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Volume I Issue V 2014
CONTENTSpage 2CANCELLED CONSTRUCTIONSunil Thacker & Jennifer Leader
page 4WHISTLEBLOWINGRini Agrawal & Surbhi Veer
page 9FROM BEACH TO BUSINESSRuchika Tandon & Jennifer Leader
page 12ABU DHABI GLOBAL MARKETSTushar Bhargava & Zisha Rizvi
page 14ANIMAL RIGHTSMargarida Narciso & Yassir Ahmed
page 17MEDICAL NEGLIGENCENiharika Singh & Surbhi Veer
id you know? Beverage
giant Coca Cola makes
so many different drinks
internationally that if you drank one
per day it would still take you over
9 years to sample them all. Some of
the samples would be so obscure
that you wouldn’t necessarily
recognize the name of the product
or even the language in which it was
written. The same may be said of the
law – we all know that it is there in
the background, but we could not
possibly familiarize ourselves with each and every provision. Even if we had such
access there is no guarantee that this would afford us a solid understanding of each of
the issues at hand. STA therefore presents Court Uncourt – your comprehensive and
innovative guide to all things legal. Whether you are in pursuit of specific information
or simply looking to enhance your general legal knowledge, Court Uncourt is the
publication for you.
Welcome back and happy reading!
page 6LABOR LAW: TIME TO MOVE ON?Jennifer Leader & Mohammad Badr
2
CANCELLED CONSTRUCTIONPROJECTS IN DUBAI
Decree Number 21 of 2013 – One Year Later
e’re all familiar with the story. Mr A buys property off-plan. Developer advises property will be completed by 201X. Mr A awaits handover with anticipation. 201X comes and goes, with no news on the property. Developer or sales
agent contact Mr A to advise that construction has been delayed. Some years pass and Mr A sees no further development. Developer and sales agent are unforthcoming. Mr A decides to take legal action. Mr A contacts one international law firm, famed for providing bespoke legal advice and seemless, high-quality counsel…Incomplete construction projects are by no means a new phenomenon in Dubai. Indeed, one year ago our legal newsstands were heavy with articles relating to this topic owing to Decree 21 of 2013 (the Decree). Issued on 23 July 2013, the Decree proposed a system for the management of litigation cases filed as a result of cancelled construction projects. In summary it provided for the formation of a special judicial committee (the Committee) to rule on cases in which the developer of an officially-cancelled construction project has failed to refund the purchasers’ money. Although Article 11(5)
of Law Number 13 of 2008 (Law 13) gave the Real Estate Regulatory Authority (RERA) the authority to annul delayed construction projects, and Executive Council Resolution 6 of 2010 (the Council Resolution) laid out the circumstances, conditions and procedures for such cancellation, further attention was needed to ensure the streamline settlement of all outstanding dues and enforcement of the parties’ rights. Article 27 of the Council Resolution states that should a developer fail to reimburse a purchaser within a timeframe established pursuant to the same Resolution then RERA shall take all measures to ensure that the rights of the purchaser are upheld – an obligation which may necessitate RERA referring the matter to the “competent judicial authorities”. The Decree goes further to name the “competent judicial authority” as the Committee.We know what you’re thinking –“this is a news letter, not a history letter”. So why are we writing an article on an arguably stale, old topic? The reason is this: although July – September 2013 brought to us the promise of a reformed litigation system for the relevant cases and a plethora of publications on the subject, we have seen no practical changes to date. Article 9 of the Decree makes clear that the provisions shall have effect from the date of publication in the Official Gazette, which occurred on 10 September 2013. Clear guidelines were in place regarding the constitution of the Committee – namely that each panel should consist of at least 3 judges from the Dubai Courts pursuant to Article 1 – and Articles 3 and 5 take measures to ensure that the Committee has exclusive and undisputable jurisdiction over the specified matters. Yet although such concise provisions govern the actual working of the Decree, no date has been set for the diversion of cases into the new system. This is despite the fact that Article 3 states that all judgements issued prior to the commencement of the Committee’s work must (not “may”) be referred to the Committee for consideration nonetheless.It may therefore seem as though the workload of the Committee is already building up and, as we are all aware, the cancellation of construction projects is no rare occurrence in Dubai. However purchasers wishing to refer their relevant disputes to the appropriate authority remain without the guidance of precedent or knowledge of the way in which decisions will be made by the Committee, and several questions remain unanswered. What would happen, for example, if a developer claims that it intends to re-commence works on a project? Or what if the developer wishes to sell the land?
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In answering these questions we should remember the purpose of the Committee. As per Article 2A of the Decree, this is “to consider and decide such issues, demands and claims that may arise between real estate developers and purchasers, whose subject matter or cause is CANCELLED real estate projects”. Cancelled. Not delayed, stalled or suffering setback, but officially and permanently cancelled. And the authority to enforce cancellation is not the power of the Committee but the power of RERA as per Law 13 and the Council Resolution. If cancellation is imposed by RERA pursuant to the conditions prescribed by Article 23 of the Council Resolution then under Article 24 the developer shall have 7 days to appeal against the decision to RERA. RERA shall then have a further 7 days to consider the same and deliver a final verdict. If the decision remains the same and the project is cancelled RERA must meet the provisions of Article 25 – namely appoint an auditor (and the cost of the developer) and ensure that any monies in the escrow account are refunded to purchasers within 14 days. If the account contains insufficient funds to fully reimburse a purchaser the developer shall be afforded 60 days (and any such extension permitted by RERA) to provide purchasers with their money.
We have already established that Article 27 of the Council Resolution provides that should a developer fail to reimburse a purchaser then RERA must refer the case to the appropriate judicial authorities (namely the Committee) for the enforcement of the same. We have further clarified that, under Article 2A of the Decree, the Committee’s field of focus shall be disputes arising between the developer and purchaser as a result of the cancelled project. It therefore follows that the Committee has no jurisdiction in cases whereby the developer is challenging the cancellation of the project. These are matters for RERA, who have exclusive authority over whether or not a project is to be cancelled. So to revert to our earlier questions – what would happen if a developer wished to re-commence development on a project or wanted to sell the land? If the escrow account proved to be sufficient to reimburse purchasers and other outstanding dues can be settled without the sale of the land, then post-settlement the developer shall surely be free to dispose of the land however he so choses. And if RERA have ruled that a project is to be cancelled the developer has no other authority to
whom to appeal. His only other option regarding re-commencement of the project shall be to apply afresh to RERA at a later date.
So if RERA are the sole body with the power to cancel a project and the Committee shall not have the authority to overturn the decision, what are the duties of the Committee? Article 2A of the Decree further clarifies that the Committee shall have the power to liquidate projects cancelled by RERA. Therefore if a purchaser approaches the Committee with the grievance that the developer has not refunded his money in accordance with Articles 25 and 26 of the Council Resolution the Committee may consider the following: should liquidation be effected and, if so, how should the funds be allocated? In addition to taking into consideration the purchaser’s right to a refund the Committee shall also need to consider contractors, sub-contractors, suppliers, service providers and any other party with a claim to interest.
Let us revisit Mr A. In the instance that the construction of his property has been cancelled by RERA and the developer has not refunded his money, what will happen? When the Committee becomes operational it shall have the authority to order the developer to reimburse him. And if the developer isn’t sufficiently solvent to do so, it may order liquidation and allocate the resulting funds in the appropriate proportions – which may or may not involve the payment of Mr A. The obvious question here is “but what if Mr A receives nothing”? Unfortunately for Mr A he will have no further options. Pursuant to Article 5 of the Decree the Committee’s decision is final and binding there shall be no further right to appeal.
So what are the advantages of this new system? In the happier circumstance that the Committee is able to allocate Mr A his dues then under Article 5 the decision may be enforced by the Execution Section of the Dubai Courts, and to Mr A’s relief Article 9 states that any matters handled by the Committee shall be exempt from any court fee.
Of course, Mr A will still need to pay his representatives’ professional fees – but fortunately for him, the aforementioned international law firm approached offer excellent competitive rates…
4
WHISTLEBLOWING –A SILENT NOISE
Should I not hear, as I lie down in dust, The horns of glory blowing above my burial?
Conrad Aiken
uvuzelas, firealarms and whistleblowing-sounds that can result
in bleeding ears. The legal maxim ‘Quis custodiet ipsos custodes,’
or ‘who will police the police,’ is why whistleblowing, as annoying
as it may be, is an essential element to counteract corporate corruption.
It is an alarming fact that corporate wrongdoing has become a routine
occurrence. It makes one question if corporations have lost track of their
ethical compass or is it that we are paying more attention to their activities?
There has been a significant increase in the number of international
legislations to combat corruption in organizations. As a result of this, a
number of employers have adopted these legislations in the form of
employee codes of conduct, whistle blowing policies, anti-fraud and
misconduct policies.
The accounting scandals of Enron and Worldcom dominated news
headlines for months and whilst it seemed that the concept of business
ethics would become archaic, two whistleblowers emerged assymbols of
integrity to the American public. Indeed, Sherron Watkins and Cynthia Cooper were among “The Whistleblowers”
named as Time magazine’s “Persons of the Year” in the year 2002. At a significant risk to their careers, financial stability
and mental well being, the two alerted high level executives at their respective companies to accounting fraud.
Unfortunately, most whistleblowers take all these risks when they report illegal activities occurring within their
organizations. The magnitude of these frauds is startling and, unfortunately appears to be indicative of a widespread
problem.
Protection for whistleblowers
In the United States, the Sarbanes Oxley Act of 2002 provides financial rewards to the whistle-blowers who bring
these wrong doings/misconducts of fellow employees or about the organization to the forefront. In order to enhance
anti-bribery and corruption law practice and to avoid such bad practices many countries in the world have promoted
such things as important parts of employer and employer relationship and encourage them to sign these policies at
the time of joining the organization. Many jurisdictions have provided protection for employees who highlight wrong
doing in the workplace. Also employees who are involved in wrong doing at the workplace can be sent behind bars or
risk seeing their careers annihilate in front of them. Similarly in the United Kingdom, the Employment Rights Act 1996
provides protection to the employees who disclose wrong doings and mismanagement, which is considered a part
of public interest. It is also possible that an employee can seek benefits if he blows the whistle being a part of offshore
company irrespective of its presence in the US or UK.
5
In the UAE, there are no regulations in relation to employees’
protection for any whistle blowing actions. However, many
companies have started enacting and adopting such policies
to address accountability and candor at work place. The
UAE’s sole anti-corruption authority, the state audit institution provides a mechanism on its website through which
wrongdoing within state-owned entities and central government departments can be reported. Complaints can
be made anonymously, which may encourage reporting without fear of retaliation. There are no blanket protection
mechanisms for employees in the private sector in UAE. To this effect, the Dubai Financial Service Authority (DFSA)
which is an independent authority, has taken certain initiatives to address such corporate misdemeanors and to
disclose information to DFSA authority about the issues involving market misconduct, financial crime or money
laundering.
In June 2013, UAE legislators put forward a bill to create a new anti-corruption authority named “The Federal Authority
for Combating Corruption” (the FACC). This new legislation under discussion shall derive its structure from the United
Nations Convention against Corruption and the definition of corruption includes money laundering; embezzlement;
bribery; breach of trust; abuse of public functions or authorities; damage to public property; or the concealment of the
proceeds of any of these crimes. The legislation would empower the FACC to issue regulations to protect whistleblowers
from being prosecuted criminally, civilly or administratively. This protection will extend to whistleblowers who report
information in relation to corruption in good faith. Whistleblowers will be presumed to act in good faith and public
interest where enough evidence exists to justify their initiative.
Conclusion:
It can be understood that the position in relation to whistle-blowing legislations is still in its infancy. A number of
countries across the globe are attempting to combat the effect of corporate scams with the help of key personnel
within organizations. There is now considerable international pressure for countries to adopt standard laws and
practices on whistle-blowing, but if these laws are adopted in a vacuum, it is unlikely that they will succeed. It is
imperative that laws and policies are enacted and it is understood that perpetrators and fradusters do their best to
hide their dirty deeds from the public. This makes it close to impossible to process its effect on the common man as
fraud and corruption cannot be measured.
6
LABOR LAWith the treatment of migrant workers in Qatar hitting the headlines on a regular basis at present, labor laws throughout the
Middle East have been placed under the microscope. The subject of “labor law” in the UAE alone is itself a vast topic, as the relevant legislation is not contained within one statute but a collection of applicable laws, provisions and amendments. In later issues Court Uncourt we shall explore a selection of rights and duties afforded to employers and employees, but for the purpose of this article we shall focus on one particular area – namely the end of an employee’s employment.
In the fast-paced commercial environment of Dubai and in the wider world of employment opportunities it is a fact of modern life that people move to new jobs more frequently than ever before. Whether we leave in pursuit of a more suitable employment opportunity or are shown the door due to “fatal incompatibility” with our company, the professional climate is such that we would be wise to take note of our legal rights and obligations upon vacating a position.
Evidently the constitutive document governing our employment will be our labor contract. This may contain a variety of terms and conditions as collaborated by our employer. However the diligent employee will bear in mind that the provisions of his labor contract cannot override the law, and will therefore take care to ensure that each provision is compliant with the relevant
legislation before signing the document. If the law is silent with regards to any specific point then the terms of the labor contract shall prevail, thus an employer and employee should make sure that they negotiate any such specifics so as to protect their respective positions in the event of any future disputes.
The legal provisions relevant to an employee leaving his position can be found in Federal Law number 8 of 1980 (the Labor Code). Article 113 outlines the various circumstances under which an employer and employee may part company – namely on the expiration of the contractual period, on mutual consent of both parties (provided that the employee’s consent is given in writing) or, if the contract is unlimited, at the option of either party so long as the provisions of the Labor Code are upheld. Article 114 goes on to specify that a labor contract will not terminate on the death of the employer unless the subject of the contract is related to him in person. However the contact shall terminate immediately upon the death of the employee - perhaps an unnecessary provision, as even the most unreasonable of employers would surely not insist on specific performance should the employee have passed away! If an employee was to become incapacitated to the extent that he was completely incapable of performing his duties as confirmed by a report from the State Medical Authority the contract shall also terminate, however partial incapacitation shall necessitate the employer moving the employee to a position suited to his capabilities.
7
It may initially seem as though the employee enjoys a relatively well-protected position. Article 113 would imply that an employee on a limited contract cannot be removed from his position during the contractual period by the exclusive option of the employer, and would need to give written consent should the premature termination of the contract be agreed. So what is to stop such an employee from turning up late to work every day, neglecting his duties and sleeping at his desk, given the protection afforded to him by law? Article 120 prescribes 10 circumstances under which an employer may dismiss an employee immediately and without notice, including an event in which the employee persistently fails to perform his basic contractual duties. A thorough analysis of this clause may leave the reader with the opinion that the circumstances are somewhat ambiguous, thus meaning that the worker is not as well-protected as we initially thought. However an employee on a limited contract can at least rest assured that as per Article 115 he is entitled to compensation should the contract terminate early through mutual agreement and for reasons other than those stipulated in Article 120.
We have established that the Labor Code facilitates the removal of an employee without notice in certain situations. But is the employee also afforded the right of immediate departure should he be the victim of circumstances? Like the employee, the employer is also a party to the employment contract, and as such has duties and obligations which he is bound to meet. Article 121 provides that the employee may vacate his position without notice in the event that the employer fails to meet his obligations under the contract and law, and may do the same should he be the victim of an assault at the hands of his employer. Yet just as the employee is entitled to compensation should the contract terminate prematurely for reasons other than those outlined in Article 120, Article 116 states that the employer shall also have the right to compensation should the employee terminate the contract for any reason other than the 2 laid out in Article 121.
Other than in the scenarios as outlined above an employee will generally be obliged to serve a notice period before vacating his position. This is the case whether his departure is voluntary or further to his compulsory dismissal. The amount of notice required shall depend upon the type of contract and length of service, as per Article 117 and 118. Any form of animosity between the parties may result in the notice period being an uncomfortable time, yet the worker’s spirits will undoubtedly be lifted by the fact that he is likely to be entitled to end of service gratuity pay on his final departure.
In accordance with Article 132 of the Labor Code each worker who has completed one or more years of continuous service shall be entitled to end of service gratuity, although it should be noted that any day on which the worker was absent from work will not be included in the calculation of the service period.The payment awarded to the worker shall depend upon the length of his service, with the entitlement being 21 days of salary for each year served up to a period of 5 years, and 30 days annual salary for each year served thereafter. However this is qualified by the restriction that the total payment does not exceed an amount equivalent to two years of his salary.The worker shall be entitled to this remuneration in respect of fractions of the year payable pro rata for the time actually worked.The worker’s basic salary entitlement is therefore an obvious starting point in the calculation of end of service gratuity. The figure used shall be his last basic wage – namely his salary less any allowances or benefits in kind such as housing, overtime, child education, transport or travel – as per Article 134.The fact that a worker is entitled to gratuitous payments on leaving his position simply as recognition for his services puts employees in the UAE in a favourable position. However the turnover of staff in Dubai inparticular is high and the guarantee of end of service gratuity may be considered to dissuade workers from remaining loyal to their employer. The commitment of employees is therefore often an issue, and as such the Labor Code makes provisions to discourage
8
workers on unlimited employment contracts from leaving a position after only a short period of service, and limits their end of service gratuity accordingly. Again, a worker on an unlimited contract is required to complete one year of continuous service before his entitlement to any gratuity kicks in, but Article 137 provides that full entitlement will only commence after the worker has retained his position for five years. Any period of service ranging from three to five years will afford him two thirds of the entitlement
defined under Article 132, with one third being payable if he has served one to three years.
It should also be noted that under Article 138 any worker on a fixed-term contract leaving his employment of his own volition before the contractual period expires shall forgo all entitlement to end of service gratuity unless his period of service exceeds five years.
The deductions discussed thus far have one major factor in common, namely that they are all a direct result of the worker’s voluntary and liability-free departure. However provisions giving the employer the right to deduct or even deny the employee end of gratuity service in certain circumstances are also in place. Article 135 provides that an employer has the right to deduct from an employee’s end of service gratuity any amount due to him, however the Labor Code does not go so far as to specify qualifying debts or entitlements. Although we may reasonably consider any loans or advance salary payments afforded to the employee as permissible subtractions, most employees questioning the validity of such deductions will have no option other than to seek recourse via the Labor Courts.The Labor Code additionally takes into account circumstances in which the worker’s resignation from his position is voluntary, but is due to the fact that his termination was inevitable had he not resigned. If an employee is found to have breached the law by falling foul of any of the provisions laid out in Article 120, realizes that his termination is therefore imminent and resigns accordingly he shall not be entitled to any end of service gratuity pay, regardless of his length of service at the time of the violation. Evidently he shall also forgo entitlement should his employment be terminated pursuant to the same Article. Gratuity may also be withheld in the event that the worker resigns from his position and leaves without serving the required notice period, save for if his departure is the result of any occasion outlined in Article 121.This Article has thus far presumed that an out-going employee is in such a situation that he will be taking up alternative employment. Yet what if a worker is resigning from his position because he is of retirement age? In the UAE there is no mandatory provision requiring an employer to establish a pension, security or retirement scheme, yet several employers will entitle employees to such an option. In the event that the employee is entitled to a like benefit he shall have a choice upon leaving his position: he can either accept his gratuity pay or withdraw the funds accrued in the relevant benefit scheme in keeping with Article 141. The Labor Code does not offer any opportunity for the employee to claim both. It would seem thus far that in reality the employer and employee enjoy a reasonable balance of rights and entitlements, at least where the end of employment is concerned.Despite the current media-fuelled controversy surrounding the rights of expat workers in the Middle East the Labor Code takes care to ensure that employees in the UAE are generally well-protected so long as they abide by the law and perform their contractual duties accordingly. Likewise the employer may rest assured that the law does not afford the employee any unreasonable advantages to the detriment of the company. Of course, the Labor Code is probably not the most comforting of thoughts after a long and stressful week in the office, but perhaps our favourable position is something we should take into consideration before complaining…
9
FROM BEACH TO BUSINESSCOMPANY FORMATION IN BAHRAIN –
THE OPTIONS OF A FOREIGN INVESTOR
he geography alone paints the picture of a holiday-maker’s paradise.
As an island located off the western shores of the Persian Gulf, the mere
mention of Bahrain puts us in mind of white-sand beaches, calm azure
seas, palm trees and pina coladas. Yet anyone arriving in the country in pursuit
of such a vision is likely to be disappointed. For the past 20 years only 5% of the
beaches adorning the175km of coastline have been publically accessible. So
how else could a disheartened beach-enthusiast spend their time in Bahrain?
Perhaps they could visit one of the many art and culture centers for which
the area is famed? Or make a trip the Formula One racing track? Or possibly
incorporate a company?
Accepted, corporate activity is maybe not the best substitute for sun bathing.
Yet operating out of such an appealing setting, conveniently located between
Asia and Europe, in a GCC country that prides itself on being a little more relaxed
than its neighbours are all factors which are drawing investors to Bahrain on
account of the commercial landscape as opposed to the physical. This article
is therefore intended to provide a brief overview of the laws and procedures
applicable to any foreign national wishing to incorporate an entity in Bahrain.
It is of note that the general premises of the law are similar throughout the
GCC. Dubai has long since enticed investors from across the globe, and the
universal interest in setting up corporate entities here has resulted in numerous publications, articles and guides to
company formation. Why then, given the general similarities in law across the GCC, does company formation in Bahrain
warrant specific attention? The justification is routed within one fundamental distinction between the commercial
laws of Bahrain and the UAE in particular, namely in the provisions relating to the compulsory involvement of a local
shareholder. Here, Bahraini law adopts a unique and industry-specific approach, which we shall examine in greater
detail hereafter.
As in the majority of countries across the globe, the law of the Kingdom of Bahrain distinguishes between a number of
forms that a company may take. Article 2(a) of the Legislative Decree 21 of 2001 (the Commercial Companies Law) provides that a commercial entity must take the form of a general partnership company, limited partnership company,
association in participation, joint stock company, limited partnership by shares , limited liability company , single
person company or holding company. Any entity failing to take one of these recognized forms shall be annulled, with
the partners, shareholders and any other individual who has signed any paperwork pertaining to the same incurring
joint and unlimited liability for the non-compliant company.Despite the number of models available our focus here is
on foreign nationals considering incorporation. Certain forms (for example limited partnership companies) will require
the cooperation of a Bahraini national – we shall therefore concentrate only on the company types available to entities
10
registering under 100% foreign ownership.
Perhaps the most familiar of these models is the limited
liability company (nationally known as a WLL – a
company“with limited liability”), which is defined under
Part VII of the Commercial Companies Law. In general
such an entity is characterized in the same way as under
the law of the UAE and in a multitude of other jurisdictions
– namely that the liability of each shareholder is limited
to the amount of the capital which he has invested.
However here the aforementioned distinction comes
into play – under the law of Bahrain 100% of a WLL may
be owned by foreign nationals. The reasons for such
commercial liberty can only be speculative, yet the fact
that local citizens make up a greater percentage of both
the national population and workforce than in many
other GCC countries may be a contributory factor.
So pursuant to the law, Mr X and Mr Y (both foreign
nationals) are able to incorporate a WLL company in
Bahrain. What requirements must they meet? For starters
they must ensure that they have a minimum share
capital of BD 20,000 (Bahraini Dinars twenty thousand
– the equivalent of USD 53042 and AED 194,854) as
per Article 264 of the Commercial Companies Law. This
capital may be divided into a number of equal shares
of the duo’s choosing, providing that the value of each
share is at least BD 50 (Bahraini Dinars fifty). They must
also observe the requirements of Article 265 when
drafting the Memorandum of Association (MOA) taking
care not only to include the listed information (such
as their names, titles and nationalities, the company
headquarters, company objectives and conditions
applicable to share assignment)but to also ensure that
an Arabic language version of the document is notarized
in accordance with Article 6. Failing to take this step will
result in the invalidity of the company. Moreover, having
selected a company name (ensuring that it includes
the prefix “with Limited Liability”),Messrs X and Y must
remember to use the same in any contract, invoice,
publication, paper or advertisement pertaining to the
company. Should they neglect to do so each shall fall
liable to the extent of his personal wealth, rather than
the individual portion of share capital invested.
Once the constitutive documents have been prepared
and the lease of a premises to serve as the company’s
office has been secured Messrs X and Y may approach
the Bahrain Investment Centre (BIC) to submit the
documents required in order to obtain the approval of
the Ministry of Commerce (MoC). Without the MoC’s
consent the company cannot be incorporated. In
addition to the draft MOA the pair should also present
their completed company registration application form,
relevant identification and the lease agreement relating
to the company’s premises. Furthermore they shall
require their respective CVs and proof of qualification.
The specifics of the latter requirement, namely the proof of
qualification, will vary depending on the principle activity
of the intended company. If Messrs X and Y intended
to incorporate a company dealing in contracting they
would require only proof that they had completed their
secondary school education, yet the desire to provide
business consultancy services would render proof of
a master’s degree or 5 years of relevant experience
necessary. However when considering the activities of
the company the team have a much more important
factor to take into consideration – under the Commercial
Companies Law and directions of the Ministry of Industry
and Commerce some commercial activities, such as
any service relating to gambling, the manufacturing of
alcoholic beverages, cigarettes and narcotics and the
importation or industrial use of restricted chemicals, are
completely prohibited.Others are reserved for Bahraini
national citizens (for example the supply of foreign
manpower, car and motorcycle rental, the supply of oil
products and commercial agencies) and the provision
of further services are restricted to Bahraini and/or GCC
citizens (fishing, accounting and book keeping services
and cargo clearing). Additionally, despite the country’s
11
seemingly liberal approach to expats’ commercial
activities, even greater limitations apply. A Bahraini
partner is required for any entity operating in the field of
travel and tourism, licenses for medical centres and clinics
(save for hospitals)are awarded only to GCC nationals
with medical degrees and residing in Bahrain, and the
requirement of a 51% minimum local shareholding
applies to any company operating in the trade or retail
sector. Given that trade and retail is probably the most
common principle activity of a foreign WLL the latter
regulation alone imposes a huge restriction on foreign
investors. Article 262 of the Commercial Companies
Law narrows the window of opportunity further still by
prohibiting a WLL from undertaking insurance, banking
or fund investment related activities.
Let us imagine that Mssrs X and Y are performing an
activity that did not fall foul of the above restrictions.
They have successfully incorporated their WLL (the
process of which, according to the MoC, would have
taken approximately 2 weeks) and are respecting the
provisions of Article 286 regarding the annual submission
of audited financial statements. The business (named Z
WLL) is operating at a profit and is not subject to any legal
proceedings. However on account of commitments
in his home country Mr X decides that he wishes to
dispose of his interests in Z WLL and leave Bahrain.In
keeping with Article 270 shares in the company may
be transferred via procedures similar to those in the
UAE – namely that Mr X must first notify Mr Y and any
other shareholders as to the availability of his shares and,
after a time lapse of 2 weeks, may transfer the shares to
a third party should none of the existing shareholders
choose to redeem them. In this instance Mr Y informs Mr
X that he would like to purchase the shares. The transfer
takes place in keeping with the Commercial Companies
Law, and is registered in the Commercial Register and
publicized in the Official Gazette as per Article 271.
This has the effect that Mr Y becomes the sole
shareholder of Z WLL. As the number of shareholders has
fallen below 2 the provisions of Article 261 shall apply,
thus effecting the transformation of Z WLL into a single
person company by force of law. As per Article 2(a) a
single person company is a separate type of entity, and
such a transformation will require Mr Y to examine the
relevant provisions of the Commercial Companies Law
to ensure Z WLL remains compliant. In order to maintain
the existing company model Mr Y will have 30 days in
which to transfer some of the shares to at least one other
third party – the minimum number of shareholders
(namely 2) will then have been achieved, and Z WLL will
retain its status.
The transformation of Z WLL into a different category
of entity and the responsibility of ensuring that the
single person company complies with a different set of
provisions may be cumbersome to Mr Y. However the
capacity to amend the company’s structure in Bahrain
affords benefits which are not available in the UAE, where
the right to operate a sole establishment outside of a free
zone is afforded only to local citizens. Despite the fact
that he will have to exercise diligence in researching the
relevant applicable law Mr Y may continue to operate
the company without much inconvenience.
So were we justified in our earlier assumption that
Bahrain has adopted a more relaxed approach to foreign
investment and company incorporation? Although the
prima facie provision that foreigners may own 100% of
a company without the involvement of an obligatory
local partner or sponsor makes the establishment and
operation of a WLL somewhat easier than in the UAE, the
less-obvious restrictions on various business activities
go some way to cancelling out the benefits. But for any
foreign investors (jointly or separately) wishing to own
100% of a WLL or single person company which will
perform a permitted activity, the provisions in place in
Bahrain are no doubt appealing.
Perhaps more appealing than the country’s beach
scene…
12
he financial sector has always been volatile.
Yet, the increasing interest it has drawn from
public sector initiatives across the globe
remain noteworthy. In 2013, the Chinese government
introduced the China Pilot Free Trade Zone which was
speculated to provide a blueprint for reforming the
financial sector. This free zone was a testing ground for
the convertibility of Yuan and China plans to accelerate
the process of making the Yuan convertible on the
capital account allowing foreign investors to use it to
invest in Chinese financial institutions. In the same year
the Government of Abu Dhabi also passed the Federal
Law Number 4 of 2013 establishing a financial free zone
in Abu Dhabi (the Decree). Many of the efforts within the
GCC region in establishing financial centers are inspired
from the success story of the Dubai International Financial
Centre. The introduction of the Dubai International
Financial Centre (DIFC) in 2004 marked the beginning of
a well structured business environment for the financial
services domain and sizable investment firms chose
DIFC to set up their base in Middle East. Later, the Qatar
Financial Centre was set up in the GCC region however
its ten percent corporate tax policy barred it to qualify to
the definition of a ‘free zone’ and restrained its success in
terms of captivating interests of international investors.
As such, the DIFC enjoyed unparallel investor support
owing to its world-class infrastructure, tax free regime
and an independent legal framework.
With the announcement for introduction of Abu
Dhabi Global Market (ADGM) - a financial free zone
in the Emirate of Abu Dhabi pursuant to the Decree -
comparisons between DIFC and ADGM are bound to
take interesting leaps and bounds. Abu Dhabi is one of
the most stable economies with rich oil reserves to boast
of. However, it faces challenges in terms of attracting
foreign direct investment in other sectors particularly
banking and finance; and also those pertaining to
increasing exports and making Abu Dhabi lucrative to
the larger international market players. The laying down
of the foundation of ADGM is a conscious decision by the
law makers and is no doubt a milestone in meeting these
challenges.
The Operations ADGM is expected to be operational in the year 2015.
In terms of Article 2 of the Decree, the objective for
the formation of ADGM is the promotion of Emirate as
a financial center, the development of the economy of
the Emirate and the presentation of the same as both
an attractive environment for financial investments
and an effective contributor to the international
service industry.’ The Decree further lays down the core
constitutive ingredients for the setting up of the ADGM.
It states that ADGM will be operated by and between
three autonomous bodies, namely (i) the Global Market’s
Registration Bureau (ii) The Financial Services Regulations
Bureau and (iii) the Global Market’s Courts; each of which
shall have different regulatory, compliance and legal
functions.
Article 14 of the Decree provides that licensed ADGM
establishments can carry out the following activities:
a. Banking and financial services activities including
funding services;
b. Investment business, commercial and private
banking, wholesale trading and electronic banking,
managing, dealing and arranging investments;
c. Accepting deposits (excluding deposits taken
from the state’s market or dealing in UAE Dirham),
opening and maintain bank accounts of all types
ABU DHABI GLOBAL MARKETS
13
for third parties;
d. Trading in and dealing with all types of financial instruments, currencies, commodities, metals and derivatives
of all types (including trading and dealing on margin with spot and forward contracts or through the offering,
buying and selling of financial futures and options of all types) and short selling as permitted by Financial
Services Regulation Bureau;
e. Storage, processing and delivery of all types of commodities and metals whether through actual delivery or the
delivery of instruments representing such commodities and metals and related complimentary services;
f. Financial and monetary brokerage including prime brokerage activities;
g. Providing Islamic financing and Islamic banking;
h. Establishment and management of assets and funds, trust and fiduciary services;
i. Custody, settlement, clearing and deposit activities;
j. Transportation and shipping including sea, air and rail shipping;
k. Selling, buying and issuing of shares, bonds, sukuk and other financial instruments;
l. Providing insurance, re-insurance and brokerage
services in line with Federal law Number 8 of 2004;
m. Auditing, accounting, legal and other ancillary
services; and
n. Support and assisting works for financial and
banking activities.
The Global Market will not just provide tax free and
internationally recognized legal jurisdiction but will also
help in training and educating young Emirati.
The Legal FrameworkArticle 14 of the Decree provides for the establishment
of two tier hierarchical system of courts within the
ADGM- the Court of First Instance and the Appeal Court.
A chief justice would preside in the ADGM courts whose
remuneration shall be fixed by the government.
While the Decree goes on to provide clear indications on appointment, duties and tenure of the judges it leaves much
to apprehension in terms of the law governing operations within ADGM. Specialists debate that with DIFC providing a
Common Law inspired legal framework, ADGM shall follow similar footprints. It is however clear that being a free zone,
ADGM will be subject to the federal law governing the free zones in UAE.
In EssenceGovernment and administrative efforts are being streamlined to make ADGM operative by 2015 as planned. Whether
this proposed new financial free zone which is in close proximity to DIFC will have an adverse effect on the growth
of DIFC cannot be commented upon. What remains to be seen is whether this free zone, to be located on Al Maryah
Island, will add any feathers to the cap of the financially stable Abu Dhabi economy or not. Without doubt, if ADGM
is able to achieve the objectives enshrined in its preamble, the Emirate of Abu Dhabi will be a major commercial hub
to look out for. In sharp contrast to the competitive side which is speculated, ADGM may in fact serve as an extended
platform for DIFC in the long run should there be cooperation between the two bodies.
14
ilikum – the giant whale at Sea World, Florida -
created a splash in global news calling for
urgent attention to animal rights and welfare.
Whether considered as labour, food or friends it goes
without saying that the most basic of civic duties is
animal protection. Tilikum’s plight hit the headlines
as a result of one film maker’s interest in the subject
but there are innumerable events and instances that
go unreported. The prevalence of animal cruelty in
modern society has necessitated the establishment of
organizations such as PETA and many others – however
the work of such welfare groups generally commences
once harm has occurred. It is inevitably the case that
preventative measures – namely preventing the harm
before it actually happens – would be preferable.
Educating the public as to their legal responsibilities
towards animal welfare is therefore essential.
The UAE’s Federal Law number 16 concerning animal
protection was enacted on 4 September 2007 (the
Law). This legislation goes some way towards realizing
the benefits animals can bring to our society. This
“The greatness of a nation and its moral progress can be judged by the way its animals are treated.
”Mahatma Gandhi
enactment is undoubtedly a positive step towards
educating the public on a subject that may otherwise
have been ignored. Article 1 of the Law clarifies the
scope by defining animals to include “poultries, reptiles,
amphibians, fish, mammals, wild animals strayed and
locked.”
The Law
The owners or custodians of the animals have a duty
of prevention as per the law, “in order to keep them
away from any harm”, in addition to those special duties
of care specifically listed. These take into account the
species of the animal, its development rate, adaptability,
domestication and needs, according to experience or
scientific knowledge. The Law provides that animals
should not be left alone or abandoned; that they should
be taken care of and supervised by enough - not suitable
– people with knowledge, skills and qualifications. Both
the animal and its living conditions must be checked at
least once per day.
in addition to noting the duty of care required of animal
owners, the law also establishes a system of control not
15
only by the Ministry of Environment and Water, but also
by the municipalities and local authorities concerned with
animal issues, veterinarians and specialists. These bodies
are vested with powers of supervision, and are permitted
to enter into a facility “if they think that the animals in it
are subject to sufferance, harassment and sickness or are
bred in a way contradicting the provisions of the Law”. It
is worth noting that the law does not require prior proof
or evidence – mere suspicion alone will suffice. In case of
private houses the power remains valid, but there will be a
need for prior approval by the Public Prosecution. In such
cases, the owner or person responsible for the animal
has an obligatory duty to offer assistance to the relevant
body, “including helping them to tie the animals to examine them when possible, and taking samples and submitting
any required document regarding the animals”.
Under the Law animals are entitled to some rights, such as the right to have enough space enabling them to move freely,
accordingly to their needs; to be fed and watered adequately according to their age and species, to be transported
in a way that their security is at all times ensured; that the buildings with which they are in contact are not “harmful,
but free from any source of pollution, easy to clean and to disinfect completely”. One of the most important rights
assigned to animals is one stating that they shall be provided with shelter to protect them from weather conditions,
predators, any danger to their health and that they shall have access to suitable sleeping place and an adequate
system of waste disposal.
Regarding medical treatment, the law stipulates that the animals shall be anesthetized locally or generally when they
go under surgery, and the place where the same occur shall be appropriately equipped for it.
Pertaining to abandoned animals, the Law affords the competent administration or authority the right to confine an
animal if it constitutes a danger or if it is suffering from any pain or annoyance. In these cases a veterinarian must be
consulted if it is not possible to find or communicate with the animal’s owner. All the costs incurred by the treatment
of the animal shall be allocated to its owner, should he be reached.
In order to further protect the animals the Law expressly prohibits their sexual abuse, condemning the abuser to a term
of imprisonment of not less than one month and a fine of not less than AED 5,000/-(UAE Dirhams five thousand). The
same Law stipulates the prohibition of mingling species of animals during exhibitions or fairs, and forbids exposing,
selling or marketing them when they are sick, injured or weak. The same law also prohibits the use of animals for
scientific purposes or the organization of fairs, competitions and events– not only for trade purposes but for any other
reason, unless expressly authorized in writing by the competent administration or authority.
If someone knowing that an animal is infected decides to release it into the wild he will be sentenced to a term of
imprisonment not exceeding one year and/or a fine not less than AED 5,000/- (UAE Dirhams five thousand). Other
violations of this Law, as well as those set in its implementing regulations and decisions, may incur a fine not exceeding
16
(1) http://gulfnews.com/news/gulf/uae/community-reports/exposing-animal-cruelty-in-uae-1.801373 http://monstoner.wordpress.com/2011/04/27/animal-abuse-in-the-united-arab-emirates/(2) http://www.thenational.ae/news/uae-news/uae-inspectors-in-appeal-to-protect-neglected-pets#ixzz2yMLiDVBT(3) http://www.timeoutdubai.com/community/features/11751-pet-hate
20,000/-(UAE Dirhams twenty thousand).
Modern society has seen the introduction of a number
of amenities geared towards animals, including
specialized hotels, hairdressers and blood banks.
Yet the truth is that across the country – depending
on the emirate – the actual Law and its provisions
continue to be ignored by most of the population. A
quick internet search1 would be enough to realize that animal rights are still not respected, and that often those who
should be vigilant and report such situations allege not to see or have knowledge of them. The monthly inspection
at pet stores and the fact that resulting complaints to the Municipality must be forwarded no later than 48 hours
upon completion do not seem to be sufficient measures to prevent atrocities against animals to being committed. In
an article of The National2 , Dr. Abdulrahman Loai - veterinarian and leader of the inspection unit of the Al Ain public
health department - admitted that “We ask people to help us with that because we cannot inspect each pet shop
daily, most of the people who work in these shops are not well trained and they do make some mistakes” Dr. Loai also
believes that people may still feel uncomfortable making this type of complaint, however he notes its importance, as
it “is a matter of life for these animals” adding “We are very happy when we see some people are worried about animals
because they help us to do our job”.
Our duty is therefore clear – if we witness or acquire knowledge of an instance of animal abuse we must not hesitate
to submit a complaint to the Municipality. In Dubai, the complaint can be made over telephone or online on the
Municipality website. Dr. Mohammed Yusef, the head of the veterinary patrol unit in the Dubai Municipality’s Veterinary
Services department, on an interview with Time Out,3 states that upon submission of the complaint the same will
be investigated within three working days by the veterinary department. He explained that later, the Municipality
“can make - the perpetrator - sign an undertaking not to do it again” in addition to the penalties provided by law.
The perpetrator can even be put “on the “black list” that prevents them from owning any more animals”. However,
Dubai’s pet shops have no access to this black list, which demonstrates that additional measures and improvements
in communication between the relevant entities is still required in order to achieve a strong protection network..
Whether compliance with the aforementioned requirements is the result of our legal obligation or sense of stewardship
and civic duty, in most cases the situation is a matter of life or death for the animal. Therefore, regardless of our
motivation, perhaps we should all bear in mind the words of Ghandi when considering how we treat our nation’s
animals.
17
MEDICAL NEGLIGENCE- FREQUENTLY ASKED QUESTIONS
1. What exactly do you mean by medical malpractice?
A1. All doctors and medical practitioners have an
obligation to their patients to ensure that they are
providing a certain standard of care. When a doctor or
medical practitioners fails to meet this standard, it can come to be
known as medical malpractice.
Q2. Is there a particular law in the UAE about medical negligence
and malpractice?
A2. Yes, The Government of UAE enacted Federal Law number
10 of 2008 which governs specific aspects of doctor and patient
relationship. Article 3 and Article 4 of this particular law outline
in great detail the duties and obligations of a doctor or medical
practitioner towards his/her patients. It is important to understand
that the law does not wish to make it difficult for the doctors to treat their patients but to ensure that they are
practicing this noble profession with accuracy, honesty and in accordance with recognized scientific and technical
principles.
Q3. I recently had an outpatient treatment for psoriasis which is a skin condition. This treatment entails being exposed
to radiation for treatment. I am certain that I was exposed to radiation for longer than I should have. This resulted in me
fainting and suffering from second degree burns on some part of my body. What do you suggest I do?
A3. I am sorry to hear about your condition. Legally speaking, you should obtain an opinion from another doctor at
the earliest. It is important to understand and determine that the cause for the burns and your fainting can be directly
attributed to the negligent treatment you received. If it is proven that the treatment caused second degree burns,
then you can file a complaint at the Ministry of Health and/or bring a civil action against the medical institution. The
procedures for filing a complaint at the Ministry of Health in Dubai and at the Health Authority in Abu Dhabi vary
slightly.
Q4. Are there any criterias which have to be met with in order for a case to fall within the purview of a Medical
Malpractice?
A4. The law on medical malpractice is liable to be misused leading to serious implications being drawn on either
party. In order to safeguard the interest of both the patient and the doctor, certain conditions must be established. At
a preliminary stage, the court shall examine the duty of care cast upon the doctor towards his patient. Subsequently,
the court must also ascertain that the standard of care expected to be exhibited by the medical practitioner was in fact
lacking and that it was consequent to the doctor’s negligence that the patient suffered injury and damages.
18
Q5. What is the procedure that one must follow to file a
case of medical malpractice in Dubai?
A5. The aggrieved party alleging the medical malpractice
has the option of following any one of the following
procedures:
(a) By filing a civil case in the Dubai Court; or
(b) Report the malpractice to the Dubai Police or Public
Prosecutor, which shall result in initiation of a criminal
case against the physician involved; or
(c) By filing a complaint with the Dubai Health Authority.
Q6. What are the remedies available to the victim of medical malpractice?
A6. The decision of the court pertaining to cases dealing with the subject matter shall vary according to different facts
of the case. If the charges against the medical practitioner are proved and he is convicted, he is liable for punishment
of imprisonment of minimum two years but not exceeding five years or be also liable for payment of compensation
ranging between AED 200.000 and AED 500.000.
Q7. What is a “Medical Error” as per law?
A7. Article 14 of the Medical Liability Law defines the term ‘Medical Error’. It refers to ‘Medical Error’ as an error occurring
due to lack of knowledge in the technical matters which is expected in the profession or due to negligence or not
paying due attention. In general terms, it refers to a deviation from the normal course of action which a medical
practitioner would have adopted in similar circumstances.
Q8. Does disclosing the medical condition of the patient to another doctor or a family member without his consent
and knowledge, amount to a medical malpractice?
A8. The Medical Liability Law explicitly prohibits a doctor from disclosing any confidential information of the patient
which he was entrusted with during the course of practice. The exception to the above law being, if the disclosure was
made upon the patient’s request or for the best interest of the spouse by informing them in person about the disease.
The doctor may also report the matter in order to prevent a criminal act or if he assigned by a judicial authority or an
official investigation authority in the State.
Q9. Will a wrong diagnosis fall within the ambit of medical negligence?
A9. In the event where the diagnosis of a patient is wrong, the Ministry of Health holds the authority to cancel the
license on grounds of negligence and misconduct.
Q10. I am an expatriate and prior to arriving at UAE, I was diagnosed for a stomach ailment and prescribed medication
by my home country doctor. After five months of stay in the UAE, I suffered a relapse and was clinically examined by
a UAE doctor to whom I showed the medical prescription of my home country doctor. The UAE doctor diagnosed
me for a different ailment and prescribed medication but did not inform me of the change in diagnosis. Presuming I
was suffering from the same ailment, I continued with the medication prescribed earlier by my home country doctor
but my health deteriorated. Please advise whether the UAE doctor should have informed me of the change in my
diagnosis thereby advising me against following the prescription of my home country doctor?
19
A10. In such circumstances, the case can be decided for
either of the parties. In your defense, the law provides that
the physician must inform the patient about his illness
and must instruct to strictly adhere to the physician’s
prescription and course of treatment. But however, if the
patient refuses for any reason whatsoever or fails to follow
the medical treatment, the physician shall not be liable
for the same.
Q11. I recently read about a case where the hospital
couldn’t diagnose the disease suffered by a child leading
to his death. In such circumstances, what is the remedy
available to the aggrieved party?
A11. After filing the complaint with the relevant authorities, the committee shall review the matter. It shall examine
the sequence of events and the child’s previous medical records. After hearing both the parties and evaluating the
evidence, the committee shall give its judgment. As the laws relating to medical negligence are vague and liable to be
misused, leading to serious implications, the judge must look into the facts of the case in its totality and arrive at his
findings of whether or not adequate standard of care was exhibited by the medical practitioner.
Q12. Would it amount to negligence on part of the hospital if it denies medical treatment to a person on grounds of
insufficient funds?
A12. Individuals practicing medicine in the UAE shall perform their duties accurately, honesty and in accordance with
the recognized scientific and technical principles to provide the necessary care for patients, in addition they shall
not make use of the patients’ needs for illegal benefit to themselves or others and without discrimination between
patients. (Article 3)
Q13. I was diagnosed for an infection and was assigned a lady gynecologist. On the day of my follow up, the lady
doctor wasn’t available and I was instructed to see another doctor. I resented this due to the fact that he was a male
physician and I felt uncomfortable the whole time. My question to you is, whether I had a right to object to being
examined by a doctor of an opposite gender?
A13. Yes, you have the right under the Medical Liability Law to ask for a doctor of the same gender. It has been
elaborated under Article 5 (clause 6) which affirms that the patient shall not be examined by a doctor from an opposite
gender, without the presence of a third person and without attaining a prior consent of the patient.
Q14. What are the provisions governing emergency surgeries? I have a close friend whose fetus was aborted without
her consent when she came in as an accident case?
A14. In emergency situations, the doctor has to first try and obtain the consent of the patient or her husband. But if it
is impossible in the given situation, the physicians are instructed to prepare a report stating the abortion justifications.
This report has to be signed by the patient and her husband or her guardian. The concerned parties shall also be
given the copy of the report. However, the consent of the husband is not necessary in emergency cases where an
immediate surgery is required.
ISBN 978 - 9948 - 22 - 445 - 7
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