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Issue 291 I August 2016
UPDATE
Latest Legal News and Developments from the MENA Region
E DU CATIO N
Employment Law Considerations
for Education Providers in the UAE
Reducing Risk of Organising Major Sport Events in the UAE
Bahrain Adopts New Measures For Businesses,
Encouraging Enterprise and Investment
The New Saudi Companies Law: What You Need to Know
Our Regional Footprint
UAE JORDAN
Abu Dhabi Amman
Dubai, DIFC
Dubai Internet City KUWAIT
Dubai, The MAZE Tower Kuwait City
Ras Al Khaimah
Sharjah OMAN
Muscat
BAHRAIN
Manama QATAR
Doha
EGYPT
Cairo SAUDI ARABIA
Jeddah
IRAQ Al Khobar
Baghdad Riyadh
Erbil
United Arab Emirates
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Bahrain
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Egypt
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Contents
Judgments
6 Dubai Courts recall UK’s accession to NY
Convention but forgets reservations
10 Declaring a Debtor Bankrupt in the UAE
12 Arbitration 14 Banking & Finance
Enforcement of Foreign Awards in the Pledge through DMCC Tradeflow
UAE: Back on Track? Platform
16 Sports Law 18 Intellectual Property
Reducing Risk of Organising Major Trademark Ownership Structure in the
Sport Events in the UAE UAE
Education Supplement
22 Employment Law Considerations 38 Education within Egypt’s Reform
for Education Providers in the UAE Plans
26 Eureka! Monetising Research in 40 Educational Developments in
the Education Sector Oman
28 The Development, Ownership 42 Investing in Iran’s Education
and Operation Models for Private Sector
Sector Schools in the GCC
46 The Development of Bahrain’s
32 The Gap between Education, Education System
Talent and Technology in the UAE
36 Vision 2030 and the
Transformation of Education in
Saudi Arabia
Jurisdiction Update
50 Bahrain Adopts New Measures For
Businesses, Encouraging Enterprise
and Investment
News and Events 62
54 The Importance of Opposing
Trademark Applications in Bahrain
56 The New Saudi Companies Law:
What You Need to Know
60 Bonds and Sukuk Under the New CMA
Regime in Kuwait
UAE Federal Gazette 66
In this Issue Welcome to the August edition of Law Update. Many of us have returned from the summer holidays and are now getting back into the swing of things. I very much hope you had an enjoyable break and are looking forward to the remainder of 2016. I am always pleased to start my welcome with some good news and this month, I am happy to inform you that our firm received an award for “Promoting Health in the Workplace” at the Asia Best Employer Brand Awards held recently in Singapore. We are proud to have been recognised for our commitment to employee health and well-being and in particular for our “Take a Stand” campaign, which we launched to encourage all of our staff to stand up and move around more often at work. We are very proud to receive this award, particularly one that is focused on health and wellbeing in the workplace. This month’s magazine focuses on Education and you’ll see that we cover a wide array of topics pertaining to this very important and growing sector for our region. From employment law considerations for service providers in the UAE to the development of the education systems in Bahrain, to Egypt’s education reform plans, this insert has it all. Please have a look through from pages 22 to 49 and get in touch if you would like further information. With the commencement of the Rio Olympics, it is timely to take a look at some of the risk management issues involved when organising large scale sporting events. These risks can come from both participants and spectators suing for injuries sustained as a result of how the event was conducted, or they can arise from the financial loss that results when an event is cancelled or cannot go ahead at the last minute through no fault of the event organiser. We analyse these risks and more on page 16. With the numerous new and impending regulatory and procedural changes affecting Saudi companies it is vital that both existing companies and new investors make themselves fully aware of the changes made, review how they are conducting their procedures and affairs to bring them into line with the new law and review and make any changes required to their existing constitutional documents to be consistent with the new law. Find out more on page 56. I hope that you find this edition of Law Update to be an enjoyable and an informative read. As always, please do get in touch if you have any questions or if we can help in any way. All the best Husam Hourani h.hourani@tamimi.com
Judgments
Judgments
Law Update Judgments aim to highlight recent significant judgments issued by the local courts in the
Middle East. Our lawyers translate, summarise and comment on these judgments to provide our readers
with an insightful overview of decisions which are contributing to developments in the law. If you have
any queries relating to the Law Update Judgments please contact lawupdate@tamimi.com
Hassan Arab Dalal Al Houti
Deputy Managing Partner Associate
Regional Head of Litigation Dubai, UAE
Dubai, UAE d.alhouti@tamimi.com
h.arab@tamimi.com
Dubai Courts recall UK’s accession
to NY Convention but forgets
reservations
Earlier this year the Dubai Court of Appeal this decision in a judgment issued on 19 June
shocked the local and international legal 2016 (Case No. 384 of 2016). However although
community by refusing to enforce an English the Court found that the UK is indeed a
arbitral award on the grounds that it was signatory to the NY Convention, the reasoning
not satisfied that the United Kingdom was a of the Court failed to acknowledge that the
signatory to the 1958 New York Convention on UAE had not made any reservations when
the Recognition and Enforcement of Foreign acceding to the NY Convention, and that the
Arbitral Awards. We are pleased to report that award should have been recognized irrespective
the Dubai Court of Cassation has now reversed of the UK’s status as a signatory.
6 LAW UPDATE
Judgments
Background and not the Civil Procedures Law. There
was therefore no need to show reciprocity of
enforcement.
By way of background, the Court of Appeal
on 30 March 2016 rejected an English arbitral Whilst the decision is welcome, it is troubling
award for two reasons that were controversial: that the Court of Cassation overlooked the fact
that when the UAE signed the NY Convention,
it did so without making any reservation as to
1. It ruled that a principle of reciprocity reciprocity under Article I(3). Some states, for
in the UAE’s Civil Procedure Law example the UK, have made this reservation,
applied to the enforcement of the award. which means that they will only apply the
This was controversial because, being Convention to awards made in another
a signatory to the NY Convention, contracting State. By not making this reservation,
the UAE Civil Procedure Law should the UAE is obliged under the Convention to,
not have been applied. Under the NY in principle, recognized all foreign awards,
Convention there is no reciprocal regardless of whether they emanate from a
principle (i.e. no need to show that the Convention state or not. In our view that should
state in which the award was made would have been a key part of the Court’s reasoning.
enforce a UAE award).
2. It ruled that the principle of reciprocity
The Decision in Context
had not been satisfied because there was
no evidence that the UK had signed any
convention with the UAE relating to the A number of UAE court decisions have already
enforcement of arbitral awards. This was upheld English awards and recognized that the
controversial because it is a recorded UK is a signatory to the NY Convention. They
fact that both the UK and the UAE have also recognized that the NY Convention
are signatories to the NY Convention. takes precedence over the pre-existing rules for
Furthermore, when the UAE signed the enforcement of awards found in Article 235 of
NY Convention in 2006 it opted not to the Civil Procedures Law. This is why the Court
sign a reciprocity reservation that allows of Appeal decision was considered so shocking
signatories to limit its application only to – it was not only clearly wrong (the UK being
awards issued in other contracting states. a signatory), but was contrary to previous UAE
court decisions.
Court of Cassation For example, in a ruling dated 27 April
2010 (Case No. 35/2010), the Fujairah Federal
Court of First Instance enforced two awards,
The Court of Cassation reversed the Court of one on the merits and the other on costs,
Appeal judgment. rendered by a sole arbitrator in London under
The Court explained that Article 238 of the Rules of the London Maritime Arbitration
the Civil Procedures Law provides that “the Association (LMAA) following an application for
rules laid down in the foregoing articles shall enforcement by the award creditor in terms of the
be without prejudice to the provisions and New York Convention. After evidencing that:
conventions between the UAE and other • the awards were indeed certified and
countries in this regard”. This means that the issued in the United Kingdom
provisions of conventions between the UAE
• that the UAE had ratified the New York
and other foreign countries or international
Convention in 2006; and
conventions ratified by the UAE are applicable
in relation to the enforcement of foreign • that the awards were issued pursuant to
judgments and arbitration awards. English Law in the United Kingdom,
which is also a signatory to the New York
The Court noted that both the UAE and
Convention
the UK are signatories to the NY Convention,
and therefore the award was to be recognized the Fujairah Court held that the two underlying
and enforced pursuant to the NY Convention, foreign awards were enforceable in the UAE.
LAW UPDATE 7
Judgments
Similarly, in the case of Maxtel International “the court’s supervisory role
FZE v. Airmec Dubai LLC (Court of First when looking to recognize
Instance Commercial Action No. 268/2010), and enforce a foreign arbitral
dated 12 January 2011), the Dubai Court of First award is strictly to ensure that
Instance enforced two awards, one on the merits it does not conflict with the
and one on costs, issued by a sole arbitrator in Federal Decree under which the
London under the DIFC-LCIA Arbitration rules. UAE acceded to the New York
The case involved two Dubai-based companies. Convention on the recognition
Following an application for enforcement under and enforcement of foreign
the NY Convention, the award debtor objected arbitral awards and satisfied the
to the enforcement of the awards seeking requirements of Articles IV and
nullification on a number of procedural grounds V of the Decree in terms of being
under the UAE Civil Procedures Code. However duly authenticated.”
once it was established that both awards were
foreign awards, and having showed that the UAE This ruling was affirmed by the Dubai
has ratified the New York Convention, the Dubai Court of Appeal (Case No. 132 of 2012) in 22
Court of First Instance held that February 2012.
8 LAW UPDATEJudgments
Conclusion Although understandable, it is a shame that
the Court of Appeal judgment will likely get
more attention than the Court of Cassation
As can be seen, there are UAE judgments
judgment reversing it. Equally, it is unfortunate
dating back to 2010 that have found that
that although the Court of Cassation came
English awards are to be enforced under the
to the right decision, it did so without fully
NY Convention. The Court of Appeal decision
acknowledging the extent of the UAE’s
was therefore extraordinary to find otherwise.
commitments under the NY Convention. In
However it is a reminder both that the UAE
any event, there has been considerable progress
courts can at times render errant decisions (and
in Dubai’s legal system in recent years with the
perhaps more so given the lack of a binding
courts working to support the rising popularity
precedent system), but also that the system
of arbitration in the UAE. The Court of
accounts for this with an ability to appeal.
Appeal decision should not obscure or detract
Indeed, from the Court of First Instance there
from this progress.
is an automatic right to appeal, and lawyers
are obliged to file an appeal, unless explicitly
directed not to by their clients.
LAW UPDATE 9Judgments
Naief Yahia Zane Anani Hussain Abdel Ghaffar
Partner Head of Knowledge Senior Associate
Dubai, UAE Dubai, UAE Dubai, UAE
n.yahia@tamimi.com z.anani@tamimi.com h.ghaffar@tamimi.com
Declaring a Debtor
Bankrupt in the UAE
A declaration of bankruptcy, according to bankruptcy of companies and other businesses,
Article 645 of the Commercial Transactions but does not have a specific definition of
Law, can be imposed on any trader who ceases “bankruptcy” and merely highlights the
to pay some or all of its commercial debts. situations in which a trader will be regarded as
While a debtor’s cessation of payment is a bankrupt. The meaning may be inferred from
presumption against him, the trader might not Article 645 of the law which provides that “a
be considered bankrupt if the failure to pay is trader who ceases to pay his debts can apply to
due to a dispute regarding the debt. In other the court for his adjudication as bankrupt”.
words, it is important to prove that the debtor Recently however Al Tamimi & Company
ceased to pay a certain commercial debt due to successfully represented a claimant (in
financial distress and credit issues. It is for the Commercial Case 393 of 2015 dated 12
Court of First Instance to determine, without August 2015) in obtaining a declaration
review by the Court of Cassation, whether there of bankruptcy and the appointment of a
is an established case of bankruptcy (Dubai bankruptcy administrator in relation to
Court of Cassation – Civil Appeal No. 343-1997 a defaulting defendant. Furthermore, the
– 28.03.98). Court of First Instance’s judgment in the case
Despite this, declarations of bankruptcy appears to be the only recent decision that
are extremely rare within the UAE. The considers the conditions to be satisfied before a
Commercial Transactions Law (Federal Law declaration of bankruptcy will be made against
18 of 1993) contains provisions regulating the a defaulting debtor.
10 LAW UPDATEJudgments
Background The Dubai Court of First Instance accepted
the Claimant’s contention that the Defendant’s
debt had been established and held that:
The Claimant obtained a judgment in the
sum of AED 85 million against the Defendants
“It is clear to us that the claimant’s debt
(a UAE Company and its subsidiary). The
is established by the judgment entered in
Defendants failed to pay this sum and as a
Commercial Action No 1969-2012 which has
result, on 1 March 2015 the Claimant initiated
become final and res judicata after no timely
bankruptcy proceedings with the Dubai Court
appeal was filed. The debt is accordingly due
of First Instance against the UAE Company
and payable. It is further clear to us that the
seeking (i) a declaration that the Defendant is
Defendant sought to be adjudicated bankrupt
bankrupt; (ii) the appointment of a bankruptcy
within the meaning of the Federal Commercial
administrator to oversee the bankruptcy
Transactions Law. They ceased to pay their debts
proceedings; (iii) an order that the Defendant’s
when due to the Claimant as they were in dire
premises be sealed; (iv) measures to safeguard
financial straits with no prospect of recovery
the Defendant’s assets; (v) an award for costs
and return to normal business operations at the
and fees against the Defendant; and (iv) that
level of trust, confidence and standing required
a judgment be rendered with immediate
to carry on business activities. This consequently
enforcement without the requirement of a bond.
puts creditors’ claims at risk as indicated by the
Claimant’s documents and the report of the court
Findings of the Court of First Instance appointed expert. The conditions to declare
bankruptcy are thus met and we accordingly
declare the defendant bankrupt.’
The Claimant argued that the Defendants
ceased making payments as a result of several
credit issues and the outstanding debt was Conclusion
clearly evidenced by the court judgment. The
Claimant submitted photocopies of a statement
This judgment is significant as it emphasizes
from another UAE bank which the Defendants
what the courts look for before declaring a
held an account with which confirmed that the
defaulter bankrupt. The outstanding debt
Defendants had no balance. The Claimant also
should be clearly and conclusively proved.
submitted a statement from the Dubai Financial
In this case, there was a judgment obtained
Market (DFA) which confirmed that there
against the defaulter from the Court of First
was no record of the Defendant in the DFA’s
Instance confirming the debt. In addition,
clearing system.
the report filed by the expert in the case
The Claimant argued that there was no concerning the debt also confirmed the
prospect of recovering the judgment debt as the outstanding debt obligation of the Defendant.
Defendant’s offices/business units were closed
The financial instability of the defaulter as
and no further assets could be traced.
well as the non-availability of any kind of assets
On 3 June 2015, the court appointed an of the defaulter also has to be established. In this
accounting expert to review the matter. The case, the Claimant was successful in establishing
expert filed his report and confirmed that the that there was no prospect of recovery of the
Defendant was indebted to the Claimant for judgment amount as the Defendant had no bank
an amount of AED 85 million and further accounts or assets.
concluded that the Defendant ceased making
payments due to its bad financial situation.
The Defendant failed to appear either in
person or by counsel at any of the hearings
despite having been served with the summons.
Therefore, a judgment was entered against the
Defendant pursuant to Article 53(1) of the Civil
Procedures Law.
LAW UPDATE 11Arbitration
Hassan Arab Dalal Al Houti
Deputy Managing Partner Associate
Regional Head of Litigation Dubai, UAE
Dubai, UAE d.alhouti@tamimi.com
h.arab@tamimi.com
Enforcement of Foreign Awards in the UAE:
Back on Track?
In recent years, arbitration in the UAE has experienced proceedings in London pursuant to the agreement.
significant growth among domestic and international The arbitral tribunal issued two awards in the
users. Whilst there is undoubtedly a positive trend in the Claimant’s favour, one on the merits and one on costs, the
use of arbitration as a mechanism to resolve disputes in the last being issued on 20 March 2014.
UAE, one of the main criticisms is the uncertainty around
The two awards became final when the Respondent
enforcement of both domestic and international awards,
did not challenge them after having been duly notified in
despite the UAE’s accession to the New York Convention for
accordance with English law.
the Recognition and Enforcement of Foreign Arbitrational
Awards (the “New York Convention”) in 2006. In fact, any The Claimant commenced proceedings in Dubai for
arbitration practitioner with experience in the UAE will be the recognition and enforcement of the two awards. The
familiar with the local enforcement battles, as demonstrated Dubai Court of First Instance ordered the recognition of
by the case of International Bechtel Co. Ltd v. Department both awards and their enforcement in accordance with
of Civil Aviation of the Government of Dubai, as well as a the enforcement procedure outlined in the UAE Civil
recent Court of Appeal decision which questioned whether Procedure Law.
the UK was a signatory to the New York Convention. The Respondent appealed and on 15 July 2015, the
However, in the recent Dubai Court of Cassation Court of Appeal upheld the decision of the Court of First
Commercial Appeal No. 693 of 2015, it could be argued Instance. On 13 September 2015 the Respondent appealed
that the feelings of distrust and uncertainty may be put at this decision to the Court of Cassation.
bay, at least for the time being particularly when it comes to In that action, the Respondent raised two heads of
enforcement of foreign awards. challenge. First, it argued that the Court of Appeal was
The case concerned a charter-party agreement dated wrong to have rejected its plea that the Respondent was
2 May 2007. A dispute arose between the Claimant and not served with the arbitration notice, and, as such, was
the Respondent and the former commenced arbitration unable to present its case before the arbitral tribunal.
12 LAW UPDATEArbitration
This was because a commercial agent, rather than the
Respondent itself, had received the arbitration notice.
According to Article
The Respondent argued that as an Emirati company 238 of the UAE Civil
it should be served with the arbitration notice in
accordance with the Agreement on Judicial Assistance
Procedure Law,
between the UAE and the UK, ratified by Federal internationalconventions,
Decree No. 38 of 2007.
Secondly, the Respondent argued that a person not
by virtue of ratification,
authorised to bind the Respondent to arbitration signed the shall apply as though
agreement containing the arbitration clause. The Court of
Appeal had held that the Respondent failed to prove this in they were domestic
accordance with the law of the country where the arbitral law in the UAE to
award was issued, being the laws of England and Wales.
The Court of Cassation dismissed the argument, stating
disputes concerning the
that according to Article 238 of the UAE Civil Procedure enforcement of foreign
Law, international conventions, by virtue of ratification,
shall apply as though they were domestic law in the UAE court decisions and
to disputes concerning the enforcement of foreign court arbitral awards.
decisions and arbitral awards.
The Court of Cassation explained further that by under some incapacity under the law of the country where
Federal Decree No. 43 of 2006, which was published in the the award was made or was not given proper notice of
Official Gazette on 28 June 2006, the UAE acceded to the the appointment of the arbitrator or of the arbitration
New York Convention. Therefore, its provisions applied to proceedings and was unable to present its case.
the present dispute. The Court of Cassation found that the Respondent had
The New York Convention provides that, as a general not produced any evidence before the trial court that it
principle, and subject to any permissible reservations lacked capacity to sign the contract in accordance with the
that it has entered into, each contracting state shall law of the country where the arbitral award was issued. As
recognise arbitral agreements as binding, as long as there regards notice, the fact that the Respondent had attended
is an agreement on arbitration in writing (whether in a the arbitration hearings was evidence that it had received
contract, a standalone agreement, or in an exchange of sufficient notice. The entire appeal was therefore dismissed.
letters or telegrams). In conclusion, the Dubai Court of Cassation in this case
Article V states that: “1. Recognition and enforcement has clearly adopted a pro-enforcement attitude towards
of the award may be refused, at the request of the party foreign arbitration awards and recognised the primacy
against whom it is invoked, only if that party furnishes of the New York Convention. The Court of Cassation
to the competent authority where the recognition and held that, pursuant to Article V(1)(a) of the New York
enforcement is sought, proof that: Convention, the issue of the capacity of the person signing
the arbitration clause is to be assessed using the law of
(a) The parties to the agreement referred to in article the country where the award was issued (the law of the
II were, under the law applicable to them, under some seat), regardless of the parties’ nationality or the domestic
incapacity…., under the law of the country where the law under which the party acquired its legal status. This
award was made; or is particularly encouraging, because technical points
(b) The party against whom the award is invoked was not regarding the authority of a signatory to bind a company to
given proper notice of the appointment of the arbitrator arbitration are often raised to resist enforcement of awards
or of the arbitration proceedings; or (c), (d), (e).” in the UAE. This decision will go some way in comforting
applicants that such points may no longer be sustainable
In other words, the party against whom the arbitral where the enforcement relates to a foreign award.
award was issued may plead that the award should not be
recognised under any of the conditions listed in Article
* Previously Published in Kluwer Arbitration Blog on 17 June 2016.
V, including (a) and (b), provided that it furnishes proof
to the court where the recognition is sought, that it was
LAW UPDATE 13Banking & Finance
Divya Abrol Gaurav Jain
Senior Associate Associate
Dubai, UAE Dubai, UAE
d.abrol@tamimi.com g.jain@tamimi.com
Pledge through DMCC Tradeflow Platform
The Dubai Multi Commodities Centre (DMCC) was reduce and mitigate risk and offers much needed capital
established in 2002, with a mandate to provide the relief. With this in mind, the DMCC has developed a
physical, market and financial infrastructure required to pledge structure which allows commodity owners and their
set up a commodities market place in Dubai. Today the financiers to register pledges on the DMCC Tradeflow
DMCC is recognised as one of the largest free zones in the being collateral in return for working capital financing.
United Arab Emirates (UAE) with over 12,000 registered The advantage of a pledge for financiers is that it creates a
companies under license. security interest over the assets, allowing them to be used to
In this article, we briefly discuss the operation of the secure the performance of an obligation, i.e. a trade finance
DMCC tradeflow and the procedure for creation of a loan. The pledge is created electronically in accordance with
pledge through the DMCC tradeflow. the DMCC Security Rules annexed to Corporate Access
Agreement (the ‘Security Rules’). The process involves
The DMCC operates an electronic central registry
registration of parties as participants with DMCC which
of ownership of commodities called the Trade Flow
is done by way of acceptance of the DMCC Tradeflow
(‘Tradeflow’). The platform has been developed with extensive
Corporate Access Agreement (and all the Rules appended
interaction from the DMCC members alongside advice
thereto including the Security Rules and Warrant Rules).
from key regional financiers and commodity owners. The
Each participant (pledgor, storage operator and the finance
access to the Tradeflow is under the DMCC Tradeflow
party) would sign a document called ‘Letter of Adherence’.
Corporate Access Agreement dated 11th February 2013 (the
‘Corporate Access Agreement’). This registry uses negotiable Security is created electronically by way of electronic
electronic title documents called DMCC Tradeflow warrants issuance of a standard format Security Notification (as
(‘Warrants’) to provide interested parties with the undisputed defined in the Corporate Access Agreement) and Security
proof of ownership and security interests attached to UAE Acceptance (as defined in the Security Rules). In order
based inventories. The Warrants are issued by storage to enter into subsequent transactions over the DMCC
operators (in the DMCC) in accordance with the DMCC Tradeflow evidencing a pledge over future Warrants (issued
Warrant Rules annexed to Corporate Access Agreement (the by the storage operator as and when additional goods are
’Warrant Rules‘) and provide evidence of specified goods deposited), the pledgor (as the legal owner) is required
(quantity and quality) being stored therein. Ownership of to issue a new Security Notification to the DMCC on
DMCC Tradeflow Warrants can be electronically transferred the DMCC Tradeflow in relation to the new Warrant(s)
between members using the web-based, secure interface. instructing the DMCC to hold the new Warrant(s) by way
of pledge for the pledgee. Upon receipt of the Security
The use of collateral management in trade finance is
Notification on the DMCC Tradeflow, the DMCC would
increasingly seen as a tool that gives financiers a way to
14 LAW UPDATEBanking & Finance
hold the said Warrant for the benefit of the pledgee. The (c) third, in or towards satisfaction of all costs, charges
pledgee upon the receipt of the Security Notification is and expenses incurred, or payments made, by and
required to issue and transmit the Security Acceptance evidenced in writing by the Tradeflow Finance Party in
on the DMCC Tradeflow within seven (7) days of receipt connection with such sale of the Warrant (or the Goods
thereof. The creation of security by way of pledge over the represented by the Warrant); and
Warrant(s) is subject to cancellation by the DMCC without (d) fourth, in or towards satisfaction of the Secured
notice if, within seven (7) days after the date of the Security Obligations to which the relevant Warrant relates; and
Notification, a Security Acceptance has not been received
(e) fifth, as to the surplus (if any), to the person or persons
from the pledgee.
entitled thereto.’
The Security Rules also provide for a close out
mechanism which permits enforcement of the pledge by Therefore apart from the cost of the DMCC for the sale of
way of sale of the Warrants by the DMCC (and the goods the Warrant (or the Goods represented by the Warrant),
it represents) without recourse to the pledgor or a court the realisation under the pledge documents will also be
order on receipt of a Close Out Settlement Instruction (as subject to any limitation arising from the storage operator’s
defined in the Security Rules) as prescribed in Rule 3 of the lien over the goods and such lien shall rank ahead of the
Security Rules. However the recognition of the close out pledgee’s claim and shall include all lawful storage charges,
mechanism under UAE law requires detailed examination money claims, insurance, transportation, labour, weighing,
as the concept of “self help” is not recognised under UAE coopering and any advertisement charges for auction of
law and an order of a UAE court may be required for the goods in the event of a default. Accordingly, the storage
enforcement of any security created under any of the operator may have priority in the insolvency of the pledgor
security documents. Further, any default by the pledgor for unpaid rentals and other charges for the storage of
may not automatically give the pledgee any right to attach goods in their vault.
the Warrants (or the goods). It may, however, instruct the The DMCC Tradeflow platform provides for pledge
DMCC on the DMCC Tradeflow by way of a Security over commodities stored in the DMCC registered
Enforcement Instruction (as defined in the Security Rules) warehouses and is an important step in the trade financing
to hold the goods in favour of the pledgee and not to release for the companies having storage of their goods in the
the same until the successful conclusion of the proceeding DMCC. While the pledge through the DMCC Tradeflow
or any judgment or appealable order issued by a UAE platform is still at a stage of infancy, it holds great promises
Court in relation to the pledgor’s default. for trade financing in future.
The storage operator warrants or guarantees to hold
the stored commodity by way of safe custody implying that
although they are legally liable for any value lost through
theft or damage, they have no legal ownership in them
except for the storage operator lien as highlighted below. As
such, in case of liquidation, the storage operator’s creditors
will be unable to seek recourse to the commodities stored
since the legal title remains with the holder of the Warrants
- as registered on the DMCC Tradeflow central registry. It
is also important to note the Rule 3.3 of the Security Rules
which provides the following order of priority in relation to
any monies realised pursuant to the enforcement of security:
‘(a) first, in or towards satisfaction of any Storage
Operator’s lien which is duly annotated on the relevant
Warrant at the time of sale; and
(b) second, in or towards satisfaction of all costs, charges
and expenses incurred, or payments made, by and evidenced
in writing by DMCCA in connection with such sale of
the Warrant (or the Goods represented by the Warrant)
(including the agency fee referred to in Clause 3.5); and
LAW UPDATE 15Sports Law
Steve Bainbridge Justin Carroll
Regional Head of Sports Law Senior Associate
Abu Dhabi, UAE Dubai, UAE
s.bainbridge@tamimi.com j.carroll@tamimi.com
Reducing Risk in Organising Major
Sports Events in the UAE
With Olympics fervor building as the start of the summer Spectators and Participants
games in Rio de Janeiro approaches in August, it is timely
to take a look at some of the risk management issues
In addition to the basic insurance coverage required by
involved when organising largescale sporting events.
statute (e.g. for employee coverage, corporate vehicle usage)
Whether it is the Abu Dhabi Formula 1 Grand Prix and otherwise for prudent protection in the ordinary
or the Dubai Air Show or the UAE Desert Challenge, course of business (e.g. covering loss or damage to buildings
the UAE increasingly plays host to a variety of premier and/or equipment, business interruption, etc.) in the case
sporting events throughout the year. Those who arrange, of a sporting event to which an event organiser charges
host and deliver sporting events necessarily assume a range an admission, the event organiser is entitled to impose
of legal and financial risks which they may not always turn conditions of entry as part of its contractual agreement
their minds to until one or more of those risks materialises. with the spectator and the spectator is entitled to expect
that the event will take place as promised by the organiser.
Event Organisers A condition typically imposed by the event organisers is
that the spectator agrees that, if, while watching the event,
the spectator suffers loss or injury, the spectator will not hold
It is important to note that event rights holders, host facilities
the event organiser liable. This condition is commonly called
or venues, event organisers, broadcasters and a range of third
a waiver of liability clause and it will be enforceable against
party contractors could be involved in one or more stages
the spectator who has suffered a loss or injury where:
of delivery. In such cases, it is prudent practice to include a
comprehensive risk identification component during the event
• the loss or injury was caused by or arose out of the
planning stage and to allocate risk accordingly (usually on
event; and
those parties best placed to minimise or avoid it, with any
identifiable residual risk insured against). • the event organiser otherwise took reasonable
precautions against the risk of loss or injury occurring.
For the purposes of this article, we will refer generally
to event organisers but it should be noted that it is often However, under UAE law, a waiver of liability clause
the case in major sporting events that insurable risk is will usually not relieve the organiser from liability for
borne by a number of parties and should be coordinated failing to make the premises or the event reasonably safe
to ensure optimal cover or dove-tailing of policies for spectators.
without undue duplication.
16 LAW UPDATESports Law
So, for example, if a spectator at a baseball game were • physical damage to the premises where the event is
to sustain injuries on being hit in the head by a ball that to be staged;
flew through a hole in the protective net behind home • extreme weather preventing the event from
plate, a waiver of liability probably would not bar him from proceeding or spectators from accessing the event’s
recovery. On the other hand, a waiver of liability would site or premises;
likely prevent a spectator from recovering damages on an
• the late arrival or failure to arrive of persons or
action brought if the same injury were sustained while the
equipment critical to staging the event; or
spectator was sitting in the outfield stands.
• the sudden withdrawal or suspension of
The principle producing these two legal outcomes
governmental approval for the event to proceed.
expresses the understanding that spectators to an event,
even to physically dangerous events, are taken to accept Where any one of these incidents occurs, it can result in
some, but not all, risks in watching those events. At the significant financial loss for the event organiser who would be
same time, spectators are legally entitled to rely on the left, in the absence of insurance, to pursue any legal claim that
event organiser taking reasonable precautions to make the they may have against the persons responsible for the loss.
event safe for them to watch.
Inevitably, pursuit of those claims would entail further
expenditure of time and money and would likely compound
Managing Third-Party Risk the loss arising from the cancellation of the event. In many
cases, the original loss and the subsequent efforts to recover
To protect itself from incurring liability in these that loss through legal action are likely to impact the event
circumstances, the event organiser is usually advised to organiser’s cash flow for months or years to come.
take out public liability or third party liability (‘TPL’) Insurance cover for this risk or even for the risk of
insurance. This form of insurance protects an event reduced spectator turnout removes the prospect of the event
organiser from liability to third parties for loss or injury turning out to be a financial disaster for the event organiser.
that arises out of the premises that the event organiser Where an event organiser takes out this kind of insurance
controls or out of its conduct of the event itself. and is forced to make a claim under it, the insurance payout
As the event tourism market grows and diversifies, it is will allow the event organiser to move on quickly and will
becoming more common for large scale events to feature shift the cost and effort of pursing legal claims against the
designated spectator activity areas or ’fanzones‘, in an effort parties responsible for the loss onto the insurer.
to enhance the customer experience and/or to upsell basic
entry revenues. Risk Management is Indispensable
In such circumstances, careful consideration should be
given to any particular equipment for rides, experiences Many financial and legal risks are attached to the
or challenges offered to spectators (who may become organisation and staging of public sporting events. These
participants or end users of third party suppliers retained risks can come from spectators or participants in the event
by a sporting venue) and what additional risks and suing for injuries sustained as a result of how the event was
corresponding coverage should be put in place. conducted, or they can arise from the financial loss that
In such scenarios it is prudent to make early disclosure results when an event is cancelled or cannot go ahead at the
of anticipated activity to your broker – even arranging site last minute through no fault of the event organiser.
visits if necessary – to determine if proposed activities come In each case, strategic early identification and allocation
within the existing TPL cover and to determine if they of risk, complemented by taking out the appropriate
are out-of-scope whether their presence on site may vitiate insurance cover where the relevant risk cannot otherwise
existing cover, necessitating changes. be addressed is an important risk management tool that
allows pricing of appropriate coverage into
Cancellation Risk revenue models and should ensure that
foreseeable financial and legal fallout from
the event, should it happen, does not bring
Perhaps the largest financial risk to which an event
irreparable financial harm to one or
organiser may be exposed is the risk that the event is
more of the key stakeholders in the event
unable to go ahead and has to be cancelled at short notice.
management chain.
Many things can cause an event to be cancelled at the last
minute, including: This article first appeared in the July/August 2016
edition of Middle East Insurance Review magazine.
LAW UPDATE 17Intellectual Property
Rasha Al Ardah
Senior Associate
Dubai, UAE
r.alardah@tamimi.com
Trademark Ownership Structure in the UAE
Trademarks are exceptionally important and valuable industrial, handicraft or services activity in any country
perpetual assets and should always be treated as such. But which treats the State according to the reciprocity principle
who should be the owner of the trademark? While it may and (v) public juridical persons.
seem a straightforward question, this is often overlooked Accordingly, a trademark owner can include
or does not get much attention when considering the individuals, companies in all legal forms (eh. sole
protection of trademark. This question should be decided establishment, limited liability, public joint stock) and
carefully, after analysis and as a priority. Deciding who will public judicial persons such as government entities.
be the owner of the trademark may be critical.
The decision on the owner of the trademark may be
Why it is important to decide on the owner of the
easy, but it could become more complicated when the
trademark?
owner is a group company with a complicated structure
of aff iliated companies and subsidiaries or in the case
of a joint venture or partnership of any kind. In this The advantages of owning a trademark can be summarised
article we will highlight the different perspectives of as follows:
trademark ownership structures and common issues
related to the same. • The trademark is an asset and a valuable one,
for example Apple is the world’s most valuable
trademark with a value of USD 154.1 billion
Who can own a trademark? (According to Forbes’ list of the World’s Most
Valuable Brands 2016);
Pursuant to Article 6 of the UAE Federal Trademarks • Only the owner of trademark will financially
Law, Law No. 37 of 1992 and its amendments, the benefit from such trademark. The owner only can
owner of a trademark can include: (i) national natural or exploit the trademark through commercialisation,
juridical persons carrying out any commercial, industrial, licence and assignment and can be used in business
handicraft or services activity; (ii) foreign natural or negotiations.
juridical persons carrying out any commercial, industrial, • Only the legal owner of a trademark has standing
handicraft or services activity in the State, (iii) foreign to enforce the trademark rights and prevent any
natural or juridical persons carrying out any commercial, infringement upon the same.
18 LAW UPDATEIntellectual Property
Deciding on who is the owner of the trademark licence to each subsidiary to use the relevant trademark),
or at the subsidiary level, each subsidiary owns the
trademarks relevant to its business. Each structure has its
The owner of the trademark will depend on the nature
own advantages and disadvantages, for instance having all
of the business, its structure and the strategies and goals
the trademarks owned by the group company will ensure
adopted by the business.
the central management of the trademark portfolio and
The straightforward scenario is that when a company ensure the trademarks are being used to the same level
is established, the trademark shall be registered under its of quality within the entire group companies. It may also
name and it will be the owner of the trademark. A common strengthen and enhance the assets of the group company
mistake made is to have an executive of the company file for making it more attractive to investors and increasing its
a trademark in their own personal name. This can restrain negotiation weight in any business transaction. However,
the company from enforcing its trademark rights against this means the involvement of the group company in the
competitors, and will hurt the company financially as it may prosecution of all legal actions related to its trademarks.
deprive the company of one of its most valuable assets. Having the ownership vested with each subsidiary, may
Nevertheless this is not always the rule, as in some cases seem an easier structure with less paperwork (internal
an individual creates a trademark and concept, and when licences). When each subsidiary owns its own trademark,
he wants to commercialise this trademark and concept, he this will increase its assets. But each subsidiary being
would enter into partnership with some investors. In such responsible for its trademarks and their maintenance may
cases and when such partnership is still new, the individual entail having a dedicated team to do that.
may consider keeping the trademark under his personal For businesses with a substantial amount of intellectual
name and grant the partnership entity a licence to use the property (“IP”), it may be reasonable to establish an IP
trademark, to ensure his rights over the trademark. holding company to become the owner of such assets.
When the trademark is very personal, such as the name Having an IP holding company as the owner of the
of person, the owner of the trademark would normally trademarks may improve the business’ ability to manage
be that person. For example, a fashion designer may its intellectual property. In such a structure, the parent
retain the ownership of their trademark, which is his/ company, the original owner of the trademark, establishes
her personal name, even though they have huge corporate a wholly-owned subsidiary and then transfers ownership of
entities operating and manufacturing under the trademark. its IP to the newly-created subsidiary. The right to use the
Although this will protect the name of the designer, the risk trademark is then licensed back to the parent company or
in such case is that in the event of the death of the owner, other group companies.
the trademark will become part of the inheritance, which The structure and position of the IP holding company
may affect the business using the brand. should, of course, be subject to careful consideration,
In joint ventures, attention should be given to who owns taking into consideration the nature of trademarks and the
the trademark that will be used by the joint venture. The governing laws in the jurisdiction where the IP holding
trademark to be used may actually be owned by one of the company is to be established. The UAE has recently
partners. However if not, the partners should agree clearly recognised and allowed the establishment of IP holding
on who will own the trademark or whether they jointly own companies. The new Commercial Companies Law,
it. The Joint Venture Agreement should clearly state the Law No. 2 of 2015, has allowed for the establishment of
rights of each party and what will happen to the trademark IP holding companies in the form of limited liability or
when the joint venture is dissolved. joint stock companies, While it is still unclear how such
In case of a group of affiliated companies using the companies will be governed under this new law, it is now
same trademark, usually the owner of the trademark will an option to be considered in the UAE.
be the group company (holding company), who would In conclusion, different aspects should be taken into
grant internal licences to each of its affiliates to use the consideration when determining the proper trademark
trademark. This structure will help the group company to owner. The trademark ownership structure may also
maintain the protection of the trademark portfolio. change throughout the life of the business and with changes
When the affiliated/subsidiaries use different of its business strategies, its growth and its trademark
trademarks, there are two options for the ownership assets. Clear legal advice on the ownership structure is
structure of the trademarks; either the ownership of all always recommended together with a regular review of
trademarks be vested at the group company level (with a such structure to ensure it serves the present business needs
and strategies.
LAW UPDATE 19Title
A Focus on Education
Middle East Education Sector in 60 seconds
In this month’s special feature of Law Update we focus on Education and cover everything
from monetizing research to education reforms in Egypt and Iran. The following is a 60 second
whirlwind look at the entire region.
Despite the gloomy economic outlook, public spending on education within the GCC has been
ring-fenced by most governments (20-25% of total government expenditure). Currently there are
education projects valued at USD 50 billion under development across the GCC, which is the
fastest growing private education market in the world.
The picture is not uniform across the GCC as KSA currently has a restrictive approach in
relation to FDI in education. KSA makes up about 75% of the entire student population in the
GCC and itsVision 2030 has the stated objective of increasing private sector participation in the
education sector. The precise details remain to be seen but announcements are expected later this
year which will be keenly watched by international education providers given the sheer scale of that
market and the opportunities therein.
At the other end of the spectrum lies Bahrain, a small country with a long and distinguished
tradition of international schools. Interestingly it allows 100% foreign investment in education, and
has some of the oldest educational institutions in the Gulf.
Qatar and UAE are very mature private education markets, boasting some of the most
prestigious international universities and schools in the world. Qatar Education City is a who’s who
of top US universities on a single campus whilst the UAE hosts impressive heavyweights in different
standalone campuses, with Dubai aiming to become an education tourism hub. The private schools
market in the UAE continues to perform well albeit with signs that supply in Dubai is finally
catching up with demand.
Although a small market, Oman will be appealing to foreign investors due to its welcoming
approach to FDI.
In the non-GCC, Iran and Egypt are the most populous markets, both with a long history in
education. Egypt is launching a major overhaul of its education system with ambitious goals for the
short and medium term which will be of interest to international education providers.
Iran’s education sector is looking to increase FDI following the easing of sanctions, but it will
likely remain a challenging and highly regulated environment.
These are certainly exciting times for the education industry in the Middle East. The name of
the game seems to be ‘transformation’ and even if half of the measures come to fruition we will be
looking at a much changed education landscape in the years to come. Al Tamimi, with its footprint
extending from the Red Sea to the Gulf, will continue to closely monitor these developments with
our local on the ground presence whilst engaging with regulators and stakeholders to ensure our
clients are best placed to seize the inevitable opportunities that will arise.
Ivor McGettigan
Partner
Abu Dhabi, UAE
i.mcGettigan@tamimi.com
20 LAW UPDATETitle
Education Supplement
22 Employment Law Considerations for 38 Education within Egypt’s Reform
Education Providers in the UAE Plans
26 Eureka! Monetising Research in the 40 Educational Developments in Oman
Education Sector
42 Investing in Iran’s Education Sector
28 The Development, Ownership and
Operation Models for Private Sector 46 The Development of Bahrain’s
Schools in the GCC Education System
32 The Gap between Education, Talent
and Technology in the UAE
36 Vision 2030 and the Transformation
of Education in Saudi Arabia
LAW UPDATE 21Education Supplement
Ivor McGettigan
Partner
Abu Dhabi, UAE
i.mcGettigan@tamimi.com
Employment Law Considerations
for Education Providers in the UAE
There is a certain degree of predictability in relation contract (“MOE Contract”) which contains a
to the human resources (“HR”) challenges facing number of provisions that are at variance with the
education providers the world over. In the UAE, Labour Law. In addition, a decree issued by the
these challenges must be considered in the context of Minister of Labour, Decree 765 of 2015, which
an employment law landscape that is multi-faceted came into effect on 1st January 2016 (“Decree”),
and can appear complex. imposes further constraints on employers under
In this article, we will take a high level view of the remit of the Ministry of Human Resources and
the key employment considerations for both schools Emiratisation (formerly the Ministry of Labour)
and higher education institutions in the UAE. (which may include some education providers). The
overall position can be ambiguous, which is why it is
Private sector employers, including education
important for schools to be aware of the key issues as
providers, are subject to the Federal Law No. 8 of
well as have clear contracts and HR policies in place
1980 (“Labour Law”). Publically owned education
to help navigate a sensible course through it.
providers may be subject to other laws, which would
need to be considered prior to formulating an HR
response. For the purpose of this article, we will Contractual fundamentals
consider some of the recurring HR issues for private The default position for private schools is to issue a
providers but the topics covered are of general limited term contract. The Labour Law provides
interest to the entire education sector. that there is no requirement for a notice period prior
to termination in a limited term contract, however,
Schools the MOE Contract contains a two month notice
period, whilst, the Decree stipulates that notice
should be no less than one month in respect of a
Some schools are required to issue a standard renewed fixed term contract (i.e. after the first term
form Ministry of Education (“MOE”) employment has expired). In the school sector, this disparity is
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