of the regulations. Previously, only law firms were required to be licensed, not individual lawyers (other than advocates operating in the Dubai courts).

Proactive move

The regulations represent a proactive step on the part of the Government in ensuring greater protection of clients' interests through tighter regulation of the provision of legal services in Dubai and, accordingly, the elimination of unqualified and unlicensed lawyers from the market.

In summary, although the two developments above have been of primary relevance to lawyers, they are significant to the business community and will undoubtedly have an impact on the way parties resolve their disputes and lawyers practice in Dubai.

It is expected that 2012 will see more substantive developments, both in terms of law and regulation and government policy, in a bid to support the growth of commerce and industry.

This article appeared in Gulf News in December 2011 

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