Latham & Watkins | Doing Business in the UAE 1
A Guide to the Financial, Business,
and Legal Considerations for
Navigating the UAE’s Dynamic Market
Fourth Edition
Doing Business
in the UAE
Latham & Watkins | Doing Business in the UAE 2
Surveying the Legal Landscape in the UAE
Country Background
Free Zones
Status of Shari’ah in the UAE
03
Establishing a Legal Presence in the UAE
Incorporating a Local Entity
Opening a Branch or Representative Oce
Setting up a Free Zone Entity
Holding Companies
Commercial Agency Relationships
05
General Legal Considerations
Doing Business With the Public Sector
Foreign Exchange Controls and Anti-Money Laundering
Bribery and Anti-Corruption
Taxation
Employment Law
Intellectual Property
Data Protection and Cybersecurity
Governing Law
Dispute Resolution
Competition Law
09
Resources
18
Endnotes
Contacts
19
Contents
Latham & Watkins | Doing Business in the UAE 3
Surveying the Legal
Landscape in the UAE
Latham & Watkins | Doing Business in the UAE 4
Country Background
Formed on December 2, 1971, the UAE is a federal state
of seven emirates comprising Abu Dhabi, Ajman, Dubai,
Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain.
The UAE federal constitution provides the legal
framework for the federation and is the basis of all
legislation promulgated at the federal and emirate level.
Pursuant to the constitution, the federal government
has exclusive jurisdiction in various substantive
matters, including foreign policy, defense, and security.
Legislation passed at the federal level has primacy over
the local laws of each emirate. The local government
of each emirate is, however, permitted under Article
122 of the constitution to regulate all local matters
which are not subject to federal legislation or matters
which are not expressly reserved in the constitution
to the federal government (examples of such federal
matters being foreign aairs, defense, and health). As
such, the governments of each individual emirate retain
substantial powers to regulate commercial activities,
issue trade licenses, and aect the incorporation of
corporate entities to the extent that such activity is not
regulated under federal legislation.
The UAE judicial system varies signicantly across the
dierent emirates. Five emirates submit to a federal
court system while Dubai and Ras Al Khaimah retain
their own independent court systems. Abu Dhabi is
unique in that it submits to federal courts while retaining
its own parallel independent court system. All courts in
the UAE exclude juries, are presided over by a single
judge or a panel of three judges, and follow the same
rules of civil procedure and evidence. Certain free zones
have their own judicial systems, as well as their own
rules of civil procedure.
This guide provides an overview of the principal legal issues for foreign investors
considering doing business in the United Arab Emirates (the UAE).
Free Zones
The UAE federal constitution, the federal laws relating
to free zones, and the powers reserved by the individual
emirates under the federal structure, permit each emirate
to set up economic free trade zones or “free zones”
for general or industry-specic commercial activities.
The purpose of free zones is to encourage foreign
direct investment into the UAE. Free zone entities are
generally permitted to have 100% foreign ownership,
have laws and regulations issued in English, generally
enjoy specialized customer care, and in some cases
also enjoy certain tax benets.
Free zones are authorized to enact their own laws and
regulations in specic areas, which may in some cases
override federal and emirate-level laws on the subject
matter. For example, the Dubai International Financial
Centre (DIFC), which is a nancial free zone, has its own
body of laws, including corporate laws, contract laws, and
employment laws, as well as its own court system.
Unless otherwise stated, references in this guide to
matters of law or practice applicable in the UAE generally
refer to the wider UAE outside of the free zones.
Status of Shari’ah in the UAE
While the UAE federal constitution provides that
Shari’ah is the main source of law, it is not the only
source and its application is generally limited to:
(1) being used by the courts as an interpretative aid
if no express provision of legislation governing a
particular question exists; (2) religious, morality, and
personal law matters (e.g., inheritance for Muslims);
and (3) transactions which are intentionally expressed
to be Shari’ah-compliant, such as Islamic banking
transactions. Outside of these limited areas, contractual
terms that would be forbidden under Shari’ah are
generally enforceable under the laws of the UAE.
For example, a contractual term in a conventional
commercial transaction requiring the payment of
interest (which is a concept that is forbidden under
Shari’ah) is, in general, valid in the UAE and would
normally be enforceable in UAE courts.
Latham & Watkins | Doing Business in the UAE 5
Establishing a Legal
Presence in the UAE
Latham & Watkins | Doing Business in the UAE 6
In order to conduct business in the UAE, most foreign
investors are required to establish a formal legal
presence in the UAE, which will typically be through any
of the following means:
• incorporating a local entity;
• registering a branch or representative oce of a
foreign company;
• establishing a free zone entity or free zone branch; or
• entering into a commercial agency relationship with a
local agent.
Incorporating a Local Entity
Unlike many other jurisdictions, buying shelf companies
in the UAE is generally not feasible due to stringent
incorporation, ultimate benecial ownership, and
economic substance requirements.
1
While the UAE does
not have a central public platform that compiles company
information, the Department of Economic Development
of each emirate does disclose certain basic information
on registered companies including company name,
commercial registration number, company address,
contact details, and commercial activities.
As a general requirement, locally incorporated entities
must obtain a commercial license from the Department
of Economic Development (or similar government
agency) of the emirate in which they are incorporated
and, if necessary, authorization from industry-specic
ministries or government entities in the relevant emirate
or free zone (such as the Central Bank of the UAE).
2
Locally incorporated entities may be formed as civil
companies
3
or incorporated under Federal Law No. 32
of 2021 concerning commercial companies (Companies
Law). All locally incorporated companies must be
established in accordance with the Companies Law. The
Companies Law requires companies to adopt one of the
following legal forms:
• limited liability company;
• private joint stock company;
• public joint stock company;
• limited partnership; and
• joint liability company.
Of the entities listed above, most foreign investors choose
to establish a limited liability company given that they
are the most exible in nature. The relevant licensing
authority in each emirate also imposes a minimum capital
requirement which varies depending on the nature of
the business of the limited liability company. Pursuant
to Article 76 of the Companies Law, a limited liability
company must have sucient capital to achieve the
objects of its incorporation. Limited liability companies
may not oer their shares for public subscription, a
right reserved only for public joint stock companies.
Nevertheless, a limited liability company may change its
legal form in order to qualify for public subscription.
Under the Companies Law, a foreign investor may
establish a 100% foreign-owned entity in mainland UAE,
provided the activities the company would carry on are
specied on a list issued by the Department of Economic
Development in the relevant emirate. However, 100%
foreign ownership is not permitted for entities carrying
out activities with strategic impact.
4
A company
undertaking activities with a strategic impact requires
a majority UAE national shareholder or must be wholly
owned by UAE nationals.
Opening a Branch or Representative
Oce
Articles 335 to 339 of the Companies Law permit foreign
companies to open branches or representative oces
within the UAE. A branch or a representative oce of a
foreign company may be wholly owned by foreigners.
The UAE does not impose minimum capitalization
requirements for a branch, although the foreign company
is required to provide a standard form bank guarantee
from a local bank or an international bank with a branch
in the UAE in the amount of AED50,000 (approximately
US$14,000) and a letter from a locally registered auditor
conrming its appointment.
The branch must have a commercial activity, which the
relevant local authorities must approve in advance. The
commercial activity of the branch must be the same
commercial activity as its foreign parent company. With
Establishing a Legal Presence in the UAE
Latham & Watkins | Doing Business in the UAE 7
regard to trading activities, branches are not typically
permitted to physically deal or trade in goods within the
UAE, other than goods manufactured by their foreign
parent or their foreign parent’s group. A branch is,
however, permitted to provide maintenance and repair
services to customers of its foreign parent company.
Importantly, approval for the issuance of a license for
a branch depends on the type of activity the proposed
branch intends to carry on in the relevant emirate.
Companies should therefore obtain initial approval
from the relevant local authorities for the proposed
activities of the branch prior to commencing the
incorporation process.
A representative oce is more limited than a branch
oce in the scope of activities that it is permitted to
undertake. A representative oce may only conduct
marketing and administrative functions on behalf of its
foreign parent company. A representative oce typically
gathers information on the local market, establishes
relationships, and solicits orders to be performed by the
foreign parent company.
Setting Up a Free Zone Entity
A free zone entity will generally take one of the
following three forms: a branch of a foreign company,
a free zone company, or a free zone establishment.
The minimum capital requirements for companies
established in free zones will vary between free zones;
for instance, a private limited liability company in
the Khalifa Industrial Zone Abu Dhabi must have a
minimum share capital of AED150,000. Conversely, the
DIFC does not formally set a minimum share capital for
private limited liability companies.
The key limitation of a free zone entity is that it is
generally only permitted to conduct business within
the geographical location of the relevant free zone
or internationally, and is limited to performing solely
those activities specied in its license.
5
A free zone
entity must typically hold one or more of the following
licenses: (1) trading license, (2) service license, and/or
(3) manufacturing/industrial license. In order for a free
zone entity to engage in sales within the UAE (outside
the relevant free zone), the entity will be required to
retain the services of a commercial agent or distributor
or establish an onshore entity.
Holding Companies
Pursuant to Article 268 of the Companies Law, a holding
company may take the form of a limited liability company
or joint stock company. The objects of a holding
company are limited to (1) holding shares in joint stock
companies and limited liability companies; (2) extending
loans, guarantees, and other forms of nance to its
subsidiaries;
6
(3) ownership of real estate and moveable
assets necessary to achieve its objects; (4) management
of its subsidiaries; and (5) ownership of intellectual
property. A holding company may only carry on its
objects through its subsidiaries.
In certain circumstances, entities incorporated in free
zones may be used as oshore holding companies,
meaning that they are used in transactions that do not
involve operations physically situated in the relevant
free zone. Examples of this practice include the use of
companies incorporated under the oshore companies
regime of the Jebel Ali Free Zone for use as a regional
holding company, or as a holding company for the
ownership of real estate assets in Dubai. Additionally,
pursuant to the Prescribed Company Regulations of
August 10, 2022 of the DIFC, prescribed companies
(which are akin to holding companies) can be
incorporated in the DIFC in certain situations and take
advantage of the regulatory environment and court
system oered by the DIFC.
While exceptions such as those mentioned above
do exist, free zone entities are generally required to
have physical operations within the free zone in which
they are incorporated. Most free zones have a focus
on attracting and retaining a particular industrial or
economic sector, as evident in the names of free zones
such as Dubai Internet City, Dubai Healthcare City, or
Dubai Media City. While many of the UAE’s free zones
are physically located in Dubai, prominent free zones
outside of Dubai include the Abu Dhabi Global Market
(ADGM) and the Khalifa Industrial Zone in Abu Dhabi,
the Hamriyah Free Zone in Sharjah, and the RAK Free
Trade Zone in Ras Al Khaimah.
Establishing a Legal Presence in the UAE
Latham & Watkins | Doing Business in the UAE 8
Commercial Agency Relationships
Foreign companies wishing to import/distribute goods
in the UAE but who do not wish to maintain a physical
presence in the UAE, will generally enter into a
commercial agency relationship with a UAE national, a
private company that is wholly owned by UAE nationals,
or a public company that is at least 51% owned by
UAE nationals.
Commercial agencies enable foreign companies to
leverage domestic expertise and to forego the high costs
and diculties in establishing a physical presence in the
UAE. Commercial agents are common among foreign
manufacturers and traders, especially in the large-scale
importation of goods.
As a recent development under Federal Law No. 3 of
2022 on Regulating Commercial Agencies (eective
from June 15, 2023) (Commercial Agencies Law), a
foreign entity may sell its own products directly in the
UAE without a commercial agent, provided that (1) the
product did not previously have a commercial agent
appointed in the UAE; and (2) the product is not subject
to an existing commercial agency in the UAE.
The Commercial Agencies Law provides a number of
protections to the registered agent, such as an exclusive
right to represent the principal and trade in the principal’s
products in the UAE, and entitlement to commissions
from the trade in the principal’s products in the UAE
(even if the registered agent was not directly involved in
such trade).
Registered commercial agency agreements can only be
terminated as follows:
• upon the expiry of the agreement (unless specied
otherwise in the agreement, written notice of less than
one year, or half the contract’s full term, is needed to
terminate under this limb);
• in accordance with the termination provisions
contained in the registered commercial agency
agreement;
• by the mutual agreement of the parties; or
• by court order (this route is usually reserved for
disputes which cannot be amicably settled and may
also result in compensation payments).
Notably, for agency agreements currently in place, the
termination provisions of the Commercial Agencies
Law will only apply from June 2025. Furthermore, if the
commercial agent’s investment exceeds AED100 million
or if it has been a registered commercial agent for
more than 10 years, then the termination provisions of
the Commercial Agencies Law will only apply to that
arrangement from June 2033 onwards.
Establishing a Legal Presence in the UAE
Latham & Watkins | Doing Business in the UAE 9
General Legal
Considerations
Latham & Watkins | Doing Business in the UAE 10
Doing Business With the Public Sector
Foreign businesses that do business with the UAE
federal government or any other governmental body
must comply with the public sector procurement rules
set forth in Financial Order No. 16 of 1975, the Federal
Regulation of Conditions of Purchases, Tenders and
Contracts (Public Tenders Law). The Public Tenders
Law applies to federal but not emirate-level government
projects. Individual emirates have their own local
procurement rules, which are usually similar to the
federal system. To bid for government contracts, bidders
must typically register on the relevant eProcurement
system. The Ministry of Finance will announce tenders
and contracts for contracts with federal entities. On an
emirate level, each emirate will have its own system
whereby bids can be submitted.
Foreign Exchange Controls and
Anti-Money Laundering
The UAE does not generally have any currency
exchange controls and restrictions on the remittance
of funds. Furthermore, free zone entities are permitted
to repatriate 100% of their prots from the UAE in
accordance with regulations in place in their respective
free zones.
The UAE has recently strengthened its laws relating to
money laundering, terrorist nancing, and proliferation
nancing. The principal anti-money laundering and
counter terrorist nancing legislation is Federal
Decree No. 20 of 2018 on Anti-Money Laundering and
Combating the Financing of Terrorism and Financing of
Illegal Organisations (AML Law), as amended by Federal
Decree No. 26 of 2021. In conjunction with the AML
Law, Federal Law No. 14 of 2018 on the Central Bank
and Organization of Financial Institutions and Activities
(Central Bank Law) provides for further anti-money
laundering enforcement, and is supplemented by various
pieces of guidance and standards issued by the UAE
Central Bank, to ensure adequate supervision of all
nancial service companies in the UAE.
Additionally, as a member of the global Financial Action
Task Force (FATF), the UAE has implemented anti-money
laundering procedures to meet the standards of the FATF.
The various free zones also have rules on preventing
money laundering. For example, the Dubai Financial
Services Authority (DFSA), serving as the DIFC’s nancial
regulatory agency, has detailed additional anti-money
laundering rules in its DFSA Rulebook.
Bribery and Anti-Corruption
The UAE does not have a standalone bribery law, with
bribery primarily being governed by Federal Law No.
31 of 2021 (Penal Code). The UAE has also ratied the
United Nations Convention Against Corruption, through
adoption of Federal Decree No. 8 of 2006, and has
enacted federal and emirate-level legislation that targets
bribery and corruption.
Bribery of a UAE public ocial (including any public
servant, person assigned to a public service, as well as a
foreign public servant or an employee of an international
organization) is a criminal oence in the UAE. This
applies equally to the public ocial and those who oer,
accept, and facilitate bribes, whether or not they actually
benet from the bribe. Private sector bribery within the
UAE is similarly prohibited. Penalties for bribery can
include forfeiture of the bribe, up to ve years in prison,
and nes commensurate with the amount of the bribe.
Economic Substance
Entities incorporated in the UAE (both onshore and
within free zones) which carry out certain activities are
required to maintain an adequate “economic presence”
relative to the activities they undertake.
The economic substance requirements apply to entities
operating in any of the following elds:
• Banking
• Insurance
• Fund management
• Financing or leasing
• Shipping
• Holding companies
• Exploiting or holding intellectual property
• Headquarters
• Distribution and service centers
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 11
While the National Assessing Authority and Ministry
of Finance are charged with regulating economic
substance, entities must self-assess to determine
whether they are caught by the criteria.
Slightly dierent economic substance requirements
apply to each relevant activity, but generally, economic
substance can be evidenced through performing core
income-generating activities in the UAE, being “managed”
from within the UAE, having an adequate number of
employees in the UAE, and incurring proportionate
operating expenditure in the UAE. The requirements are
generally less onerous for holding companies. Entities
falling within the scope of the economic substance
requirements are required to le a notication with the
Ministry of Finance every nancial year. The notication
must provide detail on the relevant activities carried out,
income generated, and related tax treatment. Additionally,
entities that have earned income from a relevant activity
must le a more comprehensive report with additional
detail surrounding their nancial operations.
Penalties for failure to comply range from nancial nes
to suspension or revocation of business licenses.
Taxation
VAT was introduced in the UAE on January 1, 2018, at
a rate of 5% for the majority of goods and services, and
is overseen by the Federal Tax Authority. VAT applies to
all tax-registered businesses in the UAE (both onshore
and within free zones). Businesses with an annual
turnover of AED375,000 or more are required to register
for VAT with the Federal Tax Authority through an online
portal. Once registered, businesses must submit regular
VAT returns and pay any VAT due to the Federal Tax
Authority on all taxable supply of goods or services
at each step of the supply chain. However, foreign
businesses may also recover the VAT that they incur
when visiting the UAE.
The UAE Ministry of Finance issued Federal Decree
No. 47 of 2022 on the Taxation of Corporations and
Businesses (Corporate Tax Law) which will primarily
take eect from June 1, 2023. A corporate tax rate
of 9% is applicable to the following taxable persons:
(1) companies and other certain judicial persons
incorporated in, or eectively managed from the UAE;
(2) natural persons (individuals) who earn business
income and hold, or are required to hold, a commercial
license or otherwise permitted to conduct a business
or business activity in the UAE; and (3) non-resident
juridical persons (foreign legal entities) that have a
permanent establishment in the UAE.
Entities incorporated in UAE free zones are also within
the scope of the corporate tax as taxable persons, and
will need to comply with the requirements set out in the
Corporate Tax Law. However, the tax regulations set
out a number of exemptions that will apply to entities
incorporated in free zones which may allow them to avoid
paying corporate tax based on the nature of their income.
There are no personal taxes of any kind in the UAE
— i.e., no federal income tax, capital gains tax, or
inheritance tax. Certain municipality taxes are levied at
the emirate level on designated services.
Employment Law
In November 2021, the Ministry of Human Resources
& Emiratisation (MHRE) announced an overhaul
to the labor laws in the UAE, with the introduction
of Federal Decree No. 33 of 2021 on Regulating
Labour Regulations, which came into eect as of
February 2, 2022 (Labour Law). The Labour Law
introduced signicant changes and replaced the
previous Federal Law No. 8 of 1980 on Regulation of
Labour Regulations (Old Labour Law).
The Labour Law applies to all employees working
in the UAE. Certain categories of individuals are
exempted from the law, including federal and emirate-
level government employees, domestic servants, and
employees of the armed forces, police, and security.
In addition to the Labour Law, the MHRE has issued a
number of ministerial resolutions and circulars which
supplement certain provisions of the Labour Law, and in
some instances have been used to clarify the application
of certain provisions of the Labour Law.
The Labour Law aords certain protections for
employees, including setting minimum standards on
employing juveniles, working hours, vacation and public
holidays, sick leave, maternity leave, employee records,
safety standards, termination of employment, and end of
service gratuity payments.
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 12
Employee grievances are handled by a special program
run by the MHRE, and the MHRE must also be informed
if an employee is subject to the disciplinary code.
Pensions and social security schemes in the UAE are
governed by the Federal Law No. 7 of 1999 on Pensions
and Social Security, as amended, applies to UAE and
Gulf Cooperation Council (GCC) nationals.
Some free zones have their own employment laws
and employee grievance procedures, although these
generally mirror the provisions of the Labour Law. In
some free zones, for example the DIFC and the ADGM,
the employment laws dier greatly from the Labour Law.
The Labour Law requires that all employees must be
employed on a xed-term contract for a period of up
to three years. Under the Old Labour Law, only full-
time work was possible; however, the Labour Law
now recognizes part-time, temporary, and exible
employment. The Labour Law also imposes mandatory
internal policy obligations on employers with over 50
employees. The internal policies implemented must
address employee work instructions and the criteria and
controls for promotions, bonuses, holiday entitlement, and
termination. The internal policies must also include a list of
sanctions that may be imposed on oending employees,
and the conditions and rules for their imposition.
Most employees working in the UAE, including in the
free zones, have written contracts of employment. The
MHRE requires a standard form contract of employment
to be entered into and led. Many employers also enter
into further, more comprehensive employment contracts
with their employees.
Another key provision of the Labour Law is a
requirement to pay a statutory end of service gratuity
(ESG) to non-UAE or GCC employees upon termination
of their employment (subject to satisfying certain
requirements). The ESG regime in the UAE is designed
to take the place of a formal pension regime. ESG is
calculated at a rate of 21 days of basic pay per year
for the rst ve years of service and 30 days for each
year thereafter, up to a maximum amount of ESG equal
to two years of salary. ESG is payable as a lump sum
on termination of employment. Employees summarily
dismissed retain their entitlement to ESG, and reductions
no longer apply if an employee resigns (as was the case
under the Old Labour Law).
The DIFC has implemented the DIFC Employee
Workplace Savings Plan (DEWS) as an end-of-service
benets plan which is a funded, professionally managed,
and dened contribution plan. The DEWS plan requires
employers to contribute 5.83% of an employee’s basic
salary with a service period of less than ve years, and
8.33% of an employee’s basic salary with a service
period of more than ve years.
UAE federal law also sets out preferences for hiring
UAE nationals and, for some administrative positions,
requires that only UAE nationals be employed. Following
the introduction of the updated Labour Law, the MHRE
has issued new emiratization requirements in an eort
to increase participation of UAE nationals in the private
sector. Under the new requirements, private sector
companies with more than 50 employees must ensure
that a minimum of 2% of its workforce are Emirati,
and are required to increase their Emirati workforce in
excess of their current quota through a 2% year-on-year
increase until a 10% Emirati workforce is reached by
2026. However, separate emiratization requirements
apply for the banking and insurance sectors, which
require a 4% and 5% Emirati quota respectively. The
emiratization policy applies to both the public and
the private sector, and both local and international
companies operating in the UAE are subject to the
emiratization policy in the sectors for which such
guidelines have been formulated.
Intellectual Property
The UAE is an attractive global business center and
gateway to the wider Middle East region for international
companies seeking to commercialize and exploit their
brands, products, and technologies. In support of this
status, the UAE recently passed new laws regulating
trademarks, copyright, and patents, which became
eective in 2021-22 and incorporated global best
practices with respect to IP protection (https://www.
moec.gov.ae/en/intellectual-property-legislations).
1. Trademarks: Trademarks are regulated by Federal
Decree Law No. 36 of 2021 On Trademarks and
Geographical Indications (eective as of January 2,
2022). Trademarks, designs, and logos can all be
registered with the UAE Ministry of Economy. The
UAE has also recently signed the Madrid Protocol,
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 13
an international treaty enabling trademark owners
in one member country to protect their trademarks
in other member countries via single lings with the
World Intellectual Property Organisation (WIPO); it
became eective in the UAE as of December 18,
2021. (https://www.wipo.int/madrid/en/) In the UAE,
enforcement proceedings can be brought against
suppliers of counterfeit goods and unauthorized
sellers, with various sanctions and remedies
available, including provisional prevention measures,
seizures and conscations, criminal sanctions, and
damages covering lost prots.
2. Patents: In 2021, the UAE adopted a new law on
industrial property rights, Federal Law No. 11 of 2021
on Regulation and Protection of Industrial Property
Rights. Wide protection in respect of patented IP
and other industrial property can be obtained in the
UAE. The Ministry of Economy's Centre for Patent
Registration is the competent registration authority.
Previously, patent protection could also be achieved
via ling patent applications to the Patent Oce of
the Gulf Cooperation Council (which includes the
UAE and other Gulf states, such as Saudi Arabia) in
Riyadh, however, the Patent Oce does not currently
accept new applications due to ongoing IP law
reforms in the region.
3. Copyright: Copyright is regulated by the 2021
Federal Decree-Law No. 38 of 2021 on Copyrights
and Neighbouring Rights. The UAE is party
to international treaties, including the Berne
Convention for the Protection of Literary and
Artistic Works 1886, the Rome Convention for the
Protection of Performers, Producers of Phonograms
and Broadcasting Organisations 1961, and others.
In 2022, the UAE also launched a rst collective
management organization (CMO) in respect of
IPRs, such as to enable the collection of certain
royalty payments within the Gulf states. In the UAE,
copyright can be registered with the UAE Ministry
of Economy. Although registration is not mandatory,
it ensures a veriable record of the content of work
as it existed at a specic time. This can be valuable
evidence if a dispute arises and an author needs to
prove a copyright claim (e.g., in a case concerning
breach of copyright materials in a technology
transfer project). While in most cases a license is
required for a third party to use copyright-protected
items, third parties can rely on the doctrine of “fair
use” in certain circumstances to use copyright work
even without a licensor’s permission, or apply to
court for mandatory licenses.
However, when seeking to protect or exploit IP,
companies should be mindful of a number of unique
challenges under UAE laws, including the following:
• registration of IP in the UAE, which violates public
order or public morals specic to the UAE, may not be
possible;
• while an author may contract for the disposal of future
works, a disposal by an author of the total body of his
or her future intellectual work or more than 10 future
copyright works is void;
• notwithstanding the limitation of disposal of future
works, in most cases employers are deemed to be
owners of works created by their employees during
the course of employment;
• with respect to patents, inventions which are created
in the context of employment and relate to the
employer's eld of activities by an employee whose
employment agreement does not require inventive
activity, belong to the employee, unless the employer
noties the employee otherwise, within four months
of becoming aware of the invention, and pays
remuneration for the invention;
• with respect to copyright, license agreements must be
entered into in writing, and could be registered with
the authorities (for which purpose they should be in or
translated into Arabic);
• a trademark licensee does not have a right to initiate
certain types of legal proceedings in its own name
against infringing entities;
• authors with respect to copyright, and inventors
with respect to patents, are entitled to remuneration
for creation of IP and to seek a review of any
consideration agreed upon with the transferee as to
whether it is fair; and
• moral rights cannot be waived or assigned (including a
right to prohibit modication and a right to withdraw a
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 14
work from circulation), even if the author has assigned
economic rights (however, considerable limitations are
now in place on how these rights can be exercised).
Companies looking to develop, protect, or exploit IP in
the UAE need to give thought to including mechanisms
in their contracts to address these challenges:
• if a company is licensing its IP, it should oblige the
licensee to register any licenses in the UAE and notify
the company of claims relating to IP infringements;
• each company should establish contractual and
organizational arrangements in respect of IP with its
employees and contractors, in particular, it should have
specic provisions on ownership of IP in underlying
agreements, require employees and contractors to
notify to the company creation or any relevant IP, and
potentially execute retrospective assignments subject
to remuneration, if appropriate; and
• when dealing with moral rights, impose clear
compensation obligations in the event that an author
seeks to exercise them to the prejudice of the owner
of economic rights to the IP, e.g., by withdrawing their
work from circulation.
In addition, companies should consider taking steps to
register IP ownership rights or licenses independently of
any underlying agreement relating to such IP.
Data Protection and Cybersecurity
Data is one of the most valuable assets of a company.
The UAE recognizes this, and therefore operates a
complex legal framework that has sought to impose data
handling obligations with respect to various forms of data.
In September 2021, the UAE issued its rst
comprehensive federal level Data Protection Law,
Federal Decree No. 45 of 2021 (Data Protection Law),
which became eective in January 2022 and will
become enforceable six months after the publication
of forthcoming Implementing Regulations.
7
The Data
Protection Law applies to organizations in the UAE that
process personal data (information relating to an identied
or identiable individual, e.g., employees, business
contacts, website visitors), and to organizations outside
of the UAE that process personal data of individuals who
are located in the UAE. This means that an organization
is in scope of the Data Protection Law if it oers goods or
services to individuals in the UAE, or otherwise processes
UAE individuals’ personal data, even if the organization
has no local UAE presence.
The Data Protection Law contains similar concepts and
compliance requirements as other international privacy
regimes such as the European Union General Data
Protection Regulation (GDPR), however, organizations
should consider some areas of divergence. Some of the
key compliance requirements include:
• compliance with data processing principles, including
a requirement to process personal data fairly, lawfully,
and transparently, to only process personal data for
specied purposes, to limit personal data processing
to the minimum personal data necessary, and to apply
appropriate technical and organizational security
measures to protect personal data;
• providing individuals with privacy notices;
• having a legal basis for processing personal data,
such as the prior consent of the individual or a legal
obligation to process personal data;
• responding to individuals’ rights requests, such as
providing individuals with a copy of their personal data
and amending and deleting personal data on request;
• maintaining a detailed record of the organization’s
personal data processing operations;
• notifying the UAE Data Oce, and in some cases
impacted individuals, of a personal data breach; and
• implementing a valid transfer mechanism to transfer
personal data outside of the UAE.
Possible penalties (e.g., nes) for non-compliance
with the Data Protection Law will be set out in the
Implementing Regulations.
Organizations should review their current data protection
compliance program to assess gaps which need to be
remedied to comply with the Data Protection Law.
In addition to the federal level Data Protection Law,
organizations should also be aware of a number of
free zone and sector-specic data protection laws in
the UAE. The Data Protection Law does not apply to
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 15
the processing of certain types of personal data which
are subject to sector-specic data protection legislation
(such as the processing of health data and banking
and credit data). The Data Protection Law also does
not apply to processing within scope of certain free
zone-specic data protection laws, such as the DIFC
and ADGM. Many organizations will therefore need
to navigate both sectoral and free zone-specic data
protection laws, alongside the new Data Protection Law.
Further, other UAE laws impose a number of additional
data protection requirements and rights, such as those
relating to consumer protection and cybercrimes,
including:
• a right to freedom and condentiality of
communications. Individuals have a right to complain
about invasions of this right to privacy;
• it is a criminal oence to publish personal data (such
as photos) relating to an individual without their
consent;
• it is a criminal oence to access or disclose certain
communications without consent; and
• there is a prohibition on the invasion of an individual’s
privacy by means of an IT system without the
individual’s consent and unless otherwise authorized
by law.
Given the complex framework of obligations applicable
to processing personal data in the UAE and personal
data about individuals in the UAE, we recommend
to always obtain specic advice prior to processing
personal data. Organizations that process personal
data should adopt and maintain industry-standard data
security measures.
Governing Law
Jurisdictions which have, and rely upon, large bodies of
case law (particularly common law jurisdictions such as
the US and the UK) tend to have more developed bodies
of commercial and corporate law than the UAE. The
same is true, to an extent, of other civil law jurisdictions
as well. Laws and cases in the UAE tend not to be
as readily available, or available with reliable English
translations, as in those other jurisdictions. Accordingly,
when a foreigner enters into contracts with a party
located in the UAE (other than an entity connected
to federal or emirate governments), non-UAE law is
commonly selected, with a notable tendency to select
English law (or, in some instances, New York law or
Delaware law) as an alternative.
Companies should to ensure that the selection of a
governing law is made expressly, that the selection of
a governing law extends to non-contractual obligations
arising out of or connected to the relevant contract
(where appropriate), and that the selection and/or the
law itself will be recognized in any enforcement action
in the UAE. Parties should also be aware that the
selection of a non-UAE law will not prevent mandatory
rules of UAE law impacting on contractual obligations
in some circumstances (especially if contractual
obligations are performed in the UAE or if enforcement
is sought in the UAE).
While including such provisions may be helpful as a
matter of practice, whether a foreign jurisdiction or
arbitration clause would be recognized by the UAE
courts in practice remains uncertain. The UAE Civil
Code and general law in the UAE gives the UAE courts
broad powers to hear and adjudicate matters involving
a UAE party, therefore inevitably prompting a risk that a
UAE court could purport to take jurisdiction over a matter
despite an express provision providing for an alternative
jurisdiction. UAE legislation provides that the UAE courts
have jurisdiction to hear actions brought against UAE
nationals, UAE corporate entities, and foreign citizens
having an address or place of residence in the UAE,
irrespective of any agreement between the parties in
respect of jurisdiction and applicable laws.
Dispute Resolution
Arbitration
International arbitration is the preferred method of
dispute resolution for cross-border transactions relating
to the UAE. The primary reason for that, and one of the
key features of international arbitration, is the relative
ease with which arbitral awards can be enforced in
countries around the world due to the 1958 New York
Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, to which well over 140
countries are a party. The UAE acceded to the New York
Convention in 2006, which means that foreign arbitral
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 16
awards should be as easily enforced within the UAE as
local arbitral awards. As a result, many parties doing
business in the UAE (both foreign- and locally based)
tend to refer any disputes arising out of or in connection
with their contracts to nal and binding arbitration.
Dispute Resolution Options in the DIFC
The DIFC Courts’ jurisdiction includes matters which
are referred to the DIFC Courts by private parties on a
consensual basis, whether or not such parties are DIFC-
domiciled entities, in addition to all matters pertaining
to the parent companies of DIFC-registered branches.
8
The practical eect of these changes is to enable non-
DIFC persons to opt in to the jurisdiction of the DIFC
Courts, including through the inclusion of forum selection
clauses in ordinary commercial contracts and nance
documents, irrespective of a nexus to the DIFC.
In 2021, Dubai Decree No. 34 of 2021 abolished the
DIFC Arbitration Institute and transferred its jurisdiction
to the Dubai International Arbitration Centre (DIAC).
Arbitration in the DIFC Courts subject to a DIFC-
LCIA Court of International Arbitration (LCIA) are now
procedurally governed by the DIAC Arbitration Rules
2022. These rules have been adapted to reect the
latest developments in the international arbitration
eld, the needs of the business community, as well as
containing provisions on expedited arbitration and an
alternative process for appointing arbitrators.
A common concern that remains with respect to DIFC
Court judgments is the procedure for enforcement of
those judgments. At least within the UAE, however,
established procedures and codied guidelines ensure
that DIFC Court judgments are adequately enforced
by the Dubai Courts or the other emirates of the UAE.
Pursuant to the Protocol of Enforcement between
the Dubai Courts and the DIFC Courts (Protocol of
Enforcement), all judgments, orders, and awards issued
or certied by the DIFC Courts will be enforced by the
Dubai Courts, provided that the relevant judgment or
order has been translated into Arabic and constitutes
a nal judgment.
9
Crucially, the judge recognizing and
executing the judgment at the Dubai Courts has no
authority to review the merits of an order or judgment
during any enforcement proceeding. The procedure
established by the Protocol of Enforcement essentially
facilitates the conversion of a DIFC Court judgment
into an order of the Dubai Courts. Thereafter, automatic
enforcement can be achieved not only onshore in Dubai,
but in the other emirates of the UAE as well.
Nevertheless, the question remains as to whether the
courts of other GCC countries will similarly enforce
an order of the DIFC Courts that has been converted
into a Dubai Court judgment pursuant to the Protocol
of Enforcement. In theory, a region-wide treaty should
support pan-GCC enforcement — the GCC Convention
for the Enforcement of Judgments and Judicial Notices
and Delegations (GCC Convention). This treaty provides
that all member states shall ensure that their domestic
courts enforce the nal judgments of the courts of other
member states. However, the GCC Convention authorizes
the courts of member states to reject enforcement if the
judgment in question is deemed to be contrary to the
provisions of Islamic Shari’ah, the provisions of a member
state’s constitution or public order.
Competition Law
The UAE regulates competition through an extensive
framework of laws, implementing regulations, and
cabinet resolutions (primarily Federal Law No. 4 of 2012
on the Regulation of Competition, the Implementing
Regulations of the Competition Law of 27 October 2014
along with Cabinet Resolutions No. 13 of 2016 and No.
22 of 2016 (collectively, the UAE Competition Laws)).
Primarily, the UAE Competition Laws regulate the
following:
• Restrictive Agreements — agreements which abuse,
restrict, or prevent competition, including agreements
that aim to x purchase or sale prices of goods or
services, are prohibited.
• Abuse of Dominance — parties with a dominant
position in a market (dened as a market share of more
than 40%) are prohibited from taking any action which
limits or prevents competition. This eectively prevents
actions such as predatory pricing, refusal to conduct
transactions with certain parties, or forced cross-selling.
• Merger Control — Merger lings are also required for
proposed transactions if (1) the combined market share
of the parties to the transaction exceeds 40% of the
relevant market; and (2) the economic concentration
would aect competition in the UAE market or enhance
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 17
a preexisting dominant position. If the thresholds
specied are met, the parties are required to request
approval from the Competition Department in writing
prior to concluding the transaction.
The UAE Competition Laws provide an exemption
for establishments owned or controlled by the UAE
federal government or a local government of an emirate
according to the controls specied by the cabinet.
This exemption also applies to all acts carried out by
establishments under the control of the UAE federal
government or local government of an emirate if either
(1) an establishment is fully owned by the UAE federal
government or a local government of an emirate; or (2) an
establishment is no less than 50% owned by the UAE
federal government or a local government of an emirate.
General Legal Considerations
Latham & Watkins | Doing Business in the UAE 18
Al-Mirsal
Please visit www.al-mirsal.com to view Latham’s Middle East blog,
which is produced in English and Arabic and highlights industry and
legal developments relevant to the region.
Latham & Watkins | Doing Business in the UAE 19
Christopher Lester
+971.4.704.6369
christopher.lester@lw.com
Eyad Latif
+971.4.704.6318
eyad.latif@lw.com
Omar Maayeh
+971.4.704.6427
omar.maayeh@lw.com
1 We are aware of some corporate service providers in the
UAE oering shelf companies incorporated in certain free
zones.
2 These business activities and corresponding government
agencies include, among others: industrial projects
(Ministry of Finance), health services (Ministry of Health/
relevant health authority depending on the emirate where
such service will be provided), engineering consultants
and related technical services (municipality authority of
the relevant emirate), law rms (the Ruler’s Court of the
relevant emirate, e.g., Government of Dubai Legal Aairs
Department), banking and nancial services (UAE Central
Bank), recruitment agencies (Ministry of Human Resources
& Emiratisation), sea cargo, freight forwarding, and cargo
clearing (Department of Ports and Customs).
3 Civil companies may only be established in the emirates of
Dubai and Sharjah and are typically established to practice
certain types of professions, and are subject to separate
rules and regulations.
4 The activities with strategic impact are (1) security and
defence activities; (2) banking and nance companies
(regulated by the Central Bank); (3) printing currency or
bank notes; (4) telecommunications; (5) Hajj and umrah
(pilgrimage) services; and (6) sheries-related activities.
5 The relevant license will be issued by the free zone
authority regulating the free zone in which the company
is incorporated. In certain instances, a free zone entity
may be able to apply for an additional license from a UAE
authority that has jurisdiction outside of the free zone (for
example, the Dubai Department of Economic Development)
if it is conducting certain kinds of permissible business in a
particular emirate outside of the free zone of incorporation.
6 With the introduction of holding companies, the Companies
Law also includes a denition for “subsidiaries” in the
context of holding companies.
7 As of the date of publication (April 2023), the Implementing
Regulations have not been published and it is not clear
when they will be published.
8 Dubai Law No.12 of 2004 as amended by Dubai Law No.16
of 2011.
9 The Protocol of Enforcement extends to arbitral awards
issued by the DIAC, however, these awards must rst be
ratied by the DIFC Courts before being enforced by the
Dubai Courts.
Endnotes
Contacts
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