News

News

Mohammed Al Dahbashi to speak on the panel at the UK-Middle East Legal Services Week

Join, Mohammed Al Dahbashi, co-founder and managing partner of ADG Legal as he speaks on a panel discussing dispute resolution on Tuesday 6th July. The panel host will be Mark Watson-Gandy, Barrister at Three Stone, and other panelists include Sajid Suleman, Barrister at 36 Commercial, Rania Tadros, Partner at Ince and Claire Miller, Partner at Beale & Co.

 

This session will be one of many in the upcoming UK-Middle East Legal Services campaign, led by the Ministry of Justice, their first-ever ‘UK-Middle East Legal Services Week.’ This will bring together a number of keynote speakers from across the Uk and the Middle East to share knowledge in a number of panel-led discussions and seminars and will be taking place between 6 to 8 July 2021.

The event will be hosted by Lord (David) Wolfson of Tredegar QC, so join us for an engaging and insightful programme of tailored panel-led discussions and seminars that bring together leaders in their respective fields of legal expertise from across the UK and Middle East. Find out what the biggest market trends are for the region in sectors ranging from infrastructure to technology and discover how you can access new jurisdictions to expand the partnership and collaboration opportunities for your business.

 

Find out more about the ‘Legal Services are GREAT’ and register for the event here

ADG Legal Partners with Evolvin’ Women to Drive Women Empowerment

ADG Legal has signed an agreement with Evolvin’ Women, a social enterprise dedicated to the empowerment of women in developing countries and help advance the skill development of women in the private sector.

 

As a part of the two-year partnership, ADG will assist Evolvin’ Women in promoting their program with the global private sector, with a view to securing work placements and training opportunities in other countries for the Evolvin’ Women participants.

In addition, the ADG will host legal workshops for the Evolvin’ Women team and provide the social enterprise with legal counsel and support when required.

The aim of the partnership is to promote social responsibility in the private sector by involving organizations in solving women’s development and gender inequality issues, as well as to socially and economically empower women under the Evolvin’ Women program through international experience and exposure.

Mohammed Al Dahbashi, Managing Partner, ADG Legal: “We are honored to work with Evolvin’ Women – an organization which is driving social change through strategic collaborations to transform the lives of underserved women. We look forward to playing our part in taking this movement forward and shining a spotlight on the role every company – no matter how big or small – can play in improving societal development by supporting humanitarian causes.

Vimbai Hungwe, Chief Operating Officer, ADG Legal: “Evolvin’ Women has proved that social responsibility is not mutually exclusive to large corporations, every company can make a difference. The program is giving the private sector an opportunity to make a positive social impact. We are proud to become a part of Evolvin’ Women’s initiative and we will use our network and influence to advance socially aware economic models that empower under privileged women.

Assia Riccio, Founder, Evolvin’ Women: “We value the support from the private sector as it helps us grow and achieve our aim of elevating the livelihoods of women from developing areas by enabling them to reach their full potential. ADG Legal’s commitment to women empowerment coupled with their strong international and local presence will bring attention to the Evolvin’ Women cause from the global private sector as we look forward to welcoming more organizations in our quest to advancing social responsibility and gender equality.

For more information about ADG Legal, visit ADG

For more information about Evolvin’ Women, visit Evolvin’ Women

 

 

 

DMCC Crypto Centre to Revolutionize Digital Currency

The world’s largest Cryptocurrency, Bitcoin, hit another milestone last month as it reached a record high of sixty thousand dollars. The currency is becoming more and more of a major factor in the financial market each day and is garnering the attention of big banks and governments. And Dubai is set to lead the way with the Dubai Multi Commodity Centre (DMCC) Crypto Centre making it safer, easier, and more efficient to trade in Crypto Assets.

The Crypto Centre is a comprehensive ecosystem for businesses operating in the cryptographic and blockchain sectors. It will be the hub for the development and application of crypto and blockchain technologies. Offering a home to all types and sizes of crypto businesses, from the listing, offering, issuing, and trading of crypto assets by firms to companies developing blockchain-enabled trading platforms.

This is all part of the UAE government’s Blockchain Strategy 2021, wherein the government plans to digitize 50% of government transactions into a blockchain platform by 2021 using cryptographic and open-source technologies and therefore become the world’s epicentre for crypto investments.
DMCC announced the launch of the DMCC Crypto Centre on Monday (24/05). The Centre will offer co-working spaces to crypto entrepreneurs and SMEs and a range of incubator and accelerator programmes, all within the DMCC’s Jumeirah Lakes Towers district.

The Centre is located at the prestigious Almas Tower a cutting edge 68-storey, skyscraper. It will also house a leading crypto advisory practice led by CV Labs, who were behind Crypto Valley, the Switzerland government-backed crypto community, where crypto leaders Cardano and Ehtererum originated.

DMCC has collaboratively developed a solid, progressive and supportive regulatory environment for crypto firms operating in Dubai. Activities conducted within the Free Zone that include the exchange of crypto assets will be regulated by the UAE’s Securities and Commodities Authority (SCA). Crypto firms will also benefit from DMCC’s business regulatory framework, which increases the ease of doing business whilst upholding robust governance and transparency.

As with most new financial products, Cryptocurrency comes with risks, price volatility, hacking and security all need to be considered as the tech is being developed. It also raises a spur of questions such as ‘What will be the impact of Cryptocurrencies on the banking system?’
Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer of the DMCC gave his assurance that this would not be overlooked, in an interview saying: “Confidence, Trust and Security, this will not be launched without covering all bases.”

The benefits of understanding the current crypto asset climate cannot be overstated. We are poised at a unique time in human history due to technological, cultural, and social development in the last century. With China introducing its own digital currency last month, the digital Yuan controlled by its central bank, which will issue the new electronic money. Bankers and other analysts have stated that Beijing aims to digitise all its money eventually.

For those wishing to either set up a company and/or trade in crypto assets in the UAE and legal advisory services, please contact us at ADG Legal:

Contact number: +971 4 4441 2031

E-mail: info@adglegal.com

Website: https://adglegal.com/contact-us/

EID AL FITR 2021: UAE COVID LAWS

With a Covid pandemic still looming and EID fast approaching, a time of celebration and gathering for many worldwide, and safety being a key concern for both Muslims and non-muslims worldwide, let us have a look at UAE Eid Al Fitr Covid Laws for this year. 

 

The battle with Covid 19 had been ongoing for over a year now with the declaration by the World Health Organization on the 30th of January 2020, of the outbreak of a Public Health Emergency of International Concern, and a pandemic on 11 March 2020.

 

Over a year later there have been three million casualties worldwide, with 1,610 in the UAE as of the 8th of May 2021. This caution is heightened by a recent outbreak in India which has led to between 300,000-400,000 new reported cases for the last two weeks.

 

The UAE has handled the pandemic very well and this is due to a prompt and efficient response by the authorities involved. These measures though valid, have led to some outcry with some 84,253 appeals to penalties imposed for Covid-19 safety violations in 2020, according to the UAE Public Prosecution. And 4,210 fines in Abu Dhabi in one week.

 

To avoid fines during this festive period we have outlined the measures posed by Government for this year’s EID celebration:

 

  • The National Emergency Crisis and Disaster Management Authority (NCEMA) announced on Tuesday, May 4th: UAE residents have been told to avoid family visits and gatherings during EID Al Fitr. Celebrations must be restricted to members of the same family living in the same house.
  • Greetings must be exchanged via electronic means of communication and not in person.
  • Neighbours and family members must not give each other gifts or share food.
  • The tradition of giving cash or gifts (Eidiya) must be avoided. If they must, cash must be transferred to bank accounts.

 

Considering all this we would just like to applaud the UAE’s efforts in handling the pandemic and due to the preventive measures it has taken since the outbreak of the pandemic, it has managed to deal with the pandemic effectively and efficiently while ensuring the continuity of business activities and community affairs.

 

The UAE is ranked 8th globally and maintained its 1’st ranking among the Arab countries on Bloomberg COVID-19 Resilience Ranking Index.

 

EID Mubarak, ADG wishes you all a very happy and peaceful EID.

Crypto Assets in the UAE Regulations

Can you trade cryptocurrency such as Bitcoin in the UAE?

 

A new decision by the Securities and Commodities Authority (SCA), being ‘The Chairman of the Authority’s Board of Directors Decision No. (23/R.M) of 2020 Concerning Crypto Assets Activities Regulation’ dated 01 November 2020 (Decision), dealing with Crypto Assets in the UAE was published a few months earlier. For sake of brevity, we offer an outline of the decision in this piece.

 

Essentially the Decision offers guidance on how Crypto Assets may be regulated in the UAE, including who can offer services, who can be offered the services in the UAE, and operation and guidelines for Crypto Asset activities. Whilst the Decision sets out the federal regulatory framework to deal with Crypto Assets in the UAE (both mainland and financial free zones), the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) had launched the region’s first comprehensive crypto asset regulatory framework in June 2018. Since then, the ADGM has emerged as the preferred hub for crypto asset activities in the region.

 

Initially, the UAE did not adopt a system to regulate previously issued cryptocurrencies as the term ‘cryptocurrency’ was unknown to many UAE residents before 2008-2009. However, the UAE has since grown to become one of the best ecosystems today for cryptocurrency activities worldwide.

 

These changes have largely come about due to the UAE government’s Blockchain Strategy 2021, wherein the government plans to move 50% of government transactions into a blockchain platform by 2021 using cryptographic and open-source technologies. In pursuance of the Strategy, the government-owned licensing firm Kiklabb now allows clients to pay for their visa and trade license fees using cryptocurrencies.

 

The cryptocurrency (a form of Crypto Assets) market is currently valued at over USD 1T. Even at such a unique time in history characterised by the global pandemic and ambiguities in the financial sectors, cryptocurrencies continue to thrive, with Bitcoin recently growing past the USD 50,000-mark.

 

Now is the best time for intrepid investors to understand the laws surrounding crypto assets in the UAE. Sue to the progressive and innovation-driven outlook of the UAE’s government, the crypto assets’ space is fast changing.

SCA Decision for Regulations of Crypto Assets Activities:

 

The high-level outline of the Decision (available online) is below:

 

  • Who these laws apply to

 

  • What is defined as Crypto Assets

 

  • Who can offer Crypto Assets

 

  • Who can Receive Crypto Assets

 

  • Key takeaways from the Decision

 

Who these laws apply to

 

  • exchanges

 

  • marketplaces

 

  • fundraising platforms

 

  • custodian services

 

  • any person who conducts financial activities in respect of crypto assets

 

What are defined as Crypto Assets

 

The Decision bases the definition of Crypto Assets broadly as ‘a record within an electronic network or a distribution network that acts as a medium of exchange, storage, unit of account representation of ownership, usufruct that can be transferred electronically from one person to another through the operation of a computer programme or an algorithm governing its use.’ Recognizing that there could be different forms of Crypto Assets in the market, SCA vide the Decision extends the definition of Crypto Assets to include commodity tokens and security tokens.

 

Who can offer Crypto Assets

 

To offer Crypto Assets (or any related services) there are two requirements:

 

  • Provider must be incorporated onshore within the UAE or any of the UAE’s financial free zones.

 

  • Providers must be Licensed by the SCA.

 

Who can Receive Crypto Assets

 

Two classes of people can be offered Crypto Assets in the UAE.

 

  • Qualified Investors:

 

  • Institutional investors such as federal government, local governments, government institutions and authorities, foreign governments and their institutions or the companies fully owned by any one of the aforementioned; international bodies and organizations, who meet at least two of the following requirements:

 

  • Hold assets worth more than AED 75m.
  • Have a net annual revenue of AED 150m.
  • Have a net equity or paid-up capital with a minimum of AED 7m.

 

  • Individuals who hold AED 4m in funds and have an annual income of no less than AED 1m, and can verify that they possess sufficient knowledge and understanding about the risks of investing in crypto assets.

 

  • Others, those who do not meet the eligibility criteria as a Qualified Investor (with SCA’s prior approval).

 

Key takeaways from the Decision

 

  • Before approaching a qualified investor, Licensees must file documents with the SCA in advance of offering crypto assets to Qualified Investors. In all other cases, licensees must request prior approval from the SCA before offering crypto assets to non-Qualified Investors.

 

  • Licensees may ‘passport’ the listing of crypto assets on one or more cryptocurrency exchanges.

 

  • Strict provisions govern the use of subcontractors and employees working for crypto asset providers, custodians, escrow companies and other contractors insofar that they must possess the requisite skills and experience to perform their roles.

 

  • Licensees may appoint subcontractors but will bear the risks and liabilities stemming from any breach of the Decision committed by their subcontractors. For this reason, the Decision requires licensees and their subcontracts to formulate a detailed service level agreement spelling out the division of responsibilities between both parties relating to cybersecurity and data protection.

 

  • According to computing and data residency rules, any computer systems or cloud computing facilities must be located by service providers onshore within UAE using international standards. Typically, this is to entail service providers (or their subcontractors) being able to demonstrate compliance, at the very least with ISO9001 and ISO27001 and cybersecurity standards laid down by the UAE’s Federal Government.

 

  • In the case of service providers who use offshore servers or public cloud facilities to encrypt, store, process or transfer crypto assets, or personal data, the SCA’s Decision requires such providers to utilise onshore cloud computing services to provide parallel backup and disaster recovery facilities.

 

  • The SCA clarified that it has full powers to audit licensees and to monitor online transactions. In the event of any breaches, the SCA has wide-ranging powers to impose fines, suspend or withdraw a licensee’s right to offer crypto assets and publish the names of violators.

 

Due diligence

For anti-money laundering compliance and ‘know your customer’ checks on potential investors, the Decision clarifies that all customers must be classified and assessed as if they were a ‘high risk’. This broadly translates into conducting ‘enhanced due diligence’ into a customers’ source of funds, ultimate beneficial ownership structure, political exposure risks, the potential risks of customers being used as conduits for money laundering activities and any geographical risks presented by customers, their directors, shareholders and associated suppliers and intermediaries.

 

For more information on Crypto Asset guidelines in the UAE please contact us at ADG Legal:

 

Contact number: +971 4 4441 2031

E-mail: info@adglegal.com

Website: https://adglegal.com/contact-us/

Written by Mahdi Eldaw and Kostubh Devnani.

***

 

UAE Ramadan 2021: Dubai and Abu Dhabi Ramadan and Covid Laws

Ramadan celebrations last year were largely disrupted due to the strict pandemic measures in place but how will 2021’s Ramadan fare with measures for the pandemic still in effect, albeit slightly alleviated?

Beginning today, Tuesday 13th April, let’s have a look at government measures that will affect Ramadan this year: 

Ramadan Covid 19 Guidelines:

  • Mosques will be open this year but they must be sanitised before and after prayers.
  • Mosques can open at 50% capacity for all but Friday prayers, which are limited to 30% capacity.
  • To prevent the spread of covid-19, there will be no iftar tents or banquets outside mosques, or anywhere else.
  • Taraweeh, the prayers after evening prayers, will be conducted under the same safety measures, including capacity limits and compulsory masks.
  • Attendees must take their own prayer mats and copies of the Quran.
  • Different families cannot celebrate iftar together. Iftar and suhoor should be shared only with others in the same households; wider family gatherings are prohibited.
  • Majlis should be avoided.
  • Dubai Islamic authority has cancelled all permits for Ramadan tents this year and the setting up of tents or outdoor areas to distribute free iftar meals is prohibited.
  • Those interested in donating iftar meals to workers should contact the manager of the housing and a restaurant to arrange the distribution of packed meals, as meals can be distributed only in labour accommodation this year.
  • Restaurants cannot distribute food in or outside the premises.
  • Authorities will be conducting intensive inspection campaigns and action will be taken against offenders.
  • The elderly with chronic diseases that place them at high risk should continue to avoid public places.
  • Masks should be worn at all times anytime one is outside the home.
  • In the last ten days of Ramadan the situation will be reassessed, and restrictions may be eased.

Immunise Against Construction Disputes: A Guide to Better Dispute Outcomes

The construction industry in the MENA region is suffering from difficult times. The saturation of Coronavirus-related commentary distorts the reality that Coronavirus is simply exposing the real and pre-existing difficulties faced by the industry.

While Coronavirus did bring limited disruptions to supplies and labour, progress on most contracts largely continued unaffected and Coronavirus-related claims have fallen into the general mix of claims. The result is that most causes of disputes have and will remain the old favourites, being delay and variations (performance bonds are featuring also and we will be addressing this in our next webinar).

We expect the next 12-18 months to bring a significant increase in the number and magnitude of disputes in the construction sector. This article is intended as a road map to avoiding the litigation / arbitration train and securing better outcomes when major disputes cannot be avoided.

Approaching Final Account – A Typical Scenario

Let us assume a typical scenario – a mixed-use commercial/residential tower, with a FIDIC Red Book 1999 as the base contract document. It is 90% complete and the ‘Time for Completion’ has lapsed. The Contractor has claims for delay but has not made any formal delay submissions. There are variations both positive and negative, only a few have been recorded formally by the issue of VOs, but none have been assessed or determined. The Employer has failed to pay the last five interim payment certificates and the Contractor is financially squeezed to pay subcontractors and keep them on site.

The Contractor needs to be able to shore up its position as the Employer is threatening to claim delay damages and encash the performance bond.

On the other hand, the Employer is concerned over the quality of the work, given the Contractor’s financial troubles, the ability of the Contractor to complete, and not overpaying the Contractor should the interim certificates be paid and then its claims exceed the retention and performance bond held.

Back to Basics

First, some broad truisms about disputes:

  • Don’t make vague and unsubstantiated claims.
  • Don’t pull a gun unless you intend to shoot; making a threat without being sure of your grounds before proceeding can destroy a relationship, whether it is threatening suspension or encashing of the bond. Don’t become the boy who cried wolf.
  • Only present legitimate (i.e. arguable) claims. Otherwise, you will be seen as ‘claims aggressive’ which is, again, a credibility issue.
  • If the contract requires notices to be given to preserve your rights, give the notices. If you receive such notices, do not consider them as acts of aggression or hostility; they are only given because they are required.
  • Developing a ‘best friends’ relationship on the other side is to be welcomed, but not at the expense of maintaining the project management principles discussed below.
  • Don’t place too much weight on a relationship with a specific person on the other side; there is no guarantee they will be there at crunch time. And, even if they are there, as soon as other departments or external consultants become involved their hands may become tied.
  • Giving unachievable assurances will inevitably cause the project to spiral toward dispute.

Contract is Key

Remember the starting point in the UAE is that the contract is your law. 

Of course, there is also the backdrop of the Civil Code which affects how the law is applied and what outcomes will be from certain facts, in particular the obligation of good faith, especially in administering the contract. Operating successfully in such an environment relies on implementing and following good project management practices.

As always, the onus is on you to prove your claim. As such, it should be no surprise that the lack of proper records or accessible records is usually the biggest obstacle to mounting or defending a claim. The key is not to produce records for their own sake but for establishing cause and effect, i.e.:

  • what effect did the event have on the direct or other work faces?
  • was labour reallocated for that time?
  • what mitigation measures were considered and taken?

Records must also be accessible. Keeping records on personal laptops and mobile phones is not good practice. Trying to retrieve WhatsApp conversations may be impossible.

After a project is completed, it is difficult to keep all the relevant staff or witnesses around. Good records assist with not having to rely on fading memories as to what a note meant or the impact of an event.

Importance of Notices

Notices are not just a matter of convenience, they are essential requirements of FIDIC clause 20. You may recall that, where a delay is concerned, the general sequence of notices is:

  • Notice of delay within 28 days of the occurrence of the event;
  • A fully detailed claim within 42 days of occurrence;
  • A further 42 days for Engineer approval or disapproval (but not necessarily a final determination).

It may seem straightforward to comply with this, but it can be very onerous, especially where there is ongoing delay and it remains to be seen how much it will delay completion. Rarely do contractors or employers deal with this situation well.

Our advice is that contractors should keep sending the update letters but quality, not just quantity, is important. Where the delay is ongoing it must set out a range of things, namely:

  • which activities cannot be commenced?
  • how many days is that activity delayed by?
  • what impact will this have on completion? The most recently updated program should be used to conduct at least a rudimentary analysis.
  • what have you done to mitigate this? Have you dedicated resources to other work fronts? Have you demobilized any resources? Were you able to re-sequence in any way?

While you may arrive at a different delay duration after the event, when you can have a delay analysis done properly, it will be very difficult to challenge the underlying facts feeding into the analysis if the progress, and all steps taken, were documented as and when they were occurring.

At worst, it should narrow the scope of the dispute substantially and this will make a big difference on whether you can avoid an arbitration.

The Contractor’s View

A major difficulty is that there are no time frames prescribed for the Employer or the Engineer to act regarding determinations and assessments of variations and EOTs under the Red Book. The Contractor is still obligated to follow the instructions by the Engineer given under Sub-Clause 3.1 and 3.3. This leaves the Contractor to argue that the Engineer should have issued a variation or extension but failed to do so – a breach by the Employer.

With the project nearing completion, yet with numerous claims on the table, a Contractor can face a crossroads of sorts. Cash flow can be at its tightest point, yet throwing all resources towards completion is usually seen as the best solution. However, Contractors should always pause to contemplate – is there any reason to think the Employer will treat my claims more favourably post-completion? The answer is probably no.

A Contractor’s Next Steps

Naturally, a balance needs to be struck between wanting to be friendly and co-operative with the Employer on one hand and being professional and properly protecting your rights on the other.

The following are key:

  1. The program: Keep the program up to date and relevant. If there are changes, note why those changes have occurred and particularly any updates to linkages between activities.
  2. Progress reports: Ensure progress reports are completed, containing relevant details and not just simple fact recording; add analysis where it is needed on causes and consequences.
  3. Outstanding information: Where there is outstanding information, follow up with the Engineer with RFIs. The Contractor should also respond to the RFIs issued by the Engineer to avoid being blamed as the cause of the issue.
  4. Suspension: Regarding the unpaid certificates which will inevitably have arisen, the Contractor should consider what rights it may have to suspend or slow down the progress of the work.

The Red Book (Sub-Clause 16.1) contains a right for the Contractor to suspend if the Engineer fails to issue interim payment certificates properly. However, the Contractor needs to be confident he is on solid ground before taking such a step. 

Consider also that the Employer bears the risk that the suspension is found to be lawful. Remember that there is no obligation to suspend if the Contractor does give the notice of intention, but credibility may be affected.

It should go without saying that the Contractor should take legal advice before going ahead with any suspension.

  1. Third-party review: Consider getting an independent third-party audit of the claim. This does not necessarily have to be a full-blown analysis including liability and quantum but it is worthwhile spending some time on testing the assumptions that have been made. Often, those too close to the trenches may form views based on the need and pressure of cost minimisation and without the benefit of a cool and unbiased head.

The Employer’s View

For the Employer, the following items are generally on the table:

  • Claims for delay damages.
  • Claims to come from the Contractor.
  • Possible claims for negative variations and defect claims.

There may also be a concern over the ability of the Contractor to complete.

Employers should consider the following:

  1. Unlike Contractor claims, there is no strict time bar clause for making Employer claims, such as under Sub-Clause 20.1. Rather Employer claims are to be made as soon as is practicable under Sub-Clause 2.5.
  2. Despite the lack of a strict time bar, check that pre-conditions for claims have been met, e.g. the pre-condition under Sub-Clause 8.7 for levying delay damages being the Engineer’s determination under sub-clause 3.5.
  3. The unenforceability of delay damages (where they have liquidated sums under the Contract) does not remove the right to claim damages generally if liquidated sums are challenged under the Civil Code, so the Employer may need to be able to establish actual damages suffered due to the delay. Again, this highlights the need for proper records on the effects of delay.
  4. Whether to have all variations assessed and determined where a dispute is pending, particularly where the determination will be a rejection of the Contractor’s claim or the issue of a negative variation.
  5. Where there is defective work, ensure that the Engineer has issued the required notices to remedy that work. These are pre-conditions for the Employer’s right to recover or take-out. In our experience, these procedures are rarely followed properly.

Terminating?

As the project nears completion, in many cases the Contractor holds more leverage than he previously has. But this is not true in all cases. There can be a fine balance between cutting losses and opening exposure to hefty damages.

On the Employer side, consider:

  • Low risk of damages claims if you terminate invalidly, given that there will probably be minimal, if any, profit left for the Contractor.
  • Under UAE law, should the Contract be terminated before works are completed, the secondary obligation regarding payment of delay damages may fall away and be unenforceable.
  • There is still the performance bond and retention.
  • Administrative problems of procuring a new contractor to complete.
  • DLP is wiped by termination.
  • Approvals are still needed.
  • Possibility of engaging subcontractors directly, which is not permitted under Red Book per se but can be done successfully if managed properly.

On the Contractor side, consider:

  • Low additional risk if you suspend or terminate as a potential claim for the ‘additional cost to complete’ is comparatively minimal.
  • Risk to performance bonds and retention.

Joint Non-Binding Opinion – Last Stop Before Arbitration?

Where there has been no compromise, negotiations will likely commence as a pre-cursor to arbitration. This will usually involve some members of senior management weighing in.

Typically, this will narrow down some of the issues, and hopefully, the major ones. But where there is no solution that both sides can live with, are there any options left to avoid a costly and drawn-out dispute?

If, as will commonly be the case, there is no DAB process, then consider proposing that the parties jointly appoint an independent expert for a non-binding opinion before negotiations. While we are not generally in favour of non-binding procedures, if they are limited in scope and time, they can help give the reality check that is needed. It is open for the parties to agree that neither of them can call that expert in any later arbitration.

Should I Move First to Request Arbitration?

This is a commonly asked question in circumstances where claims are or will be flowing in both directions.

Getting in first can bring considerable advantages. Why? Because the Claimant has better control of the timetable.

There is very little time to prepare a response, especially if you lead with a fully detailed Statement of Case, rather than a brief Request for Arbitration. Your opponent will also be under cost pressure from the outset. Their lawyers will have to get up to speed rapidly, which will come at a cost.

Naturally, though, the availability of this option is only as good as your preparation.

Having some form of independent expert analysis is ideal, particularly for EOT claims. If you do the reality check early on, you can avoid spending money developing a claim which had no merits to start with.

Last, it should be remembered that it is also possible to arbitrate while the project is ongoing, usually on a discrete matter. While this is often considered a nuclear option (or at least premature), there is nothing to stop it in principle. Again, it depends on the quality of your preparation and the dynamic of the relationship.

If you would like to discuss any dispute avoidance strategies or any live dispute issues, please contact Josh Kemp (jk@adglegal.com) or Scott Lambert (sl@adglegal.com).

UAE Announces 100% Foreign Company Ownership

On Monday, the UAE government announced an exciting new reform on the Commercial Companies Law, allowing foreign investors 100% business ownership, effective 1st December 2020.

For decades, most foreign investors in the United Arab Emirates (“UAE”) engaged in commercial trading were under an obligation to be partnered with a UAE national to legally operate their businesses within prescribed areas of the country. This week, a phenomenal reform was introduced by the President of the UAE, His Highness Sheikh Khalifa bin Zayed Al Nahyan, which changes the course in which the UAE is moving.

Under Federal Law No. 8 of 1984, which was effectively replaced by Federal Law No. 2 of 2015 concerning Commercial Companies Law, most foreign investors setting up a limited liability company were obligated to enter into a partnership with a UAE citizen. In such a partnership, the UAE citizen would dominate, holding at least a 51% stake in the company. Now, the new decree abolishes the former business structure and introduces the long-awaited reform.

However, whilst the new reform replaces the old law on the federal level, it simultaneously confers powers to local authorities (i.e. each emirate) to determine exceptions, perhaps based on specific business activities. It will take some time for such exceptions to be announced so the idea of complete ownership is still yet to be confirmed in practice and application within each emirate.

Although the exceptions to the new reform are yet to be announced, foreign investors should take time to consider the possible implications of this change on their existing side agreements, nominee agreements or any other ancillary agreements, whereby their local partner has been remunerated in the form of a fixed fee or other alternative arrangements. For existing businesses, there will be multiple factors to consider before deciding whether to make changes or not.

The new reform demonstrates the UAE’s eagerness to advance in respect of the many commercial and investment opportunities that the country has to offer and this is certainly promising news for anyone looking to set up a new business in the UAE. However, for existing foreign investors, we caution great care and not to hasten in abrogating existing business relationships.

If you would like assistance in reviewing any existing agreements concerning company ownership, or you are looking to set up a new business in the UAE, get in touch on +971 4 441 2031 or by email at info@adglegal.com.

 

Written by Bahriddini Sultan

ADG Legal Expands its Construction Team in Dubai

We are delighted to announce the continued growth of our construction and infrastructure team at ADG Legal with the arrival of Scott Lambert, who joins us as a Partner.

Scott has over 32 years’ experience and has been in the Middle East for more than 6 years. In the region, Scott has previously worked as the Regional Head of Construction and Infrastructure at Al Tamimi, and more recently as a partner at Beale & Co. Before coming to the Middle East, Scott was a partner at the well-regarded Australian firm Holding Redlich.

Scott brings a wealth of experience to the firm and bolsters its construction and infrastructure offering.  He has worked on all aspects within construction and infrastructure sector including advising consultants, contractors, developers and facility operators across a range of disputes, procurement, contracts and projects advisory matters including a major regional rail project, solar parks, oil and gas FEED issues, desalination plants, cooling plants, commercial and mixed-use developments and shopping malls, throughout the Middle East and North Africa.

Scott is also a regular speaker at industry events for RICS across Dubai and Abu Dhabi and brings with him a focused marketing and business development strategy. He was also the winner of a UAE Client Choice Award 2018 for construction law.

“We are delighted to welcome Scott to the team in Dubai where he will work alongside our other Construction Partner, Josh Kemp. The addition of Scott strengthens the transactional and project advisory aspect of what is already an extremely talented and experienced construction and infrastructure team.  Having previously worked together for several years, Scott and Josh offer a depth of experience to assist premium construction industry players to achieve the best results” – Managing Partner Mohammed Al Dahbashi

Update – New Data Protection Law, DIFC Law No. 5 of 2020

The new Data Protection Law, DIFC Law No.5 of 2020 (“DP Law”), came into force on 1 July 2020, replacing the Data Protection Law, DIFC Law No.1 of 2007.

The DP Law will bring the DIFC closer in line with international models which have been adopted in Europe and the US, such as the EU’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act. It also aims to strengthen the DIFC’s reputation for data protection, which may pave the way for future recognition by foreign states as an ‘adequate’ jurisdiction.

The DP Law is also accompanied by a new Data Protection Regulation which set outs procedures for notifications to the Commissioner of Data Protection, accountability, record keeping, fines and a list of ‘adequate’ jurisdictions for cross-border transfers of personal data.

The DP Law will begin to be enforced from 1 October 2020, providing several months for businesses subject to the law to review and amend their existing data protection policies, processes and contracts, in order to be compliant from the outset.

 

Key Changes

Below we take a look at some of the key changes brought in by the DP Law.

Application:

  • Whereas the old law only applied to businesses registered in the DIFC, the new DP Law also applies to any business which processes data within the DIFC as part of stable arrangements and those which process data on behalf of either of the two.

Higher penalties for non-compliance:

  • Failure to notify the commissioner of an unauthorised data intrusion – an increase from $5,000 to $50,000;
  • Failure to implement and maintain technical and organisational measures to protect personal data – an increase from $10,000 to $50,000;
  • Failure to maintain records of processing – an increase from $5,000 to $25,000.

A wider range of offences (with fines up to $100,000) including:

  • Failure to comply with data subject rights of access, rectification and erasure of personal data;
  • Failure to comply with new requirements relating to data portability; and
  • Failure to comply with the new right of a data subject to object to any decision based solely on automated processing, including profiling, which produces legal or other seriously impactful consequences.

Higher governance standards have been imposed, including the maintenance of a record of processing activities, as Controllers and Processors are required to demonstrate compliance with the DP Law.

Data Protection Officers (DPO): DIFC bodies and companies conducting High Risk Processing Activities will need to appoint a DPO. The definition of High Risk Processing Activities includes:

  • Adoption of new or different technologies or methods that materially increase the risk to data subjects or renders it more difficult for data subjects to exercise their rights;
  • Processing a large amount of personal data (including staff and contractor data) where such processing is likely to result in a high risk to the data subject;
  • Systematic and extensive automated processing, including profiling, with significant effects; and
  • Processing of special categories of personal data (i.e. sensitive data) on a large scale.

Data Protection Impact Assessments: controllers will be required to conduct data protection impact assessments before undertaking any new High Risk Processing Activity.

Data Protection Principles: there is a requirement to process personal data in a transparent manner and in accordance with the application of data subject rights. Currently, there is no guidance on the meaning of a “transparent manner”. However, under the old law, personal data had to be processed fairly, lawfully and securely.

Rights of Individuals as ‘data subjects’ have been strengthened, as there are now the following additional rights:

  • to withdraw consent at any time. An absolute right available to a data subject if the basis for the processing of the personal data is consent;
  • to access information on their personal data. There is a timeframe of one month to respond to data subject access requests at no charge. Complex requests can be extended by a maximum of two further months;
  • to data portability, where the processing of personal data is based on consent, the performance of a contract, or is carried out by automated means. The data subject has the right to receive a copy of their personal data in a structured, commonly used, machine-readable format that supports re-use;
  • to object to automated decision making, including profiling, and the right not to be subject to decisions based solely on automated processing which significantly affects them;
  • to non-discrimination. If an individual exercises any of their rights under the DP Law, controllers may not deny any goods or services; charge different prices or rates, including through the use of discounts or other benefits or imposing penalties; or provide a lesser quality of goods or level of service.

Cross-border transfers: the new law mirrors the GDPR. Personal data can be transferred outside of the DIFC without permission from the Commissioner if a country falls under the ‘adequate jurisdiction’ list. Otherwise, it is permitted to transfer the data, so long as appropriate safeguards are in place (e.g. by adopting standard data protection clauses approved by the Commissioner, by legally binding instruments between public authorities, and through (approved) binding corporate rules within the same group of companies).

 

How to prepare your business for compliance

Businesses covered by the new law will need to conduct a review of their current data protection policies and procedures. This should focus on, at least:

  • Mapping the type of data the business is and expects to be processing;
  • Reviewing whether the data being collected is for a legitimate reason;
  • Confirming whether a Data Protection Officer is needed and make such an appointment;
  • Ensuring any outsourcing of processing is subject to contractual obligations to comply with the DP Law, in the form set out in the DP Law;
  • Establishing a procedure for notifications to the Commissioner and responses to data subjects, in accordance with the new time limitations;
  • Conducting employee training on the new requirements.

Should you require any assistance in adapting to the DP Law, please contact Josh Kemp at jk@adglegal.com.

Written by Josh Kemp and Kamila Sielski.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this. You can find out more information on the way we use cookies in our privacy policy.

Close