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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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