court uncourt volume i issue ii
TRANSCRIPT
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I 2014
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YOUR SOURCE FOR LEGAL NEWS
CONTENTS
volume I issue II
page 2DON’T STEAL MY SMELL Sunil Thacker
page 4SHIPPING AND MARITIME LAWS
Surbhi Veer
page 7EVEN CO2 SELLS!
Margarida Narciso
page 9OFFENSES AGAINST THE FAMILY Marwan Mohamed
Dr. Ashraf Ibrahim
page 11ARBITRATION IN THE FEDERAL CODE
Zisha Rizvi
page 13MALTA INDIVIDUAL INVESTOR PROGRAMME
page 14IJARAH AND ARBITRATION
Our Offices: ABU DHABI I DUBAI I SHARJAH I LONDON I LUXEMBOURG I RUSSIA
Court Uncourt 3
http://www.ipo.gov.uk/o20300.pdf, point 22
Contrary to what would be expected, the registration of olfactory mark has
not really achieved the desired success. One argument that can be levelled
against smell marks is that temperature, humidity levels, and wind conditions
can greatly affect both potency of a scent and the scent itself. Several
attempts have been made in past to record these marks at international level
but the success rate has been relatively low. In the United Kingdom, the
paradigmatic examples are “floral fragrance/smell reminiscent of roses as
applied to tyres (no.2001416) and the strong smell of bitter beer applied to
flights for darts (no.2000234).” Both registrations were applied for on 31 October 1994 (the first day of the coming into force of the 1994
Trade Marks Act), and as such, would possibly have been the first marks of this type encountered by the Registrar “these marks
remained active at least until 2012.
Australia’s trademark law defines trademark as ‘A trade mark Is a
sign used, or intended to be used, to distinguish goods or services
dealt with or provided in the course of a trade by a person…’ Section
6 of the law clarifies that sign includes the following or any
combination of the following, namely, any letter, word, name,
signature, numeral, device, brand, heading, label, ticket, aspect of
packaging, shape, colour, sound or scent. Accordingly, Mr. Cee of
JKL Perfumes in UAE can in fact register a scent mark in Australia.
The trademark application must include a graphical representa-
tion of the scent mark. This could be by way of verbal description
of the scent such as “the scent of pine”. Mr. Cee in the present
case however cannot register these scents if they are: i) natural
scents; ii) masking scents; iii) scents which are common to trade;
etc. Examples include vanilla, chocolate, eucalyptus, and scent of
lemon.
Canada’s Federal Government recently introduced Bill C-31 cited
as Economic Action Plan Act 2014 on 28 March 2014. Bill C-31
seeks to amend nearly 40 different statuses. Prior to Bill C-31,
Canada had proposed Bill 8 and Bill 56 on 1 March 2013
‘Combating Counterfeit Products’. Bill C-31 amends definitions of
trademarks to now include scent, sound, taste and texture. Mr.
Cee just got lucky! Interestingly, the word Hong Kong means
‘fragrant harbour’.
Hong Kong Trademark Ordinance (Chapter 559) allows
registration of smells marks. In fact, the Intellectual Property
Department of Hong Kong has on numerous instances
encouraged firms to register smell marks. Smell marks may be
described in the form ‘the scent of newly mown grass’.
South Africa’s Companies and Intellectual Property Registration
Office (the CIPRO) in 2009 issued guidelines with regard to
registration of non-traditional trademarks (Patent Journal no.2,
Volume 42, February 2009). These guidelines provide clarity on
procedures to be followed in registration of non-traditional
trademarks. Although, South African Trademark Act (Law 194
of 1993) can be interpreted to be somewhat restrictive when
considering registration of these marks, it does not prohibit
their registration.
Morocco’s trademark law permits registration of smell marks
pursuant to Article 133 contained in Title V of Indus-trial
Property Law number 17-97 of 2000. It is likely that Thailand
may consider registration of smell marks however further
regulations are awaited in this regard.
Other jurisdictions where registration of smell marks is possible
under respective jurisdiction’s trademark law include New
Zealand (section 5 (1) of Trademarks Act of 2002, see smells)
although registration of smell marks poses practical problems
due to the graphical representation requirement, Singapore
(the Singapore Trademarks Act 1998 does not define what is a
registrable trademark but instead sets out situations in which
application will be refused), Korea (Article 2 (1) (C) of the
Trademarks Act makes reference to odour as eligible mark for
registration), Taiwan (Article 18, Section I, Chapter 2).
Decision 486 of the Common Intellectual Property Regime (the
Communitarian Law) is applicable to Andean Communities
that include Peru, Columbia, Ecuador and Bolivia. Article 134 (c)
recognizes smells and sounds as registrable trademarks. Pepsi-
co’s example above confirms regis-tration of smell marks in the
United States. Part II of this article will explore other interesting
aspects surrounding intellectual property. Until then, Mr. Cee
can start on building his smell mark portfolio across the globe.
4 Court Uncourt
Shipping Law Related FAQsIntroductionTravel and transport by sea is the earliest recorded channels of commerce. Dispute resolution that involved maritime
trade was developed much earlier in history than any other. Maritime law has undergone significant transformations
since then. Though each nation has its own legislation governing maritime matters, it is imperative to note that a
considerable part of this field of law is influenced by international law which includes multiparty international treaties.
SHIPPING AND MARITIME LAWS (Part 1)
Court Uncourt 5
FAQs
1. I intend to start a maritimebusiness venture and plan on buying new ships. How do I go about the registration process?
2. And will my vessel automati-cally acquire UAE nationality?-tion process?
4. And the master? Who canappoint and dismiss him? What are his powers and obligations?
3. What employment laws willregulate my crew?
Law
The UAE Maritime Trade Law (Federal
Law Number 26 of 1981, as amended)
(the ) regulates all shipping practic-
es within the United Arab Emirates. The
Law prohibits ships to fly the flag of the
UAE unless such ship satisfies the condi-
tions imposed under Article 18 to Article
37. That said, certain categories of ships
are exempted from registration proce-
dures. Pursuant to Ministry of Commu-
nications Decree number 110 of 1998,
foreign vessels that are more than 20
years old from date of construction are
prohibited to operate on UAE territorial
waters. Both national and foreign
vessels must have a general and valid
insurance policy to classify for operation
in UAE. The Marine Affairs Department
at Ministry of Communication oversees
the registration process and affairs
related to maritime industry. Fishing
ships, pleasure liners, or commercial
ships that weigh less than 10 tons are
exempted from register. Also, vessels,
barges, lighters, tugs, boats, cranes,
diver's boats, freighters and other
floating installations within UAE's ports
are also exempt from registration.
Tankers that are over ten years old
cannot be registered.
Article 27 of the Law sets out the regis-
tration procedure and requires every
applicant to submit a)name of the ship;
b) former names of ship (if any); c) date
and place of building, name and
address of factory or shipyard where the
ship was built; type of ship, loading
capacity and related measurements, d)
names of owners, their occupation,
religion, nationality, and address, e)
name of owning company, company's
business activity, its headquarters,
details of management, f) name of ship
master, his nationality, residence and
qualifications, g) name of carrier and
related details, h) mortgage details, etc.
In a recent decision by the executive
council resolution number 11 of 2013
issuing the implementing bylaw of law
number 11 of 2010 concerning the
licensing of vessels in the Emirate of
Dubai, the role of Dubai Maritime City
Authority has been strengthened,
allowing it to set out licensing frame-
work for vessels operating within the
territorial waters of Emirate of Dubai.
The decision also encompasses matters
relating to transfer of vessel ownership,
amendment of license, license cancel-
lation, loss or damage, etc.
In line with provisions contained in
Article 14 of the Law, a ship acquires
UAE nationality if it is registered within
UAE’s ports or is owned by individuals
or a company possessing the said
nationality. As long as corporate
entities maintain the respective share-
holding structure set out under UAE
Commercial Companies Law (Federal
Law number 8 of 1984, as amended),
ships registered under such entities can
acquire UAE nationality. In cases where
ship is owned by a body corporate
wherein more than one state has shares
in company’s capital, the ship in such
event acquires nationality of partner
states in accordance with the interna-
tional treaties. Ships that have been
confiscated for breach of law and stray
ships will automatically acquire nationality.
Article 165 of the Law sets out that “the
rights and obligations of the crew shall
be defined in the bylaws in force on the
vessel, in such a manner as is not
contradictory with the contracts of
employment made therewith”. With
the exception of overtime provisions,
UAE Labour Law (Federal Law number
8 of 1980) governs employment
The master shall be appointed or
dismissed by the operator. The Law sets
out that the master shall be solely in
command of the vessel comply with
the directions of the operator, and
direct the sea voyage. When in
command of the vessel the law
provides that the master shall take into
account technical principles accepted
in navigation by sea and international
conventions, and the provisions in
force in the State in whose waters the
vessel is located. The master also must
maintain the vessel in seaworthy condi-
tion and ensure that there are sufficient
supplies for the voyage. The master
must personally take over the direction
of the sailing of the vessel upon the
entry or exit of ports, anchorages or
rivers, and generally in all circumstanc-
es where navigation is subject to partic-
ular difficulties, even where he is
required to seek the assistance of a
pilot. The master also shall have the
power of authentication of documents
and carry out all the administrative
questions on board the vessel and is
aspects. and stray ships will automatically
acquire nationality.
also entitled to impose disciplinary
penalties in accordance with the rules
and conditions set forth by ministerial
resolution.
Court Uncourt 6
FAQs
5. What are my rights andduties if I sign a maritime trans-port contract?
6. What happens in case ofaccidents or collision?
Article 318 to Article 326 of the Law
regulate and cover aspect pertaining to
accidents or collisions. The UAE Civil
Code also covers matters relating to
collision. This question however
will be discussed in a greater detail
in my next article.
A contract of maritime transport is a
contract whereby the carrier unde takes
to carry goods from one port to another
for consideration agreed between the
carrier and the shipper. The same must
be evidenced by a bill of lading and the
carrier of his representative must issue a
bill of lading upon the request of the
shipper. The bill of lading must set out
relevant details as to the contract includ-
ing but not limited to the name and
address of the carrier, the shipper and
consigner, port of loading and port of
arrival, place of issue and date of the bill.
The rules and conditions set forth by
ministerial resolution.
7 Court Uncourt
“”T
It is the striking imagery of global warming that opens our eyes to the idea of climate change. The melting snow caps, the stranded polar bears, declining air quality and the rising ocean temperatures
encouraged dialogues about the changing face of our planet.
he US government is divided when it comes to acknowledging the climate change or the effects of global
warming. On the other hand, the EU nations are already in a two year trial phase of the European Trading
Schemes, a scheme aimed at minimizing the carbon dioxide and related emissions. The rising prices of energy are
having a global impact and people are concerned if not frightened, about their own carbon productions.
The United Nations Framework Convention on Climate Change (UNFCC), an international treaty with 192 parties
introduced the Kyoto Protocol (the Protocol) that came in force in the year 2005. This treaty imposes binding obligations
on developed nations to reduce release of greenhouse gases such as Co2, hydro fluorocarbons (HFCs), and
perfluorocarbons (PFCs). The Protocol ackfor the significant levels of greenhouse gas releases in the atmosphere.
Historically and statistically, US is the nowledged that the developed countries are principally responsible highest emitter
of greenhouse gases and although it is a signatory to the Protocol, it has not ratified the same till date. Consistent with
the Protocol’s objectives, a number of developed states committed to reducing Co2 and related emissions. These
commitments are legally binding. Developing economies do not have binding targets under the Protocol but have
committed to significantly reduce their carbon creation. After much debate and consideration, it was accepted by
member nations that Carbon trading was the preferred method of regulating carbon emissions rather than carbon
taxation.
Carbon trading is the name given to a system to control carbon dioxide emissions. This system is based on the premise
where a limit is set on carbon dioxide emissions by governments or international organizations. Carbon trading allows
developed nations to trade their commitments under the Kyoto Protocol. They are permitted to trade their carbon
emission quotas among themselves and also receive carbon credits for financing projects in developing countries that
are aimed at reducing carbon emissions. The countries that are legally bound by the limits set and agreed to by the
Protocol are referred to as compliance markets. Within the compliance markets, the responsibility to reduce carbon
emissions falls on individual industries and companies to emit less carbon into the atmosphere. Let us illustrate this with
an example:
Company A and Company B are both allocated 100 carbon credits which permits them to emit
100 tons of carbon dioxide. Company A invests in environment friendly machinery and installs
upgrades to ensure that it only emits 90 tons. Company B has not implemented either of the
options as they cannot afford a refurbishment of their machinery. They are emitting 110 tons
of carbon dioxide which is 10 tons above their allowance. Now in order to comply with the
Protocol and to ensure that it satisfies the rules governing carbon emissions, Company B can
buy carbon emissions allowance (in cash) from Company A. And this in turn helps Company A
recover some of the monies spend on the upgrade of their machines.
Court Uncourt 8
2 SCAMwatch, WesternField Holdings Inc. Carbon Credit Investment Scams,
http://www.scamwatch.gov.au/content/index.phtml/itemId/781866
The accused were sentenced to prison for a combined 35 years. This case also resulted in an overhaul in the law
surrounding carbon credit trading in the UK and other EU nations. The onus of paying VAT now lies on the seller of
carbon credits rather than the buyer.
http://cases.iclr.co.uk/Subscr/search.aspx?path=WLR%20Dailies/WLRD%202011/wlrd2013-503
3
EVEN CO2 SELLS!Carbon credits have thus created a market by giving a monetary value to the cost of polluting the air. There
are a significant number of national and regional carbon markets that are currently in the process of being
developed.
In addition to the above example, individuals, groups and organizations can also trade in carbon credits. The
markets that cater to conscientious citizens and organizations that are looking to be carbon responsible can
trade within the voluntary carbon markets (i.e. markets other than compliance markets that are not legally
bound to adhere to a set limit on emission.
All said these carbon credit transactions have raised alarms in the global trade community. It has been argued
by economists that if the carbon market is left unregulated and allowed to operate freely, there will be no
significant decrease in carbon emissions. They believe that there are not adequate incentives for companies
to reduce emissions under the principle of carbon trading. It is a difficult concept to implement and regulate
the voluntary carbon market. Lack of coherent regulations, absence of unified authority to monitor and
control the carbon trade may become a boon for a few such as bankers and traders but leave a far more
damaging effect on many in the global community.
Clearly, unlike traditional commodities, carbon emissions are not very well understood by buyers and even
some sellers. This lack of knowledge and understanding makes carbon emission trading highly vulnerable to
fraud. This form of trading is still in its infancy and it is certain that as this market develops so will the
complexity of trading. The carbon trading market can be fraudulently manipulated by claiming more carbon
credits from certain projects that were actually obtained. There have been a number of instances where
carbon credits have been sold to people with good intentions, but in essence, they never existed or belonged
to someone else entirely (and not the person who posed as the seller). The complexity of the carbon markets
has been taken advantage of by companies that have made false claims about the financial and
environmental benefits of investing in carbon emissions to make such investments look attractive.
An Australian company in the year 2009 ran a telemarketing campaign, claiming that carbon credits were the
future and offering high returns on their investments. The company was prosecuted for having defrauded
investors of over 3.2 million USD2.
It has been reported that the weak regulations in this trading sector have been taken advantage of to carry
out money laundering, tax fraud and securities fraud. In Regina v Dosanjh and others, the Southwark Crown
Court in London found three defendants who had established dummy companies that were seemingly
importing carbon credits into the UK, guilty of defrauding the UK government of 39 million pounds of VAT
(Value Added Tax) in just 69 days of trading. The stolen VAT was then transferred to bank accounts in the UAE
to launder and legitimize3.
The complex nature of the carbon credit market makes it easier to manipulate. It is critical that legal regulation
is more stringent when it comes to the regulators and traders being permitted to trade in this commodity.
This market is bound to get more multifaceted in the near future and there is a need for rigorous domestic
and international legal review to protect the companies and individuals who are looking to be
environmentally conscious. Today Co2 sells but what do can we expect the future to emit?
9 Court Uncourt
T he enactment of penal laws requires an initial policy determination as to (1) those social and
individual interests which should be protected by the criminal processes and (2) the kinds of
conduct that should be proscribed.i
In determining whether criminal sanction should be
imposed on accused, the courts take in to account several
factors including the intention of the accused, willfulness,
circumstantial evidence, and witness testimony to name a
few. My research on prevailing criminal laws of both – devel-
oping as well as developed nations seems to suggest that
new forms of crime are on the rise and the courts continue to
apply the guilty mind (or, mens rea) test to establish the crim-
inal intent. Whilst crimes such as white collar crimes, informa-
tion technology related crimes are on rise,
In the present article, I discuss the law relating to family offenses in the United Arab Emirates. It
was the intention of UAE’s legislature to protect interests of family from crimes affecting the
families given that these crimes have a long-bearing effect on families in general and
communities at large. The above assertion is based on the fact that although a crime may be
committed against victim, it is essentially a crime against the community whose law is violated.
Part 6 (Article 327 to Article 330) of the UAE Penal Code (Federal Law Number (3) of 1987, as
Article 327 of the Law aims at protecting interests of families as well legal guardians of a
newborn child. It is provided that i) abduction of newborn children from his or her legitimate
guardian; ii) concealing a newborn from his/her legitimate guardian; iii) substituting a newborn
child with other; or iv) falsely handing over a newborn to persons other than newborn’s
legitimate parents will result in imprisonment. Accordingly, the above Article requires
involvement of two physical acts – a) it involves a newborn; and b) taking the newborn away
from legal custody of its parents or legal guardian making it difficult to recognize the newborn
in future. In the event there is evidence to prove that the said child was born dead, the offender
will be subject to a two months imprisonment or a fine of up to 1000 Dirhams, or both.
Cases where guardian of a child abstains or refuses to deliver the child to persons legally
entitled to the child’s custody pursuant to a court order is discussed under Article 328 of the
Law. Guardian’s failure to restore custody to persons legally entitled may result in such
guardian’s imprisonment or fine. The degree of punishment falls in the present case and the
main reason underlying lower punishment appears to result from the fact that a guardian has
fiduciary duty towards the child and in his capacity the guardian has the choice to raise the
child as long as the guardian agrees to handover child’s custody to his legitimate parent or
OFFENSES AGAINST THE FAMILY
one area of crim-
inal law that has failed to gain the much needed importance
is the offenses against the family.
amended) (the Law) dealing with family related offenses is discussed below:-
guardian as per court order or certificate from relevant authority.
Court Uncourt 10
i ster, Henry H. Jr.; Freed, Doris Jonas; 32 U. Mo. Kan. City L. Rev. 33 (1964)
a. The complainant must have an enforceable judgement for
alimony or maintenance;
b. The offender must refuse payment to complainant after three
month warning/notice;
c. Victim must register a complaint; and
d. The parties must have submitted a claim before personal status
court and exhausted all procedures set forth by the law.
Disputes relating to child custody generally fall within the jurisdiction of the personal
affairs court, but matters bearing criminal overtone may be referred to the court of
misdemeanors provided however that the claimant holds an enforceable judgment
to claim legal custody of the child.
Abduction of minors by parents or grandparents with or without deceptive intent or
coercion will result in imprisonment or fine per provisions of Article 329 of the law. In
other words, if a parent or grand-parent abducts child or grandchild personally or
through others from persons legally entitled to be guardian of the child pursuant to a
court order or by a competent authority, such parent or grand-parent will be subject
to above punishment. This means that the intention of kidnapper is to bring an end to
the legal relationship existing between the child and his/her legal guardian.
Finally, Article 330 deals with situations where persons against whom a judgment
towards payment of maintenance or alimony has been pronounced and such persons
fail to comply with the terms of said judgment within three months from the date of
notice being served. This Article punishes the offender with imprisonment not exceed-
ing one year or fine of AED 1000/- or; both. In the event the offender settles the
amount due against him or produces guarantee that is satisfactory to the complain-
ant, the penalty provisions shall not apply to the offender. An analysis of Article 330
suggests that these four elements must be involved to constitute a crime:-
Before I conclude, it is worth mentioning that except for provisions contained in
Article 327, the complainants must register a complaint consistent with Article 10 of
the UAE Criminal Procedures Code (35 of 1992) which sets out that criminal action
must be based on an written or oral complaint by the victim or his/her legal repre-
sentative and within three months from the date of event in matters relating to
a) refusal to handover the custody of children to their legally entitled guardians; and
b) refusal of payment of alimony, maintenance, or housing allowance to wife or
person named under court order.
11 Court Uncourt
In our previous newsletter issue we addressed the legal aspects of arbitration under the UAE Civil
Code and further understanding legislature’s intention in developing arbitration as alternative
means of resolving disputes. The article clarified that parties choosing to opt for arbitration would
avoid the lengthy court procedures in addition to long-drawn appeal procedures adopted by
courts across the United Arab Emirates. The earlier article also aimed at examining
the role of national judiciary in certifying an arbitration award and instances where courts may
consider applications as to invalidity of arbitration claims.
The legislature has and continues to promote, foster and
develop arbitration system to lower the burden of courts. To
this effect, Article 3 (d) of the DIAC Statute Rules (as amend-
ed) impose an obligation on Dubai International Arbitration
Centre to promote awareness of methods of alternative
dispute resolution through conferences, symposia, work-
shops, training courses, specialist publications as well as
printed materials. Arbitration continues to develop and apply
to commercial and civil matters except for certain matters
that may be referred exclusively to state courts.
In deciding validity of an arbitration award, a judge cannot in any manner discuss arbitrator’s under-
standing of the facts and laws. This precedent rule however is not absolute since the legislature allows
judge while considering the aspect related to nullification of arbitration award to reasons provided
under Article 216 (1) of UAE Civil Procedure Code, Federal Law No. (11) Of 1992.
Article (216/1) states: “The parties to a dispute may, at the time of consideration of the arbitrator’s award
, request the nullification of the same in the following events:
a. If the award was issued without, or was based on invalid terms of reference or an agreement which
has expired by time prescription, or if the arbitrator has exceeded his limits under the terms of reference.
b. If the award was issued by arbitrators who were not appointed in accordance with the law, or by only
a number of the arbitrators who were not authorized to issue the award in the absence of the others, or
if it was based on terms of reference in which the dispute was not specified, or if it was issued by a
person who is not competent to act as an arbitrator or by an arbitrator who does not satisfy the legal
requirements. If the award of the arbitrators or the arbitration proceedings become void and such
voidness affected the award.”
The Dubai court of Cassation (case 32 of 2009 and dated 29 March 2009) has held that
“The UAE Civil Procedure Code contains limited articles that define the scope and extent to
which the judge can discuss the nullification of an arbitration award. The basis and limit to which parties
may dispute or challenge nullification of arbitral award are contained in Article 216 of the Civil Proce-
dure Code”. This Article now considers two main issues that one must consider prior to challenging
nullification of arbitration award.
ARBITRATION IN THE FEDERAL CODE
Court Uncourt 12
Issue I: Arbitration awards are final and binding and conse-quently cannot be challenged.
The prevailing judicial system in the United Arab Emirates
follows a federal court structure with a final court (Court of
Cassation in Abu Dhabi) with the exception of Dubai and Ras
Al Khaimah that do not form part of the federal judicial
system. The court structure in Dubai is comprised of Court of
First Instance, the Court of Appeal and the Court of Cassation.
With regards to arbitration, the UAE currently does not have a
formal legislation dealing with Arbitration. Accordingly, the
UAE Civil Procedures Code governs arbitration. Article 217 of
the Civil Procedures Code confirms that ‘the award of
arbitrators may not be contested by any manner of appeal’.
That said, it is pertinent to clarify that an application for nullifi-
cation of arbitration award is not considered as an appeal and
this has been upheld by the apex court citing Article 213 (3),
Article 216 (1) and Article 217 (1) of the Civil Procedures Code
clearly citing that ‘arbitration award may not be contested in
any manner of appeal decided by law.’ (Case 387 of 2007 and
Case 414 of 2001 dated 17 February 2001). It is clear from
above that legislature’s intention was to ensure timely
enforcement of arbitration award in light of very objectives of
arbitration system that aims at quicker means of dispute reso-
lution.
Issue II: When can a Party claim nullification of arbitral award?
The legislature’s decision under Article 216 of the Civil
Procedure Code suggests that a party to arbitration dispute
may at time of consideration of arbitration award request the
nullification of the award. This means that a party can request
nullification of arbitral award during the course of ratification.
Perhaps the reason behind binding the ratification demand
and the nullification of award request together is because the
need to nullify an award does not usually arise unless a
request for ratification and execution is demanded.
However there is nothing that prevents a party from
challenging nullification without or prior to award being
ratified. This has been confirmed by Court of Cassation (Case
387 of 2001 and 404 of 2001 dated 17 February 2002) which
sets out “Application for nullification of arbitration award
could be either by filing a claim for nullification, or by and
opposition filed against the original request for ratification.”
This article now examines situations where arbitral awards can
be set aside. Consistent with the provisions contained in the
civil law, a claim for nullification of arbitration award can be
based on two aspects – a) the arbitration agreement itself
and; b) claim based on arbitration proceedings.
A) Claim to set aside arbitration award based on arbitration agreement: Such claim generally arises:-
i) If the award was issued without a valid arbitration
agreement between the parties;
ii) The award is based on arbitration agreement that is
invalid – for instance, contract that has not been signed or
cases where contract does not refer to arbitration;
iii) If the award is based on agreement that is no longer
valid on account of lapse of time or is ultra vires;
iv) If the arbitrator exceeded its authority in addressing
or deciding matters that were outside arbitrator’s scope; or
v) Award violates public order.
B) Claim to set aside arbitration award based on arbitration proceedings: Such claim generally arises:-
1) If the award results from irregular composition of
arbitral tribunal or cases where arbitrators are not appointed
in accordance with the law, for instance act of arbitrator to
unilaterally proceed with arbitration proceeding with arbitra-
tion despite an objection being filed against his appointment.
2) If the award was issued by one arbitrator in the
absence of the other(s) without having any authorization to
decide solely.
3) If the awards fails to define terms of dispute.
4) If the award issued by a person who is not compe-
tent to act as an arbitrator.
5) Failure by arbitrator to afford opportunity of being
heard to a party to arbitration claim.
6) Lack of capacity to enter in to arbitration agree-
ment.7- If the arbitration proceedings become void or cases
where failure by arbitrator to adopt correct procedures affects
the award.
To conclude, arbitral awards can only be challenged on
grounds discussed above. The next article will address
number of key issues that are beyond the scope of arbitration
and in specific, I will discuss mediation and conciliation.
Court Uncourt 13
T
Contribution to National Development and Social Fund of €650,000 for the main applicant
Contribution for spouse and minor children (if applicable): €25,000 each
Contribution for dependent children 18 to 26 years or dependent parents over 55 years (if applicable):
€50,000 each
MALTA INDIVIDUAL INVESTOR PROGRAMME
he new Malta Individual Investor Programme is an attractive proposition for wealthy non-EU citizens who wish
to benefit from citizenship in Malta, a highly respected, stable and neutral EU Member State. EU citizenship
confers a number of important rights, including the right to move freely in all 28 EU countries. The Individual
Investor Programme provides for the granting of citizenship of Malta by a certificate of naturalisation to foreign
individuals and their families who contribute to the economic development of Malta. Applicants must make a signifi-
cant contribution to the National Development and Social Fund established by the Government and hold residence
status in Malta for a period of twelve months immediately prior to the issuing of the certificate of naturalisa tion. There
is also a strict due diligence process to ensure that only highly reputable applicants are admitted.
The applicant must also commit to retain a residential property in Malta for a period of at least 5 years, either through
the purchase of property, for which the minimum value must be at least €350,000 or through leasing a property for
which the minimum annual rent must be at least €16,000.
There is also a requirement to invest a minimum of €150,000 in Government approved financial instruments, which
must also be maintained for a minimum period of 5 years.
For further information about Malta’s Individual Investor Programme and how we can be of assistance to you through
contact our Immigration Practice Group today.
The minimum contribution levels that must be met to qualify under the Programme have been set as follows:
14 Court Uncourt
Q
IJARAH AND ARBITRATION
uestions that are generally debated these days within business and legal diasporas pertain to the
recession aftermath.
These questions seek to inquire matters such as i) what led to the recession, ii) could it have been prevented and;
iii) what do we learn from this precedent? For instance, let us consider the case of Royal Bank of Scotland. The
bank’s market valuations soared to extreme high levels until 2008 making it a global banking powerhouse. The
2008 crisis however changed the bank’s financial position leading it to collapse in the arms of the British state for
a high price of USD 32 billion. Economists and experts speculated and continue to comment that this event has
marked the biggest failure in UK’s banking sector.
Many of the property investors in today’s market turn to a bank to avail mortgage facility. The cumbersome
administrative policies of banks backed with detailed AML and KYC policies leave investors with very little time
to carefully read through the fine print in mortgage contracts and understand the implications that may arise. In
this article we examine the implications arising out of a commonly used financing module referred to as ‘ijara’
within the Islamic finance domain.
The banking sector operates across several verticals, one such vertical being Islamic finance. The products
offered under Islamic finance are designed or structured under the fabric of Sharia Law. Sharia is not a codified
law but inspired by religious teachings and the holy book, the Quran.
On a more specific note, ijara by way of an explanation means lease, rent or wage. The concept of ijara refers to
selling the benefit of use or service for a fixed price or wage. Pursuant to this form of an arrangement, bank
makes available to its customer the use or occupation of assets (purchased by customer and financed by bank)
for a fixed period and price.
Within the United Arab Emirates, ‘ijara’ has been linked to real property transactions whereby banks enter into a
forward lease agreement to finance its clients’ property. Under this arrangement, property is financed by the
bank on long term basis and the borrower pays fixed monthly rentals. The lease rentals are structured in a
manner that upon conclusion of the lease term, the bank recovers purchasing cost and profits. In return, the
borrower gains title to the property by way of a gift or related disposition.
Court Uncourt 15
To illustrate a case study, a property investor invoked arbitration clause to claim compensation worth AED 12mil-
lion against a property developer for delaying handover of a commercial property by more than five years. The
claim for compensation included borrowing costs incurred by the investor towards ijara form of mortgage availed
from one of the local banks. In the present case, the developer challenged the legal capacity of the investor. The
developer relied upon the sale and purchase agreement (the SPA) and cited that the mortgaging bank was named
as the purchaser under the SPA. Accordingly, the investor had no valid agreement with the developer and conse-
quently it had no power to bring proceedings based on arbitration clause under the SPA. The legal question that
arises from above case study is whether the investor infact has any legal right to bring an action on his own?
Article 258 (1) of the UAE Civil Code states – “The criterion in (the construction of) contracts is intention and mean-
ings and not words and form’. Bank’s principle business is that of accepting deposits and granting loans. Under an
ijara agreement, bank does not intend to assume ownership rights in the property purchased but instead acts as a
financer to facilitate the transaction on behalf of its borrower. Article 245 of the UAE Civil Code sets out “In the case
of commutative contracts to derive benefits from the property, provided the conditions for validity thereof are
satisfied, the person dealing in the property shall have the obligation to deliver it to the usufructuary, and the
usufructuary shall have the obligation to deliver considerations for the benefit of the owner of the property’.
A Dubai court recently voided an ijara agreement on the grounds that it represented not a lease, but a sale contract
and the asset being sold was not completed at the time developer started collecting payments. A similar decision
was passed by Dubai courts in 2010. In appeal number 268, 290/2209, the Dubai Court of Cassation has held that
if ‘relationship between parties extends to more than what is written on paper, it is at the discretion of the judge
to consider the relationship between the parties and determine the rights of each party.’ Article 248 of the Civil
Code permits a judge to treat a contract void if such contract is made by way of adhesion or contains unfair
provisions.
In terms of the SPA, it may be argued that both bank and investor share similar set of obligations. Whilst bank
continues to fulfill payment obligations to developer, the investor continues to pay consideration to bank in
addition to service charges and maintenance fees. Importantly, investor has ‘inherent interest’ in the property,
whereas bank does not. The investor is in fact the successor in title and it can be argued that an assignment exists
by virtue of Article 1109 of the UAE Civil Code. The successors and assigns provision is part and parcel of commer-
cial contracts and inserted in almost every agreement. An assignment is effected once a party transfers its right to
a third party allowing third party to accept other party’s performance. To this effect, Article 251 of the UAE Civil
Code states that “If the contract gives rise to personal rights connected with a thing transferred thereafter to a
special successor, such rights shall be transferred to such successor at the time at which the thing is transferred if
it is one of the appurtenances thereof and the special successor was aware of those rights at the time of transfer
of the thing to him.”
Article 254 of the UAE Civil Code reads: “(1) It shall be permissible for a person to contract in his own name impos-
ing a condition that rights are to enure to the benefit of a third party if he has a personal
interest, whether material or moral, in the performance thereof.
(2) Such a condition shall confer upon third party, a direct right against the undertaker for the performance of those
conditions in the contract enabling him to demand performance thereof unless there is a contrary agreement, and
such undertaker may rely as against the beneficiary on any defences arising out of the contract’
(3) The person making the condition may also demand the performance of the condition in favour of the benefi-
ciary, unless it appears from the contract that the beneficiary alone has such a right.”
The Dubai Court of Cassation delivered a landmark decision in 2000 (Contract of Supply and Installation of
Mechanical, Electrical and Sanitary works, between the Main Contractor and a Subcontractor) whereby it ruled that
if the arbitration agreement is incorporated in the main contract, and one of the parties to the main contract
assigns its rights and obligations under such contract to a third party who consents to the assignment, whether in
an express or implicit manner, the assignee will replace the assignor in his commitment to the arbitration clause.
(Dubai Court of Cassation – Cassation Appeal No. 537 year 1999 – 23/04/2000).
Litigation involving banking and financial claims may sound stressful to some but the courts in UAE have restored
investor’s sentiments by applying the letter of law.
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