Dispute Resolution

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1 June 2017

Dispute Resolution in Free Zones & Special Economic Zones

Despite the prevalence of a number of judicial systems within the UAE, there are separate dispute resolution forums that focus on the commercial disputes arising out of the free zones and special economic zones within the UAE.

These “free zones” were created to attract business and investment, and as a result they have their own laws and court systems that differ to varying degrees. Among the most prominent of these free zones is the Dubai International Financial Center (DIFC), the Jebel Ali Free Zone (JAFZ) and Dubai Technology and Media Free Zone Authority (DTMFZA), to name just a few.

Dubai International Financial Center (DIFC)

The DIFC has its own laws and courts based on English common law, and is the appropriate forum for disputes involving DIFC, relating to a contract executed in the DIFC, or where DIFC laws and regulations apply. DIFC judgments can be registered and enforced in Dubai courts, as can arbitration awards from the Dubai International Arbitration Centre, the DIFC’s LCIA, or foreign awards under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.1

Legal restrictions within the DIFC include the following:

DIFC entities cannot offer retail products or services;

Insurance activities are restricted to re-insurance;

UAE federal money laundering laws apply (although federal civil and commercial laws do not otherwise apply);

DIFC entities must reside in the DIFC itself, and entities can only avoid this requirement if no space is available until such time as space becomes available.2

Jebel Ali Free Zone (JAFZ) versus the Dubai Technology and Media Free Zone Authority (DTMFZA)

Other free zones are less independent than the DIFC with respect to the resolution of disputes. For example, the JAFZ is responsible for adjudicating labor disputes, whereas the DTMFZA is not responsible for resolving such disputes; in the event of a labor dispute in the DTMFZA, the issue will be referred to the Ministry of Labor and Social Affairs, which may in turn refer the matter to the Dubai Courts.This difference in adjudication is a mere illustration of the sometimes major differences between dispute resolution in the free zones and special economic zones.

Conclusion

In short, each free zone or special economic zone adjudicates disputes differently, some with independent dispute resolution bodies, and others by referring disputes to the local Dubai courts. Navigating each of these zones requires the advice of experienced counsel that is familiar with the laws an regulations of these zones.

Resources

1 See Latham & Watkins, “Dubai’s Legal System,” available at http://www.lw.com/upload/pubcontent/_pdf/pub2787_1.pdf.

2 PKF Accountants & Business Advisers, “Free Zones in the UAE,” available at http://www.pkf.com/media/135638/free%20zones%20in%20the%20uae%202009.pdf.

3 Id.

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