Government measures in key jurisdictions 3rd edition final - Flipbook - Page 133
UnitedArabEmirates
Insolvency
No changes have been made as a result of Covid-19.
Has the government
made any changes
to insolvency
legislation?
The UAE issued Insolvency Law No. 19 of 2019 came into effect on 29 November 2019 so is still a relatively
new law. The Law aims to provide an enhanced regime for individuals facing financial difficulties. It
encourages individuals to seek expert and professional help through a court-led process.
The Insolvency Law only applies to natural persons and the estate of the deceased. It does not apply to
merchants, traders, commercial companies and similar persons which fall under the scope of the
Bankruptcy Law No. 9 of 2016.
Both laws primarily focus on assisting distressed persons and entities through offering them settlement
options.
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
No specific measures have been taken to reinforce contracts in view of the Covid-19 situation. Contracts
continue to be governed by the Civil Code and Commercial Transactions law. With regards to force
majeure, under UAE law, the concept of force majeure may be pursued by a party to a contract as a
matter of law. It is a mandatory rule, as opposed to a default rule, of law that de jure applies even
without being expressly set out in a contract.
The UAE Civil Code (Federal Law Number 5 of 1985) sets the definition and boundaries of a Force
Majeure event, and the consequences it triggers. In principle, Article 273 of the UAE Civil Code
stipulates that in order for an event to be qualified as a force majeure it should be: (a) claimed in a
bilateral agreement; and (b) makes the performance of the obligation impossible – not just in hardship
It is anticipated that force majeure claims will be on the rise over the coming days due to COVID-19.
However, as the World Health Organization (“WHO”) declared the threat of Covid-19 since it was first
reported from Wuhan, China, on 31 December 2019, any defaulting party to a contract that is
concluded afterwards is unlikely to succeed in invoking a force majeure claim. As for contracts
preceding the WHO declaration, it will be examined on a case-by-case basis in order to determine
whether the underlying events meet the criteria set by law and courts practice.
Property
Have any changes
been made to
the laws around
property, rent and
enforcement?
•
The
have temporarily suspended all eviction judgments related to
residential and commercial facilities in Dubai (except cases of abandoned homes) and
imprisonment judgements linked to rental disputes since March 2020 until further notice.
•
The
have launched an AED 1.5 billion economic stimulus package to support
companies and the business sector in Dubai. Some of the key property initiatives include renewal
of commercial licenses without requirement of mandatory renewal of lease agreements; reduction
in municipality fees imposed on sales in hotels from 7% to 3.5% and freeze on fees for the rating of
hotels.
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