LegalChanges in the UAE legal environment in 2022 : A quick analysis

January 4, 2023

As the United Arab Emirates (UAE) enters into the new year of 2023, there have been several significant changes in the legal environment that will have a positive impact on the country. These changes are aimed at improving the overall business and legal climate, as well as promoting economic growth and development. It is highly commendable to note a few of the changes in the legal environment in the country in the year 2022.

One of the most significant legal developments in the UAE has been the introduction of a new Commercial Companies Law, which came into effect in 2015 and has been amended regarding 100% Foreign Ownership of companies in 2021. This law introduced a number of important changes to the way companies are regulated and governed, including the introduction of a new corporate governance framework. This attracted a lot of foreigners to invest and build companies in UAE.

Another major change in the legal environment of the UAE has been the implementation of a new arbitration rules (the ‘Rules’) on 2 March 2022. The New Rules replace the DIAC Arbitration Rules of 2007 and are applicable to all arbitrations commenced after 21 March 2022, regardless of when the arbitration agreement was entered into. This law provides for the creation of a specialized arbitration center in Dubai, which will handle disputes arising from international and domestic contracts. The law also provides for the establishment of an arbitration tribunal, which will be responsible for resolving disputes between private parties.

The Labour Law, which was implemented in February 2022, mandated that all private sector employers provide fixed-term contracts for their employees with a maximum duration of three years. However, due to concerns from UAE businesses that the three-year limit could hinder their ability to attract and retain talented employees, Federal Decree Law No.14 of 2022 was issued last month, which allows employers to negotiate the length of fixed-term contracts with their employees.

Another amendment to the UAE Labor Law introduced a new unemployment insurance program. People who have been subscribed to the program for at least a year will be eligible for income protection if they lose their job. The income protection is capped at AED 20,000 (about $5,500) per month for three months after the start of unemployment. It is expected that the program will begin in JAN  2023 and that premiums will be deducted from employees’ salaries by their employers. Companies should pay attention to any updates on this unemployment insurance program to be prepared for its implementation.

Along with these major legal reforms, the UAE has also made a number of positive changes in other areas of law in recent years. For example, the country has implemented changes to the bankruptcy law, which aims to provide a more efficient and fair process for dealing with bankruptcy cases.

There has been a significant raise in creative industry and to support that the UAE has also introduced amendments on the intellectual property law. The New Federal Trademarks Law No. 36 of 2021 (“New Law”), issued on September 20, 2021, published on September 26, 2021, and came into effect on January 2, 2022 aimed at protecting the rights of creators and innovators in the country.

In addition to these new laws, the UAE has made efforts to improve its legal system and make it more transparent and efficient. This includes the introduction of new technology and digital systems, as well as the establishment of specialized courts to handle specific legal issues. These efforts will help to ensure that the legal system in the UAE is fair, efficient, and accessible to all.

Looking forward, it is clear that the UAE is committed to continuing to modernize and improve its legal environment. This is good news for businesses operating in the country, as it provides a more predictable and transparent legal framework within which to operate.

Overall, it is clear that the legal environment in the UAE is undergoing significant changes, which are set to benefit both businesses and individuals operating in the country. As we are just heading towards  the new year, it is important to stay up to date with these changes and to take advantage of the new opportunities that they present. Lastly , we understand that the legal environment in the UAE is likely to continue to evolve and improve in the coming years, bringing with it many positive changes and benefits for entities and individuals operating in the country.

UAE at the moment is well positioned to take advantage of these changes and continues to be a leading hub for business and innovation in the region along with all the legal benefits coming through our way.

Legal Coordinator – Samira Al Zarooni Advocates & Legal Consultants

UAE legal scenario 2022
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