UAE Legal Insights & Expert Commentary

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  • Aligning with Global Standards: Dubai Court of Cassation Embraces Pro-Arbitration Principles

      The Dubai Court of Cassation (DCC) recently issued three pivotal judgments that significantly advance the pro-arbitration stance of the UAE, bringing its legal framework into closer alignment with international best practices adopted across major global jurisdictions. These rulings affirm principles of party autonomy and arbitral authority that are foundational to international commercial arbitration.

      Read more: Aligning with Global Standards: Dubai Court of Cassation Embraces Pro-Arbitration Principles
      1. Cost Recovery: Upholding Party Agreement (Commercial Case No. 756/2024)
        The most critical ruling addressed the recoverability of legal costs under the rules of the International Chamber of Commerce (ICC).
      • The Shift: Historically, Dubai courts required an explicit clause in the arbitration agreement itself to allow a tribunal to award legal costs.
      • The New Standard: The DCC reversed this stance, ruling that Article 38(1) of the ICC Rules (which permits the recovery of “reasonable legal and other costs”) constitutes a sufficiently clear and express agreement by the parties to grant the tribunal this power.
      • Global Alignment: This decision reinforces the universal principle that parties are bound by the rules they choose to govern their arbitration. It aligns with the practice of most leading arbitration seats worldwide, where the incorporation of institutional rules like the ICC’s is considered sufficient to empower the tribunal on costs.
      1. Arbitration Clause Continuity in Contract Assignment (Commercial Case No. 945/2024)

      The Court provided clarity on the transfer of arbitration agreements in commercial transactions:

      • The Ruling: The DCC held that a broad assignment of rights under a contract is deemed to include the transfer of the arbitration clause to the assignee. The clause remains valid and binding on the new party.
      • Global Alignment: This ruling adheres to the international doctrine that the arbitration clause follows the main contract (often expressed as the principle that the accessory follows the principal). It prevents parties from circumventing a valid arbitration agreement through contractual restructuring, upholding the sanctity of the original agreement.
      1. Procedural Prerequisites: Tribunal Authority Confirmed (Commercial Case No. 946/2024)
        The DCC clarified the legal nature of procedural conditions (like mandatory negotiation or submission to an expert) required before commencing arbitration:
      • The Ruling: The Court confirmed that the fulfillment of these prerequisites is a matter of “admissibility” (a procedural issue for the tribunal to decide), not “jurisdiction” (a matter that could allow the court to intervene and invalidate the entire agreement).
      • Global Alignment: This position supports the competence-competence principle and limits judicial interference in the arbitral process. It empowers the tribunal to manage its own proceedings and prevents parties from easily derailing the arbitration by claiming procedural non-compliance in court.
        In essence, these judgments collectively enhance the integrity, enforceability, and efficiency of arbitration seated in Dubai, ensuring its legal framework is harmonized with the standards expected by the international business and legal communities

    • Insight: The Regulatory-Powered Transformation of the UAE’s Healthcare and Life Sciences Ecosystem

        The UAE’s healthcare and life sciences sector is undergoing a profound shift, driven less by organic market growth and more by deliberate, top-down legislative and strategic mandates. This transformation is positioning the country as a regional powerhouse for Precision Health, Biotechnology, and Digital Medicine, with recent regulations acting as powerful accelerators rather than mere administrative overhead.

        Read more: Insight: The Regulatory-Powered Transformation of the UAE’s Healthcare and Life Sciences Ecosystem
        1. Centralizing Power to Fast-Track Innovation (Regulatory Shift)
          The most immediate and impactful regulatory development is the establishment of the Emirates Drug Establishment (EDE), facilitated by the new Federal Decree-Law No. 38 of 2024. 
        • Impact: The EDE centralizes the regulatory process for everything from pharmaceuticals and medical devices to genetically modified organisms (GMOs) and biobanks. This unification is a crucial signal to global biotech and pharma firms: the UAE is moving towards a single, streamlined, and efficient approval pathway. The law’s objective is explicitly to enhance supply chain security and attract investment by removing bureaucratic fragmentation, allowing innovative products to reach the market faster. 
        1. Genomics and Precision Health Go Mainstream (Trend & Mandate)
          Genomics is no longer an academic pursuit but a national health mandate. The Emirati Genome Program has moved from a research phase to an active public health strategy.
        • Impact: The decision to make genetic screening mandatory for Emiratis in premarital exams, along with approvals for nationwide screening programs (e.g., newborns, cardiovascular diseases), creates one of the world’s most comprehensive population genomic databases. This data asset is being used to fuel massive investment in precision medicine and gene therapy centers, often through partnerships with leading global institutions (e.g., US-based academic medical centers). The regulatory environment (e.g., specific rules for biobanks under the new 2024 law) is evolving to govern the ethical and secure use of this sensitive data for developing tailored treatments. 
        1. AI and Digital Health Move Beyond Telemedicine (Trend & Governance)
          The digital health trend has matured from simple telemedicine to a foundational pillar of the ecosystem, heavily relying on legislative governance.
        • Trend: The UAE is accelerating AI adoption in advanced diagnostics, robotics, and predictive health. Projects like Abu Dhabi’s Malaffi health information exchange, which securely connects virtually all public and private providers, provide the Big Data necessary for sophisticated AI applications. 
        • Regulatory Inclusion: This is only possible due to robust governance. The Federal Decree-Law No. 45 of 2021 (PDPL) ensures health data is classified as Sensitive Personal Data, addressing security concerns that often stifle digital innovation in other markets. Furthermore, authorities have introduced regulatory sandboxes and ethical guidelines for AI, allowing innovators to test new solutions (like AI-driven diagnostics) in a controlled but commercially viable environment. 
        1. Strategic Investment in Biomanufacturing and R&D (Investment & Infrastructure)
          The focus is shifting from simply importing drugs to localizing manufacturing and R&D, positioning the UAE as a secure supply chain node for the broader region.
        • Impact: New industrial clusters like the Health, Endurance, Longevity, and Medicine Cluster (HELM) are attracting significant Foreign Direct Investment (FDI) into biomanufacturing, clinical trials, and advanced medical logistics (e.g., vaccine distribution hubs). Investment is strategically focused on high-growth areas like cell and gene therapy (CGT) development and biosimilars manufacturing, backed by tax incentives and infrastructure readiness to ensure a rapid path to market. The regulatory environment actively supports this by streamlining the licensing process for R&D facilities and clinical research organizations (CROs). 
          In conclusion, the UAE’s healthcare and life sciences journey is defined by a unique convergence: visionary government strategy, massive sovereign investment, and agile regulatory reform. The legislative framework is designed not to restrict, but to enable, ensuring the country can host cutting-edge technology and research while maintaining global standards of safety and data protection.

      • VARA, SCA, and the Code: Defining the Future of Crypto Regulation in the UAE

          The United Arab Emirates, led by Dubai, is rapidly shedding its image as a regulatory gray zone for cryptocurrencies and is solidifying its position as a global hub for virtual assets (VAs). Rather than adopting a single, centralized approach, the UAE has implemented a comprehensive, multi-layered regulatory matrix designed to categorize, license, and govern every type of crypto token and associated service. 

          Read more: VARA, SCA, and the Code: Defining the Future of Crypto Regulation in the UAE

          This new regime, anchored by the Virtual Assets Regulatory Authority (VARA) in Dubai and the Securities and Commodities Authority (SCA) at the Federal level, is a calculated effort to marry aggressive innovation with robust investor protection and market integrity. 
          VARA: The Catalyst for Crypto-Native Innovation in Dubai
          VARA, established under Dubai Law No. 4 of 2022, is the world’s first independent regulator focused exclusively on virtual assets. Its rules primarily govern all VA activities conducted in onshore Dubai (excluding the Dubai International Financial Centre, DIFC). 
          Clear Token Classification and Licensing
          VARA’s success lies in creating a clear, tiered licensing system that covers the entire value chain of virtual asset services (VASP). Key activities requiring a VARA license include: 

          • Virtual Asset Issuance: This covers businesses creating and launching new tokens. 
          • Virtual Asset Exchange Services: Required for operating any crypto trading platform. 
          • Broker-Dealer Services: Facilitating transactions between users. 
          • Custody Services: Holding or managing clients’ virtual assets. 
            Strict Market Conduct and Investor Protection
            VARA has been notably proactive in setting standards for market behavior. Its regulations are particularly strict on: 
          • Marketing and Advertising: Firms must provide clear disclaimers, avoid sensational claims (like “guaranteed profits”), and ensure all communication is fair, clear, and not misleading to protect retail investors. 
          • Token Disclosures: Issuers must provide detailed Whitepaper Disclosures, outlining the token’s utility, underlying assets, and associated risks—a foundational step toward ensuring transparency. 
          • Anti-Money Laundering (AML): VARA enforces rigorous compliance with federal AML/CFT laws, including implementing the “Travel Rule” which mandates the collection and transmission of originator and beneficiary information for transactions above a certain threshold. 
            SCA: Integrating Digital Assets into Federal Capital Markets
            While VARA manages the “crypto-native” space, the federal regulator, the Securities and Commodities Authority (SCA), has focused on integrating tokens that represent traditional financial instruments into the UAE’s established capital markets framework.
            A New Regime for Security and Commodity Tokens
            The SCA’s Decision No. 15/RM/2025 is a landmark piece of legislation that creates a legal framework for Security Tokens (STs) and Commodity Token Contracts (CTs). This move champions the principle of technological neutrality: 
          • Definition: If a token legally represents a share, a bond, or a tradeable debt (a Security Token), or if it represents physical assets like gold or oil (a Commodity Token), it is regulated exactly like its traditional counterpart. 
          • Trading Mandate: Crucially, STs and CTs must be traded and settled on a licensed “Market” or an Alternative Trading System (ATS) authorized by the SCA. This effectively plugs DLT-based financial products directly into regulated venues like the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM). 
            This approach provides legal certainty and opens the door for the tokenization of real-world assets (RWA) under a known regulatory framework, appealing directly to institutional finance.
            The Central Bank and Financial Free Zones: A Unified Ecosystem
            The regulatory landscape is further defined by other key authorities:
          • Central Bank of the UAE (CBUAE): The Central Bank’s Payment Token Services Regulation (PTSR) governs any service that connects crypto to the conventional financial system, such as fiat-to-crypto conversions and payment services, ensuring control over systemic financial risk. 
          • Abu Dhabi Global Market (ADGM): The Financial Services Regulatory Authority (FSRA) in ADGM continues to refine its own comprehensive regime, particularly for Fiat-Referenced Tokens (FRTs) or stablecoins, often pioneering clear rules before the onshore regulators. 
            The UAE’s Differentiating Strategy
            The UAE’s token regime is not just about control; it’s about strategic global competitiveness. By offering clear, detailed rules across multiple regulatory bodies (VARA for innovation, SCA for capital markets, CBUAE for payments), the UAE offers a regulatory pathway for virtually every type of crypto business. 
            The result is a highly attractive proposition for major global exchanges and fintech firms seeking stability, clarity, and access to the regional market, positioning the Emirates as the world’s most deliberate and comprehensive jurisdiction for the digital asset economy.

        • Global Tax Guide to Doing Business in the UAE

            Global Tax Guide to Doing Business in the UAE
            The United Arab Emirates (UAE) has transitioned from a largely tax-free environment to a jurisdiction aligned with global standards, most notably through the introduction of a federal Corporate Tax (CT) regime. This shift is crucial for multinational entities operating or planning to establish a presence in the Federation.


            Legal System
            The UAE operates a Civil Law system, which means its legal framework is based on codified laws and statutes rather than judicial precedent. It is influenced by Islamic Sharia principles, particularly in personal matters and certain aspects of commercial law. The UAE has both a Federal court system and autonomous judicial systems in certain financial free zones, such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). These financial Free Zones utilize a distinct Common Law system, complete with English-language courts and independent regulatory bodies, offering an alternative legal framework for international finance and dispute resolution.
            Taxation Authorities
            Taxation is governed at the federal level. The two main authorities are:

            Read more: Global Tax Guide to Doing Business in the UAE
            1. The Federal Tax Authority (FTA): This is the principal body responsible for the administration, collection, and enforcement of all federal taxes, including Corporate Tax (CT), Value Added Tax (VAT), and Excise Tax. Businesses register with the FTA and file tax returns through its portal.
            2. The Ministry of Finance (MoF): The MoF is responsible for drafting tax legislation, issuing Cabinet Decisions, and representing the UAE in international forums, including negotiating and implementing Double Taxation Treaties (DTTs).
              Business Vehicles
              Foreign companies typically structure their operations in the UAE using three primary entities:
            • Mainland Limited Liability Company (LLC): This is the most common entity for trading activities within the UAE market. Recent legislative reforms have largely eliminated the mandatory requirement for a local partner in many sectors, allowing for up to 100% foreign ownership of an LLC.
            • Free Zone Entity: The UAE hosts numerous Free Zones (special economic areas) that offer specific benefits, primarily 100% foreign ownership and the ability to repatriate all capital and profits. These entities are within the scope of Corporate Tax but may benefit from a 0% rate on qualifying income.
            • Branch or Representative Office: These are considered an extension of the foreign parent company and are taxed as a Permanent Establishment (PE) in the UAE on locally sourced income.
              Financing a Corporate Subsidiary
              Financing a UAE-based subsidiary, typically through inter-company loans, is subject to strict compliance under the new Corporate Tax law, specifically concerning Transfer Pricing (TP) rules. The law adheres to the Arm’s Length Principle, requiring that the terms (including the interest rate) of related-party debt be consistent with what independent parties would agree to.
              Furthermore, the deduction of net interest expense is limited to 30% of the company’s Adjusted Taxable Income (an EBITDA-equivalent measure). This restriction aims to prevent excessive debt-loading within the UAE entity to shift profits out of the country.
              Corporate Tax (CT)
              The UAE introduced a federal CT regime (Federal Decree-Law No. 47 of 2022) effective for financial years commencing on or after June 1, 2023.
              The CT regime features a competitive dual-rate structure designed to support small and medium-sized enterprises (SMEs) while meeting international obligations:
            1. 0% Rate: Applied to taxable income (profit) up to AED 375,000 (approximately US$102,000).
            2. 9% Rate: Applied to taxable income exceeding AED 375,000.
            3. Large Multinational Enterprises (MNEs): A different, currently unspecified, rate (expected to be 15%) will apply to large MNEs that meet the criteria for the OECD Pillar Two global minimum tax.
              Free Zone Taxation: Entities that qualify as a Qualifying Free Zone Person (QFZP) benefit from a 0% CT rate on their Qualifying Income. This zero-rate typically covers income derived from transactions with foreign parties or with other Free Zone entities, provided the QFZP maintains adequate substance.
              Cross-Border Payments
              The UAE maintains a favorable tax environment for cross-border transactions:
            • Withholding Tax (WHT): The UAE currently imposes no domestic WHT on most payments made to non-residents, including dividends, interest, royalties, and service fees. This provides a significant advantage for multinational groups structuring their cash flows through the UAE.
            • Transfer Pricing: While WHT is zero, the inter-company payments for services, royalties, or interest must still comply with Transfer Pricing documentation rules to ensure the payment amount is commercially justifiable at arm’s length.
              Payroll Taxes
              The UAE tax system is exceptionally simple for individual employees:
            • Personal Income Tax: The UAE does not levy any personal income tax on wages, salaries, or other emoluments earned by employees.
            • Social Security: While expatriate employees do not contribute to a mandatory payroll tax, employers are legally required to make mandatory contributions to a social security scheme for their UAE and GCC national employees only.
              Indirect Taxes
              Indirect taxes in the UAE primarily consist of VAT and Excise Tax, generating a substantial portion of the federal budget.
            • Value Added Tax (VAT): Implemented in 2018, VAT is levied on most goods and services. The standard rate is 5%.
            • Specific sectors and supplies, such as international transport, certain education and healthcare services, and exports, are subject to a 0% rate.
            • Certain services, like specific financial services and residential property rentals, are exempt from VAT.
            • Excise Tax: This tax applies to specific goods deemed harmful to human health or the environment. The rates are 50% for carbonated and sweetened drinks, and 100% for tobacco and tobacco products, electronic smoking devices, and energy drinks.

          • Regulating the Future: How the UAE Governs Banking Innovation Through FinTech


              The UAE has cemented its position as a global financial hub, not by resisting the tidal wave of financial technology (FinTech), but by actively embracing it. The nation’s regulatory bodies, led by the Central Bank of the UAE (CBUAE), recognize that FinTech is a powerful tool for enhancing financial inclusion, market efficiency, and customer experience. Instead of imposing static rules, the UAE regulates banking innovation by creating proactive, innovation-centric frameworks that guide disruption rather than restrict it. 
              Here is a breakdown of how the UAE actively governs the banking sector through regulatory innovation:

              Read more: Regulating the Future: How the UAE Governs Banking Innovation Through FinTech

              The Central Bank’s Approach: Guided Disruption
              The Central Bank of the UAE (CBUAE) has moved beyond traditional oversight to become an enabler of digital finance, focusing its strategy on infrastructure and open standards.

               
              A. Mandating Open Finance and Interoperability
              The most significant move has been the introduction of regulations that mandate openness. The Open Finance Regulation (Circular No. C 7/2023) is a game-changer. It requires licensed financial institutions to create secure interfaces (APIs) for sharing customer data (with explicit consent) with approved third-party providers (TPPs). 

              Impact on Consumers: This regulation drives competition, forcing banks to integrate with FinTechs to offer better, personalized services.

              Impact on Businesses: It allows FinTechs to build innovative products like real-time working capital solutions (e.g., invoice financing) using up-to-the-minute business data, leading to faster credit decisions and less friction.


              B. Modernizing Core Infrastructure
              Innovation in regulation also means modernizing the rails upon which money moves. The CBUAE’s Financial Infrastructure Transformation (FIT) program aims to create a highly efficient, future-proof financial ecosystem. Key projects include: 

              Instant Payments: Developing a domestic instant payment platform to allow real-time movement of funds between banks and payment providers. 

              Digital Currency: Exploring and piloting a Digital Dirham to enhance wholesale and cross-border payments efficiency using distributed ledger technology (DLT). 


              C. Governing New Payment Methods
              To ensure safety in the shift to a cashless society, the CBUAE actively regulates digital assets used for payment. The Payment Token Services Regulation ensures that digital wallets and stored value facilities operate within a clear, secure legal framework, protecting consumer funds and maintaining stability. 

                Impact: This approach encourages foreign FinTech firms to choose the UAE by significantly reducing the cost and risk of launching groundbreaking technologies, accelerating the time to market.


                D. Dedicated Virtual Asset Regulation
                The free zones have pioneered clear frameworks for digital assets that were previously unregulated. ADGM was an early mover in issuing comprehensive rules for Virtual Asset Service Providers (VASPs). Similarly, the establishment of the Virtual Assets Regulatory Authority (VARA) in Dubai (under Law No. 4 of 2022) provides a dedicated, specialized license for firms dealing with cryptocurrencies, NFTs, and other digital assets, signaling a commitment to integrating this asset class into the formal economy securely. 
                Conclusion: A Framework for Economic Diversification
                The UAE’s regulatory strategy is clear: FinTech is not just a technological change; it is an economic growth driver. By embedding open banking standards, modernizing national payment systems, and providing dedicated testing grounds for innovation, the regulators are successfully shifting the banking sector from reactive compliance to proactive innovation. This balanced approach ensures that consumers and businesses benefit from world-class financial convenience, while the system remains stable, secure, and compliant with international standards for anti-money laundering (AML) and consumer protection.