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Transforming the DIFC Courts: Insights into Law No. (2) of 2025 governing the Dubai International Financial Centre (DIFC) Courts

by BUSINESS

On March 10, 2025, Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (2) of 2025 (the “New Law”), a landmark legislation governing the Dubai International Financial Centre (DIFC) Courts. The New Law replaces the previous DIFC Law No. (10) of 2004 and Dubai Law No. (12) of 2004 (as amended) (collectively referred to as “Old Law”), marking a significant evolution in the DIFC legal framework and transforming the way disputes are resolved within the DIFC.

Key updates at a glance –

1. Expanded scope and exclusivity of Jurisdiction

  • Exclusive Jurisdiction: The DIFC Courts now have exclusive authority over civil, commercial, and labor disputes involving DIFC entities, reducing jurisdictional conflicts and providing legal certainty for businesses.
  • Expanded Scope: The DIFC Courts’ jurisdiction has been broadened to include claims arising out of or related to trusts, wills of non-Muslims, and arbitration-related applications, offering a more comprehensive legal framework.

2. Establishing a Mediation Services Centre

  • Alternative Dispute Resolution: The New Law establishes a new Mediation Centre providing an efficient and cost-effective way to resolve disputes amicably, reducing litigation costs and thereby preserving commercial relationships.

3. Judicial Efficiency and Transparency

  • Public Hearings and Judgments: The New Law mandates public access to court proceedings and judgments, enhancing transparency and accountability.
  • Provisional Measures: The DIFC Courts can now issue provisional or interim orders, such as asset freezes, to protect rights effectively.

Comparison with the Old Law

Feature Old Law (DIFC Law No. 10/2004 & Dubai Law No. 12/2004) New Law (DIFC Law No. 2/2025)
Jurisdiction Parties may agree in writing to have civil or commercial claims or actions heard before the DIFC Courts. Expanded to include cases with employment disputes, trusts, wills of non-Muslims, and arbitration-related applications.
Enforcement of Judgments Less robust mechanisms for enforcing judgments outside the DIFC. Improved mechanisms for enforcing judgments both within the UAE and abroad.
Dispute Resolution Traditional litigation was the primary method. Introduction of a Mediation Centre for civil, commercial, and labor disputes, offering an alternative to litigation.
Alignment with UAE Laws Less emphasis on alignment with UAE federal laws. Strengthened alignment with UAE federal laws to ensure legal harmony across jurisdictions to aid in enforcing judgements.
Provisional Measures Limited ability to issue interim orders. Empowered to issue asset freezes, disclosure orders, and other interim measures to protect rights.
Transparency Less emphasis on public access to court proceedings. Mandates public hearings and announcements of judgments to enhance transparency.
Arbitration Recognition Less streamlined process for recognizing foreign arbitration awards. Simplified process for recognizing and enforcing foreign arbitration awards.
Enforcement Writ No explicit provision for Enforcement Writs. Enforcement was based on court orders and arbitral awards. Explicitly includes judgments, decisions, orders, arbitral awards, and settlement agreements, enhancing clarity and efficiency in enforcement procedures.

 

What does this mean to you?

For parties interacting with the DIFC Courts, the New Law offers several benefits:

  • Legal Certainty: Businesses have clearer guidelines on jurisdiction, reducing legal risks and enhancing contract enforcement.
  • Enhanced Legal Protection: The ability to issue provisional measures provides better protection for individuals’ rights during legal proceedings.
  • Efficient Dispute Resolution: The mediation centre and streamlined procedures reduce the time and cost associated with disputes.
  • Enhanced Enforcement: The New Law strengthens the enforcement of judgments, including the ability to execute judgments against assets outside the DIFC.
  • Increased Transparency: Public access to court proceedings ensures that justice is not only served but also seen to be served.

In conclusion, Law No. (2) of 2025 marks a significant step forward for the DIFC Courts, enhancing legal certainty, efficiency, and transparency. The benefits of streamlined dispute resolution and stronger enforcement mechanisms cannot be overstated and are likely to make the DIFC an even more attractive hub for international business and investment.

At Al Midfa & Associates, we offer comprehensive services tailored to meet your needs, ensuring that your rights are protected at every step of the way. Please feel free to contact us.

Dubai Freezone exapansion

Dubai Free Zone Expansion Update: Enhanced Opportunities and Key Considerations

by BUSINESS

On the 17th of March 2025, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, in his capacity as Chairman of Dubai’s Executive Council, introduced a transformative resolution (No. 11 of 2025) permitting free zone businesses (excluding DIFC financial institutions), to operate in mainland Dubai. While this marks a pivotal shift in Dubai’s economic framework, stakeholders should note that the resolution has not been issued yet and key details remain pending, including the finalized list of permitted activities.

Below, we expand on the implications, challenges, and steps for businesses navigating this evolving landscape.

Key Provisions and Early-Stage Considerations

  • Activity-Specific Permissions: The resolution currently only applies to specified economic activities. However, the Dubai Department of Economy and Tourism (DET) is yet to announce what activities will fall under the ambit of the resolution and will publish a list of specified economic activities within six months. 
  • Licensing: Free zone entities can apply for a renewable one-year mainland license or activity-specific permits through the DET.
  • Compliance Window: Existing businesses operating outside free zones must align with the resolution within one year (extendable further for similar periods subject to approval from the Director General of the DET).

Benefits for Businesses

  • Direct Access: Eliminates the need for local sponsors or intermediaries to serve mainland clients, much like certain dual-licensing free zones (e.g. DMCC).
  • Hybrid Model: Combine free zone tax benefits with mainland market reach (e.g., retail, direct B2C services).
  • Infrastructure Leverage: Utilize existing free zone offices while expanding mainland operations, reducing overhead.

Challenges and Regulatory Uncertainties

Despite the welcome change, the resolution is still in its nascent stages and requires further details to be issued as highlighted below –

1. Pending Activity List

  • Early-Stage Limitation: Businesses will need to closely monitor the changes in this space given that the DET has not yet defined which activities will be permitted.

2. Compliance Burden

  • Financial Segmentation: Despite having a free zone registered license, it will be mandatory that all financial records maintained by the business remain separate to indicate free zone and mainland financial records.
  • Dual Regulations: The free zones and mainland have historically operated with separate laws and their application to entities within their respective zones. As such, with the new resolution coming into effect, further clarity will be needed to navigate overlapping free zone and mainland laws (e.g. VAT, employment norms).

What’s Next?

While the resolution is transformative for Dubai and is in alignment with the goals of the Dubai Economic Agenda, D33, undoubtedly consolidating its position among the world’s top economic cities, its full impact hinges on the DET’s forthcoming guidelines.

Al Midfa & Associates is tracking regulatory updates and will provide tailored strategies once the DET clarifies permitted activities.

At Al Midfa & Associates, we offer comprehensive services tailored to meet your needs, ensuring that your rights are protected at every step of the way. Please feel free to contact us.

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Emiratisation Update: Key Changes for 2025

by BUSINESS

As part of the UAE’s ongoing commitment to integrating Emirati nationals into the private sector, significant updates to the Emiratisation policy (as amended) went into effect on January 1, 2025. These changes build on the framework established in 2024 and reflect the government’s dedication to fostering a more inclusive and sustainable workforce. Below are the key updates for 2025 and how they differ from the requirements in 2024.

At a Glance

Aspect 2024 Requirements 2025 Requirements
Scope for Smaller Companies (20-49 employees) Hire at least one Emirati Hire at least two Emiratis
Penalty Per Unmet Quota AED 96,000 (AED 8,000 p.m. for each Emirati position not filled) AED 108,000 (AED 9,000 p.m. for each Emirati position not filled)
Annual Target for Large Firms Maintain a 2% annual increase Continue with a cumulative target of up to 10% by 2026

Key Updates for 2025

Expanded Scope for Smaller Companies:

  • In 2024, private sector companies with 20 to 49 employees were required to hire at least one Emirati national.
  • For 2025, this requirement increases to two Emirati nationals, emphasizing the UAE’s focus on creating opportunities in small and medium-sized enterprises (SMEs).

Higher Penalties for Non-Compliance:

  • The financial penalty for failing to meet Emiratisation quotas will rise from AED 96,000 per unmet quota in 2024 to AED 108,000 in 2025.
  • The administrative fines for circumventing the Emiratisation requirements shall be AED 20,000 up to a maximum of AED 100,000.
  • Penalties will be calculated annually and collected at the start of the following year (e.g., non-compliance in 2025 will result in penalties due in January 2026).

Ongoing Annual Targets for Larger Companies:

  • Companies with 50 or more employees must continue achieving a 2% annual increase in Emiratisation of skilled roles, aiming for a cumulative target of 10% by 2026.

Impact and Benefits

The updated Emiratisation policies are expected to create a multitude of jobs annually for UAE nationals across the specified sectors listed in Emiratisation Policy. This initiative provides substantial employment opportunities and encourages local talent development, particularly in small and medium-sized enterprises (SMEs) and start-ups.

These developments underscore the UAE’s commitment to nurturing local talent and fostering a more inclusive labour market. Companies operating in the UAE must stay informed about these changes to ensure compliance and contribute positively to national development goals.

Businesses that align with these requirements contribute positively to national development goals and can benefit from government incentives such as wage subsidies, tax benefits, and training support.

At Al Midfa & Associates, we are committed to helping our clients navigate these regulatory changes seamlessly. If you have any questions or require assistance with compliance strategies, please do not hesitate to reach out to us here.