Government measures in key jurisdictions 5th edition - Flipbook - Page 149
United Arab Emirates
Insolvency
Has the
government made
any changes
to insolvency
legislation?
The UAE issued Insolvency Law No. 19 of 2019 came into effect on 29 November 2019 so is
still a relatively new law. The Law aims to provide an enhanced regime for individuals facing
financial difficulties. It encourages individuals to seek expert and professional help through a
court-led process.
The Insolvency Law only applies to natural persons and the estate of the deceased. It does not
apply to merchants, traders, commercial companies and similar persons which fall under the
scope of the Bankruptcy Law No. 9 of 2016.
Both laws primarily focus on assisting distressed persons and entities through offering them
settlement options.
Federal Law No 9 of 2016 was amended in 2020 to add a new chapter addressing provisions
which would apply during a period of Emergency Financial Crisis. The amendment defined an
Emergency Financial Crisis as “A general situation that affects trade or investment in the
country, such as a pandemic, natural or environmental disaster, war, etc. The UAE Cabinet has
now confirmed that an Emergency Financial Crisis shall be deemed to exist during the period
from 1 April 2020 until 31 July 2021 due to Covid-19.
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
No specific measures have been taken to reinforce contracts in view of the Covid-19
situation. Contracts continue to be governed by the Civil Code and Commercial
Transactions law. With regards to force majeure, under UAE law, the concept of force
majeure may be pursued by a party to a contract as a matter of law. It is a mandatory rule,
as opposed to a default rule, of law that de jure applies even without being expressly set
out in a contract.
The UAE Civil Code (Federal Law Number 5 of 1985) sets the definition and boundaries of
a Force Majeure event, and the consequences it triggers. In principle, Article 273 of the
UAE Civil Code stipulates that in order for an event to be qualified as a force majeure it
should be: (a) claimed in a bilateral agreement; and (b) makes the performance of the
obligation impossible – not just in hardship
It is anticipated that force majeure claims will be on the rise over the coming days due to
Covid-19. However, as the World Health Organization (“WHO”) declared the threat of
Covid-19 since it was first reported from Wuhan, China, on 31 December 2019, any
defaulting party to a contract that is concluded afterwards is unlikely to succeed in
invoking a force majeure claim. As for contracts preceding the WHO declaration, it will be
examined on a case-by-case basis in order to determine whether the underlying events
meet the criteria set by law and courts practice.
Property
Emirate of Dubai
Have any changes
been made to
the laws around
property, rent and
enforcement?
•
The Dubai Judicial Council have temporarily suspended all eviction judgments
related to residential and commercial facilities in Dubai (except cases of abandoned
homes) and imprisonment judgements linked to rental disputes since March 2020
and as far as we are aware this continues until further notice.
•
The Dubai Government have launched an AED 1.5 billion economic stimulus
package to support companies and the business sector in Dubai. Some of the key
property initiatives include renewal of commercial licenses without requirement of
mandatory renewal of lease agreements.
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