As the UAE matures beyond 'emerging market' status, preservation of the natural environment is becoming an increasing priority for almost every governmental and quasi-governmental authority. As such, it is vitally important that investors, developers and prospective purchasers, of real estate assets in the region, are aware of the relevant environmental regulations and take steps to ensure compliance with those regulations. In this update we explore how such regulations apply in the Emirate of Dubai and the wider UAE.

The law

Federal Law No 24 of 1999, for the Protection and Development of the Environment, provides the legislative framework for environmental regulation within the UAE. The key principles behind the law can be summarised as follows;

  1. to protect and conserve the quality and natural balance of the environment;
  2. to control all forms of pollution and avoid harmful immediate or long term adverse effect resulting from economic, agricultural, industrial, development programs aiming at improving standards of living;
  3. to develop natural resources and conserve biological diversity;
  4. to protect society and the health of human beings from activities and acts that impose harm to the environment;
  5. to protect the UAE environment from the harmful effect of activities undertaken outside the state; and
  6. to comply with international and regional conventions ratified or signed by the UAE in respect of the protection of the environment.

There is a series of other legislative provisions which cover specific areas of environmental concern, for example, exploitation, conservation and development of aquatic resources, use of radioactive substances, and regulation and control of the trade of rare animals and plants. Each Emirate and various free zones within individual Emirates have an additional set of local orders on various environmental issues specific to that Emirate or free zone.

Regulators in the Emirate of Dubai

The Environment Department of the Dubai Municipality is the relevant government authority which regulates and enforces the environmental regulations applicable in Dubai. The activities of businesses carrying out projects involving industrial uses, telecommunications, roads construction, well drilling and drainage services are closely monitored and regulated by the Environment Department so as to ensure their compliance with the regulations.

Various free zones within Dubai have their own regulatory arms which deal with environmental issues. For example, Trakhees has a regulatory department for Environment Health and Safety (known as EHS), which regulates and enforces rules and regulations related to environmental protection such as air and water quality, marine mammals, and 'landscaping' within a number of the free zones including Dubai Multi Commodities Centre, Dubai Media City and the Jebel Ali Free Zone.

Compliance

If an entity wishes to undertake a project in the UAE, which may have an impact on the environment, it must apply for a licence from the Federal Environmental Agency or other relevant competent local authority depending on the area in which the entity is proposing to undertake the project. The application process involves an environmental impact assessment being carried out.

Penalties

Federal Law sets the benchmark for penalties for non compliance with the environmental regulations within the UAE in general. Penalties can be severe and include fines from AED 1000 up to AED 10 million and imprisonment. Supplementary regulations or local orders for specific Emirates or free zones may detail their own penalties which can differ from those specified within the Federal Law, it is therefore important that an entity is fully aware of the specific regulations governing the area in which they propose to carry out an activity.

Hidden dangers

Purchasers of property in Dubai are faced with a number of issues when it comes to carrying out environmental due diligence.

There are, as yet, no low cost providers of desktop environmental reports which are a common feature in more mature jurisdictions. Also, whilst regulation of environmental issues has improved in recent years, access to environmental records is still heavily restricted and as such it is sometimes difficult to identify where regulatory violations have occurred with respect to a particular site. The result of this is that a purchaser could find themselves liable for violations of environmental regulations, which existed prior to the purchase. A purchaser could also incur significant site clean up costs in order to procure compliance with the regulations if these were not attended to by a previous owner.

Conclusion

Environmental protection is an increasingly important feature of transactional due diligence and commercial licensing, both in Dubai and the UAE more widely. It is therefore recommended that any business operating in the region should be aware of the various environmental laws and regulations. Where an entity's activity may (or may have in the past) resulted in potential contamination or where environmental due diligence is undertaken, it is recommended to seek advice from the relevant scientific and legal consultants, so as to avoid the risk of being sanctioned for non compliance by the relevant authorities and incurring any remedial costs.