UPDATE: Overview of United Arab Emirates Legal System

Dr. Khedr is a faculty member Faculty of Law at the British University in Egypt (BUE) and Adviser of Corporate Affairs. He holds LLB, BA of Police Science, LLM in International Commerce and PhD Highest Class with honor in Commercial Law major in Corporate Law and Corporate Governance from Ain Shams University. He holds Professional Education in Business Management, Corporate Restructuring, Mergers & and Acquisitions from Harvard University, professional (TOT) in Corporate Governance from (IFC) World Bank Group. In addition, he has many professional Courses and certifications relevant to Mediation, Compliance, AML/CFT, Development & Management, Computer and Information Security and Management of safety. Dr. Khedr has more 15 years' experience in as practitioner, Lecturer and Adviser of Law and Corporate Affairs. His fields of interest are Commercial & Corporate Laws, Int. Commerce Law, Corporate Governance & Compliance Systems, M&A, Financial Crimes, Consumer Law, AML, Mediation, Commercial Contracts, Investor Relations, Regulations, Family Business Charter, Stock Market Corporate codes, Code of Conduct and CSR. He has published research and books on these topics in periodicals and scientific journals. He has provided consulting in Corporate Affairs to many firms, several multinational and local companies in MENA and USA. Ahmed has an experience in the MENA especially Egypt and the Gulf countries. The ABCCG (Abu Dhabi Chamber of Commerce & Industry) chose him for designing the first "Corporate Governance Program for Lawyers & Corporate Advisory” in UAE and Arab Region.

Ahmed has been member founder and Program Manager for College of Law, Taibah University in the Kingdom of Saudi Arabia. Dr Khedr is member of the T20 (Association of Egyptian Alumni of Global Business Schools) supporting the Egyptian government to assess projects existing, provide recommendations in investment and companies Laws to Prime Minister and Minister of Planning. He is founding partner of KLCCA, one of the leader and fastest growing MENA firms in Corporate Affairs, in addition, he is an Independent Board Member for many companies and Not-Profit institutions. Dr. Khedr is a member of ECGI, UIA, ALU, ESIL, ESPESL, SLS, IACL, HUMA and HAAA.

Published January 2018

(Previously updated in March 2014)

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Table of Contents

1. Introduction:

The United Arab Emirates is a united, independent state. The Article one of the constitution provides that the Union consists of the following Emirates Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Fujairah, and it is allowed for any independent Arab country to join the Union, once approved by the Supreme Council of the Federation at a unanimous consensus (Ras Al Khaimah joined the Federation of the United Arab Emirates in February 10, 1972).

1.1. Location and Population

United Arab Emirates is located in the south-east region of the Arabian Peninsula, as it extends from the Oman Gulf eastward to Qatar westward, bordered by the Arabian Gulf from the north and the north west, Qatar and Saudi Arabia from the west and Oman Gulf as well as Sultanate of Oman from the east. United Arab Emirates shores towering over the southern coast of the Arabian Gulf extends to cover an area of 644 kilometers from the base of Qatar Peninsula westward to Ras Masandam eastward, having the emirates of Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman and Um Al Quwain diffused over the coast, whereas the coast of the seventh emirate Al Fujairah stretches for 90 kilometers over the coast of Oman Gulf. Therefore, the state occupies the located area between the latitudes 22 and 26.5 degrees northward, and the longitudes 51 and 56.5 degrees eastward Grenache.

United Arab Emirates area excluding the affiliated isles amounts to 83.600 square kilometers. The Emirate of Abu Dhabi represents the greatest share since it covers an area of 67.340 square kilometers equivalent to 87% of the total area of the State.

The federal authorities of the State consist of the Supreme Council of the Federation, the Chairman of the Federation and his Deputy, the Cabinet, the Federal National Council and the Federal Judiciary Body. The Union represents a part of the great homeland bonded by the ties of religion, language, history and mutual destiny, as its people constitute an integral part of the nation.

The population of United Arab Emirates amounts to more 8.00 million (estimations of 2010) and is continuing to grow at a rapid rate despite the global downturn. The major towns are Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Um Al Quwain and Al Fujairah. The capital is Abu Dhabi, the majority of the population lives in Dubai and Abu Dhabi.

1.2. UAE Religion and Language

Islam is the official religion of the United Arab Emirates. Arabic Language is considered the official language in United Arab Emirates whereas English Language is widely used as far as the commercial and economic domains are concerned.

1.3. History of the United Arab Emirates

The life of the ruling H.H. Sheikh Zayed bin Al Nahyan (The founder of the Union) was quite important in the history of United Arab Emirates and the Arab states. In the UAE region in December 2nd 1971, United Arab Emirates was declared as a united, independent and sovereign state encompassing of seven emirates.

Up through the end of the Second World War, pearling was a major trade, but after the war, and after the Japanese began creating cultured pearls, the pearling industry withered away. It was not too many years, however, before oil became the UAE's biggest and most important export.

Before the export of oil in the regions that became the UAE, economic adventures included fishing, agriculture, pearl production, and herding. After oil prices rose significantly in 1973, however, the export of oil has been the dominant money maker for such states, accounting for most of its export earnings. The UAE has very large oil reserves, estimated at nearly 100 billion barrels in 2003, and gas reserves estimated to fill 212 trillion cubic feet. At maintained drilling levels, these resources could last for over 150 years.

United Arab Emirates Timeline:

2. United Arab Emirates Legal System

2.1. The Basic System

Although the core principles of law in the UAE are drawn from Sharia, most legislation is comprised of a mix of Islamic and European concepts of civil law, which have a common root in the Egyptian legal code established in the late 19th to 20th centuries. The French influence is most clearly demonstrated by the adoption of the civil law by most countries in the region similar to those in European states, rather than the common-law system in the UK.

In addition to specific legal legislation covering agencies, company law, labor law, and intellectual property, the UAE has enacted civil and commercial codes. Although the system has led to the development of comprehensive and structured legal systems, they are rigid and inflexible to some degree, and they constitute the bureaucracy of regulation that is associated with countries in the Middle East region as a whole.

The structure of the legal system is complex with both dual courts, Sharia courts and civil courts operating in parallel, but covering different areas of the law. For example, in the UAE, each Emirate has its own federal court of first instance, although Dubai and Ras al Khaimah have their own separate judicial frameworks.

UAE’s Legal System as of the other Legal systems in the Gulf is usually quite complicated and those unfamiliar with their workings can find this very difficult. The fact is that these systems are completely different to those in the west with a whole different language, which makes it worrying for those who want to transact in business in the UAE and the Gulf states.

Although these systems are different, the basic legal principles and structure are logical and understandable. They have evolved over many centuries, in a similar way to the West and, especially in the UAE, are adapting to the changing needs of society with new developments in thinking for a modern age. More changes in commercial law have liberalized legal regimes, creating a more open and understandable environment for foreign businesses and investors.

The basis of the legal system in the UAE is Sharia or Quranic Law. In the constitutions, Islam is identified as the state religion as well as the principal source of law. However, although the principles of Sharia influence criminal and civil laws, the direct influence of Sharia in the UAE is primarily confined to social laws, such as family law, divorce or succession. Most commercial matters are now dealt with by either civil courts or permanently established arbitration tribunals.

There are several core principles of Sharia which apply to business transactions and which have influenced the development of commercial codes that apply in the UAE. Although these concepts don't directly translate into commercial codes (although they may do in Islamic finance), they have exerted an influence over the drafting and interpretation of these laws. These are:

2.1.1. Issuance Constitution of United Arab Emirates

Since its establishment on the 2nd of December, 1971, the UAE has set a temporary constitution, which rapidly has turned into a permanent one. This happened after the federal state of the UAE has established its stability, committed to a moderate policy, and made cultural changes and giant accomplishments on the local, regional and international levels and further progressed for the people of this federation. By so doing, this would be one of the most successful experiences of unification in the modern history.

This constitution explains the main rules of the political and constitutional organization of the state. In fact, it has demonstrated the main purpose of establishment of the federation, its objectives and components on the local and regional levels. It has also elaborated on the major social and economic pillars of federation and stressed public rights, responsibilities and freedoms. Moreover, it has highlighted federal authorities, organized issuance of federal legislation and the competent authorities as well. Above all, it has also dealt with financial affairs of the federation, armed and security forces provisions and legislative, executive and international jurisdictions between the federation and the member emirates.

2.1.2. Constitutional Amendments and Procedures

According to Article 144 of the constitution, amendments to the constitution are drafted by the Federal Supreme Council, and must be approved by a two-thirds majority of the Federal National Council, after which the amendment is signed into law by the president.

2.2. The Values of Justice and of Issuance of Laws

2.2.1. The Values of Justice

There is a separation of Executive, Legislative, and Judicial Powers. The constitution describes five federal institutions. These are the Federal Supreme Council (FSC-executive), the President of the Union and the vice president, the Council of Ministers of the Union, the Federal National Council (FNC-legislative), and the Judiciary of the Union. The Federal Supreme Council elected Abu Dhabi’s President Shaikh Zayed unanimously for the sixth time on December 2, 2001 as the President of the Union.

The Council of Ministers drafts decrees and various decisions. The prime minister and the members of the cabinet are responsible to the president and to the Federal Supreme Council (FSC), which is the highest executive body in the federation, made up of the rulers of the seven emirates.

Main Provisions:

Civil Rights:

2.2.2. Issuance of Laws

Federal laws are drafted by the Council of Ministers and are then submitted to the FNC, where they are first sent to the proper committee. If a committee makes amendments to the proposed draft by the executive, the amended draft goes to the Legal and Legislative Committee, before the floor debate, for consultation and formulation of its provisions. Finally, the draft is presented to the president of the federation.

By part 5 of UAE constitution explains the process of legislation in the UAE which is: The legislative branch is the unicameral Al-Majlis Al-Watani Al-Ittihadi, or Federal National Council (FNC) of (Seven Emirates). Twenty of the FNC's 40 members are elected by 7000 notables who are chosen by the local governments to represent various social groups and tribes. The other twenty are appointed by the rulers of the Emirates to serve a two-year-term of office with the possibility of renewal. The selection process of the FNC members is left by the constitution to the Emirates' discretion. Of the 40 members, the share of Abu Dhabi and Dubai is eight members each. Sharjah and Ra’s al Khaymah have six members each, and Ajman, Umm al Oaywayn, and Al Fujayrah each has four members on the Federal National Council.

The FNC reviews legislation and proposes amendments to it, but it does not have the power to veto laws or to initiate new laws. As such, the parliament is largely a consultative body. The Council, however, does have the power to examine and amend proposed legislation and the power to summon and question any federal minister as well as its own members. One of the main duties of the FNC is to discuss the annual budget.

The beginning and termination of legislative sessions are determined by presidential decree.

Official Gazette and Law Enforcement: Article 111 clearly states that laws shall be published in the Official Gazette of the Union within a maximum of two weeks from the date of their signature and promulgation by the President of the Union after the Supreme Council has ratified them.

Article 112 clearly states that no laws may be applied except on what occurs as from the date they become in force and no retroactive effect shall result in such laws. However, if necessity so requires, the law may stipulate the contrary in matters other than criminal. The power of law starts after publication in the official Gazette.

Different Legislations:

Criminal Procedures law (Arabic), Civil Procedures (Arabic), Personal status law (Arabic), Anti-Money Laundering Law No. 4 [Arabic]

Legislative Texts [Arabic]:

For latest legislations and laws (ArabicEnglish )

2.3. Conclusion of Treaties and Agreements

Article 47 points out that The Supreme Council of the Union shall exercise Ratification of treaties and international agreements, and such ratification shall be accomplished by decree. When article 60 adds that The Council of Ministers shall be responsible for supervising the execution of international agreements concluded by the Union. And further article 91 states that the Government shall inform the Union Assembly of international treaties and agreements concluded with other states and the various international organizations, together with appropriate explanations.

3. The Governance and Authorities

Article 45 shows that the Union authorities shall consist of The Supreme Council of the Union, The President of the Union and his Deputy, The Council of Ministers of the Union, The National Assembly of the Union and The Judiciary of the Union

3.1. The Supreme Council of the Union

The Federal Supreme Council consists of rulers of the seven emirates constituting the federation or their deputies in their emirates in case of rulers' absence or unavailability. Each Emirate has one single vote in the council resolutions and deliberations.

The Federal Supreme Council performs the following responsibilities:

Mechanisms of Federal Supreme Council Resolutions:

3.2. The President of the Union

Article 51 states that the Supreme Council of the Union shall elect from among its members a President and a Vice President of the Union and that the Vice President of the Union shall exercise all the powers of the President in the event of his absence for any reason.

The President of the Union shall assume the following powers:

3.3. The Council of Ministers of the Union

Article 55 shows that The Council of Ministers of the Union shall consist of the Prime Minister, his Deputy and a number of Ministers, and article 57 states that the Prime Minister, his Deputy and the Ministers shall, before assuming the responsibilities of their office take the following oath before the President of the Union:

"I swear by Almighty God that I will be loyal to the United Arab Emirates; that I will respect its Constitution and laws; that I will discharge my duties faithfully; that I will completely observe the interests of the people of the Union and that I will completely safeguard the existence of the Union and its territorial integrity."

Responsibilities of the Council of Ministers of the Union:

3.4. The National Assembly of the Union

Article 55 states that the National Assembly of the Union shall be composed of forty members. Seats shall be distributed to member Emirates as follows:

Article 77 clearly states that the member of the National Assembly of the Union shall represent the whole people of the Union and not merely the Emirate which he represents in the Assembly.

3.5. Federal Judiciary and UAE Court System

The United Arab Emirates is essentially a civil law jurisdiction heavily influenced by French, Roman, Egyptian and Islamic law. Common law principles, such as adopting previous court judgments as legal precedents, are generally not recognized (although judgments delivered by higher courts are usually applied by lower courts). Only local firms may appear as counsel before a court. As the UAE has established itself as a regional hub for international business, arbitration is gradually becoming a popular method of dispute resolution.

Court Structure: Although there is a federal court structure with a final court of appeal in Abu Dhabi (the Abu Dhabi Supreme Court), both Dubai and Ras Al Khaimah are not part of the federal judicial system. Unlike the other emirates, Dubai and Ras Al Khaimah have their own court systems, which are not subject to the federal Supreme Court. There are three main branches within the court structure: civil, criminal and Sharia, or Islamic, law. The court structure in Dubai is comprised of the following courts: The Court of First Instance, the Court of Appeal and the Court of Cassation. The Court of First Instance includes the Civil Court, the Criminal Court and the Sharia Court.

A UAE court willaccept an attorney appointed by a litigant according to the provisions of the law, and the attorney must prove his appointment as representative of his client by an official deed (i.e. power of attorney) notarized by a notary public.

The Civil Court: The Civil Court (or Court of First Instance) hears all claims ranging from commercial matters (including debt recovery cases) to maritime disputes. After judgment has been delivered, the parties have the right to appeal to the Civil Court of Appeal on factual and/or legal grounds within 30 days of the date of judgment. It is possible to introduce additional evidence to the Court of Appeal and/or request that additional witnesses be called to testify. Thereafter, parties may appeal on points of law alone to the Court of Cassation (the highest court in Dubai), which is usually composed of five judges. The appeal must be filed within 30 days of the date the parties were notified of the judgment of the Court of Appeal. All decisions of the Court of Cassation are final and are not subject to appeal.

Criminal Actions: Criminal actions in the UAE commence with the filing of a complaint with the local police in the jurisdiction where the offense was committed. During the investigation, police may take the statements of any parties involved. Following this initial investigation, local police usually refer the matter to the prosecutor's office within 48 hours of the filing of the complaint. The police may refer the matter to the prosecutor for advice prior to officially forwarding the case with a recommendation to press charges.

The prosecutor’s office will then investigate the matter, take the statements of any parties involved, and hear their witnesses or any other person the prosecutor decides has information germane to the matter. The prosecutor’s office will then decide either to refer the matter to the court or to decline to press charges in the absence of sufficient evidence that a crime has been committed. The prosecutor must decide either to press charges or drop the case within 14 days of receiving the case from the police. If the prosecutor needs more time to reach a decision, he may file a request for extension with the court, which is approved or denied at the court’s discretion. Although it happens extremely rarely and only in extenuating circumstances, cases have been known to sit with the prosecutor as long as a year.

Sharia or Islamic Courts: Sharia or Islamic courts work alongside the civil and criminal courts in the UAE. The Sharia court is the Islamic court in the UAE and is primarily responsible for civil matters between Muslims. Non-Muslims will not appear before a Sharia court in any matter. Sharia courts have the exclusive jurisdiction to hear family disputes, including matters involving divorce, inheritances, child custody, child abuse and guardianship of minors. In the absence of any particular provision in the UAE codified law, the Islamic principles of Sharia as found in the Islamic Sharia textbooks are applied.

The Sharia court may, at the federal level only (which, as mentioned earlier, excludes Dubai and Ras Al Khaimah), also hear appeals of certain criminal cases including rape, robbery, driving under the influence of alcohol and related crimes, which were originally tried in lower criminal courts.

The Court of Cassation: The Court of Cassation is the highest court in the UAE, and it will only hear disputes on matters of law. The Court of Cassation will not only act as an appellate court with respect to the decisions of lower courts, but will also supervise these lower courts to ensure that they are applying and interpreting the law correctly. Lower courts must abide by the legal principles set down by the Court of Cassation.

The Emirate of Dubai has its own Court of Cassation. In all Emirates, other than Dubai and Ras Al Khaimah, the final appeal will be to the federal Supreme Court located in Abu Dhabi. Drafted 22 March 2005. Based upon an article entitled “The Courts System in the UAE,” by Mohamed Ali Abou Sakr, Liberty magazine, Issue 03, March 2005. Edited for content and to include post research into the topic.

Constitutionality of Laws and Judicial Review: The Court of Cassation is also entrusted with judicial review for all legislation, both for laws that originate at the federal level and for those enacted by the individual emirates.

3.6. Provincial and Local Government

Each of the seven emirates has its own government, which functions in tandem with the federal government. The largest and most populous emirate, Abu Dhabi, has its own central governing body, the Executive Council, chaired by the crown prince; the Eastern and Western Regions and the island of Das are headed by a ruler’s representative. Municipalities administer the main cities, each of which has a municipal council. The National Consultative Council functions like the Federal National Council. Local departments carry out various administrative functions. A similar system of municipalities and departments exists in the other emirates.

The Emirates: Article 116 shows that the Emirates shall exercise all powers not assigned to the Union by this Constitution. The Emirates shall all participate in the establishment of the Union and shall benefit from its existence, services and protection while article 117 describes the targets of the rule in each emirate which are maintaining security and order within its territories and the provision of public utilities for its inhabitants and the raising of social and economic standards. And further article 118 states that the member Emirates of the Union shall all work for the co-ordination of their legislations in various fields with the intention of unifying such legislations as far as possible & adds that it is allowed, after obtaining the approval of the Supreme Council, for one emirate or more to agglomerate in a political or administrative unit, or unify all or part of their public services or establish a single or joint administration to run any such service. In connection with the matters regarding to the execution of judgments and requests for commissions of rogation and serving legal documents and surrender of fugitives between member Emirates of the Union, Article 119 provides that it shall be regulated with utmost ease by Union law.

3.7. Government for the Future

The UAE Federal Government is under the process of major structural changes. Several federal ministries, authorities and institutions are being ceased or merged. In the new government strategy, the UAE has a roadmap to outsource most government services to the private sector.

3.7.1. Highlights of 2016 Government Structural Changes

3.7.2. Creation of a Ministry of State for Happiness

UAE has taken the initiative to appoint the minister of state for happiness to be the first in the region, and one of the few in the world. This step was made part of the 2016 Cabinet re-shuffle and the creation of the government of the future. The Minister of State for happiness will assume the responsibility of harmonizing all government plans, programmers and policies to achieve a happier society. The appointed minister, Her Excellency Ohoud bint Khalfan Al Roumi, is a young woman which indicates the trend of the UAE government to encourage assigning women and youth in the leadership positions.

3.7.3. Technology in Providing the Government Services

His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, launched a smart government center on September 9, 2017 at Emirates Tower. The center introduces the artificial intelligence technology, Watson, and smart robots which has been launched to offer customers unprecedented services. It will combine 14 government entities under one roof and will provide a smart access to more than 100 government services offered by eight public entities, including Ministry of Interior, Ministry of Human Resources and Emiratisation, Shaikh Zayed Housing Program, Emirates Post Group, Ministry of Infrastructure Development, Ministry of Climate Change and Environment, Ministry of Culture and Knowledge Development and Telecommunications Regulatory Authority. This step aims to facilitate and streamline the access to vital government services through reducing the number of visits to all in one visit and unified payment.

4. Focus on Some Topics of Law and Economy / Business:

We chose three different topics to focus on: first in the domestic community, second in the international community, third in the business community.

4.1. Transparency and Protection of State Assets

The Federal National Council of the UAE discusses the annual budget and yearly final accounts. Under the country’s constitution, half of each emirate’s revenues are reserved for the federal budget, but in practice Abu Dhabi and Dubai generate most cent of the UAE’s gross domestic product and are the only ones to contribute to federal finances. Of the two, Abu Dhabi’s contributions are the larger by some margin. The deficit is typically funded by additional contributions from the two emirates, together with some support from the UAE Central Bank. Negotiations are under way with other members of the Gulf Cooperation Council to prepare a common data standard and fiscal accounting framework.

Public Audit: Governed by Federal Law 7 of 1976, the State Audit Institution (SAI) conducts audits of ministries, federal government departments, public corporations, and all entities in which public ownership is at 25 percent or more of total shares. In cases of financial misconduct the president of the SAI may decide to prosecute the case before a special disciplinary council or to refer it to the concerned authority. The SAI is expected to write a general annual report of all its activities.

Auditors in the UAE are under the mandate of Law No. 9 of 1975, which established a register for auditors and established standards for the profession in the country. Law No. 22 of 1995 and supplementary regulations in Decree No. 49 of 1997 have now superseded the original legislation. All auditors in the country must register with the Ministry of Economy and Commerce. UAE business law expressly prohibits obstructing auditors’ access to company books and withholding required information; violating of laws pertaining to employment of U.A.E. nationals; and disregarding transparency laws for auditors.

Public Procurement: The Public Tenders Law 16 of 1975 regulates all public-sector tenders except those concerning federal defenses or the individual emirates. The requirement that only UAE entities or nationals may bid may be waived when bids are directly solicited from manufacturers or, on a case-by-case basis, when the goods or services are not widely available.

4.2. Law and Economy / Business:

4.2.1. UAE Economy and Business

United Arab Emirates Economy: The UAE consists of seven states (emirates). Abu Dhabi, the most renowned oil-rich state rated as the world's richest city by Fortune in 2007 – and Dubai – the commercial hub of the Middle East. The country is home to many projects with international flavor including the world's tallest tower, biggest airport, seaport and indoor theme park. The country realized the significance of foreign investment some time ago and has sought to meet the competing demands of the world's largest building program whilst providing an investment climate that meets those demands.

The region attracts substantial foreign investment in a variety of areas, including defense, infrastructure, real estate, transportation, oil & gas, health and education. Investors need to understand or at least be receptive to the region's language, culture and legal system and the particular style that needs to be followed in commercial agreements and negotiations.

The region is currently witnessing numerous incorporations, joint ventures, mergers & acquisitions and cross-border transactions. A lawyer's day-to-day professional life encompasses a variety of issues including - advising on the most suitable investment structures; ensuring legal and regulatory compliance; drafting and vetting of complex agreements and documents; due diligences and negotiations with counterparties.

Also, in recent years we have witnessed a phenomenal growth in dispute resolution through arbitration. The presence of world class arbitration centers like the Dubai International Arbitration Centre, the Abu Dhabi Commercial Conciliation and Arbitration Centre and the London Court of International Arbitration at DIFC are each providing valuable dispute resolution services.

Banking: The Central Bank, established by Union Law No. 10 of 1980, supervises a commercial banking system of 46 banks with over 300 branches. Like other central banks it issues the national currency and directs monetary, credit and banking policy. It also sponsored a seminar in 2004 about informal financial transfers in efforts to regulate and license this segment of the financial system. In late 2005, it joined the International Finance Corporation in promoting international practices of corporate governance in the formal banking sector.

The Central Bank tightened its supervision and monitoring program over the banks following a series of banking scandals and difficulties with non-performing loans in the 1980s and early 1990s. It also set a new risk-weighted minimum capital-asset ratio of Basel recommended minimum.

A new anti-money laundering law in May 2002 gave the Central Bank the power to freeze any suspected accounts for seven days without prior legal permission. The banks were required to provide all details of their clients and internal and external transactions on request and to report on any suspected deal. The Central Bank has already frozen or blacklisted nearly 30 bank accounts on these grounds and uncovered several money-laundering operations inside the UAE. Laws were passed in 2004 and update against financing terrorism and for addressing money laundering issues in the UAE’s financial free zones.

Privatization: The federal government has encouraged diversification and privatization of the economy. Dubai has taken the lead in encouraging foreign investment, in efforts to become a leading hub of international commerce, while Abu Dhabi, which accounts for many percent of the oil production, is spearheading the privatization of utilities and seeking foreign investment in some sectors of the economy, particularly the power industry, to bring in modern technology and management techniques and reduce costs.

The most ambitious privatization plans concern water desalination and producing and distributing electricity. The companies are to be created in Abu Dhabi to manage the different aspects of producing, operating, scheduling, dispatching and distributing of water and electricity. Other issues include the elimination of government subsidies of water and electricity as well as a plan to trim some strong staff in the industry in order to lower costs and increase profitability.

Stock Exchange: The Emirates Securities and Commodities Authority (ESCA), established in 2000, is the regulatory and licensing body responsible for the market integrity and transparency of the Abu Dhabi Securities Market and Dubai Financial Market, which commenced operations in June of that year. The Dubai International Financial Center in turned opened global operations in September 2004, and efforts are continuing, with advice from the IMF, to develop a comprehensive regulatory framework for these emerging capital markets. There are plans to establish a Securities Exchange Markets Board to monitor the market. Listed companies are obliged in the interests of transparency to issue quarterly financial statements.

In 2006, thirty-eight companies were listed for trade on the ADSM and thirty-four on the DFM. Market capitalization in the ADSM and the DFM reached 60% of GDP at the end of 2004 and was second regionally only to Saudi Arabia, although the turnover ratio remained below 4 per cent of the value of traded stocks. The Central Bank is keen to promote the development of a bond market, as a means to improve liquidity, and allow companies to raise medium-and long-term finance.

The Dubai International Financial Center (DIFC) is intended to become a regional financial center on par with New York, London, Tokyo and Hong Kong. The DIFC possesses its own legal structure and financial regulations, drawn up on the basis of international best practices. The DIFC operates in dollars, and contains its own regulatory body, the Dubai Financial Services Authority, and its own exchange market, the Dubai Regional Exchange (DRX). The regulatory structure for the center was published in December 2003.

International Transparency Standards: The United Arab Emirates permits publication online of the IMF's annual Staff Report on Article IV Consultations and joined the IMF’s General Data Dissemination System on July 31, 2008. The Emirates have also engaged with the IMF and World Bank in publishing Reports on the Observance of Standards and Codes (ROSC) for banking supervision and payment and settlement.

4.2.2. Business Laws in the UAE

The UAE provides a supportive legal framework for businesses in line with the vision of country's leadership and their deep conviction that an effective legal framework in par with international standards is essential to a competitive and prosperous economy. The country has issued a number of laws related to the economy, trade and investment since its formation in 1971. These laws are listed in the right column of the page. New Business Laws and Amendments

The UAE is currently working on upgrading a number of key legislations, especially with regard to the development of the country's economic infrastructure and investment climate in a bid to better address investment issues and regulate the relationship between all parties concerned with the country's economic development and investment process.

Draft bills on foreign investment, competition, arbitration, certificate of origin, industry affairs organization, suppressing commercial fraud, industrial property law, federal law on organization of the auditing profession and federal law on commercial companies are already being reviewed by the relevant authorities.

Foreign Investment Law: The new law on foreign investment removes a large part of the regulatory and administrative obstacles to attract more foreign and Arab direct investment. It is aimed at creating a unified regulatory framework for foreign investment in terms of regulating investment procedures, registration and licensing. The law also deals with the advantages, tax exemptions and guarantees for foreign investors, as well as their rights and obligations.

Competition Law: The competition law is aimed at promoting the principle of competition and evolving a competitive market that is ruled by sheer market mechanisms. The law is envisaged to free the national economy from all wrong practices that adversely affect its efficiency, including monopolies which are against the principle of competition and prohibits all types of acts that lead to a monopoly. It is prepared in line with the recommendations made by the World Trade Organization (WTO) in its last review of the UAE's trade policy.

The law also provides a conducive environment for businesses to promote efficiency, competitiveness, consumer welfare and sustainable development in the country.

Law on Certificate of Origin: The law on certificate of origin aims to reorganize the legislations related to the rules of the certificate of origin based on the progress achieved in this area. The new law will address various issues pertaining to the origin of national goods and issuance of certificates of origin. It will also allow the Ministry of Economy to impose penalties and fines on those who issue fake certificates, documents or data.

New Federal Law on Commercial Companies: The new federal law on commercial companies makes it mandatory for all companies in the country to develop a general framework for corporate governance to ensure the protection of shareholder rights, achieve transparency, disclose financial data and improve the efficiency and integrity of the company’s director board.

The New Law on Commercial Arbitration: The new commercial arbitration law in collaboration with a number of legal experts from the Abu Dhabi Conciliation and Arbitration Centre.

The new law will be applied to resolve commercial disputes instead of the UAE Civil Procedure Code (Federal Law No. (11) of 1992. As per the new law, civil cases will be heard by the civil courts of respective emirates, while the Abu Dhabi Federal Court of Appeal will hear international cases. The law is in line with international arbitration principles, particularly the Model Law of the United Nations Commission on International Trade Law (UNCITRAL) of 1985 and its amendments in 2006. Development of Business Laws

Significant efforts go into the development process of laws and legislations to ensure their compatibility and relevance to the general economic and social conditions of the country. Preparation of laws takes a series of procedures and discussions involving several federal and local government bodies.

The Ministry of Economy, when introducing any amendments to an existing law or preparing a new bill, presents a memorandum seeking the permission of the cabinet which, after studying the request, authorizes the ministry to form the draft bill. The ministry then prepares a first draft of the bill which is shared with the competent authorities from local bodies or the private sector to discuss and collect their opinion and observations or publish it on the ministry's website before the final version of the bill is prepared.

After this stage, the proposed bill is presented to the cabinet for approval and then to the Technical Committee for Legislation in the Ministry of Justice which includes legal experts who study the draft bill from various aspects and make necessary modifications in coordination with the Ministry of Economy. The bill is then sent to the Ministerial Committee for Legislation which includes the Minister of Justice as Chairman and the Minister of State for FNC Affairs, the Minister of Social Affairs, the Minister of Finance, the Minister of Environment and Water and the Minister of Economy as members. The committee reviews the law and makes necessary amendments in accordance with the policy orientation of the country.

After the committee's review, the bill goes to the cabinet for its review and approval and then to the Federal National Council for further discussion and approval. The Ministry of Presidential Affairs then scrutinizes the final version of the law and publishes it in the Official Gazette.

4.2.3. National Development Strategies in UAE UAE Vision 2021

UAE Vision 2021 was launched by H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, at the closing of a Cabinet meeting in 2010. The Vision aims to make the UAE among the best countries in the world by the Golden Jubilee of the Union. In order to translate the Vision into reality, its pillars have been mapped into six national priorities which represent the key focus sectors of government action in the coming years. EXPO 2020

In November 2013, the United Arab Emirates was nominated to host the World Expo 2020 in Dubai. It will be held Between October 2020 and April 2021. Bringing together more than 180 nations and an international audience of 25 million visitors, it will be one of the greatest shows on Earth. Estimates indicate that the economic impact of Expo will be approximately US$19.6 billion between now and 2021. In addition, it is estimated that over 275,000 jobs will be created to cater the Expo across various sectors including tourism, aviation and infrastructure. UAE Post-Oil Strategy-2016

Currently, the UAE is underway to launch its roadmap for UAE after oil. The emphasis will be on human capital, knowledge and innovation. Abu Dhabi Vision 2030

Abu Dhabi Vision 2030 provides a comprehensive plan for the diversification of the emirate's economy and a significant increase in the non-oil sector's contribution to the emirate's gross domestic product (GDP) by the year 2030. The vision identifies two key priority areas for economic development in Abu Dhabi, the first is building a sustainable economy, and the second is ensuring a balanced social and regional economic development approach that brings benefits to all. Dubai Plan 2021

Dubai Plan 2021 describes the future of Dubai through holistic and complementary perspectives, starting with the people and the society that have always been, and always will be, the bedrock of the city. This aspect describes the characteristics that Dubai’s people need to have to deliver on the city’s aspirations in all areas, and examines the society needed to support and empower these individuals in achieving their goals. The plan also addresses the urban environment including both natural and built assets, and looks at the living experience of the people of Dubai and its visitors as a result of their interaction with this environment and the economic and social services provided. In addition, the plan also focuses on the economy, which is the city’s development engine and its fuel for its march forward. Finally, the plan addresses the government as the custodian of the city development in all aspects. These perspectives were divided into 6 themes, each highlighting a group of strategic developmental aims for Dubai, and together forming the city’s vision for 2021. Value Added Tax (VAT)

The UAE is considering levying Value Added Tax (VAT) from January 2018. The rate of VAT is likely to be 5 per cent. It will provide the UAE with a new source of income which will be continued to be utilized to provide high-quality public services. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.

4.2.4. UAE in the Global Economic Reports World Bank Report 2016

According to the World Bank report which measures the performance of 189 countries in “facilitating doing business for investors”, the UAE ranked first in the Arab world for the 3rd year in a row. And it was ranked first regionally in the general classification and the number of documented improvements, first globally in the category of the impact of non-payment of taxes, which does not affect business, second globally in the category of the process of construction permits, and fourth globally in the category of electricity delivery. The Global Competitiveness Report 2015-2016

UAE was ranked first regionally and 16th globally, maintaining its lead among the top 20 competitive economies in the world, according to the recent version of the Global Competitiveness Report 2016 issued by the World Economic Forum (Davos) in Switzerland. The report is one of the most important global competitiveness reports, which monitors annual performance and competitiveness of the economies of countries in terms of strength, weakness, impact on quality of life, prosperity and well-being of people. IMD World Competitiveness Yearbook

According to the IMD World Competitiveness Yearbook, the UAE is ranked 1st regionally and 12th globally amongst 61 countries reviewed for their capability to manage their resources for long-term value creation.

4.2.5. Latest Legislation & Laws

4.3. Human Rights and Cooperation with the International Community

The United Arab Emirates is committed to pursuing its efforts to enhance human rights in keeping with its own cultural identity and special characteristics and in cooperation with international human rights bodies. The Government respects the integrity of every individual residing in the country. Its commitment to guarantee equality and social justice for all citizens is embodied in the Constitution, which also outlines the freedoms and rights of all citizens, prohibits torture, arbitrary arrest and detention, respects civil liberties, including freedom of speech and press, peaceful assembly and association, and the practice of religious beliefs.

Foreign Ministry in his address to the UN General Assembly in September 2012, spelt out the parameters of UAE human rights policy are basic principles in guiding our political orientation and represent lofty values to the citizens of the United Arab Emirates and to our society as a whole. In this sense, the United Arab Emirates has been and will remain committed to moderation in its approach, and accepts other communities as part of a diverse world built on mutual respect. It is these human values which have informed our convictions with regard to many issues such as counterterrorism, human rights, the empowerment of women, and coexistence among peoples and communities.

Minister of State for Foreign Affairs made a strong defense of the UAE's commitment to tolerance; something that is essential part of the country's values and beliefs; is intangible and unquantifiable but critical for stability and progress. Most important of all is a respect for people's freedom to live life as they wish: in short, tolerance. Cultures that defend tolerance have a strong sense of what should not be tolerated: namely, those who preach that people should be persecuted because of their beliefs.

In 2009, the UAE submitted its first report on the status of human rights in the State to the UN Human Rights Council under the Universal Periodic Review process. The UAE's second report, which outlines the State's efforts to follow up on the issues raised, was submitted at the end of January 2013 and adopted on the 7 June 2013. The UAE has accepted 100 recommendations, partially accepted or noted 61 recommendations and rejected 19 recommendations.

The Government continues to renew its support for the funds of the Office of the United Nations High Commissioner for Human Rights, which will help the Office to implement its programme. The State's contributions to these funds, The UAE announced its intention to a number of human rights funds such as the Trust Fund on Contemporary Forms of Slavery; the Voluntary Fund for Victims of Torture; the United Nations Voluntary Trust Fund for Victims of Human Trafficking; and funds for UNDP programmes.

The United Arab Emirates continues to modernize its laws and practices. Government policy focuses on legislation to uphold and protect fundamental freedoms and the legal rights of individuals, rights of women and children, labor rights, as well as the development of high-quality education and healthcare systems and the assimilation of members of society with special needs and other vulnerable groups into the development process.

Labor Policies: The UAE acknowledges the contribution that foreign workers (almost 4 million of 200 nationalities) make to its economy and has reiterated its commitment to protecting their rights and empowering them to fully benefit from their residency in the country.

Perhaps the single most important achievement to date has been the recognition by countries of origin and destination that improving the developmental outcomes of labor mobility is contingent on the due consideration of the legitimate interests of all its stakeholders: the worker, the employer and the respective country of origin and country of destination. This has paved the way for increased collaboration in identifying and implementing practical solutions to the problems that impede such outcomes, which, in turn, translate into joint initiatives.

The United Arab Emirates Ministry of Labor has introduced a comprehensive range of protection measures covering both pre- and post-departure needs of workers, beginning in the country of origin (for instance, by shielding workers from illegal recruiters and setting up a contract validation system), continuing after arrival in the country of destination (for instance, through measures curbing abuse and non-payment of wages), and on return and reintegration back home.

The United Arab Emirates signed a technical cooperation agreement with the International Labor Organisation (ILO) to provide decent working conditions in the country. The major components of the strategy include protection of the rights of laborers, development of national employment policies and monitoring systems, as well as the enhancement of social dialogue. Recent initiatives to protect the labor force have been praised by the ILO, such as the Wage Portection System (WPS) introduced by the Labor Ministry to ensure that workers receive their salaries without delay. Other innovations are aimed at introducing greater flexibility and freedom of movement in the labor market, and establishing a balanced contractual relationship between employer and worker. At the same time, access to effective legal remedies in the event of a labor dispute has been improved. In particular, the Ministry has set up a collective labor disputes committee, with representatives of workers and employers, in each labor office. The committees must issue a decision on a dispute within two weeks of referral. Their decisions can be challenged before an appeal court within 30 days of issuance.

The Cabinet's Decision No.13 of 2009 adopted a manual setting down minimum conditions for workers' collective housing and related services and stating that, as of 1 September 2009, building permits for workers' housing must only be issued in accordance with the Cabinet Decision. The Decision also affirms that employers are responsible for providing housing in conformity with the conditions laid down in the manual, and every enterprise must comply with the Decision by the end of 2014. Work has begun on the construction of model workers' cities, of which there are now 21, serving 345,400 workers.

In relation to health issues, the Emirate of Abu Dhabi has devised a comprehensive, compulsory health insurance scheme to cover all workers, including domestic workers. The cost is borne by the employer and the scheme, which is already in effect in Abu Dhabi, will be extended to all parts of the country.

The Domestic Service Workers Bill, approved by Cabinet Decision No 1/1/1 of 2012, which sets down minimum employment conditions for domestic workers.

The UAE's national strategy to combat human trafficking, based on the five pillars of prevention, protection, prosecution, punishment and promotion (of international cooperation), is coordinated by the National Committee to Combat Human Trafficking (NCCHT).

Federal Law 51, which was passed in 2006, covers all forms of human trafficking and calls for strong punitive measures, including maximum penalties of life imprisonment for infringement. Regular workshops are held to enhance the skills of law enforcement officials dealing with this crime.

A victim support programme includes protection, counseling and rehabilitation. Police departments and non-Government organizations provide shelter and support for human trafficking victims until they are able to acquire the right documents and many victims are then sent home at the Government’s expense, under the Crime Victim Assistance Programme.

At the international level, the UAE has ratified the UN Convention against Transnational Organised Crime (Palermo Convention) and its Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children (Palermo Protocol) and, as part of the 20-member Group of Friends United Against Human Trafficking, has signed the Declaration on the Global Efforts to Combat Trafficking in Persons. The UAE also presented the UN with the funds to establish UN.GIFT, the UN Global Initiative to Stop Human Trafficking.

In addition, as part of its efforts to strengthen international cooperation on combating human trafficking and promoting human rights, the Ministry of the Interior signed no fewer than 11 treaties and memorandums of understanding with foreign governments and relevant organizations.

In April 2013, the UAE joined Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime. One of the main recommendations of the Fifth Ministerial Conference of the Bali Process is the adoption of a programme, sponsored by the UN Office on Drugs and Crime, to record information and share data on human trafficking.

Human Rights Conventions to which the UAE is a party:

5. Education and Research

5.1. Education and Youth

The UAE offers a fully-fledged educational system for both boys and girls from primary level to university, and the education for the country's citizens are provided for free through government schools, colleges and universities. There is also an extensive private education sector which now accounts for around 40 per cent of the student population.

Over half a million students are now at school or in college, while several thousand students, of both sexes, are pursuing courses of higher education abroad at government expense.

Education from primary to secondary level is universal and compulsory and literacy rates are comparable to the norm in developed countries. An adult illiteracy programmed conducted in association with the UAE Women's Federation is helping to eradicate illiteracy among the older members of society. There is a strong focus on computer literacy and on English language teaching in higher education to equip young Emirates with the necessary skills.

State-funded educational opportunities in the UAE have blossomed since the establishment of the Federation when only a tiny minority of the population had access to formal education. A comprehensive free education system is now available to all students, male and female. At the start of the 1999/2000 academic year, 336,135 students enrolled in over 640 government schools throughout the country. Substantial progress has also taken place in the private sector which accounts for nearly 40 per cent of the student population at kindergarten, primary and secondary level.

In addition, the UAE’s youth have ready access to higher education, both federally-funded and at the many internationally accredited private institutions that are being established throughout the UAE. Generous grants are also available for those wishing to study abroad.

Educational Strategy: Although the UAE has achieved much in the field of education, there is a real awareness that constant updating of policy and continual investment in infrastructure is required to ensure that graduates are properly equipped to enter the workforce and assist in the country’s development. To this end, the Ministry of Education has released a draft policy document outlining a strategy for educational development in the UAE up to the year 2020 based on several five-year plans. The strategy aims to introduce the latest information technology at all levels including a computer for every 10 students at kindergarten, every five students at primary school, every two students at preparatory school, and a computer for every student at secondary school. The primary focus of attention will be on the needs of students, especially through the promotion of self-learning and continuous education programs. There will also be training programs for teachers since surveys have shown that although the majority of students can use computers and the Internet, their teachers were less familiar with this technology.

Cooperation between the public and private sectors at this stage in the country’s progress is considered to be essential and so the draft policy document features the establishment of a council for educational development, comprising senior education specialists, government officials and businessmen to assist in raising finance for infrastructure and information technology projects. It also envisages the setting up of a special fund comprising governmental and private bodies.

The emiratization of teaching staff is scheduled to reach 90 per cent by the year 2020, a necessary development if the UAE’s Islamic traditions and principles are to be safeguarded.

Secondary School Certificate: Women in the UAE have enthusiastically embraced the educational opportunities provided by them in recent years. (For more information see the section on Women.) This was evident yet again in the General Secondary School Certificate results in 1999 where female students outshone their male counterparts for the third consecutive year. The results showed a good overall performance by girls in both the science and literature subject groups. Fifteen girls were in the top 10 places in the literature group, while 16 girls and 10 boys shared the top 10 positions in the science group. The pass percentage of government schools was 96.2 per cent in science and 82.6 per cent in literature while private schools' pass percentage was 84 per cent in science and 77.9 per cent in literature.

5.2. Higher Education and Research

More than 80 per cent of national students who graduated from secondary school in 1999 took up a place in higher education in September 1999. According to the National Admissions and Placement Office (NAPO), 90 per cent of female students and 73 per cent of their male counterparts commenced courses at the federally funded Higher Colleges of Technology (HCT), established in 1987, Zayed University for women, established in 1998, and UAE University at Al Ain, established in 1977.

A total of 16,000 students, including 4,000 new recruits, commenced the new academic year 1999/2000 at Al Ain University, whilst 1,692 students enrolled at Zayed University, where the entire educational process is computer-based, 742 at the Abu Dhabi campus and 950 at the Dubai campus.

In 1999, 4,944 students were granted admission to the 11 constituent colleges of the HCT network, compared with 4,154 at the beginning of the 1998–1999 academic year. Of these admissions, 1,675 were male and 3,229 were female, the latter figure being nearly double that for 1998.

Higher Colleges of Technology: The courses provided by the HCT are designed to prepare nationals for professional and technological careers in both government and private sectors. Since their foundation, the colleges have grown dramatically, with staff and students increasing by about 30 per cent each year. At present over 10,000 students are taking advantage of the educational opportunities offered by HCTs in Abu Dhabi, Dubai, Sharjah, Al Ain and Ras al-Khaimah. HCT courses are grouped under five main programme headings: engineering, technology, health science, communication technology, and business. During the period under review, Sheikh Zayed issued Federal Law No. 17 of 1998 dealing with the re-organization of the HCTs. The law stated that these institutions should henceforth be administered under an independent central body which will have its headquarters in Abu Dhabi but with branches in other towns.

Universities, Institutions and Research & Community Service Centers:

Financial Institutes: The Emirates Center for Strategic Studies and Research is the premier think tank in the UAE. The ECSSR is an independent research institution that serves as a focal point for scholarship on political, economic, and social issues pertinent to the UAE, the Gulf, and the greater Middle East through the sponsorship of empirical research and scientific studies conducted by scholars from around the globe. The ECSSR’s Department of Economic and Social Studies conducts research on economics and society with the objective of providing recommendations that facilitate future policies for the UAE. It also analyzes economic transformations on the local, regional, and international levels that may impact the security and stability of the UAE.

The Emirates Institute for Banking and Financial Studies (EIBFS) offers nearly 200 training programs each year for the burgeoning banking sector. It also publishes a monthly magazine and operates a Research and Studies Department, founded in 2002.

5.3. Quick Research Links:

Legal and Report Links:

Government Links:

Federal Government Entities:

Some Local Government Links:

Business and Others Links:

UAE Media Links:



UAE Education Centre:

Contact Information for UAE Schools:

Business links

International Reports