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THE PITFALLS OF THE UAE LEGAL SYSTEM

THE PITFALLS OF THE UAE LEGAL SYSTEM. Presentation by Chris Greenwell Tuesday 6 th March 2007. UAE COURT STRUCTURE. UAE comprises seven Emirates all of which have precedent which is very difficult to predict Five governed by Abu Dhabi Supreme Court

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THE PITFALLS OF THE UAE LEGAL SYSTEM

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  1. THE PITFALLS OF THE UAE LEGAL SYSTEM Presentation by Chris Greenwell Tuesday 6th March 2007

  2. UAE COURT STRUCTURE • UAE comprises seven Emirates all of which have precedent which is very difficult to predict • Five governed by Abu Dhabi Supreme Court • Dubai and Ras Al Kaimah have their own court systems • Local or licensed international lawyers must be retained • Arbitration is preferred method of dispute resolution

  3. THE LITIGATION EXPERIENCE • UAE based opponents are expensive and difficult to pursue in practice • Judgments and arbitration awards outside UAE highly likely to be unenforceable in UAE • Wealthy UAE residents look to jurisdiction elsewhere UK/US • Ideally contracts will have a nexus with UK/US and a jurisdiction clause • Institutions with UK/US assets are contractors of choice

  4. AGENCY AGREEMENTS IN THEORY • Supply into UAE is normally done through an agent • It can be done through an UAE company shareholding controlled by UAE national • Agency agreement should be registered to obtain protection of UAE commercial code • Disputes resolvable at Commercial Agencies Committee of the Ministry and thereafter through the courts • “Agency” covers distribution, franchise, sales representation, agency and commission and a wide variety of different agreements

  5. AGENCY IN PRACTICE • UAE law acts to protect the UAE agent who must be an UAE national • Agreement must define with great care • Territory • Agent’s performance obligations justifying termination • Agents control over purchase or sale prices • Jurisdiction and arbitration provisions • The commodities the subject of the agreement • Any dispute in UAE is likely to be expensive and in the absence of agreement take three years to resolve • Principal’s stock should be restricted as it is subject to lien • No replacement registered agent can be appointed until disputes are resolved

  6. TRADEMARKS AND PARALLEL IMPORTS • UAE attitude improved radically in last fifteen years • Trademarks can be registered with the Ministry of Economy and Commerce • Use of registered agent will assist in establishing trademark first use in UAE • Agent can for duration of agency dispute effectively usurp use of the trademark • Clearly defined commodities maximize protection against parallel imports which may be impounded pending dispute resolution

  7. IMPROVING THE ODDS • Choose agent with care ideally one managed by clear English speaker with direct knowledge of principal’s expectation in trading • Ideally contract with those who either have or are likely to have UK/US assets • Establish own presence in one of various free zones with concessions for external investors • Relatively high cost • Tough markets to crack from a cold start • Likely to need agent or nationals of influence trading otherwise restricted • Ensure any agency agreement is tightly drafted • Control exposed assets (stock, trademarks, contacts, contracts) in UAE

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