Legal System and Practice in the United Arab Emirates

The UAE consists of 7 emirates or states, the most renowned of which is the oil rich state of Abu Dhabi - rated as the world's richest city by Fortune in 2007 - and Dubai - the commercial hub of the Middle East.

The country is home to many massive projects with international flavor including the world’s tallest tower, biggest airport, seaport and indoor theme park. The country’s astute administrators realized the significance of foreign investment some time ago and have sought to meet the competing demands of the world’s largest building programme whilst providing an investment climate that meets those demands. It has not all been smooth sailing. Nevertheless, in parallel, there has developed a robust legal system in the region.

Civil Law System in the UAE

The UAE follows the civil law system, inspired by the Roman and French legal systems and the Egyptian civil codes of law. The primary source of law is legislation. The court system is usually inquisitorial, unbound by precedent and comprised of specially trained judicial officers. Albeit a federation of emirates, the judicial system is not all-inclusive, as some of the emirates have their own independent judicial systems. Despite being an Islamic country, the application of Shari’ah law is restricted and commercial/contractual transactions are regulated by written commercial codes and laws that are consistent with western business needs. The right of audience in a court is generally restricted to UAE nationals, licensed by the Ministry of Justice.

The region attracts substantial foreign investment in a variety of areas, including defence, infrastructure, real estate, transportation, oil & gas and social services (health and education). The need for investors to understand or at least be receptive to the region’s language, culture and legal system; and the particular style that needs to be followed in commercial agreements and negotiations, means that it is presently a very busy time for lawyers in the Middle East. The region is currently witnessesing numerous incorporations, joint ventures, mergers & acquisitions and cross-border transactions.

A Lawyer's Work Profile in the UAE

A lawyer’s day-to-day professional life encompasses a variety of issues including:

• advising on the most suitable investment structures
• ensuring legal and regulatory compliance
• drafting and vetting of complex agreements and documents
• conducting due diligences and negotiations with counterparties.

In litigation matters, the pleadings submitted by the parties - plaints or written statements - play a determining role as the courts generally decide cases based upon them. However, the courts are entitled, either on their own determination or at a party’s request, to call for expert opinion on financial or technical matters, or for example the assessment of losses. The courts maintain a panel of experts specialized in various branches to assist the court, on a full-time basis. The decisiveness of the pleadings requires the lawyers to be extremely meticulous, highly competent and experienced in their respective specializations.

Also, in recent years, there has been a  phenomenal growth in dispute resolution through arbitration. The presence of world class arbitration centres like the Dubai International Arbitration Centre, the Abu Dhabi Commercial Conciliation and Arbitration Centre and the London Court of International Arbitration [at DIFC] are each providing valuable dispute resolution services. It is widely believed that the influx of foreign investors has also contributed to the growth of arbitration.

UAE Emerging as the 'Hong Kong of the Middle East'

The country is just a few decades old in terms of real commercial business and the indigenous population accounts only for about 20%. The economy was oil -based in the past and still is to a large extent. All these developments have tested the country’s ability to provide a legal system that keeps pace with its economy. However, breaking all these shackles, the UAE is now steadily heading towards a mature legal system. Perhaps, that is the reason why many have called the region “the Hong Kong of the Middle East”.

Keeping aside the transitory financial recession and the rumors about Dubai’s debts, the region offers good prospects for lawyers. Excellent exposure, challenging opportunities and a tax free environment are only a few among the myriad of attractions that entice lawyers to relocate to this region.

[The author of this post is Faizal P. Latheef. He is a Senior Lawyer with the Abu Dhabi branch of Habib Al Mulla & Co., one of the premiere UAE law firms. He is a legal expert in corporate practice and specializes in corporate structuring, joint ventures, mergers & acquisitions and cross-border transactions.]