LEGAL

SOLUTIONS
BASED ON
ALTERNATIVE
LEGAL ADVICE
LO 4
DIFFERENT LEGAL • The UAE is a federation of seven self-governing
FRAMEWORK: emirates.
UAE LEGAL • The constitution allows for powers allocated to
SYSTEM the federal institutions and otherwise the
individual emirates have the authority to make,
implement and enforce the laws.
• The highest federal authority is the Supreme
Council of Rulers which includes the rulers of
the seven emirates. This body elects the
president (who has always been the ruler of
Abu Dhabi).
 The president appoints the prime minister
FEDERAL and Council of Ministers, which drafts
SUPREME decrees and decisions.
COUNCIL

The Federal Supreme Council has

legislative and executive roles.

It ratifies federal laws and decrees, plans

general policy and sanctions and may
change the prime minister on the
recommendation of the president.
 FEDERAL • The FNC has a consultative role and examines
NATIONAL and amends federal legislation. There are 40
COUNCIL (FNC) members appointed for a 2 year term.
• Abu Dhabi and Dubai – 8 members
• Sharjah and Ras Al Khaimah – 6 members
• Ajman, Um Al Quwain and Al Fujairah – 4
members
• From October 2006, an electoral council of
selected citizens elect half the members of the
FNC; the remaining half are appointed.
PROVINCIAL AND
LOCAL
GOVERNMENT • Each of the emirates has its own government
which functions alongside the federal
government.
• Municipalities administer the main cities and
they each have a municipal council. Local
departments carry out administrative functions.
 • For all emirates except Dubai and Ras Al Khaimah, which
have their own local and appellate courts.
FEDERAL • A dual system of: (1)sharia courts (administered by each
JUDICIARY emirate) for criminal and family matters, and
• (2) secular courts for civil matters.
 • Courts of first instance: all claims from commercial
matters to maritime disputes.
• Each emirate has a Federal Appeal Court. An appeal may

FEDERAL be made within 30 days of the date of judgment on

factual and/or legal grounds.
CIVIL COURTS • Highest court of appeal is the Court of Cassation, also
known as the Federal Supreme Court. It is located in
Abu Dhabi and consists of 5 judges appointed by the
Supreme Council of Rulers.
• It hears disputes between emirates or the federal
government and an emirate.
 • The constitution provides for the judiciary to be

JUDICIARY independent.
• However, judicial decisions may be reviewed by the
executive branch. The judges are 50% ex-patriates and
serve at the discretion of the government. Citizens
usually hold permanent positions.
CIVIL LAW

• Most legislation is a mix of Islamic and European concepts of

civil law, with a common root in the Egyptian legal code
established in the late 19th to 20th centuries.

• The French civil law system was adopted rather than the
common-law system in the UK.

• There is specific legislation for agencies, company law, labour

law and intellectual property plus civil and commercial codes.

• The basic legal principles are evolving over time and in

response to new developments.

• Commercial matters are dealt with by civil courts or

arbitration tribunals.
 Charging of interest is forbidden
SHARIA
INFLUENCE ON
COMMERCIAL Risk should be shared in profits or losses according
to amount invested (as interest cannot be paid)
CODES
Uncertainty in a contract is forbidden. All parties
must know all terms and the amount of goods or
capital agreed at the beginning.

Each party must have the legal capacity to

understand and assume the contractual obligations.

Each party must consent and enter into the contract

of their own free will and not be subject to duress
or coercion.
CIVIL RIGHTS • The constitution provides all persons are equal before
the law and there should be no discrimination.
INSOLVENCY LAW IN THE UAE

• Applies to companies incorporated following the Commercial Companies Law, corporate

entities and individuals trading for profit eg lawyers and accountants, it does not cover
companies incorporated in free zones which have their own insolvency law.
• Insolvency is established when the assets of a debtor do not cover its current liabilities.
This description is to encourage companies in debt to restructure at an early stage.
COURT PROCEDURES: 1. RESCUE OPTION (A)

• Protective Composition Procedure (PCP) – to be used when:

(1) a company is in financial difficulties but not yet technically insolvent, or
(2) Cannot pay its debts for less than 30 consecutive business days and proposes a
compromise with its creditors
• An application for PCP can be made by the debtor company or by the Court but not by
a creditor. A shareholders’ resolution supporting the application must be submitted to
the Court.
COURT PROCEDURES: 1. RESCUE OPTION (A) - PCP

• If PCP application is accepted, an expert appointed by the Financial Restructuring

Committee (FRC) supervises the management of the company for an observation period
of up to 3 months.
• Unsecured creditors may submit proofs of claims but may not take recovery action.
Secured claims may be enforced with the permission of the Court.
• During the PCP, the company continues to manage its business under the supervision of
the FRC officeholder. He/she has wide powers to preserve assets and to continue the
business.
COURT PROCEDURES: 1. RESCUE OPTION (A) - PCP

• The company produces a restructuring plan for up to 3 years. The Court reviews it and
agrees that creditors’ meetings may be called to vote on the plan. To be approved, a
majority of two-thirds in value of each class must vote in favour. If successful, the minority
dissenting group are also bound by the plan.
• A supervisory creditor committee may be appointed, including a regulator. The role is to
monitor the implementation of the plan and report to the Court, for the benefit of the
general body of creditors.
COURT PROCEDURES: 2. RESCUE OPTION (B)
BANKRUPTCY
• ‘Rescue within bankruptcy’ is available within formal bankruptcy proceedings
• A bankruptcy application must be made to the Court if for 30 consecutive business days:
(1) A company has failed to pay its debts, or
(2) Its assets do not cover its liabilities.
A shareholders’ resolution supporting the application must be submitted to the Court.
• A creditor may petition the Court for a company’s bankruptcy if a statutory demand for
AED100,000 has been served and remained unpaid for 30 consecutive business days.
COURT PROCEDURES: 2. RESCUE OPTION (B)
BANKRUPTCY
• The Court may issue bankruptcy proceedings in certain circumstances. It may also
postpone proceedings for up to one year if it is in the interests of the national economy
and there is evidence that the company can continue to trade.
• If the application is accepted by the Court, an expert appointed by the Financial
Restructuring Committee (FRC) and, if necessary, a supervisory judge(s) will take control
of the company.
• The entry into the bankruptcy process is made public and unsecured creditors may
submit proofs of claims but may not take recovery action. Secured claims may be
enforced with the permission of the Court.
COURT PROCEDURES: 2. RESCUE OPTION (B)
BANKRUPTCY
• The officeholder takes over the management of the business and has wide powers to
preserve assets and to continue (or discontinue) the business.
• Creditors’ committees may be formed to review any restructuring plan and to
communicate with the wider creditor group.
COURT PROCEDURES: 2. RESCUE OPTION (B) OR
LIQUIDATION
• The officeholder prepares a report to state:
(1) to advise whether a reasonable prospect of restructuring ( with consent of the company)
(2) whether a restructuring plan should be prepared for submission to the creditors
(3) Whether a part of the business could be sold as a going concern in the event of liquidation
• The report is provided to the creditors ahead of a meeting of all parties where the Court will
order the production of a restructuring plan for creditors to vote on, OR the liquidation of
the debtor company.
UAE DIRECTORS

• If a director, general manger or shadow director has contributed to the insolvency of a

company, they may be subject to civil and criminal liability.
• Fraudulent conduct – penalty of up to 5 years in prison and fines up to AED 1 million.
• Mismanagement or wrongful conduct – lesser penalties and may have to contribute to
the losses of the company if creditors recover less than 20% of debts owed.
• Directors guilty of the above offences may be disqualified from any administration role in
a company for up to 5 years and subject to fines. A register to be held by the
Government.
 A trade union promotes the interests of its
members, who are workers in a particular
industry.

THE ROLE OF They are independent of any employer.

TRADE UNIONS
A trade union will lobby and campaign for laws
to be changed to benefit their members and,
when successful, gains new rights for all workers.

In this way, a strong trade union movement

benefits all workers in a country.
 Negotiate agreements with employers on pay and
conditions

Discuss major changes such as large

redundancies
TRADE UNION
ACTIVITIES Discuss members’ concerns with employers

Accompany their members in disciplinary and

grievance procedures

Provide their members with legal and financial

advice
 • Takes place with employers when a specific union is
recognized as representing the workers in that
industry.
• Meetings are held between employers and the union
representatives about members’ pay and conditions.
COLLECTIVE
• Most employers recognize unions voluntarily. If they
BARGAINING employ more than 20 workers and refuse to do so,
then trade unions can ask for recognition through a
legal process, when a majority of the workers are trade
union members or support recognition in a ballot.
 • A worker has a legal right to join or to not join a trade
union wherever they work.
• They are protected from any disadvantage related to
their membership in a trade union.
• An employer may not refuse to employ a worker or
WORKERS AND dismiss him/her or select a worker for redundancy
TRADE UNIONS because of their trade union membership or activities.
• An employer must allow members time off to attend
meetings or to vote in ballots.
CITIZENS ADVICE

• A network of 316 independent charities in the UK give free, confidential advice to help
people with financial, legal, consumer, housing and other problems.
• There are 2 aims:
(1) ‘to provide the advice people need for the problems they face’, and
(2) ‘to improve the policies and principles that affect people’s lives’ – to stop problems
arising
• It is government funded.
• It is the largest independent advice provider in the UK.
AIMS AND PRINCIPLES

• A free service
• Confidentiality
• Impartiality
• Independence
• Each centre must follow these principles or risk being excluded from the national group.
• They are mainly funded by the government but are critics of government policy.
ADVICE WORK

• Advice given in the offices, in community venues, in people’s homes, by phone, by email, and online via a
Webchat service and the public site, ‘Advice Guide’ on issues, such as:
• Debt management (2)
• Welfare benefits (1)
• Housing (3)
• Immigration and asylum
• Employment
• Consumer complaints
• Landlord-tenant disputes
PARTNERSHIPS

• Advice partnerships with:

• Macmillan – cancer
• The charity Shelter –housing and homelessness
• Pension Wise – pensions

• Information and issues from the people who use the service informs policy changes.