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Why UK Entrepreneurs Are Choosing Dubai Over London

In 2024, 2,588 companies from the United Kingdom joined the Dubai Chamber of Commerce, representing a 14.2% increase over the previous year. This upward trend highlights a growing reality: UK entrepreneurs are actively relocating their businesses to Dubai. The underlying reason is not mere preference but the rising burden of operating within the UK. With the main rate of corporation tax now at 25% for higher profits and a regulatory system that often feels restrictive, London has become a more challenging environment for start-ups and established companies alike. 

In contrast, Dubai presents a competitive tax structure, where profits up to AED 375,000 are exempt and those above are taxed at just 9%, supported by free zone regimes that allow entrepreneurs to maintain ownership and operate under clear rules. These divergences in law and policy explain why this discussion is necessary: to outline the factors that make Dubai a stronger base for entrepreneurial growth than London.

Dubai as a Commercial Jurisdiction of Choice

The shift of British businesses is not simply reactive to UK pressures; it is driven by the proactive framework Dubai has built. Entrepreneurs value predictability, and Dubai’s combination of federal law, specialised free zone regulations, and internationally aligned commercial practices provides just that. For those accustomed to London’s complexity, the comparative clarity of incorporation, licensing, and dispute resolution in Dubai stands out. This legal stability anchors investor confidence and ensures that entrepreneurial energy is directed toward expansion rather than compliance battles.

Tax and Fiscal Certainty: A Legal Advantage

Taxation remains at the core of entrepreneurial decision-making. In the UK, layered corporation tax, capital gains obligations, and dividend tax create a fiscal climate where much of the profit is absorbed before reinvestment. By contrast, Dubai’s regime offers fiscal certainty: a straightforward 0% to 9% corporate tax structure with no capital gains tax on most individual holdings and no inheritance tax. This simplicity is not merely attractive; it is strategic. It provides entrepreneurs with clarity when drafting financial forecasts, negotiating shareholder agreements, or securing external investment, thereby strengthening their legal and commercial standing.

Free Zones and Corporate Structures

Beyond taxation, Dubai’s network of free zones has become an indispensable tool for international entrepreneurs. These jurisdictions permit 100% foreign ownership, sector-specific regulation, and simplified dispute resolution, often with mechanisms familiar to common law investors. For UK entrepreneurs used to the rigidity of Companies House procedures, this flexibility is transformative. It allows businesses to choose a jurisdiction tailored to their industry, be it technology, media, or financial services, while still benefiting from the overarching security of UAE law. The result is a corporate structure that balances autonomy with legal certainty.

Strategic Access Backed by Law

Entrepreneurs are not only seeking tax relief; they are seeking growth. Dubai’s position between Europe, Asia, and Africa provides unrivalled access to emerging markets. This access is fortified by aviation, logistics, and digital frameworks supported by statutory regulations that guarantee the enforceability of commercial contracts and trade arrangements. In London, geographic limitations and post-Brexit barriers have introduced additional legal complexity for cross-border commerce. Dubai fills this gap by offering both location and the legal infrastructure to support expansion into high-growth markets.

DIFC Courts and Legal Predictability

Legal infrastructure is often the deciding factor for international entrepreneurs. In Dubai, the Dubai International Financial Centre (DIFC) offers an independent jurisdiction applying common law, complete with its own courts and arbitration frameworks. This ensures that entrepreneurs from the UK, familiar with common law principles, can conduct business under a system they trust. The coexistence of UAE civil law and DIFC common law provides businesses with options, a flexibility absent in London’s unitary system. This legal duality not only attracts entrepreneurs but also reassures investors and contractual partners that disputes will be resolved with impartiality and enforceability.

Talent, Immigration, and Legal Facilitation

Another essential aspect is people movement. The UK’s post-Brexit immigration system has tightened, putting roadblocks in the way of bringing in global talent. Dubai, on the other hand, has enacted golden visas, long-term residencies, and fluid employment arrangements. These policy frameworks are not secondary; they are fundamental to entrepreneurial success, enabling businesses to recruit, retain, and lawfully employ the talent required to grow. For UK entrepreneurs, the ability to navigate immigration seamlessly is a decisive factor in relocation.

Regulatory Modernisation and Efficiency

Contemporary entrepreneurship flourishes where regulators act as facilitators. London, however, has built up layers of compliance and changing policies to create an uncertain environment. Dubai, on the other hand, has made moves toward legal reforms to bring itself in line with international benchmarks, legislating insolvency, electronic registries, and e-licensing. These efforts bear witness: to place Dubai not only as competitive but as legislatively forward-thinking. For businesses, this implies that corporate law, intellectual property law, and insolvency law are carried out within a system that is both up to date and trustworthy.

The Human Element of Jurisdictional Choice

While legal certainty and fiscal incentives reign supreme in decision-making, lifestyle concerns cannot be ignored. Dubai offers a legally secure setting, with property legislation, residence schemes, and security laws aimed at promoting long-term residence. This security is not limited to the entrepreneur but extends to his or her family and workers, providing stability that sustains business operations. In London, increasing living costs and socio-political pressures progressively diminish its attractiveness as a base of operations.

Why Legal Guidance Is Critical

Selecting Dubai is not the finality of the exercise; it marks the commencement of legal manoeuvring. There are different laws in every free zone; the mainland follows civil law, and the DIFC has common law. Framing a business without suitable legal counsel jeopardises noncompliance, contractual exposure, or ineffective tax positioning. Professional advice ensures that the benefits of Dubai are maximised, be it through proper preparation of shareholder agreements, diligence in cross-border transactions, or assistance in disputes.

Conclusion: The Legal Logic of Migration

The migration of London entrepreneurs to Dubai is an expression of law and policy and not merely lifestyle. It is a reaction to high taxation, regulation, and limited growth in the UK versus fiscal transparency, legal predictability, and strategic potential in Dubai. For UK entrepreneurs, the choice is no longer uncertain; it is a sensible move. By moving to Dubai, they gain a jurisdiction where the law supports enterprise instead of strangling it.

At Davidson & Co., we make sure this change is not just strategic but also legally solid, offering the knowledge necessary to safely navigate both UK and UAE systems.

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DIFC WillsNews

Why Every Expat in Dubai Should Consider a DIFC Will – Highlighting Legal Protections and Peace of Mind

For most non Muslim expatriates in Dubai, how their assets are dealt with after they die is something that is ignored until there is no choice. Based on the UAE Personal Status Law and the UAE Civil Transactions Law, if there is no registered will, inheritance is regulated by Sharia law rules. This is to say that the assets in the UAE will be divided by predetermined shares to the heirs irrespective of the intentions of the deceased. 

For instance, the spouse cannot inherit the whole estate simply because they are the spouse, and children might receive allocations by religious formula and not personal preference. This legal fact can result in final outcomes quite different from an expatriate’s intentions or customary expectations. The establishment of the DIFC Wills and Probate Registry has altered this environment with a framework that provides non Muslims with the means to have control over their estate being administered in accordance with their personal desires.

How a DIFC Will Avoids Sharia Law – Supported by Dubai Legislation

The DIFC Wills Service is rooted in a robust statutory framework. It has been constituted by virtue of Resolution No. 4 of 2014 of the Ruler of Dubai and supplemented by Dubai Law No. 15 of 2017. These legislative tools provide the DIFC Courts with the mandate to register and administer wills of non-Muslims for assets within Dubai and, in most cases, throughout the UAE. The DIFC Wills and Probate Registry Rules dated June 2019 give the operational framework that applies to the preparation, registration, and enforcement of such wills. Above all, Article 8 of Dubai Law No. 15 of 2017 ensures that DIFC registered wills are not subject to the operation of Sharia based succession principles, if they comply with the requirements of the registry.

Two Legal Protections You Can’t Get Without a DIFC Will

A DIFC Will provides expatriates with critical protections that cannot be secured under the default UAE legal framework. The first is the right to decide exactly how assets will be distributed upon death. This autonomy means you can leave your estate to individuals or organisations of your choosing without the constraints of fixed share inheritance. The second is the ability to appoint both interim and permanent guardians for minor children in a way that is legally enforceable. This guardianship provision is particularly significant for expatriate parents whose families may reside overseas, ensuring that decisions about a child’s care reflect the parents’ expressed intentions and are backed by the authority of the DIFC Courts.

Who Qualifies – And Why Not Everyone Can Register a DIFC Will

The DIFC Wills and Probate Registry Rules set clear eligibility criteria. Only non Muslims over the age of 21 who own assets in the UAE can register a DIFC Will. Proof of non Muslim status is a mandatory requirement. While residency in the UAE is no longer compulsory for all will categories, it remains necessary in certain cases, such as when appointing guardians for minor children. These requirements ensure that the DIFC jurisdiction is applied only in situations where it is legally valid and enforceable.

Five DIFC Will Formats That Let You Protect Exactly What Matters Most

The DIFC framework recognises that estate planning needs vary greatly among expatriates. It offers a Full Will, which covers all assets and guardianship provisions in one comprehensive document. There is also a Guardianship Will, focusing exclusively on appointing guardians for children. For those whose primary concern is real estate, a Property Will is available to cover up to five UAE properties. Business Owners’ Wills are designed for individuals holding shares in UAE registered companies, while Financial Assets Wills allow for the protection of specific bank accounts, investments, and other financial holdings. This range of will types enables expatriates to choose the format most relevant to their circumstances.

From Draft to Probate – The Legal Process Step by Step

The process of securing a DIFC Will begins with drafting the document in compliance with the WPR Rules, typically in English, and ensuring it accurately reflects the testator’s intentions. Executors and, where applicable, guardians are named, with their consent formally recorded. Registration is conducted either in person at the DIFC Wills in Dubai and Probate Registry office or via approved virtual platforms before an authorised officer. The will is then securely stored in the registry’s system. Upon the testator’s death, the executor applies to the DIFC Courts for a Grant of Probate, and the court’s orders are directly executable in Dubai and recognised across the UAE through judicial cooperation agreements.

Real Cases That Show Why DIFC Wills Matter

Consider a British expatriate who owns an apartment in Downtown Dubai and wishes for their spouse to inherit the property in full. Without a DIFC Will, Sharia inheritance rules could allocate a portion of the property to other relatives. By registering a DIFC Will, the spouse can legally inherit 100% ownership. In another case, an Australian couple in Dubai with two minor children has a family living abroad. By registering a Guardianship Will, they appoint those relatives as permanent guardians, ensuring that their children’s care arrangements are upheld. In yet another example, a South African national with assets in multiple emirates is able to cover all UAE based holdings under one Full Will, avoiding fragmented probate proceedings in different jurisdictions.

How DIFC Court Orders Hold Up Across the UAE

The DIFC Courts operate under Dubai Law No. 12 of 2004, which grants them judicial authority within Dubai. Their probate orders are enforceable across the Emirate and, under judicial cooperation protocols, recognised throughout the UAE. This jurisdictional reach ensures that a DIFC Will can be an effective estate planning instrument for assets located in any of the seven emirates, providing consistency and legal clarity in the administration of the estate.

Why Waiting to Register Could Leave Your Family Legally Vulnerable

Delaying the registration of a will can expose an expatriate’s family to avoidable legal challenges. In the absence of a valid DIFC Will, assets may be frozen, probate proceedings can become prolonged, and distributions may follow rules that conflict with the deceased’s intentions. Registering a DIFC Will before unforeseen events occur ensures that your estate is protected, your children’s guardianship is legally secured, and your family avoids the uncertainty and stress of navigating unfamiliar succession laws during a difficult time.

The Legal Tool That Gives Expats True Peace of Mind

A DIFC Will is more than a testamentary document; it is a legally binding mechanism that offers clarity, control, and protection under Dubai’s legal framework. Backed by Resolution No. 4 of 2014, Dubai Law No. 15 of 2017, and the DIFC Wills in Dubai and Probate Registry Rules, it bridges the gap between the UAE’s legal system and the estate planning needs of the expatriate community. For non Muslim expats who want to ensure that their legacy is honoured and their loved ones are provided for according to their wishes, engaging experienced legal counsel to draft and register a DIFC Will is an essential step toward achieving peace of mind.

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News

Property Distribution in Dubai: What Really Happens After You Buy Real Estate

Acquiring property in Dubai is an exhilarating move, whether for your home or investment. But it doesn’t stop the moment your name appears on the title deed. Knowing how property is owned, what applies, and how inheritance is treated under UAE law ensures that your rights and the future of your family are secure. This handbook clarifies the major legislations in an easy manner and how using experienced property dispute attorneys will assist you in making minimal errors at a minimal cost. 

Understanding Property Ownership in Dubai

Dubai’s property market is regulated by the Dubai Land Department (DLD), which ensures that all property transactions follow the law. For UAE nationals, property can be owned anywhere in Dubai. For expatriates, ownership is limited to designated “freehold” areas, such as Downtown Dubai, Dubai Marina, and Palm Jumeirah.

When you purchase a property, your name is entered into the DLD system and on an official title deed as the legal owner. This registration is your proof of ownership and is required when selling, transferring, or mortgaging the property.

The Role of the Title Deed

A title deed is not a document of convenience, it is the legal basis for your ownership rights. Without one, your ownership will not be enforced in a court of law. Your details, the address of the property, and whether it is freehold or leasehold are entered in the title deed. During cases of dispute, the title deed is used by the court first.

What Happens to the Property After You Buy It

Once bought, you can sell, rent, or pass away your property, but what happens when you die is based on your religion, nationality, and whether you have written a will or not. This is where UAE inheritance law kicks in.

Inheritance Laws for Muslims in the UAE

For Muslim property owners in Dubai, inheritance is governed by Sharia law under UAE Federal Law No. 28 of 2005 (Personal Status Law). Sharia divides an estate into fixed shares for certain heirs, such as spouses, children, and parents. The law ensures fairness according to Islamic principles but does not allow complete freedom to distribute property to anyone outside the eligible heirs, except for up to one third of the estate through a valid will.

Inheritance Laws for Non Muslims in the UAE

In recent years, the UAE introduced major reforms through Federal Decree Law No. 41 of 2022 on Civil Personal Status for Non Muslims. Non Muslims can choose the law of their home country to govern their inheritance if they make a registered will in Dubai.

If no will is made, the new default rule for non Muslims under UAE law is that half of the estate goes to the spouse and the other half is divided equally among the children, regardless of gender. This is very different from Sharia and provides more equal distribution.

Why a Will is Essential in Dubai

A well-written and registered will allow you to decide on who gets your assets. Without it, the default laws will be applied, which could not be in your own best interests. For instance, you could wish to leave your assets to a brother or charity, but without a will, this is not guaranteed.

Dedicating a will in Dubai either in the Dubai Courts or the DIFC Wills Service Centre ensures that your wishes are legally established. Property dispute attorneys can help you draft a will under UAE law and prevent future conflicts.

Transferring Property After the Owner’s Death

When a property owner passes away, the heirs must obtain a succession or inheritance certificate from the UAE courts. This document lists the legal heirs and their shares according to the applicable law. Once issued, it is submitted to the DLD to transfer ownership.

If the property is mortgaged, the outstanding loan must usually be settled before the transfer can be completed. Disputes over entitlement can delay this process, making legal guidance essential.

Common Disputes Over Property Distribution

Disputes often arise when:

• There is no registered will and heirs disagree on distribution
• A will is challenged on the basis of validity
• The property is jointly owned and one party wants to sell while others refuse
  

In such cases, courts can order the sale of the property and divide the proceeds, or they can rule on ownership shares. Skilled property dispute lawyers can negotiate settlements, represent heirs in court, and ensure the process follows UAE law while protecting clients’ rights.

How Foreign Owners Can Protect Their Interests

If you are an expatriate buying property in Dubai, you should:

• Ensure the property is in a designated freehold area
• Register your ownership immediately after purchase
• Prepare and register a will in the UAE to reflect your inheritance wishes
• Keep all documents, including the title deed and proof of payment, safe for future reference
  

Doing this not only protects your property during your lifetime but also makes inheritance procedures easier for your family.

The Significance of Legal Counsel

UAE real estate laws are distinctive, and misinterpretations may result in conflict or loss of rights. By seeking advice from property dispute lawyers prior to purchase, in case of making a will, or on inheritance, you adhere to UAE law and avoid legal intricacies.

At Davidson & Co, our lawyers counsel clients regarding property acquisition, inheritance planning, and conflict resolution. We mesh sound knowledge of UAE real estate law with seasoned court experience to guarantee the interests of our clients are safeguarded throughout. 

Final Word

Buying property in Dubai is full of great possibilities, but it does take planning. Being aware of regulations on ownership and inheritance under UAE law is the passport to securing your investment and passing it on successfully to the individuals you wish to inherit it. If you are buying your first home, expanding your portfolio, or drawing up a will, professional advice from property dispute solicitors will give you confidence and peace of mind now and in the years to come.

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News

Understanding Free Zones in the UAE: What They Are and How They Work

Establishing a company in the UAE provides numerous jurisdictional options, but free zones continue to be among the most strategically meaningful for overseas investors. As an entrepreneur or corporate body, getting to know the legal framework, scope of operation, and jurisdictional details of UAE free zones is paramount before proceeding with incorporation. This blog explains how UAE free zones function under law, the benefits they provide, and the legal factors you should consider before investing resources.

Delimiting a Free Zone in UAE Law

Free zone is a geographically defined territory of the UAE with its own regulatory body and subject to a distinct set of incorporation and licensing regulations. The zones are created under emirate level decrees or federal decisions and are empowered to make legislation on civil and commercial affairs, subject to general conformity with UAE federal legislation in matters like criminal law, anti-money laundering (AML), and counter terrorist financing (CTF).

The regulatory scheme of the majority of free zones functions in concomitance with but divergent from the UAE Commercial Companies Law (Federal Decree Law No. 32 of 2021), which applies primarily to mainland companies. Free zone governments have sole jurisdiction over licensing, shareholder structure, and management controls within their domain.

Legal Frameworks in Special Financial Free Zones

Some of the free zones, those prescribed as financial free zones under Federal Law No. 8 of 2004, are more legislatively autonomous. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have each implemented their own commercial and civil legislation modeled on common law principles. These codes address company law, contract law, employment law, and dispute resolution, and are enforced through autonomous courts with English as the language of proceedings.

For instance, a difc business setup is regulated by the DIFC Companies Law, DIFC Contract Law, and regulatory provisions by the Dubai Financial Services Authority (DFSA) where financial services are concerned. This distinctive framework attracts institutions requiring a transparent, internationally accepted legal environment.

Incorporation Process and Regulatory Compliance

The process for establishing a free zone entity typically involves:

1. Determining the business activity in accordance with the zone’s activity list.
   
2. Selecting the legal form Free Zone Company (FZCO), Free Zone Establishment (FZE), or a branch of an existing entity.
   
3. Reserving a trade name compliant with the zone’s naming regulations.
   
4. Obtaining initial approval, fulfilling share capital requirements (varies by zone and activity), and securing leased or flexi desk premises.
   
5. Applying for the business license, followed by immigration and visa issuance for employees.
   

Timelines vary substantially. For instance, non regulated trading or consultancy licenses in certain zones may be issued within 5–7 working days, whereas regulated activities especially in financial free zones can require extensive due diligence, fit and proper assessments, and multi stage regulatory clearances extending over several months.

Jurisdictional Scope and Activity Restrictions

It is essential to understand that free zone licenses typically limit onshore (mainland) trading unless facilitated through a locally licensed distributor or via specific exemptions provided under federal or emirate level legislation. Misinterpretation of this scope can lead to violations, administrative penalties, or license suspension.

In financial free zones, additional restrictions and obligations apply under their bespoke regulatory regimes. For example, DIFC regulated entities must comply with DFSA’s prudential rules, conduct of business regulations, and periodic reporting obligations.

Taxation, Customs, and VAT Considerations

Historically, most free zones granted corporate tax exemptions for defined terms, often up to 50 years. However, the introduction of Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses means corporate tax applies across the UAE, with certain qualifying free zone persons eligible for a 0% rate on qualifying income, subject to strict criteria.

Many free zones are also designated zones for VAT purposes under Cabinet Decision No. 59 of 2017. In such cases, supplies of goods within the designated zone may be treated as outside the UAE for VAT purposes, thereby deferring tax until goods enter the mainland or are consumed within the UAE.

Dispute Resolution Mechanisms

Dispute resolution frameworks vary. In most non-financial free zones, disputes fall under the jurisdiction of UAE federal or local courts. In contrast, DIFC and ADGM operate their own courts and arbitration centres, providing commercially sophisticated dispute resolution aligned with international standards. For cross border commercial disputes, these jurisdictions offer enforceability advantages through reciprocal enforcement treaties and recognition arrangements.

Variations in Response Times Between Free Zones

Applications’ response times vary because of the regulatory intricacy of activities, the extent of due diligence needed, and the number of processed applications. Sector-specific regulated zones like financial services, commodities, or health undertake advanced compliance verification, which takes longer. Strategic planning must include these anticipated timeframes to prevent operation holds.

Key Risk Areas and Compliance Obligations

Free zone business operators are required to conform to federal requirements like the Economic Substance Regulations (Cabinet Resolution No. 57 of 2020) and Ultimate Beneficial Ownership (Cabinet Resolution No. 58 of 2020). Non compliance entails huge administrative fines, license suspension, or even reputational loss.

Regular audits, license renewals, and visa quota management are other regular mandates that need to be included in operational planning from the very beginning.

Strategic Free Zone Choice

The best free zone for your company will be based on your industry, target markets, and appetite for regulation. Financial free zones like DIFC and ADGM are appropriate for regulated financial services and professional consultancy businesses that need a common law system. Sector-specific zones like DMCC (trading and commodities), DAFZ (distribution and logistics), and Dubai Internet City (media and technology) provide specialised licensing and infrastructure.

Considering the zone’s legal framework, regulatory efficiency, sector alignment, and long term cost implications is important for making an informed decision.

Why Davidson & Co Is Your Strategic Partner in UAE Free Zone Setup

Navigating the UAE’s free zone landscape requires not only understanding its advantages but also managing complex legal and compliance requirements. At Davidson & Co, we combine deep knowledge of UAE federal law, free zone regulations, and sector specific licensing regimes to deliver precise, strategic advice.

Whether guiding a client through the difc business setup process, structuring a tax efficient holding company, or ensuring compliance with cross border regulatory obligations, we take a proactive, detail driven approach. Our legal team works closely with free zone authorities, regulatory bodies, and government departments to secure efficient approvals and minimise risk exposure.

For clients seeking more than just a license for those looking for a partner who safeguards their legal position while maximising operational advantages Davidson & Co offers the insight, experience, and commitment that transforms setup into long term success.

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News

Understanding Your Rights Under “Employment law in the UAE” Everything You Should Know

Taking up a new position in the UAE can be both exhilarating and daunting. Whether you’re coming to live here for the first time or are beginning a new job after many years in the country, you’ll discover that workplace regulations can vary significantly from what you might be accustomed to back home. These regulations control your contract, your pay, your leave, and what occurs if you get things wrong. Without them, you may miss out on benefits you are due or find it difficult to defend yourself when things go wrong.

That is where UAE employment law comes in. It is your bible and your protection. It establishes understandable rights and duties for employers and employees alike so that everyone is on the same page. In this blog, we’re going to discuss the most key protections you need to know prior to signing a contract or beginning employment so that you can enter your new employment with confidence and clarity.

What “Employment law in the UAE” Means for You

UAE employment law is the collection of the regulations under Federal Decree Law No. 33 of 2021 and supporting regulations by the Ministry of Human Resources and Emiratisation (MOHRE). Such regulations cover a majority of employment positions in the nation, with the exception of certain free zones such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), which operate under independent employment laws.

The law covers everything from how contracts are formed to how disputes are resolved. It’s designed to balance the rights of employers and employees, ensure fair treatment, and maintain workplace harmony.

Understanding Your Contract

Before being employed, you will be signing a written employment contract endorsed by MOHRE. According to current regulations, all contracts are fixed term and may be for a maximum period of three years. If the term expires, both parties may agree to extend it. In case you keep working without an extension, the same conditions will hold until either party terminates it with fair notice.

Your agreement must set out your salary, title, fringe benefits, working hours, leave entitlements, and conditions of dismissal. Careful reading of it and comprehension of all its aspects are essential as it then becomes the legal guide for any dispute in the future.

The Probation Period

The initial six months at a job are typically a period of probation. Throughout this period, either party can terminate the employment upon notice 14 days if the employer and 30 days if you are quitting to move to another employer in the UAE. If you’re exiting the country entirely, you should provide 14 days’ notice. This timeframe enables both parties to consider whether the setup is suitable, but you are still under the protection of some rights like being timely paid.

Your Right to Payment on Time

You have to be paid in the agreed-on money, on the specified date of your contract, and without illegal deductions. The UAE Wage Protection System (WPS) sees to it that wages are electronically paid via authorized banks, leaving a record MOHRE can verify. Employers who do not pay on time may be fined, have their business restricted, or even have new work permits suspended.

Paid and Unpaid Leave

The law offers a number of types of leave, and each has certain regulations:

Annual leave: One year of service earns you 30 days of paid leave each year. If you have worked between six months and one year, you are awarded two days of leave per month.

Sick leave: You can take a maximum of 90 days in a year after probation: the first 15 are on full pay, the second 30 on half pay, and the last 45 without pay.

Maternity leave: Women employees are entitled to 60 days (45 on full pay, 15 on half pay), with potential additional unpaid leave if necessary due to health. New mothers also receive daily breaks for breastfeeding for six months after going back to work.

Paternity leave: Male employees receive five paid days during the first six months following the birth of a child.

Bereavement leave: Five paid days for the loss of a spouse, three for the loss of a parent, child, brother or sister, grandparent, or grandchild.

Study leave: You can take up to 10 days a year to sit for exams, if you have served for more than two years.

Workplace Safety and Health

The employers have the obligation by law to ensure a safe working condition. This involves appropriate training, safe tools, and protective devices to prevent accidents and disease. For outdoor workers, the yearly midday break regulation forbids working in sunlight from June 15 to September 15 between 12:30 pm and 3 pm.

If you become injured at work, your employer has to pay for medical expenses and your full salary for a maximum of six months, with half pay for the next six months if necessary. For permanent disability or if you die, compensation is determined on your basic salary and the severity of injury, with defined minimum and maximum payments as per law.

Protection from Discrimination and Harassment

The law prohibits discrimination against anyone based on gender, race, religion, nationality, or disability. It also prohibits harassment, bullying, or any kind of verbal, physical, or psychological abuse at the workplace. The employers are required to investigate complaints and take action, and the employees have the right to report breaches to MOHRE.

End of Service Benefits

If you have served for at least one continuous year, you are eligible for an end of service gratuity. This is computed as 21 days’ basic salary for every of the first five years and 30 days’ basic salary for each subsequent year up to a limit of two years’ total wages.

Some employers have introduced the option of an alternative savings scheme where money is invested during your employment with you potentially receiving more when you exit.

Termination of the Employment Relationship

Termination of a job has to comply with notice periods in the law typically ranging between 30 and 90 days depending on the contract. Termination with immediate effect without notice is only possible in exceptional cases, i.e., serious misconduct as specified under Article 44 of the law.

If you feel that you’ve been sacked unjustly referred to as arbitrary dismissal you can complain to MOHRE. If established, the court may order payment of up to three months’ salary on top of your other rights.

Resolving Disputes

If there is a workplace conflict, MOHRE provides mediation services. You can complain in writing on their website, through their app, or personally. In case mediation doesn’t work, MOHRE refers the case to the labour court. In claims up to AED 50,000, the court tries to settle within 30 working days.

You have two years from the time an entitlement was due to submit a claim, up from the earlier one year. This provides workers with extra time to respond if there is a delay or a complicated matter.

Last Thoughts

Understanding employment law in the UAE is knowing your rights from the day you sign your contract until you quit your job. It makes sure you receive your salary on time, get your rightful leave, work under secure conditions, and receive a fair grievance mechanism.

Should you ever require expert advice, Davidson & Co is one of the UAE’s top law firms with deep knowledge and experience in advising on employment law. Their team advises on reviews of contracts for employees and employers, resolving disputes, wrongful dismissal claims, and MOHRE proceedings making it easy for you to understand complex issues with confidence and clarity.

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Dispute ResolutionNews

Cross-Border Arbitration in the UAE: Why Global Businesses Choose Dubai for Dispute Resolution

In today’s globalised economy, cross-border conflicts have become a natural aspect of international trade. A joint venture that failed, a contract violated, or payment terms disputed, global companies require a level playing field, an efficient, and enforceable means of resolution. More and more, however, are opting for Dubai and the United Arab Emirates (UAE) as their seat of international arbitration. Why? What sets Dubai apart from other centers in the world of international dispute resolution?

At Davidson & Co., we’ve seen firsthand how Dubai’s evolution into a trusted arbitration hub has helped businesses resolve complex disputes across borders. Here’s a closer look at the reasons behind Dubai’s rising appeal in international arbitration.

1. Strategic Location Connecting East and West

Dubai’s strategic location, serving as a hub for businesses in Asia, Europe, and Africa, makes it a key meeting point. With worldwide accessibility via one of the world’s busiest airport hubs, it’s easy for parties in disputes, legal advisors, and arbitrators to meet in Dubai. This facility is particularly significant for time-sensitive arbitrations requiring hearings or submission of documents physically.

2. Pro-Arbitration Legal Framework

The UAE has made important strides in harmonizing its legislative framework with international standards of arbitration. The enactment of Federal Law No. 6 of 2018 on Arbitration grounded on the UNCITRAL Model Law was a revolutionary move. It infused clarity, certainty, and best practices into the process of arbitration in the UAE.

Key features include:

• Party autonomy in choosing arbitrators and procedures
  
• Judicial non-interference in the arbitration process
  
• Enforceability of arbitration awards under the New York Convention, to which the UAE is a signatory
  

These elements collectively enhance the credibility of Dubai as a safe and neutral arbitration venue.

3. World-Class Arbitration Centers

Dubai houses several well-established arbitration centers with world-class facilities and rules reflecting international best practices:

Dubai International Arbitration Centre (DIAC)   

Recently updated, DIAC boasts up-to-date rules, cost clarity, and technology-friendly processes.

Dubai International Financial Centre   

London Court of International Arbitration (DIFC-LCIA)   Although recently subsumed by DIAC, this center established a solid reputation for managing high-value international disputes with English-law influences.

Abu Dhabi Global Market Arbitration Centre (ADGMAC)   

Located in Abu Dhabi, but nonetheless powerful, providing common-law arbitration within a financial free zone.

They are independent of local courts to provide neutrality and effectiveness.

4. DIFC and ADGM as Common Law Free Zones

Perhaps the most groundbreaking legal evolution in the UAE is the creation of common law jurisdictions within free zones such as the DIFC and ADGM. These jurisdictions use English common law, possess their own courts, and enable international parties to choose arbitration under widely recognised legal systems.

This provides foreign investors with a feeling of legal security when conducting business in the UAE. If arbitration is conducted in the DIFC, for instance, enforcement of the award is expedited through the DIFC Courts, which are completely autonomous and conduct business in English.

5. Fast and Enforceable Awards

Certainty and speed are the most important factors in any commercial conflict. In Dubai, once an award is made in arbitration, the enforcement procedure, particularly within the DIFC and ADGM, is simplified and usually much faster than in most jurisdictions.

Additionally, since the UAE is a signatory to the New York Convention, arbitration awards made in Dubai can be enforced in more than 170 jurisdictions, and hence it is very appealing for international organizations.

6. Diversity of Parties and Arbitrators

The cosmopolitan nature of the business world in Dubai is reflected in its arbitration tribunals. With a diverse selection of arbitrators and lawyers belonging to various jurisdictions, language groups, and areas of expertise, parties are likely to get neutral arbitrators who comprehend the intricacies of their case, whether in construction, shipping, IP, or energy-related matters.

7. Confidentiality and Reputation Management

Confidentiality is paramount for most global companies. Dubai arbitration is confidential and private, safeguarding sensitive company information and business reputations as opposed to litigation, which is more often than not a matter of public record.

8. Helpful Courts and Judicial Mind-sets

The courts of Dubai, especially those in the DIFC and ADGM, are pro-arbitration and tend not to interfere unnecessarily. They intend to facilitate the arbitration process as opposed to second-guessing it, offering assistance where necessary in cases such as interim relief, summons of a witness, or enforcement without eroding arbitral autonomy.

Conclusion: 

As international trade continues to evolve, so does the demand for reliable, impartial, and binding dispute settlement institutions. Dubai has a strong combination: legal certainty, accessibility, institutional weight, and cultural impartiality. It’s not surprising that international business is increasingly opting for Dubai as the seat of arbitration, not just as it is now, but for the future-oriented legal vision it continues to embody.

At Davidson & Co., we understand the nuances of cross-border arbitration and have years of experience acting for clients in arbitrations seated in Dubai and other jurisdictions. Whether you are drafting arbitration clauses, going through proceedings, or enforcing awards, our experts are on hand to assist you every step of the way.Require advice on arbitration in the UAE? Get in touch with our international dispute resolution team today

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UAE: Strategic Considerations for HR and Legal Counsel Post-Reforms

Over the last few years, the United Arab Emirates has embarked on a comprehensive overhaul of its labour, immigration, corporate, and civil laws that represent a decisive transition towards a more transparent, globally compliant, and business-friendly environment. These reforms are not superficial; they indicate a new order of laws that necessitate both HR professionals and legal counsel to retool policies, agreements, and internal governance.

Whether operating a local workforce in the UAE or directing a multinational business in the country, the new legal reforms have presented both challenges and opportunities. We assist organisations in the transition at Davidson & Co. The following is an in-depth rundown of what these reforms entail and how HR and legal departments should strategically react.

1. Labour Law Reform – Federal Decree-Law No. 33 of 2021

The UAE’s new Labour Law, enacted on 2 February 2022, has transformed the employer-employee relationship. The most significant reforms are:

Fixed-Term Contracts Only: Unlimited contracts have been eliminated. All employment contracts need to be converted into fixed-term contracts (max 3 years).

Flexible Work Models: The law is a nod to part-time, temporary, remote, and job-sharing models, giving employers greater flexibility.

Probation Clarity: The employer must provide 14 days’ notice before terminating an employee during probation. Conversely, the employee must provide 30 days’ notice if resigning to join a new employer in the UAE.

Anti-Discrimination Provisions: New gender, race, religion, and disability protections are now statutorily enshrined.

Non-Compete Clauses: Enforceability of such clauses is clarified and cut back to two years from termination.

Strategic Considerations:

HR should update and reissue employment contracts to mirror the new fixed-term format.

Legal advice should provide compliance with new notice periods, leave entitlements, and termination practices.

Internal policies should be updated by companies to ensure anti-discrimination and equal pay requirements.

2. New Labour Dispute Resolution Processes

The Ministry of Human Resources and Emiratisation (MOHRE) has simplified the resolution process for labour disputes. A complaint should be filed first by employees with MOHRE, which can refer unresolved issues to the court.

Strategic Considerations:

Ensure a clear HR grievance policy with written internal resolution procedures.

Legal departments must maintain defensible employment files (e.g., performance appraisals, contract modifications) ahead of conflicts.

3. Emiratisation Quotas and Fines

In 2022, the UAE required private sector employers with 50 or more workers to implement 2% Emiratisation of their professional staff, growing every year up to 10% by 2026.

Non-compliance inquests financial fines of AED 96,000 annually (AED 8,000 monthly, per unmet quota).

Strategic Considerations

HR divisions need to establish Emiratisation recruitment pipelines, monitor national staff, and document compliance using MOHRE’s online platforms.

Legal departments need to counsel on Emirati recruitment incentives and maintain avertible quota misclassification, which may invoke penalties.

4. Golden Visa and Talent Retention

Changes to residency regulations have established longer-term visas, such as the 10-year Golden Visa and 5-year Green Visas for freelancers and professional specialists. These initiatives seek to retain talent and spur economic diversification.

Strategic Implications:

HR staff must assist high-achieving workers in acquiring extended residency arrangements, which may improve retention and commitment.

Legal advice needs to remain abreast of eligibility requirements and application processes in order to counsel executives and strategic hires.

5. Data Protection and Employee Privacy

The UAE enacted its first general Data Protection Law (Federal Law No. 45 of 2021) under the UAE Personal Data Protection Law (PDPL). It covers employee data and requires transparent principles of data management.

Strategic Considerations:

HR must update employment handbooks, consent forms, and onboarding paperwork to ensure lawfully processed employee data.

Legal advice should create or revise data protection policies, specifically around cross-border transfers and staff monitoring.

6. Wage Protection System (WPS) Compliance

The UAE compels all employers to remit wages under the Wage Protection System, overseen by the Central Bank. Delays or discrepancies can lead to fines, work permit suspension, or suspension from government services.

Strategic Considerations:

HR must ensure payroll accuracy and clarity, correlating payments with MOHRE-reported contracts.

Legal counsel must periodically review WPS compliance and address discrepancies promptly.

7. Occupational Health and Safety (OHS) and Work Environment

New legislation heightens employer responsibility to provide a safe and respectful working environment, including:

• Anti-harassment and bullying provisions
• Compulsory break periods in prolonged heat
• Increased emphasis on mental health and well-being

Strategic Implications:

HR must implement wellbeing policies, EAPs (Employee Assistance Programmes), and compliance training.

Legal advice must examine incident reporting procedures and inform on liability in occupational claims.

8. Termination and End of Service Benefits

Recent reforms clarified entitlements for end-of-service benefits, with possibilities for employers to implement voluntary savings schemes (e.g., DEWS in DIFC) as substitutes.

End-of-service gratuity is calculated more uniformly across contracts.

Workers who leave are no longer punished in gratuity computation, raising fiscal exposure for employers.

Strategic Considerations

HR has to provide precise computation and timely disbursement of end-of-service benefits.

Legal departments have to analyze adopting substitute retirement schemes for cost predictability and regulatory compliance.

9. Mainland vs. Free Zone Compliance

Strategic Considerations:

There are still regulatory variations between the mainland UAE and free zones (such as DIFC and ADGM). For example, DIFC and ADGM are governed by common law systems with separate employment regulations.

HR needs to have distinct policy systems for employees in various zones.

Legal advisors have to tailor contracts, dispute strategies, and disciplinary policies by jurisdiction.

Conclusion

The UAE’s reform agenda is ambitious and continuing. For HR professionals and in-house legal advisors, this new world requires not only legal acumen but strategic alignment, policy redesign, and cross-functional coordination.

At Davidson & Co., we assist organizations in navigating this changing landscape with confidence. Whether you are reviewing employment contracts, dealing with compliance audits, dealing with complex terminations, or creating localisation strategies, our team provides business-focused, practical legal assistance.

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Debt Recovery in the UAE: Strategic Enforcement Options for Corporate Creditors

Within an increasingly globalised marketplace, corporate credit is a key element of commercial transactions. Companies grant credit terms with the expectation of payment being made in full and on time. Defaults, however, occur in reality, and when this occurs, having a clear strategy for debt recovery is then vital.

The UAE’s legal system provides strong remedies for corporate creditors to recover debts by both amicable and judicial means. We have represented clients in various industries at Davidson & Co. and assisted them in going through complicated recovery procedures efficiently and effectively. In this article, we discuss the strategic enforcement remedies that can be employed for corporate creditors in the UAE and provide a practical guide to recovering what rightfully belongs.

Understanding the UAE Debt Recovery Framework

The UAE has built up a system of law that is organized and favors creditors but maintains procedural fairness. Some of the main features are:

• A civil law system in the mainland with common law systems in free zones like DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market).
  
• Enforcement of financial obligations under the Civil Procedures Code and Commercial Transactions Law.
  
• Signatory to the New York Convention for recognition and enforcement of foreign arbitral awards.
  
• Continuing criminal liability for cheques in default, although recent legislation has altered penalties.
  

This system offers domestic and foreign companies an array of instruments to recover commercial debts, depending on the character of the claim, the parties, and where the assets are located.

Step One: Internal Examination and Pre-Litigation Analysis

Prior to starting any recovery process, company creditors ought to have a proper internal examination. This entails:

• Contract Analysis: Check if the contract has clear payment terms, late payment penalties, or dispute resolution provisions (litigation or arbitration).
  
• Evidence Compilation: Gather all documents like invoices, delivery receipts, signed contracts, emails, and cheque copies. These documents will be crucial during court or arbitration proceedings.
  
• Debtor Profiling: Get to know the financial and legal position of the debtor. If the debtor is insolvent or dissolved, a different enforcement tactic may be required.
  

This initial due diligence enables companies to assess the viability of recovery and the most effective step.

Step Two: Amicable Resolution – The Preferred First Step

Suing amicably is often less time-consuming and expensive. In the UAE, this action not only follows the cultural protocol of local business operations but is also actively promoted by the courts.

Standard practice involves:

• Legal Demand Notices: Issued by legal representation formally, the notice details the sum due and the intention to pursue the case further if not paid within a stipulated time frame.
  
• Direct Negotiations or Mediation: In most instances, a formal dialogue can result in repayment schedules, partial settlements, or restructured terms.
  

Using legal counsel at this point illustrates seriousness and can encourage the debtor to settle prior to formal proceedings.

Step Three: Formal Legal Action – Litigation or Arbitration

If informal action is unsuccessful, corporate creditors are forced to move on to formal legal proceedings. The decision to pursue either litigation or arbitration usually hinges on the terms of the contract between the parties.

Litigation in UAE Civil Courts

Disputes are referred to the local courts where no arbitration clause exists:

• Payment Order Applications: A speedy remedy for undisputed claims upheld by documentary proof, well-suited for bounced cheques or outstanding invoices.
  
• Normal Civil Proceedings: More complicated or contentious cases are pursued through the normal process of litigation, involving written arguments, hearings, and expert appointments where necessary.
  

Proceedings before courts are in Arabic, and judgments are legally enforceable once made and finalized.

Arbitration in Recognised Centres

If there is an arbitration clause within the contract, the dispute is settled by institutions like:

• Dubai International Arbitration Centre (DIAC)
  
• Abu Dhabi Global Market Arbitration Centre (ADGMAC)
  
• Other international forums are subject to jurisdiction clauses
  

Arbitral awards are enforceable in UAE courts after ratification and, by virtue of the UAE’s membership in the New York Convention, also internationally.

Step Four: Enforcement of Judgments and Awards

Enforcement is the most critical stage of the debt collection process. A successful judgment or award has to yield actual payment, and the UAE courts offer various mechanisms to facilitate this:

Execution Proceedings

After obtaining a final judgment or arbitral award, it has to be referred to the Execution Court. The court will proceed to execute the award over the assets of the debtor and, if necessary, may take the following steps:

• Freezing Bank Accounts: Banks have to respond to judicial orders to freeze or debit amounts from the accounts of the debtor.
  
• Seizure of Movable and Immovable Properties: These consist of cars, lands, and stocks in domestic companies, which can be sold to pay back the debt.
  
• Wage Garnishment: The salary of the debtor can be partly deducted in some instances to fulfil the judgment.
  
• Seizure of Third-Party Debtor: If there is money due to the debtor from another party, the court will reroute such payments to the creditor.
  

Criminal Complaints for Dishonored Cheques

In addition to legal reforms, bouncing a cheque can still attract criminal prosecution. Although imprisonment is less prevalent under the new law, fines and travel bans remain effective tools for enforcement that tend to push the debtor into making payment.

Special Considerations: DIFC and ADGM Courts

Corporate creditors may want to include DIFC or ADGM jurisdiction provisions in their contracts, particularly when transacting with international counterparts. These courts provide:

• English-language proceedings
  
• Common law principles
  
• Modern procedural rules
  
• Speedier enforcement processes in their respective jurisdictions
  

A DIFC or ADGM judgment can also be ordered for enforcement on the mainland through mechanisms of reciprocal enforcement.

Best Corporate Creditor Practices

In order to improve their hand in recoveries in the future, companies should:

• Insert Clear Dispute Resolution Clauses: Indicate whether disputes are to be settled through court or arbitration, and select a convenient jurisdiction.
  
• Employ Post-Dated Cheques or Bank Guarantees: These tools offer leverage and increase enforcement potential.
  
• Keep Creditworthiness: Continuously monitor clients’ financial health, particularly before granting large credit lines.
  

Not Act:
Delay in recovering may lead to dissipation of assets or the running of time bars.

Not Engage:
Professional Legal Counsel Early: Proper legal professionals on board may result in quicker settlement and optimal results.

Conclusion: Strategic, Not Just Legal

UAE debt recovery is as much an art as it is a matter of legal process. With a blend of formalized court processes, state-of-the-art arbitration frameworks, and strong enforcement mechanisms, the UAE offers an excellent platform for corporate creditors looking to recover outstanding debt.

Here at Davidson & Co., we apply a commercially-savvy approach to all debt recovery cases, considering not just legal victory, but safeguarding your business interests during the process.

If your business is having debt recovery issues in the UAE, get in touch with our dispute resolution team for expert legal guidance and support.

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Types of Companies You Can Register in DIFC: A Legal Guide

Setting up a company in the Dubai International Financial Centre (DIFC) is more than just a regional expansion; it’s a strategic move into one of the world’s most advanced financial jurisdictions. Situated in the heart of Dubai, DIFC offers access to the MEASA (Middle East, Africa, and South Asia) region, backed by a trusted legal framework, tax neutrality, and 100% foreign ownership. Whether you’re an asset manager, advisory firm, tech company, or family office, selecting the right legal entity within DIFC is critical. 

Today, we’ll break down the different types of companies you can establish in DIFC covering both financial and non-financial setups along with the key regulatory bodies that govern them and the essential steps to get started.

Why DIFC Is Different: Your Own Legal Zone Inside Dubai

DIFC operates under an autonomous legal and regulatory system distinct from the UAE’s federal structure. The legal environment is grounded in English common law and enforced through the DIFC Courts, offering businesses familiarity, certainty, and enforceability.

There are two primary regulators within DIFC:

• The Dubai Financial Services Authority (DFSA): Oversees and licenses financial services firms operating within DIFC, ensuring global compliance standards.
  
• The DIFC Authority (DIFCA): Governs non-financial businesses and corporate services, including incorporations, amendments, and compliance functions for entities that do not provide regulated financial activities.
  

This dual-system approach allows for tailored oversight depending on whether your business provides financial services or falls within the broader commercial sector.

Financial Companies: Structured to Serve Global Markets

One must be licensed by the DFSA if your business is meant to function in the area of banking, investment management, or capital markets. Financial licenses are further divided into specific categories based on varying risk levels and services offered:

• Category 1: Banks and credit institutions offering loans, taking deposits.
• Category 2: Principal dealers in investment instruments or funds.
• Category 3A-3C: Asset managers, advisory firms, and brokers.
• Category 4: Firms conducting financial advisory or arranging services only.

Each license has capital adequacy requirements, risk frameworks, and regulatory reporting obligations that DavidSon & Co helps clients prepare for and maintain.

Non-Financial Businesses: A Growing DIFC Segment

Many of the multinational companies housed within DIFC are engaged in non-financial activities and take advantage of the globally recognized legal environment, tax benefits, and a vibrant ecosystem that DIFC offers. They do not need a DFSA license but should still register with the Registrar of Companies and comply with DIFCA regulations.

Examples of non-financial companies commonly established in DIFC:

• Professional Services Firms: Law, consultancy, accountancy, audit, and HR advisory firms.
  
• Tech Companies: Especially FinTechs under the DIFC Innovation Hub umbrella.
  
• Family Offices and Wealth Holding Entities: Taking advantage of structures like Foundations and Prescribed Companies.
  
• Retail, Hospitality, and Lifestyle Brands: High-end boutiques, restaurants, and galleries operating inside the DIFC district.
  

Available Legal Structures: Tailored to Your Business Purpose

Selecting the correct legal form is one of the most important decisions for any DIFC setup. Each structure has specific governance, capital, and compliance characteristics.

• Private Company Limited by Shares (Ltd): The most common structure for operating companies, allowing flexibility in ownership, capital, and governance. Limited liability protects shareholders’ interests.
  
• Public Company Limited by Shares (PLC): Designed for large firms intending to issue public shares. Heavier regulatory burden but suited to IPO-ready businesses.
  
• Limited Liability Partnership (LLP): Used mostly by professional service providers, LLPs provide operational flexibility while protecting partners from each other’s liabilities.
  
• Branch of a Foreign Company: Ideal for multinationals looking to operate in DIFC without establishing a new legal entity. A branch must mirror its parent and cannot engage in regulated financial services unless separately licensed.
  
• Special Purpose Vehicle (SPV): Utilized for asset holding, ring-fencing liabilities, or securitization. Not suitable for operational activities but widely used for investment structuring.
  
• Foundation: Used in succession planning and private wealth protection. Offers legal personality separate from its founders, with no shareholders.
  

Important Setup Considerations for DIFC Companies

Before registering, businesses must define the scope of activities, as this determines the licensing authority, regulatory requirements, and ongoing obligations.

Key considerations include:

• Type of Business: Are you offering financial services or general commercial operations?
  
• Capital Requirements: DFSA-licensed firms must meet specific capital rules depending on category.
  
• Office Premises: A registered office within DIFC is mandatory. Options include flexi-desks or leased space.
  
• Governance Structure: DIFC requires specific management structures and documented policies (AML, KYC, corporate governance).
  
• Compliance and Reporting: Annual returns, audits, and regulatory filings must be submitted in accordance with DIFC regulations.
  

How to Register a Company in DIFC (Step-by-Step)

1. Engage a DIFC-Registered Agent or Legal Advisor (like DavidSon & Co).
   
2. Identify Your Business Category: Financial (regulated) or non-financial (unregulated).
   
3. Select Your Legal Structure: Based on your business goals.
   
4. Reserve Your Company Name: Must comply with DIFC naming rules.
   
5. Submit Incorporation Documents: Including Articles of Association, identification, and business plan.
   
6. Receive Certificate of Incorporation: Issued by the DIFC Registrar of Companies.
   
7. Lease a DIFC Office Space: As part of setup compliance.
   
8. Open a DIFC Bank Account: Final step before operational launch.

Why Work with DavidSon & Co

Understanding the specific legal, financial and structural frameworks of the DIFC takes clarity and experience. Davidson & Co assists clients from the first consultation until DIFC Company registration, licensing, and compliance to make every step in the establishment of their DIFC operations as efficient and up to legal requirements as possible.

Whether you are starting a financial firm, setting up a family office, or creating a holding company, our team offers the best legal advice and practical execution in one of the most significant financial hubs around.

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Common Legal Mistakes to Avoid When Setting Up a Business in DIFC

Establishing a business within Dubai International Financial Centre (DIFC) is a world of opportunity, given the fact that it is a prominent financial center with a sound legal system. The stability, transparency, and internationally known regulatory regime of DIFC make it a place conducive to both new and existing businesses.

But getting around the laws of DIFC takes more than zeal. Most companies, especially startups, make serious legal blunders in their establishment and suffer from expensive fines, litigation, or even forced shutdown.

This blog spotlights the most frequent legal pitfalls in DIFC and offers sound, applicable tips on evading them.

1. Know About DIFC’s Unique Legal Landscape

Dubai International Financial Centre (DIFC) is one of the world’s top free zones in Dubai’s financial district, as it has a special legal structure. DIFC exists separately and legally under the laws and regulations of DIFC (and not the laws of the UAE federal government). The main regulators are:

• DIFC Authority: Manages company registration and administration.

• Dubai Financial Services Authority (DFSA): Regulates financial services within DIFC.

• DIFC Courts: Handles disputes within the jurisdiction.

To operate legally and effectively within DIFC as a business, an understanding of this unique legal framework is paramount. This unique framework permits businesses to have a clear legal framework. and provide voluntary compliance while minimizing the risk of costly legal mistakes.

2. Frequently Made Legal Mistakes

a. Poor Understanding of DIFC Licensing

Most companies wrongly believe that obtaining a DIFC business license permits them to conduct any business activity. However, each license is associated with certain business classes, and business activities beyond these classes can lead to the company experiencing compliance issues.

Solution: Make sure to get the appropriate license category for your business type. If in doubt, you should seek legal advice. Don’t assume you can engage in activities outside the scope of your license. Make sure no non-compliant activities are happening. This is important for operating legally and protecting the brand and your business.

b. Failing to Meet Corporate Governance Requirements

Companies normally fail to keep accurate company records, including director and shareholder records, which result in compliance issues. Inaccurate or out-of-date records have the potential to cause legal issues.

Solution: It is important to routinely keep your statutory registers up to date, submit your reports when necessary, and check that you are adhering to DIFC corporate governance standards for your company. If you wish to ensure compliance, professional corporate secretarial services can be a useful option. Keeping accurate records for transparency is important.

c. Ignoring Your Data Protection Compliance (DIFC DP Law 2020)

Most firms fail to address the compliance with DIFC Data Protection Law, putting themselves at risk of incurring significant fines and data breaches.

Solution: Register your data processing activities with the DIFC, appoint a data protection officer, if required, and put in place any data protection processes.  Review your data protection policies regularly so that you know they are compliant with DIFC laws. Fines for noncompliance can be substantial.

d. Drafting Poorly Structured Shareholder Agreements

There are some companies that employ generic or poorly worded shareholder agreements that do not specifically state the rights and duties of stakeholders, resulting in conflicts.

Solution: Invest in a customized, legally sound shareholder agreement that reflects the rights and obligations of all stakeholders. Ensure it is reviewed by legal experts who are familiar with DIFC regulations. A clear agreement prevents disputes.

e. Ignoring DIFC Employment Law

Companies tend to mistakenly use UAE mainland labor laws for employees in DIFC, which results in non-compliance and disputes. 

Solution: Comply with DIFC Employment Law, including employee contracts, minimum wage, end-of-service benefits, and annual leave entitlements. Consider consulting with employment law experts to avoid costly disputes. This protects employee rights.

4. Anti-Money Laundering (AML) Compliance

Financial businesses do not always enforce Anti-Money Laundering (AML) policies, putting them at risk with regulators.

Solution: Implement AML practices, undertake customer due diligence, and compliance reporting. Regular training sessions and awareness can keep your staff compliant. This is essential for financial integrity.

5. Having Good Corporate Governance

Some companies have poor corporate governance mechanisms, which may result in a failure to take responsibility and compliance issues.

Solution: Create a robust governance structure, comprising board meetings, shareholder resolutions, and transparent decision-making procedures. Governance reviews on a regular basis avoid compliance problems.

6. Planning for Business Expansion and Compliance

Companies at times expand without the licenses or compliance process being updated, creating legal issues as they expand.

Solution: Regularly review your business structure, licenses, and compliance obligations as your company grows in DIFC. Plan for scaling without legal risks.

7. How to Avoid These Mistakes

• Conduct thorough research on DIFC regulations before setup.
• Engage legal professionals who are knowledgeable about DIFC laws, such as Davidson & Co.  
• Keep your compliance practices in review and up-to-date.  
• Keep proper company records and have a data protection process.  
• Use customized contracts, including shareholder agreements, that suit your business needs.  
• Make sure your employees comply with DIFC Employment Law.
• Ensure financial transparency and tax compliance with expert guidance.
• Protect your intellectual property and maintain AML compliance where applicable.
• Implement a governance framework and plan for future growth.

Conclusion

DIFC business setup can be highly rewarding and enjoyable, but it’s important to have a clear understanding of the legal framework. By not falling into these general legal traps and taking proactive measures to address compliance, startup founders will be able to lay a sound foundation for their business. For additional guidance, consider obtaining legal advice from Davidson & Co. 

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Avoiding Property Disputes: A Guide for Tenants & Landlords in the UAE

Property disputes between tenants and landlords are common in the UAE, particularly in Dubai and Abu Dhabi, where the real estate market is dynamic and fast-moving. Disagreements often arise due to rent increases, contract violations, maintenance responsibilities, and eviction terms. 

Understanding rights and obligations under UAE law can help both parties avoid legal conflicts and foster a smooth rental experience.

Understanding the UAE Rental Framework

The UAE has established clear regulations to govern tenant-landlord relationships, primarily through Dubai Law No. 26 of 2007 (as amended by Law No. 33 of 2008) and Abu Dhabi’s Tenancy Law No. 20 of 2006. These laws outline the responsibilities of both parties and provide mechanisms for resolving disputes through the Rental Dispute Centre (RDC) in Dubai and similar legal bodies in other Emirates.

Key Aspects of UAE Rental Laws

• Mandatory Written Agreements: Rental contracts must be documented and registered with the Ejari system in Dubai and must detail the rent amounts, terms, renewal conditions, and any service fees.
• Rent Cap & Increases: Dubai’s Real Estate Regulatory Authority (RERA) enforces a rent increase cap based on market rates. Landlords cannot increase rent arbitrarily and must follow guidelines based on the RERA Rental Index.
• Eviction Rules: A landlord can only terminate a lease upon expiry under specific circumstances, such as personal use of the property or restoration/ comprehensive maintenance and must give a 12-month written notice via notary public or registered post.
• Security Deposit & Maintenance: Landlords must refund security deposits at lease termination unless there are damages beyond normal wear and tear. Additionally, maintenance responsibilities should be clearly defined in the rental contract.

Common Property Disputes and How to Avoid Them

Rent Increases and Payment Issues

A frequent cause of disputes in the UAE is rent hikes. Tenants often challenge increases that exceed the legally permitted limits, while landlords seek fair returns on their investments.

How to Avoid This Dispute:

• Tenants should verify rent caps via the RERA Rental Index before agreeing to a hike.
• Landlords must provide 90 days’ notice for a rent increase before lease renewal.
• Both parties should agree on payment methods and due dates to avoid bounced cheques and late fees.

Maintenance and Repairs

Disagreements often arise over who should handle repairs – whether it’s the landlord or tenant. Some landlords neglect their duty to fix structural issues, while tenants may be held responsible for damages they didn’t cause.

How to Avoid This Dispute:

• Define maintenance responsibilities in the rental contract.
• As per UAE law, landlords must cover major repairs while tenants handle minor upkeep.
• Tenants should document damages upon move-in and communicate all repair requests in writing to the landlord.

Security Deposit Refunds

Many tenants struggle to recover their security deposit due to deductions for damages that they claim were pre-existing.

How to Avoid This Dispute:

• Take photos and videos before moving in to document the property’s condition.
• Request a signed handover report upon vacating the unit.
• Both parties should conduct a final inspection together before lease termination.

Evictions and Lease Termination

Landlords cannot evict tenants without proper legal grounds, yet disputes often occur when tenants feel unfairly forced out. On the other hand, tenants breaking a lease early may face penalties.

How to Avoid This Dispute:

• Understand eviction laws: As set out above, a landlord can only terminate a lease upon expiry under specific circumstances, such as personal use of the property and must give a 12-month written notice.
• If a tenant needs to break a lease early, they should check the contract for penalties and negotiate with the landlord for a fair exit plan.

Subleasing Without Permission

Some tenants sublet their apartments to third parties without the landlord’s consent, leading to legal conflicts.

How to Avoid This Dispute:

• Tenants must obtain written approval from the landlord before subletting.
• Landlords should include a strict no-subletting clause in the contract.

Steps to Resolve Property Disputes in the UAE

Despite preventive measures, conflicts may still arise. The UAE provides formal mechanisms to resolve disputes efficiently.

Attempt Amicable Resolution

• Open communication is always the first step. Tenants and landlords should discuss concerns and try to reach a mutual agreement.
• Written correspondence (emails or letters) ensures clarity and documentary evidence. 

Seek Mediation

• Mediation through property management companies or legal consultants can help both parties settle disputes without escalation.

File a Case with the Rental RDC

• If a resolution cannot be reached, tenants or landlords can file a complaint with the RDC in Dubai or similar legal bodies in other Emirates.
• Required documents usually include Ejari registration, tenancy contract, Emirates ID copies, and proof of payment.
• The tribunal will issue a legally binding decision, which can be enforced through local courts if necessary.

Best Practices for a Smooth Rental Experience

To minimise conflicts, tenants and landlords should adopt best practices when entering into and maintaining a tenancy agreement.

For Landlords

• Ensure compliance with UAE rental laws and RERA regulations.
• Use clear and detailed contracts outlining all responsibilities.
• Maintain transparency regarding rent increases, eviction notices, and maintenance policies.
• Respond to tenant complaints promptly to build trust and avoid legal escalation.

For Tenants

• Read the tenancy agreement carefully before signing.
• Register the contract with Ejari (Dubai) or the respective authority in other Emirates.
• Keep records of all payments and correspondence with the landlord.
• Report maintenance issues immediately and follow up in writing if unresolved.

Protect Your Property Rights with Expert Legal Support

At Davidson & Co., we know that property disputes in the UAE can be costly and time-consuming. However, with clear contracts, legal compliance, and proactive dispute resolution, these conflicts can often be avoided.

A well-drafted tenancy agreement should include terms covering areas such as (but not limited to) maintenance, renewal, eviction, and dispute resolution to protect both landlords and tenants. Ensuring legal clarity helps prevent disputes and safeguards your interests.

If you need expert legal guidance on tenancy and/ or property matters in Dubai, Davidson & Co is here to help. Contact us today for tailored legal solutions.

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Legal Pitfalls in Commercial Contracts and How to Avoid Them

Commercial contracts are the backbone of business dealings in the UAE, ensuring clarity, accountability, and legal protection for all parties involved. However, many businesses fall into costly legal traps due to vague terms, non-compliance with local laws, or poor contract management. A well-drafted contract can prevent disputes and safeguard financial interests, while a poorly structured one can lead to litigation, reputational damage, and financial loss.

Let us explore the most common legal pitfalls in commercial contracts in the UAE and offer practical strategies to avoid them.

Understanding Commercial Contracts in the UAE

The UAE follows a civil law system, heavily influenced by Sharia principles, with contract laws primarily governed by Federal Law No. 5 of 1985 (UAE Civil Code) and Federal Law No. 18 of 1993 (Commercial Transactions Law). Free zones such as DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) operate under common law principles, providing alternative dispute resolution mechanisms.

Businesses must ensure that their contracts comply with UAE laws and international standards, particularly when dealing with cross-border agreements.

Common Legal Pitfalls in Commercial Contracts

Ambiguous or Incomplete Terms

One of the biggest sources of contractual disputes is vague or undefined terms. If clauses are open to multiple interpretations, it becomes difficult to enforce obligations.

How to Avoid This:

• Define key terms clearly, such as payment timelines, penalties, performance obligations, and delivery schedules.
• Use precise language to minimise ambiguity.
• Specify the governing law and jurisdiction for dispute resolution.

Ignoring UAE-Specific Legal Requirements

Many businesses fail to align their contracts with UAE laws, making certain clauses unenforceable. For example:

• Penalty Clauses: Under UAE law, excessive penalty clauses can be reduced by the court if deemed unfair.
• Non-Compete Clauses: These must be reasonable in scope, duration, and geographical reach to be legally enforceable.
• Force Majeure: UAE law recognises force majeure, but the contract must clearly define what qualifies as an event beyond control.

How to Avoid This:

• Seek legal review to ensure compliance with UAE commercial law.
• Tailor clauses to align with federal and free zone regulations.

Lack of Proper Dispute Resolution Mechanisms

If a dispute arises, the absence of a clear resolution clause can lead to prolonged and expensive litigation.

How to Avoid This:

• Include an arbitration clause, especially for high-value contracts. The Dubai International Arbitration Centre (DIAC) and DIFC-LCIA are commonly used for dispute resolution.
• Specify mediation and negotiation steps before initiating legal proceedings.
• Define the governing law to avoid jurisdictional conflicts.

Poorly Drafted Payment Terms and Penalties

Contracts that lack clear payment schedules, late payment penalties, and dispute handling for invoices often result in delayed or lost payments.

How to Avoid This:

• Clearly outline payment terms, due dates, and accepted methods.
• Specify interest rates or penalties for late payments, ensuring they are enforceable under UAE law.
• Include invoice dispute resolution mechanisms to handle discrepancies efficiently.

Failing to Address Termination and Exit Strategies

Contracts without well-defined termination clauses can lead to legal battles over liability and compensation.

How to Avoid This:

• Outline valid termination reasons, such as breach of contract, insolvency, or force majeure.
• Define exit obligations, including notice periods, settlement of outstanding payments, and return of intellectual property or assets.
• Include liability limitations to prevent excessive claims upon termination.

Overlooking Confidentiality and Intellectual Property Protection

Many businesses underestimate the importance of confidentiality clauses, leaving them vulnerable to data breaches or loss of proprietary information.

How to Avoid This:

• Include non-disclosure agreements (NDAs) and confidentiality clauses.
• Clearly define ownership rights for intellectual property, ensuring that proprietary data, trademarks, and patents are protected.
• In joint ventures or service contracts, specify who retains ownership of newly developed IP.

Failing to Review and Update Contracts Regularly

Contracts that remain unchanged despite evolving laws, business needs, or economic conditions can become outdated and unenforceable.

How to Avoid This:

• Conduct periodic contract reviews, particularly for long-term agreements.
• Update terms in response to regulatory changes or new UAE legal requirements.
• Ensure that amendments are documented and signed by all parties.

Best Practices for Drafting Secure Commercial Contracts

To minimise legal risks and enhance contract enforceability, businesses should adopt the following best practices:

Conduct Due Diligence on Contracting Parties

• Verify the legal status of the counterparty, especially in cross-border agreements.
• Confirm whether they have valid trade licences and authorisations in the UAE.

Use Clear and Concise Language

• Avoid unnecessary legal jargon to ensure all parties understand their rights and obligations.
• Use bullet points or structured formatting for complex terms.

Involve Legal Experts in Drafting and Review

• Engage specialist commercial lawyers to review contracts before execution.
• Ensure compliance with local and international regulations.

Ensure Proper Execution and Registration

• Contracts should be signed by authorised representatives.
• In Dubai, commercial contracts may need to be notarised or registered with relevant authorities to be enforceable.

Maintain Proper Documentation and Records

• Store signed contracts securely for future reference.
• Keep records of communications, modifications, and addendums to avoid disputes.

Protect Your Business with Well-Drafted Contracts

At Davidson & Co., we understand that well-structured commercial contracts are crucial for smooth business operations in the UAE. Poorly drafted agreements can expose companies to legal and financial risks, leading to costly disputes.

By ensuring clear terms, regulatory compliance, and strong dispute resolution mechanisms, businesses can protect their interests and avoid litigation. As one of Dubai’s top boutique law firms, Davidson & Co. provides expert contract drafting and legal advisory services through top lawyers to keep your agreements legally sound and enforceable.

Contact us today for professional guidance on commercial contracts!

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