DIFC to roll-out new legal framework

THE DUBAI International Financial Centre (DIFC) is attempting to counter doubts over its independence with a series of new laws to be announced in the coming months.

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By  Anil Bhoyrul Published  July 3, 2005

THE DUBAI International Financial Centre (DIFC) is attempting to counter doubts over its independence with a series of new laws to be announced in the coming months. Last week, five laws were enacted to deal with legal, employment and security issues in the DIFC. A statement from the DIFC, which is striving to be a regional financial hub and set up an international-style capital market, said the laws were enacted by His Highness Shaikh Maktoum Bin Rashid Al Maktoum, vice-president and prime minister of the UAE and Ruler of Dubai, and will be administered by the DIFC Authority. The board of the DIFC Authority has also issued new company regulations. The new laws include an Employment Law, which provides for minimum employment practices in the financial centre and a Law of Obligations, which sets out a framework for recovering non-contractual claims. Another law provides for fairness and certainty in contracts, a fourth the structure for the recovery of damages and the fifth defines various forms of security interests acceptable as collateral for repayment of debt. The sole set of regulations prescribe procedures for the formation and administration of legal entities registered in the DIFC, the transfer of such entities to and from the DIFC and the fees and costs associated with these. The statement gave no details of what the laws and regulations actually contained. “In the development of this legal system we have sought inputs from the world’s leading capital markets to ensure that we provide the world’s financial communities with the legal certainty they require … and feel comfortable operating in,” DIFC director-general Dr. Omar Bin Sulaiman said in the statement. DIFC will have entities providing asset management, banking, securities trading, Islamic finance and re-insurance services and an international financial exchange. The developments come after weeks of growing pressure for the DIFC. Last month five senior staff quit to take up jobs at the rival Qatar Financial Centre — being run by former DIFC regulator Philip Thorpe. Dubai Financial Services Authority chairman, Habib Al Mulla, is believed to be looking at a variety of new initiatives aimed at giving investors added confidence in the centre’s operational capability. Almost exactly a year ago, the DIFC hit the headlines after the sacking of both Thorpe and fellow regulator Ian Hay Davison, following allegations over the awarding of land contracts to DIFC board members.

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