Contents page 2 MEDICAL LIABILITY LAW IN THE UAE A NEW HORIZON Rini Agarwal page 5 THE EVOLUTION OF PRIVATE EQUITY IN INDIA Sunil Thacker and Minal Kaul page 8 FIDIC AND ENAA COMPARISON Rekha Panchal and Reem Ali page 12 PALPABLE PAYMENTS Reem Ali page 15 TOO MUCH OF FATCA Minal Kaul page 18 WRITS OF PERFORMANCE Ahmed page 21 WHO'S WINNING AND WHO'S WHINNING UNDER SAUDI ARABIA'S NEW ENFORCEMENT LAW' Amrutha Muralidhar lass 101 on Farming: A strong root gives rise to a strong stem; and a strong stem yields staple crops. Hence, farmers try to protect their harvest by employing agriculturalcatalysts that strengthen the roots of their crops. However, this theory is not exclusive to farmers. The case is relatively similar for nations too (who depend on their harvest of tax returns)! Governments around the world have tried to deepen their grasp in the (economic) pasture by formulating various mechanisms to ensure that their yield (tax returns) do not decay. The United States (US) is no different. In this regard, the Internal Revenue Service (IRS) enforced the Foreign Account Tax Compliance Act (FATCA) with the view of fortifying their harvest that grows on another’s pasture. Class 101 on Taxation: As the expansion of ‘I’ in the acronym suggests, the IRS only considered the revenue that was generated internally in the US while computing the tax compliance of their citizens in the past. However, who decides the ambit of the term internal? Oxford dictionary has described the term as an adjective with the meaning ‘of or situated on the inside’. But that would not stop the government of the world’s largest economy; who has even imposed tax on stolen property! In this issue of Court Uncourt, our renowned attorneys seek to explain various legal matters ranging from the FATCA compliance of US citizens and entities to the liability that arise in cases of professional negligence by medical practitioners in UAE. We intend to provide our readers with a lucid understanding of these legal issues by elaborating page 24 COMPANY FORMATION IN ADGM STA Company Formation Team C on the legal spectrum in which they reside in. Thank you and we wish you an insightful read in this issue of Court Uncourt. ensure that their concerns receive a high standard of efficiency. However, these professionals are also bound to make errors in judgment down the line. These errors are considered to constitute an act of professional negligence. But professional negligence varies substantially from carelessness in general since professionals are expected to showcase a minimum standard of expertise in their line of work. Further, the implication of professional negligence has proved to have an adverse effect in the medical sector since an error of judgment may lead to the injury of a patient. However, a doctor who has portrayed an act of negligence in his profession is bound to receive a different treatment from a defendant (criminal) who has intentionally inflicted injury onto another person. Recent developments in science and technology have taken us far away from where we were a decade ago and compelled the legal system to ponder over outdated provisions that initially dealt with much simpler situations. Hence, in this article, our team of medical lawyers in Abu Dhabi seeks to discuss the new ambit of liability that is likely to fall upon medical professionals in the United Arab Emirates (the UAE) 2 Court Uncourt - Richard Selzer who have caused injury or distress to patients due to their negligence. The Medical Regime The lawmakers of the country enacted the Federal Law Number 4 of 2016 (the New Law) with the view of enhancing the provisions relating to the liability that falls upon medical professionals who render their services in a negligent manner. The New Law has repealed Federal Law Number 10 of 2008 (the Old Law) and is expected to bring significant changes onto the existing medical and healthcare regime in the P UAE. In general, doctors are supposed to meet the ‘duty of care’ standards while executing their professional commitments to the patients. Hence, any act of negligence may lead to the severe loss or injury to the patients, who expect this duty of care standards from their doctors. From a legal point of view, a patient may pursue a civil claim against practitioner or health care provider, if they have caused injury or death to a patient because of their negligence or omission. Therefore, the patient is required to prove the following to claim for damages: (i) the professional duty and responsibility of the practitioner towards the patient; (ii) the practitioner had violated the duty of care standards which was due to be performed on a patient; (iii) the injury inflicted on the patient is a compensable injury; (iv) following the duty of care standards could have avoided the severe harm to the patient. The Ambit of Medical Negligence The following illustration can help the reader to comprehend the scope of medical negligence: James Turner, a 50-year-old mechanical engineer, had undergone open heart surgery at XYZ Hospital. However, he started losing his vision the following day and had completely lost his sight in a matter of two (2) days. The medical staff at XYZ failed to notify the concerned doctor about the issue at that time and therefore, it was too late for the physician to consult with an ophthalmologist and provide appropriate medical attention. Subsequently, the doctor was held liable for erroneously diagnosing the patient and providing him with a medication that caused the unfortunate turn of events. James had suffered from an anterior ischemic stroke of the optic nerves, due to blood loss during surgery, anemia and low blood pressure. Subsequently, it came to light that XYZ Hospital could prevent the patient’s blindness, had he been provided with timely medical attention. Further, the hospital was held liable for the actions of the practitioner and lack of medical care that caused his visual impairment. The above example sets a clear case of medical malpractice that and the patient was compensated with US Dollars four million and four hundred thousand (USD 4,400,000) by the hospital because of their negligence in reporting about his matter to the concerned doctor on time. Significant Changes With its growing economy, the UAE government felt the need to introduce changes in the existing medical law regime and hence, implemented the New Law in August 2016 with the view of regulating medical practice and aligning the chapters of liability. The Old Law was a result of the constant developments in the UAE healthcare industry and the rise in the medical complaints and cases in the country. However, a series “Negligence is the rust of the soul, that corrodes through all her best resolves” ... Owen Felltham of landmark changes reflecting updates in technology were yet to be acknowledged along with the recognition of new concepts such as euthanasia (mercy killing), sex reassignment surgery procedures, cloning, abortion and so on. Hence, the New Law came into force and implemented the following changes to combat with the rising number of medical negligence cases: I. Dispute Redressal – The primary change under the New Law is regarding the procedure for filing a dispute of medical malpractice. The Old Law did not mandate the aggrieved party to file a complaint with the relevant health authorities. Whereas, Article 18 of the New Law has established a Medical Liability Committee (the Committee) who would review cases relating to medical negligence. Under the New Law, parties should file medical negligence and malpractice cases with the health authority of the respective Emirate; who would, in turn, refer the cases to the Committee under Article 19. The Committee would issue its opinion on the matter within 30 days from the referral date to health authority after reviewing the facts of the case, medical records, investigation report, and other documents. The party, aggrieved by the report of the Committee, may file an objection before the relevant health authority within a period of 30 days from the date of receiving the notification of the decision. The health authority would then forward the matter to the Supreme Committee for Medical Liability (the Supreme Committee), whose decision would be held final and binding on the parties. In short, the practitioners and patients have the following options for instituting legal action against an alleged negligible medical professional or healthcare provider: - (a) file a complaint with local health care authority; (b) bring civil action case before relevant courts; (c) initiate a criminal action where there is a case of gross medical malpractice. II. Settlement - Article 35 of the New Law has stated that settlement between the parties may result in the forfeiture of any criminal action and suspension of the penalty, even if reconciliation happens during the execution of the sentence. However, the settlement between the parties would not hinder the patient’s right to opt for civil remedies with the view of claiming compensation. This provision has introduced a drastic change to the Old Law since the latter had not provided for any such settlement mechanism. Court Uncourt 3 professionals to disclose the information regarding the patient’s health to the relevant health authority with the view of protecting public health or prove their innocence in dispute. Hence, doctors are permitted to disclose the confidential medical information of patients to defend themselves before the authorities. IV. Penalties - The New Law has provided a detailed list of sanctions against physicians who commit the following offences: (a) doctors who carries out sexchange procedures on patients (other than in accordance with Article 7 which states that the concept of sex correction is permitted when the person suffers from sexual intricacy between masculinity and femininity; the person’s physical features are contrary to his/her physiological, biological and genetic characteristics) will be punished with imprisonment for a minimum period of 3 years and not be exceeding ten (10) years under article 31; (b) physicians who deny to treat patients in emergency cases or interrupt their treatment will be subject to a fine of not less than AED 10,000 under Article 32. The same penalty is also applicable to doctors who conduct unnecessary medical or surgical procedures on patients without their informed consent. (c) Article 32 has provided that physicians who commit gross medical errors would face imprisonment extending up to one (1) year and (/or) a fine amounting to not more than AED 200,000. However, the doctor may face an imprisonment of not more than two years and (/or) fine amounting to not more than AED 500,000 if the gross medical error results in the death of a patient. Further, the provision also states that if the gross medical error were committed under the influence of alcohol or drugs, the practitioner 4 Court Uncourt THE UAE MEDICAL LIABILITY LAW: Regulatory Changes, Dispute Redressal, Disclosure Requirements, Penalties, Other changes and more.. would face imprisonment of not more than two (2) years and (/or) a fine amounting to not more than AED 1,000,000. V. Other Changes- The New Law has also recognized various other techniques which that did not exist under the Old Law like euthanasia. Article 10 has explicitly stated that the doctor is not permitted to detach the life support of a patient even if the patient and his/ her family insists on doing so. Further, the provision has stated that the doctor may withdraw the life support if the heart and the breathing capacity or the brain of the patient has ceased to function. However, the practitioner is required to obtain approval from the Minister of Health before doing so. Further, Article 16 of the New Law addresses the issue of abortion and states that a doctor may perform an abortion after considering the following points: (a) the pregnant woman’s life is in danger; (b) the pregnancy does not exceed 120 days; (c) the procedure is done with the patient’s consent; (d) the medical committee report is formed on the basis of medical tests and other scientific techniques; (e) the foetus is suffering from malformation and because may cause pain and suffering to the child and family in the future. Conclusion The first step in pursuing a medical malpractice case is to retain an expert lawyer. Unlike some other areas of the law, self-representation in these cases is not feasible. However, attorneys do not accept medical malpractice cases due to the need of vast resources and litigation expertise. Hence, the complainant should seek out a reputable law firm that provides bespoke legal advice in medical malpractice. THE EVOLUTION OF PRIVATE EQUITY IN INDIA he advent of the year 2015 has seen a lot of political and economic skepticism unfolding in the form of the Brexit vote, demonetization in India, mounting Chinese debt and concerns over trade relations between the US and Asia. It, however, appears that the politico-economic uncertainty has not shown any signs of slowing down the private equity (PE) investment regime. More particularly, with 2016 marking the third year in a row that the Asia-Pacific PE industry has performed at historic levels—a sign that PE performance in the region is increasingly dependent on the sector’s fundamentals. Private equity investments' value in the Asia-Pacific region crossed $92 billion in 2016; which is a pullback from the 2015 all-time high of $124 billion.i The predominant objective and purpose of the PE line of financing remain growth and profits. PE firms typically infuse substantial funds with the intention to conceptualize ideas for growth and overcoming financial disability for companies thereby playing a pivotal role in the nurturing the economic climate of a country. Notably, in comparison to a venture capital investment, a PE investment is typically for a much higher amount, and in return, the investors either opts for a buyout or expects a substantial share in the company with active participation rights in the business. These investments initiate when an entity approaches a PE firm or investor seeking investment (in some situations, even the PE firm may contact a prospective business opportunity). Upon detailed discussion and taking stock of the situation, the parties arrive at an arrangement structuring terms of the investment. Importantly, at this stage, the investor shall undertake due diligence into the affairs of the company along with better understanding of the financial situation of the shareholders of the entity. Upon satisfaction of concerns in the diligence report, if any, and if the investor agrees to proceed, the parties execute final agreements, namely, shareholders’ agreement, share subscription agreement, etc. after which the investor infuses funds into the company. In India, PE line of financing is still in its nascent stages. While in the early 2000s, the focus of PE investments was towards the booming sector of Information Technology due to its dynamic growth opportunities. However, after the burst of the dot-com bubble, PE investors shifted focus to other commercially viable industries. Another hindrance to the rising graph of the PE investment was the economic meltdown in 2008- 2009 which substantially deflected the investment deals size. However, consequently Flipkart’s USD 150 million, 4th round funding in 2012 T Q1 kicked off an overall positive sentiment in funds investing in the domestic e-commerce industry. ii India witnessed an increase in the number and size of PE investments made in 2014 aggregating to around $11.5 billion, which was 17% higher than the total investment value as compared to the same period the previous year. PE investors have been steadfastly interested in certain lucrative sectors including ecommerce, financial services, power and, energy among others. Most notably, in the current economic scenario, Indian real estate industry owes its foundation to private equity. PE financing, in a broad ambit – now continued on next page Court Uncourt 5 sector, compared with just about a fourth in 2010. iii As discussed herein, this two series article aims to explain the factors that drive private equity investments in India and the regulatory framework associated. The framework and the documentation of PE investments will differ (regarding the regulator and legislation) depending on the structure of the PE investment. In India, the Companies Act, 2013 (the Companies Act), the Income Tax Act, 1961, Foreign Exchange Management Act, 1999 (the FEMA) and the rules and regulations framed therein overlook the governance of PE investments. Securities and Exchange Board of India (the SEBI) regulations governing the regulates the listed companies. By this article, we shall discuss the manner of structuring the PE funds, the mode of investments and the laws which govern the PE financing mechanism in India. Structure and Applicability In India, PE funds assume the form of trusts that are registered and regulated by Securities and Exchange Board of India's 2012 Regulations regarding Alternative Investment Funds (AIF Regulations) iv as Alternative Investment Funds (AIF). Such AIFs can be set up only as a trust, company or a limited liability partnership (LLP). Therefore, procedurally, a PE fund may be established as a trust under the Indian Trust Act, 1882 and registered as an AIF under the AIF Regulations. The trust deed and investment/contribution agreement would govern the terms of the arrangement between the parties and shall stipulate the details of the agreement including the amount of investment, period, the object of fund and manner of distribution of returns. Similarly, an AIF may be set up as a company under the provisions of the Companies Act, and the articles of 6 Court Uncourt PRIVATE EQUITY IN INDIA -Structure & Applicability association and the inter-se shareholders' agreement would govern the same. In the same manner, AIF funds can be set up as LLPs under the Limited Liability Partnership Act, 2008. However, AIF is seldom set up as a company since there are stringent compliance procedures to be followed by companies. Also, while an LLP may be an attractive choice for PE funds worldwide, it is still a relatively new structure in India. Significantly, registered AIFs in the country have substantially expanded over the past two (2) years and estimates to around 270 in 2016. AIFs have also been a major contributor to the overall fund-raising in the Indian market and contribute to around 41% of the total funds raised in India in 2016. A majority of the funds reported greater participation from LLPs through passive co-investment rights that existed in their current portfolio. PE Funds expect LLPs to play a more dynamic role in 2017 and is likely to offer more co-investment opportunities. Further, fund-raising is expected to be a higher priority for funds in 2017. It is pertinent to note that before the enactment of the AIF Regulations, the registration of all domestic private equity funds was under the SEBI (Venture Capital Funds) Regulations,1996. While new AIFs can register themselves with the AIF Regulations, PE funds registered under the earlier Venture Capital Funds Regulations have two options. They can either continue under the previous venture capital regulations till the expiry of the duration of the fund or can be brought under the ambit of the AIF Regulations by re-registration therein subject to the approval of two-thirds of the fund’s investors. Importantly, the appeal of significant growth has attracted foreign investment into India. Reserve Bank of India along with the Foreign Investment Promotion Board and the Department of Industrial Policy and Promotion have stipulated rules and regulations issued by FEMA with the view to regulate the foreign investment that flows into India. In this regard, we will discuss the foreign direct investment (FDI) policy and Foreign Exchange Management (on the Transfer or Issue of Security by a Person Resident Outside India) Regulations in detail in the second part of this Article. Manner of Investment Investors in PE may opt from one of the following instruments to effectuate their transactions: i. equity shares; ii. compulsorily convertible preference shares (CCP); and iii. compulsorily convertible debentures (CCDs). Moreover, under the FDI policy, any instrument apart from the above, which are not completely and compulsorily convertible to equity shall be treated as debt and regulated by the external commercial borrowing (ECB) norms. The old company law regime (Companies Act, 1956) strives to protect the creditors of an entity by classifying the outstanding amounts as deposits. This law states that a CCD could avoid from falling under this category as long as they are convertible into equity or secured by an immovable property. However, the Companies Act amended this provision by stating that conversion of CCD into equity should take place within five (5) years or the underlying security should rank parri passu (same or equal footage) with the first charge on the asset to avoid classified as a deposit. The issue and transfer of these equity shares, CCPs, and CCDs are regulated by the provisions of the extant FEMA regulations, as also the Companies Act and the inter-se agreements entered into between the parties. So far, this Article has purported to discuss the India’s regulated climate on private equity investment. It is evident from the increasing graph that in spite of several regulations and restrictions prescribed by the relevant regulatory authorities and laws, India continues to be a favored jurisdiction for private investment. According to a 2017 report by Bain & Company, “to attract more investments, India may have to strive to reduce the regulatory restrictions in the country; that consists of a regulatory environment that is conducive to business growth.” Hence, it is prudent that the regulators reduce the level of restrictions and policies that may hinder the incoming investment opportunities. Further, in Part II of this article, our attorneys will discuss the provisions of Income Tax Act, 1961, FEMA regulations as well as SEBI regulations regarding the aspects of the private equity market in India. We will also discuss the applicability of PE line of financing in the current economic climate of the United Arab Emirates. i. Suvir Varma, Kiki Yang and Johanne Dessard, “Asia-Pacific Private Equity Report 2017”, March 16, 2017-Bain & Company. ii. Kalpana Jain, Vikram Mathur, Punit Gupta, Ajay Sharma, “Private Equity- Fueling India’s growth”, May 2012, Deloitte. iii. Kailash Babar, “Private Equity now funds 75% of Indian property market as banks pull out”, The Economic Times, March 20, 2017. iv. Discussed at length in Part II of the Article. v. http://www.bain.com/publications/articles/india-private-equity-report-2017.aspx Court Uncourt 7 11 and negotiations on the terms of an agreement between the parties are a means to keep the complex relation of parties within the bounds of clear understanding by utilising a standard form of contract. The industry has seen the development of a various standard form of contract including, FIDIC (Fédération Internationale des Ingénieurs-Conseils), JCT (Joint Contracts Tribunal), ENAA (Engineering Advancement Association of Japan), ICE (Institution of Civil Engineers), etc. This list is not exhaustive but only indicative as there are numerous standard forms. We will discuss the standard form of contract produced by FIDIC and ENAA. The FIDIC standard form of contract is internationally recognised and a utilised form of contract. FIDIC, established in 1913 by three countries namely Belgium, France and Switzerland presently covers 97 countries as its member and has created forms of contract which are used extensively throughout the world. ENAA is a non-profit organisation established in 1978 with the support of the Ministry of International Trade & Industry of Japan. Members of ENAA consist of 217 Companies Court Uncourt sustainable development while having a voice for engineering professionals and, among other things, provide integrated assistance. FORMS OF CONTRACTS FIDIC FIDIC has the best-known standard contracts which are as follows: • The Contract for Works of Civil Engineering Construction (Red Book, 1987 First Edition, revised in 1999). • Conditions of Contract for Electrical and (for) Mechanical Works including Erection on Site (Yellow Book, 1987 First Edition, revised in 1999). 12 • Conditions of Contract for Design-Build and Turnkey (Orange Book, 1995). • Conditions of Contract for EPC Turnkey Projects (Silver Book, 1999 First Edition). • Conditions for Design, Build and Operate contracts (Gold Book, 2007). • Conditions of Contract for Plant and DesignBuild (Yellow book, 1999 First Edition). • Conditions of Contract for i) Design, ii) Build and iii) Operate (the DBO) Projects (DBO Contract, 2008 First Edition). Other FIDIC contracts which are less known are the Turquoise Book for Dredging and Reclamation Works (January 2006), and also, the White Book Model Services Agreement (October 2006) ENAA ENAA also has model forms which are increasingly used by the industry recently in the past 12 years. The forms are as follows: • International Contract for Process Plant Construction (1986 – First Edition, revised in 1992 and 2010) • International Contract for Power Plant Construction (Turnkey Lump-sum Basis) (1996 – Second Edition, revised in 2012) • International Contract for Engineering, Procurement and Supply for Plant Construction (EPS type contract) (2007 Edition, revised in 2013) General Comparisons The content structure of the FIDIC forms of contracts often consists of general conditions, forms of tender and contract agreement, guidance for the preparation of the particular conditions, and dispute adjudication agreements. The ENAA model forms’ in its latest Process Model Form – 2010 edition consists of a form of contract, general conditions, and guide notes. Wherein Volume 2 includes a sample of an appendix, Volume 4 consist of work procedures and Volume 5 consists of the general conditions and the form of agreement (an alternative form of industrial plant – without process license). The Power Model Form - 2012 edition consists of a form of agreement, and general conditions and Volume 2 provides a sample of appendices to the agreement. Although the FIDIC forms seem to be very well drafted “by the engineers for the engineers," is seemingly balanced, have many provisions, and are very extensive, they bring out the fact that legal layman draft such contracts. ENAA is written well with clear, precise, and short wordings. For the purpose of this article, with consideration to its possible limitations, we shall be comparing between FIDIC's Yellow (Conditions of Contract for Plant and Design-Build, 1999 – First Edition) and ENAA’s Power Plant Construction Form – 2012. However, there can be references in general to other forms, when stated otherwise. Where the Yellow book is for Plant and Design Build, ENAA’s Power Plant FIDIC & ENAA - General Comparison, Data Accuracy Obligations & More.. construction model form is a turnkey form for BOT (build-operate-transfer) projects. Data Accuracy Obligations In the yellow and silver book under Sub-Clause 4.10 Site Data, there seem to be no obligations on an employer regarding an error in data provided by him. However, the responsibility for proper interpretation 13 of information is put on the contractor as below text interprets: “The Contractor shall be responsible for (and) interpreting all such data.” Further, it goes on to state: “To the extent which was practicable (taking into account the cost and time), the Contractor shall be deemed to have obtained all (relevant; and) necessary information as to (inherent) risks, the contingencies and (all) the other circumstances which may influence or affect the Tender or Works. To the same extent, the Contractor shall be deemed to have inspected and examined the Site, its surroundings, the above data and other available information, and to have been satisfied before submitting the Tender as to all relevant matters,….” Court Uncourt The above words clearly indicate that the responsibility is put on the contractor as the contractor is responsible for obtaining necessary information. Which includes but is not limited to the form and nature of the site, including the hydrological and climatic conditions, subsurface conditions, and the extent and nature of the work and goods that are necessary for executing and completing the works for remedying of any defects. Though the provision states that when "taking account of cost and time" it becomes highly difficult to determine such factors of time and "practicability." Thereby rendering the provisions uncertain without laying down a clear responsibility on the employer for any information provided. Thus, the above clause and in fact the entire yellow book does not foresee any obligation on an employer for inaccurate information and even fails to place responsibility on an employer for correct information. Whereas the ENAA provisions under General Conditions 10.1 states that: "The Owner(s) shall ensure (at all times) the correctness and exactitude of (each and;) all information and or data to be (provided; or) supplied by the Owner(s) as described in Appendix 9-3 (Scope of Works and Supply by the Owner(s)) except when otherwise expressly stated in the Contract," As such it is clear that the ENAA form makes it the responsibility of an employer/owner to provide correct data before and during the contract. 14 Accordingly, the contractor bears a heavy burden of not only accessing accurate data provided by the employer but also bears the responsibility for any physical condition Under the definition of unforeseeable When this occurs, foreseeability will depend again on examination by the contractor. Employer’s Requirements As per Sub-Clause 1.9, an experienced contractor should give notice to the Engineer who will be entitled to the terms of Sub-Clause 20.1 [Contractor's Cliams] when the contractor fails to discover errors in an employer's requirements. These errors would get overlooked while exercising due care and scrutiny of the Employer's Requirements under Sub-Clause 5.1 [General Design Obligations]. Further, “the Engineer shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine (i) whether and (if so) to what extent the error could not reasonably have been so discovered." The yellow book or other such forms having similar provisions place a heavy burden on the contractor to review the employer's requirements at the tender stage. Further, as per every variation Bearing in mind that from time to time to examine the employer's requirements before providing a tender and examinations without emphasising on the obligation of an employer for such errors or on the engineer while evaluating the requirements issued by the employer. It is pertinent to note that providing the employer's need is a factor in the control of employer which is published as per his ideas and concept of the project along with all technical and quality consideration which must also be Court Uncourt 15 Technical Standards and Regulations, Contractor's Obligations, and Documentation a proper valuation of the contract price. Therefore, it is the employer who must retain responsibility for the definition and description of the works. Failing such demarcation and allocation of liability creates doubts as to the practical implementation of such provisions. The above provision of Sub-Clause 1.9 further seems contrary to clause 5.4 which states as: “5.4 Technical Standards and the Regulations: The design, the Contractor's (each and all) Documents, the execution and the completed Works shall (in totality) comply with the Country’s technical standards, the building, construction and (also;) environmental Laws, Laws applicable to the product being produced from the Works, and other standards specified in the Employer's Requirements, applicable to the Works, or defined by the applicable Laws.” The above states that the design and contractor’s documents must be in accordance with employer’s requirement. However, the responsibility of errors in employer’s requirement is not enforceable or even actionable against the employer under this form of contract. Further, only if it is determined to be undiscoverable by the engineer the contractor will be entitled to cost and extension of time. The ENAA model form under General Conditions SubClause 27.3 - Defect Liability states: “The Contractor’s obligations under this GC 27 shall not apply to ..........................(3) any designs, specifications or other data designed, supplied or specified by or on behalf of the Owner, or any matters for which the Contractor has disclaimed responsibility hereunder ...” The above clause excludes the liability of the contractor on design discrepancies, errors or omissions if such erroneous specification, drawing or such technical documents are prepared due to inaccurate information provided by or on behalf of the employer. The ENAA form also provides that the contractor shall make reasonable site examination and other data, however, puts the obligation on the employer for inaccuracy. This clause in is accordance with the principle of the risk of liability being placed on the party who can control such risk. Part II of this two series article will discuss Design obligations, force majeure, and other relevant provisions. 1 Sub-Clause 4.12 provides. For example, "physical conditions" means natural physical conditions and those that are man-made. Further, other pollutants and physical obstructions which the Contractor may encounter at the Site while executing the Works. These include sub-surface and hydrological conditions but exclude weather. 2 in sub-clause 188.8.131.52 climatic conditions are not included. "Unforeseeable" is defined as unreasonably foreseeable by an experienced Contractor on the date of submission of the Tender. 16 Court Uncourt 3 , 184.108.40.206 "Variation" means changes to the Employer's Requirements or the Works, which are instructed or approved as a Variation under Clause 13 [Variations and Adjustments]. Court Uncourt PALPABLE PAYMENTS ‘Oh, no. It costs a lot more than your (own) life. To murder innocent people?’ lthough globalisation is advancing at the seams of the 21st century, it remains unclear as to when will the legal systems across the world harmonise. The differing principles, customs, and their applications are ones that scholars attempt to understand by interlacing them. But not all policies and sources can be interpreted similarly. Some systems, such as Shariah law, have legal mechanisms that diminish both consequences and responsibility if seen through a secular lens. So, would it be daring to say that man has evaded a death penalty and received a profoundly minimised consequence of a crime such as murder, after raping and killing his daughter by paying her mother SR 300,000 (USD 79,990)? It may quite be surprising to some that the Islamic legal framework allows diya which some refer to as blood money. The payment of diya allows an offender to compensate a victim’s heirs or family for the violent and heinous crime they had committed. It also provides the offender relief from retaliation. Some legal scholars have compared diya to ‘clemency’ a form of pardoning that secular legal systems implement and the international law recognises. However, for the sake of technicality and clarity, we must distinguish between what is recognised by international law as a pardoning mechanism and the reality of what Shariah law permits. Blood Flow - Cash Flow There are three differing categories of crimes that can be committed under Islamic Jurisprudence. The one - Suzanne Collins A 17 to be discussed in our article is qisas. It broadly covers criminal acts such as intentional killings-murders, accidental or unintentional killings, and non-fatal bodily injuries. Shariah law punishes those who commit qisas through the death penalty or the payment of diya. In the United Arab Emirates, Federal Law No.3 of 1987 On the Promulgation of the Penal Code separates ‘intentional killing’ and ‘unintentional killing’. Article 28 classifies ‘intentional killing’ i as felonies punished by qisas of which the punishments include the death penalty, life imprisonment, or temporary imprisonment. ii In such a case diya can only be awarded if the family or heirs agree to grant it. However, Article 29 describes ‘unintentional killing’ as misdemeanours where diya is a punishment that can be awarded by the Court as per Article 29(3) (while the death penalty is a viable punishment).iii Other misdemeanour sentences include a fine exceeding 1,000 UAE Dirhams or temporary imprisonment. Here the law specifically mandates the application of the Shariah law. In an application of law discussed above, the Dubai Court of Appeal has sentenced the doctor, cook, and restaurant supervisor that caused the unintentional death of Nathan and Chelsea D’Souza by food poisoning to jointly pay UAE Dirhams 4000,000 as a diya payment. Also, each offender was fined to pay UAE Dirhams 20,000. As stated above, this offence was considered to be a misdemeanour of which the qisas punishment of a death penalty is not an option as per Article 29 of Federal Law Number 3 of 1987. As the decision calling for a contribution of diya payment is in the hands of the victim's family and heirs, one could perceive it as a non-judicial grant. However, as will be discussed later, this raises to question whether the practice of giving diya payments contravenes international human rights law. The thirteen jurisdictions that currently practice diya are Saudi Arabia, Bahrain, UAE, Kuwait, Libya, Jordan, Yemen, Iran, Sudan, Nigeria, Somalia, Afghanistan, Jordan, and Pakistan. With such practice comes the The Sharia Perspective.... requirement of understanding not only the traditional fabric within which the Shariah law operates; but also the traditions of each country and their colonial influences. Following such, although the victim’s families or heirs have the right to choose whether diya payment will be granted some governments also encourage it. The offender may also still face a prison sentence even in matters where the offender has settled diya payments. Pakistani application of the Shariah principle can be seen in PLD 2015 Supreme Court 77 (Criminal Appeal Number 126 of 2012) Zahid Rehman Vs State (Criminal Petition Number 568 of 2011): iv Referring to Section 302 (1), Section 304, and Section 306, to 308 of Pakistan Penal Code, the Courts held that “this intentional murder was not liable to qisas. Section 299 (K) of Pakistan Penal Code defines "qisas" as punishment by causing similar hurt in:- • the same part of the (victim’s) body of the convict as he had caused to the victim or; • by causing his death if he had committed intentional murder, in exercise of the right of the victim or a wali (family or heir of the victim"). The word qisas meant "return of evil for, evil" and it also meant "retaliation". The court further held that punishment of "qisas" left no room for 'tazir' punishment (a lesser category of crime worthy of punishment under Shariah law) to be included and concluded that if the offender is not liable to tazir, then he would only be liable to diya. The courts also relied on Muhammad Akram vs the State (2003 SCMR 855)v and held that (if tazir were to be considered in 18 Court Uncourt deciding on qisas) such interpretation would result in granting a license to parents or guardians to kill innocent persons within their families. Each diya implementing state decides the amount of diya payment differently. In Saudi Arabia and Pakistan, the diya amount is determined by the Shariah Judge. While in the United Arab Emirates the government negotiates with the family or heirs on behalf of the offender. In Iran, the amount of diya gets negotiated between the family or heirs and the offender. What may surprise more, is that it is permissible for the families or heirs to decline the payment of diya in its entirety and instead grant a pardon (known as afw) as an act of compassionate religious charity allowing the offender to evade any and all punishment or only a lesser sentence. The scope of afw is, however, one separate from diya.So, if we take what has been outlined above as a basic understanding of diya, it is evident that diya does not fit neatly into the boxes of clemency as understood by secular law systems. The United States of America defines clemency as the conversion of a death sentence into a lesser order of imprisonment. However international law would find clemency synonymous to commutation. Commutation is the substitution of a court-imposed punishment to a minor correction. This rule could apply to any prison sentence and would not be limited to qisas. Further, unlike diya, clemency would be a power possessed by an executive and as such gets witnessed as a power related to the principle of sovereignty. Such an executive may be the head of state, a government minister, or a pardons board. Over-Empowered The main difference mentioned above is the crux of the inadequacy of comparison. The power held by a private citizen to decide whether an offender should receive a form of pardon such as diya is one that opposes fundamental principles of secular legal systems. As such, diya cannot get classified as a pure form of clemency. Not only does the power to grant clemency come from the executive but some Shariah implementing countries also retain the option to Court Uncourt 19 can decide to grant diya more readily than the political and legal process, an executive must adhere to reach a decision of granting clemency. However, it is understandable to note the similarities that allow legal scholars to combine the two principles under one umbrella. In both cases, the power lies outside the scope of the judiciary. Regardless of such, both are within the legal framework of their respective systems and are authorised by the legislative. Further, the decision regarding the guilt of an offender remains within the ambit of the court's judiciary, and both diya and clemency relate to the reduction of punishment only after this decision gets established. Finally, as the granting of both is outside the scope of the judiciary, allowing a grant raise a question as to whether in doing so the authority of the courts gets subverted when involving and imposing non-judicial decision as punishment or retribution. What we would like to put forward is the necessity of a new theoretical paradigm that allows legal scholars to develop their understanding of diya outside the walls of clemency. As shown above and as will be discussed below, diya is subject to its principles and legal framework that is not compliant with a secular legal system. As it resolves disputes between individuals under the territory of criminal law, it can classify as a union of criminal and civil law. This union may be the beginning of the introduction of a new theoretical paradigm. Also, when in association and through the interpretation i Federal Law Number 3 of 1987 On the Promulgation of the Penal Code ii in Article 28 iii in Article 29(3) possibility of it contravening international human rights law. Article 6(4) of the International Covenant on Civil or Political Rights gives prisoners the right to seek commutation or pardon. This rule gets unjustly inhibited by the practice of diya. Those with limited financial resources, of a young age, bereft, and ordinary prisoners, foreigners, or without ties to the locals have their right to pardon diminished or stripped away. Further, the power to forgive is a substantial power and granting such power to the family or heirs of a murder victim is the issue. Families or heirs are often emotionally and financially invested in their decision to grant or refuse diya. There is an grant clemency and pardon in murder compensation regardless of whether diya gets refused or granted. The application of diya is also more prevalent than 20 Court Uncourt inadequate level of detachment that exists and which is necessary and gets on the surface upon implementation of clemency. So, should the relocation of pardoning to a private individual who lacks the level authority an executive possess be allowed? Conclusion Although the borders of both diya and clemency may appear to be similar, what covers within their substantive boxes differ. In understanding the principle of diya, legal scholars may look to clemency to provide a basic footing but will be required to delve into the technicalities of the diya principles through a different lens. Moreover, the diya principle’s root of Islamic jurisprudence results in the questioning of whether it is compatible with international human rights law. Unlike clemency which is granted through political and judicial checks and applies the doctrines of sovereignty and separation of powers, diya has no legal implications. iv PLD 2015 Supreme Court 77 (Criminal Appeal Number 126 of 2012) Zahid Rehman Vs State (Criminal Petition Number 568 of 2011): v The courts also relied on Muhammad Akram vs the State (2003 SCMR 855) Court Uncourt 21 TOO MUCH OF FATCA! enowned author and entrepreneur, Mark Twain, once said, ‘tax is a fine for doing well; whereas, a fine is a tax for doing wrong.' Now, the question on hand is which one of the two the Foreign Account Tax Compliance Act (the FATCA) would get unseated! Is it a tax or a fine? Let’s read further to find out. The FATCA promulgated on March 18, 2010. It was introduced in line with the Hiring Incentives to Restore Employment (HIRE) Act, and the then President Barack Obama signed FATCA into law to help the United States Government, through the Internal Revenue Service (IRS), curb tax avoidance by US citizens and entities on assets held in offshore accounts. FATCA is a comprehensive, and complex arrangement of tenets intended to impose tax compliance upon American citizen regarding assets outside the United States and such citizens are required to report such assets to IRS. Importantly, also, foreign financial institutions are also obliged to comply with the reporting requirements under which these financial institutions have to provide information and details to IRS about the accounts held by such US citizens or non-US entities in which US citizens hold significant ownership. The Why As outlined above, the intention of the US government to enact FATCA was to increase transparency for IRS to counter tax evasion by U.S. persons holding investments in offshore accounts. FATCA is a tool to keep a check on US persons who may be investing and earning income through non-US financial entities. FATCA mandates U.S. 'persons' holding foreign financial assets with an aggregate value exceeding US$ 50,000 (US Dollars fifty thousand) to report essential information about those assets on Form 8938. This Form 8938 will be attached and annexed to the taxpayer’s annual tax return. The disclosure requirement mandates taxpayers to report assets held in taxable years commencing after 18 March 2010. For a majority of taxpayers, this disclosure will be the year 2011 tax return which they file in the 2012 tax filing year. Failure by taxpayers to report foreign financial assets on Form 8938 will attract a penalty of $10,000 (and this may be raised up to $50,000 for continued non-compliance after IRS issues notification to the defaulting taxpayer(s)). In cases where IRS notices any underpayment of tax payable on nondisclosed financial assets held by taxpayer overseas, an additional penalty of 40 percent will trigger. i Importantly, the term ‘U.S. Persons’ is a broad category which includes citizens of United States, those residing within the US, holders of US green cards and trusts that are controlled by US Persons. IRS has also set extensive norms, and criteria for banks (domestically as well as overseas) wherein the banking machinery will be required to screen each and all client(s) to determine whether such person(s) falls within the definition of US Person. Foreign entities will get classified as either Foreign Financial Institutions (FFI) or Non-Financial Foreign Entities, and such entities will have to comply with FATCA reporting rules. ii FATCA mandates compliance by US citizens and entities in the following methods: i. Direct Agreements – agreements between the parties and IRS for compliance purposes; or ii. InterGovernmental Agreements (IGAs) – agreements between various jurisdictions and the US. In the case of the latter, financial institutions in the jurisdictions that have an underlying IGA with the US are mandated to submit the disclosure information to the tax authorities of their respective jurisdictions. The domestic tax authorities would then send the R 22 Court Uncourt information to the US Treasury to comply with the provisions of their IGA. However, it’s easier said than done! The demanding role of FATCA compliance primarily revolves around the sanctions that would apply on FFIs that are in breach of compliance with the reporting requirements and disclosures of FATCA. Non-compliant FFIs would have to pay a penalty of 30% of withholding tax on all US-sourced payments. Further, taxpayers benefitted from IGA during the period in which their government tries to implement the same with the US government. However, this policy of the IRS got revoked on 29 July 2016 on the basis that the Department of Treasury would implement a new list of jurisdictions that had valid IGAs with the US and subsequently, discard jurisdictions that had not yet implemented the same. Therefore, governments can avoid removal from the list by submitting an explanation as to the reasons why they have not implemented the IGA along with a process detailing how the jurisdiction will enforce the IGA in this regard. Subsequently, the Department of Treasury will not strike out the name of that particular country if convinced that the particular jurisdiction has demonstrated a ‘firm resolve’ to implement the IGA. Although, notably, the name of the country may, later on, be removed from the list if they fail to adhere to the norms and timeline which was set out in its explanatory submission to the Treasury. iii Hence, any FFI failing to comply with the above-said provisions of the FATCA will result in FFI paying a withholding tax of 30% of its payments received from a US source. The next cardinal question that arises in this subject is regarding the ambit of the ‘US-source payments.' This scope gets further elucidated with the help of the following instance: US-source payments All my money? .....The when, where and how of FATca..... is set to cover all payments to the noncompliant FFI from a US source such as principal amounts that mature from corporate or government bonds, dividend received from US entities and the like. This element is considered to be a bane in the financial industry since US stocks and bonds have a significant part to plan in the globe’s financial sector. The When, Where and How The sanction of imposing a withholding tax amounting to 30% of all US-source payments came into effect on January 1, 2014. To the awe of global economy, gross proceeds that arose from the sale of a US security also came under the scrutiny of this worldwide tax imposition in January 2015. However, the withholding of tax on foreign pass-through payments by FFIs was delayed to 1 January 2017. iv The implementation of the FATCA has proved to be an effective method to suppress the actions of US person who yearned to evade their tax liability by transferring or using financial institutions located outside the US. However, it has also given rise to various issues regarding the implementation procedures that ought to be followed by the US. The primary concern with the implementation of FATCA surrounds the compliance issues of domestic Court Uncourt 23 financial institutions in a broad range of matters including data and consumer protection, antidiscrimination statutes and the earlier withholding tax law of the US. Numerous countries had explicitly made their concern regarding FATCA compliance to be in direct conflict with the data protection and privacy laws that are already in place either in their domestic jurisdictions or in the US itself. However, this is only the commencement of the large list of issues that pose to oppose the implementation of FATCA. The overall cost of implementing the law is also expected to outrun the anticipated revenue that it is likely to raise. Further, the rationale behind compelling foreign institutions and governments to gather information regarding US citizens and entities solely for the purpose of transmitting them back to the US Government resulted in reactions from financial pundits, some of whom cited this as a ‘decisive’ action. This rationale may also give rise to a predicament whereby foreign institutions and banks may deny US citizens and entities from opening banks accounts at their respective establishments. Another crucial aspect of this issue is the increase in the number of US citizens who are willing to surrender their citizenship due to the mandatory compliance conferred upon them. v Further, the model IGA also mandates a mutual transfer of information from the US Government to the governments of other jurisdictions. However, the significant concern with this provision arises because there does not exist a specific US statute or regulation that permits such reciprocity. The rise in scrutiny regarding the legal validity of FATCA has also stirred controversies and questions in countries such as Canada and Israel; however, the high court of the latter jurisdiction confirmed and permitted the compliance requirements of FATCA. i https://www.irs.gov/businesses/corporations/summary-of-key-fatcaprovisions Conclusion The implementation of FATCA is considered to be advancing expediently, although, numerous nations have contended the global impact of the compliance requirements that arise due to FATCA. Certain jurisdictions such as the United Arab Emirates, which once was a typical tax haven, also conformed to the requirements of FATCA due to the financial havoc that non-compliance of the statute may create on a domestic level. This conformity is because a 30% withholding tax by the US Government is a fatal step than conforming themselves to the statute. The FATCA is expected to close the loopholes and tax evasion schemes used by US citizens and entities with the view of substantially increasing the tax receipts over time since; the implementation is only a one- 24 Court Uncourt time process; whereas, the revenue receipts may not stop flowing in! Interested in knowing more? Why not reach out to our US Tax Attorneys in Dubai and obtain bespoke counsel ii David Kuenzi, “What is FATCA? What do American Investors need to know?”, Thun Financial Advisors, 2017. iii Ramon Camacho, Ben Wasmuth, “Intergovernmental agreements must be in force by Jan. 1, 2017”, Tax Alert, August 2, 2016.iv S. Bruce Hiran, “Overview of FATCA”, Taxanalysts, August 29, 2016. v “5.5 Million Americans Eye Giving Up U.S. Citizenship, Survey Reveals”, Wood., Forbes, October 27, 2014. Court Uncourt 25 COURT-SIDE JUSTICE ‘You don’t go on bended-knee to petition the official culture for your rights. You have to take them.’ ountries are not sustained, and their peoples are not stable where a superior judicial system is not in place. Achieving a system of justice is not possible unless there is a good judicial system that protects the weak and beats the hand of the oppressor. A political system will remain unstable without the existence of justice; as such the right to litigation should be a guaranteed right for all. One of the most important elements and bases for achieving justice is through doing justice to justice itself. This simply means maintaining a fast speed in which cases are brought before the courts until the claimant’s rights are assured. Otherwise, delay in rights and litigating disputes will result in justice losing a fundamental part of its meaning and true essence. There is a saying which says that slow justice is an injustice, and here the legislator did its job by providing a means to meet a fixed debt which is in writing through a writ of performance and this is considered the exception to the general rule. This is because the general rule is to resort to the competent judge and proceed with the relevant procedures of the appropriate court. However, the legislator would C 26 Court Uncourt take a different route in this matter making the process easier and smoother for the judge and the concerned parties in achieving said justice. Bearing in mind that the law -Terrance McKenna has placed specific conditions that the dispute must meet for the litigants to be able to use this exceptional route. The judge of the court is afforded the discretion to decide when to award a writ of performance. How this takes place is outlined below. One Step at a Time First: A writ of performance is an exception to the general rule of raising a claim: As noted earlier, the write of performance orders are an exception to the general rule as the original rule requires a litigant to resort to the substantive judge of the matter. As such they are referred to as expedited or urgent cases for the speed in which they are resolved as opposed to the ordinary judicial procedures. The law has placed specific conditions that allow a litigant to use the route of a writ of performance. Of which, the creditor must have their right evidenced in writing, showing a fixed monetary amount, and the amount is due for payment (Article 143 of the Civil Procedure Code). Further, orders for writs of performance do not encompass and accept fragmentation. It is not the role of a judge to allow some part of a writ of performance claim and reject another. If it is apparent that some claims are not subject to the terms and conditions of issuing a write of performance, then the court must refuse to issue it and refer the matter to the competent court. Second, the order of performance is subject to a general order: A writ of performance is subject to the general order, meaning that upon meeting the conditions for issuing the writ, the litigants may not resort to a court other than that for such urgent cases. For example, upon raising it before a substantive court, the court may decide on its behalf not to accept the lawsuit. The claim will then be raised for review under the discretion of a competent judge of the court of first instance. Also, the rule of value to jurisdiction found in the Code of Civil Procedure does not apply to writs of performance. Litigants can raise a claim for a performance order regardless of the amount requested. Third: The creditor must first charge the debtor with the obligation to fulfill the debt: The creditor must first charge the debtor to meet his obligation within a minimum of five days (Article 144 of the Code of Civil Procedure). The debtor is first assigned to fulfill the debt using a notification of payment. If the debtor fails to pay after a minimum of five days, then the creditor may claim for a writ of performance from the judge of a court that lies within the district of the debtor. The claim will be issued through a petition submitted by the creditor which the One Step at a time and eight in total Performance Overdue Court Uncourt 27 bond of debt shall be attached to, and showing proof of the obligation to pay will. The creditor shall not ask for more than the amount mentioned in the petition which should not be more than the amount assigned to pay in obligation to fulfill the debt; both values must correlate. Fourth: The writ of performance must be issued within three days at most from the date of submission of the petition The writ of performance shall be published within three days of the time of filing of the petition. After all, this is the purpose of this legislation; to have the indebted amount returned in a quick and efficient timing. To return the obligated amount back to the creditor within three days of the submission of the claim is a testament to serving justice to justice. Fifth: Referring the claim to a competent court where the judge refuses to issue the writ of performance Under Article 145 of the Code of Civil Procedure, if a judge refrains from issuing a writ of performance for any reason, he shall be in charge of determining a hearing where the case will be heard before a competent court. The court shall then order the debtor to appear before it at the appointed session. Basing this on the fact that the measures before the substantive courts follow the usual procedures and none of the litigants may challenge the decision of the assignment. Sixth: The creditor must announce the performance order to the debtor: Article 146 of the Code of Civil Procedure stipulates that should the writ of performance be issued then the creditor shall announce the contents of the writ of performance to the debtor's person, in the debtors original country, or in his work place. In doing so, they must provide the petition and the order issued against the debtor to perform the debt. If this is not announced within six months of the issuance of the order, the petition and the writ of performance issued will be considered as if they were not. Thus, they would be void of legal effect. Seventh: Complaints and Appeals on a writ of performance: The debtor may raise a complaint as to the writ of performance within fifteen days from the date of its declaration. Upon doing so, the complaint must be causative for it to be heard before the competent court where the usual procedure shall take place for bringing the case before it. A creditor may also appeal in agreement with the rules and procedures of appealing judgments. Further, the start date of an appeal will begin from the date the complaint period has elapsed. The right to complain is waived if it is challenged directly by an appeal (Article 147 of the Civil Remuneration Act). Eighth: Method of executing the writ of performance: The performance order shall be subject to the usual procedures and the execution of the judgment provisions. With this follows the creditor's entitlement to raise a claim for execution after the period of complaint and appeal have elapsed regardless of whether it is an appeal to the Court of Appeal. An Overview Finally, we must ensure to discuss the rule included in the judgment of the Dubai Court of Cassation on 26 February 2012 in Civil Appeal No. 253/2011 issued in 2012. The decision highlights the right to establishing a claim for a performance order, summarizing all matters relating to the performance order and the conditions required to allow the issuance of one. The following is stated: 28 Court Uncourt [As per Articles 42, 143, and 145 of the Civil Code of Civil Procedure, a plaintiff who claims a right before his adversary can appeal to the relevant court through a statement of claim. An exception to this norm would be resorting to the issuance of a writ of performance. This can be done if the creditor is claiming for a debt that is proven in writing through signature and provided that it is consistent with several other conditions. Namely that the debt's performance is not dependent on the fulfillment of any conditions and that the amount indebted is fixed. Only if all of these conditions are fulfilled can a claimant resort to a writ of performance. It is not lawful to resort to a writ of performance claim even if these circumstances are met for only a partial amount of the debt of the claimed amount. It is a method that can be resorted to only in an exception, and its boundaries should not be broadened to allow partiality. Similarly to how a judge cannot issue an order that only allows part of a claim and disallows another part only to have it referred to a competent court for adjudication. Insofar as the above-mentioned, Overview and Conclusion Swift Justice Article 145 provides that if the judge considers that the claimant has not responded to all his requests, then it is necessary for the judge to reject the issuance of a writ of performance. This does not alter the existence of a link between the written fixed debt and the claim of another right attached to it, consequent to it, or connected to unless it is set in writing. Further, a performance order for a fixed amount can be pursued by a creditor without resorting to usual procedures for raising a claim. The legislature has also necessitated resorting to this exceptional route if the creditor is claiming for something transferred that is of a fixed type and amount, or he is indebted as per a commercial paper if his claim is addressed to the maker, drawer, and the guarantor. Conclusion Swift justice is what any legal system requires to ensure its claimants are met with the appropriate protection. The issuance of a writ of performance is one example of how a claim may be expedited and resolved within a few days. STA's team of litigation lawyers are well equipped and versed to handle matters relating to debts and collection. Court Uncourt 29 WHO’S WINNING AND WHO’S WHINING UNDER SAUDI ARABIA’S NEW ENFORCEMENT LAW Preface "Tarbitration to resolve disputes and he Prophet Muhammad (resorted to) (recommended) others to use it. His (involvement in) arbitration between the clans of the Quraysh tribe during the renovation of the Ka'ba is significant in the history of Islam and the development of Shari'ah. A dispute broke out between the tribes on who would reinsert the Black Stone in the Ka'ba after its renovation. No clan head wanted to relinquish this great honour of any other clan. Through his successful arbitration of that dispute, the Prophet prevented ‘potential’ war among the Quraysh Tribes." i Speaking specifically of Arbitration and the Kingdom of Saudi Arabia, the history and origin are both intriguing and challenging. In Saudi Arabia vs. Arabian American Oil Company, ii the arbitral tribunal considered and accepted governing laws of Saudi Arabia to apply to certain concession contract but was reluctant to apply Shari'ah principles in totality. The said reluctance resulted in tribunal using general customs applicable to the oil industry. In sum, the award was passed against the Kingdom and in favour of Arabian American Oil Company. Although the verdict was disappointing, the Saudi Government accepted the decision but renegotiated the concession arrangement with Arabian American Oil Company until 1980's and finally in November 1988 incorporated Saudi Aramco according to a Royal Decree, which is today one of the world's largest oil entity. Following the adverse verdict, Saudi Arabia enacted Resolution Number 58 which aimed at averting local government ministerial departments from engaging in arbitration.iii Saudi Arabia's ratification of the Riyadh Convention in 1985 resulted in the change of these sentiments. iv The Previous Regime Earlier, the New York Convention was the principal piece of legislation in Saudi Arabia for recognising and enforcing foreign (international) arbitral awards; this gave rise to a lack of domestic legislation in Saudi Arabia that was in conformity with the local laws. The inadequacy of laws fuelled the need for change in recent years. Therefore, Royal Decree Number M/34 of 2012 (dated 16 April 2012 and which came into force on 9 July 2012) (the 2012 Regulations) repealed the previous Saudi Arbitration Law of 1983 (Royal Decree Number M-46 and dated 12 Rajab 1403H, corresponding to 25 April 1983) (the Old Regulations). Some of the salient features of 2012 Regulations include: i. Decree M/34 introduced sweeping changes thereby removing the obstacle of local courts 30 Court Uncourt approving the arbitration before the actual commencement of the arbitration. This change, in turn, empowered the arbitral tribunals in Saudi Arabia to decide on its 'own' jurisdiction as provided for in the UNICITRAL Model Law. ii. The 2012 Regulations for the first time, also paved the way and considered the principle of severability of arbitration clause consistent with the UNICITRAL Model Law. iii. The laws before 2012 Regulations imposed a mandatory obligation requiring arbitrators to be Muslim males. This requirement witnessed a revision under 2012 Regulations and arbitrators were now required to have knowledge, experience, and expertise thereby continued on next page removing any reference to gender or nationality. iv. The 2012 Regulations permitted parties to agree to international arbitration before international arbitration bodies such as ICC or the International Chamber of Commerce and the London Court of International Arbitration (the LCIA), however, the essential condition was that the rules of such international arbitration bodies should not contravene Shari'a principles. v. Likewise, the above Decree permitted parties to consider and agree on arbitration venues in Saudi Arabia or any other location that the arbitration tribunal may deem fit. An Attempt to Hold Up International Standards However, the arbitration regime of Saudi Arabia once again fell short of international expectations due to its entry to the New York Convention in 1994.v Hence, a new enforcement law came into force in February 2013 by issuing the Royal Decree Number M/53 (the New Enforcement Law) with the intention to pursue and modify the local arbitration rules. The primary objective of the New Enforcement Law is to substitute the existing 1989 Rules of Civil Procedure before the Board of Grievances by enforcing provisions that may affect all aspects of enforcing domestic and foreign arbitral awards. The New Enforcement Law also provided that arbitral awards that were in violation of Sharia principles or public policy were not enforceable in the kingdom. Further, the commitment to diminish the existing KSA Enforcement Law - Holding up to International Standards Court Uncourt 31 arbitrator’s authority exhibited by Saudi court unveils that the country’s arbitration regulations are moving in a favourable direction. Panorama of New Enforcement Law Article 1 of the New Enforcement Law has provided that the Enforcement Judge (the Enforcement Judge) would be ‘the Chairman and Judges of the Enforcement Circuit, the Enforcement Circuit Judge, or the Judge of the Single Court’. Hence, the Enforcement Judge has a wide ambit of authority to enforce and monitor the judgments and awards in the Kingdom, after taking the exceptions into consideration. However, Article 2 stipulates that the Enforcement Judge is bound to follow the principles of Sharia law unless the law has explicitly mentioned otherwise. Before the New Enforcement Law, parties were mandated to bring the proceedings before the Board of Grievances for enforcement of foreign and domestic awards. The Enforcement Judge is also authorised to take the necessary steps and obtain assistance from the concerned authorities if and when a party fails to confer with the enforcement of the award under Article 7 of the New Enforcement Law. Further, Article 9 has stated that the Enforcement Judge would compulsorily enforce the award after the presentation of an executive deed. Further, the principle of reciprocity would also be applicable while enforcing a foreign arbitral award as stated in Article 11. The provision further states that the party who is seeking to enforce an arbitration award in the kingdom should keep the following points in mind while raising his contention to ensure the enforcement of the same: i. The jurisdiction of the local courts regarding the dispute; ii. arbitration proceedings are in compliance with the due process; iii. The award is final as per the law of seat of arbitration;iv. the award does not refute or contradict a judgment or order of a judicial authority with competent jurisdiction in the kingdom, and v. the award is in conformance with the public policy of Saudi Arabia. An Enforcement Judge will enforce an arbitration award in Saudi Arabia only if the same does not conflict with the any of the points mentioned above. Paradigm of the Enforcement Law A few years ago, a UAE subsidiary of a Greek telecommunications company obtained an ICC arbitral award totalling US Dollars eighteen million and five hundred thousand (USD 18,500,000) from a Londonseated tribunal constituting of three arbitrators. The claimant succeeded in its claims against a national data communications service provider and also successfully defended its counterclaims totalling US Dollars three hundred and fifty million (USD 350,000,000). Subsequently, the Claimant sought recognition and enforcement of the award in the Saudi courts. However, the execution of the arbitration award was dicey due to the strict application of domestic laws as per the previous regime. 32 Court Uncourt However, Saudi Arabia passed the 2012 Regulations and the Enforcement Law during the pendency of the matter. The Enforcement Law affected in the case in such a manner that the claimants were required to commence proceedings before the Enforcement Courts, rather than through the Board of Grievances which had jurisdiction earlier. This amendment in the law may benefit the party in whose favour the award is granted since the decision of the Enforcement Judge is final, and an appeal does not lie thereunder. Hence, the Claimant in the above case could not appeal against the award of the Enforcement Judge. This judgment depicts momentous departure from the existing law to the New Enforcement Law and the creation of an undeniable nexus between the latter and international arbitration standards. All’s Well That Ends Well! The New Enforcement Law is a significant step in a complimentary direction that may elevate the use of arbitration in Saudi Arabia. However, the practical advantages of the new regime are yet to be unleashed; as only time can tell about its effectivity and reliability. i Arbitration in the Kingdom of Saudi Arabia [article]; Arbitration International, Vol. 30, Issue 2 (2014), The Journal of London Court of International Arbitration pp. 388 Al-Ammari, Saud; Martin, Timothy 30 ii Saudi Arabia v. Arab Am. Oil Co. (ARAMCO), 27 ILR 117(1963); supra; note i iii supra; note i iv Saudi Arabia ratified the Riyadh Arab Agreement for Judicial Cooperation from its inception in 6 April 1983; supra; note i v UN Convention on Recognition and Enforcement of Foreign Arbitral Award dated 10 June 1958 (and came in force on 7 June 1959) vi Royal Decree Number M/53 dated 13 Sha'ban 1433H, equivalent to 3 July 2012. The Saudi official gazette published the Enforcement Law under Issue Number 4425, Year 90, 13 Shawal 1433H, corresponding to 31 August 2012. In line with provisions contained in Article 98 of this Law, the law came into force six months after being published, which was set for 16 Rabi II 1434H corresponding to 27 February 2013. The Implementing Regulation (2) on the Enforcement Law was officially issued on 17 Rabi II 1434H corresponding to 28 February 2013G; supra; note i 33 Court Uncourt he impact of globalization and elimination of trade barriers is considered to be an economic merit that consolidated the domestic markets of the world under one roof. However, there also exists an opposing view to this concept. Some financial pundits have argued that this global phenomenon may have paved the path for instability and competition hitches in domestic markets. Further, they also contend that the entry of international players into the domestic markets often leads to a misbalance in the local sectors and industries. Nevertheless, minimal trade restrictions and government intervention have increasingly become synonymous with the success of an entity. This requirement equally applies to modern financial centres. The Abu Dhabi Global Market (the ADGM) is currently the most prominent and subsisting example in this regard. The financial free zone became predominant in the region due to scarce trade barriers and absence of restrictions imposed on mainland companies in the United Arab Emirates. Further, the adaptation of international corporate governance techniques along with global financial norms and standards have only acted as a catalyst to this process. T 34 Court Uncourt Setting up a Legal Entity in ADGM The ADGM offers investors with superior location and a dynamic business environment to attract investors from the global financial community. Multinational corporations approach the financial free zone with the intention of establishing themselves in the region; whereas, new investors view this as an opportunity to establish themselves at par with the former. Further, the common-law legislations and legal structure of the free zone acted a magnet to the investors who were looking to either, expand or establish their business in the region. The ADGM also covers in-house courts and dispute resolution bodies to avoid the implication of Shariah Law onto civil and commercial disputes that arise within the free zone. The free zone also offers a variety of real estate solutions to meet the high-end and dynamic needs of different types of entities established in the free zone. Customizable office spaces and retail outlets are only a new start to a long list of attractions in the ADGM. The robust and extensive set of ADGM company laws that largely mirror the UK Companies Act of 2006 but carefully cover requirements of the region and local regulations. The interesting feature of 'restricted scope entity' providing for minimal disclosure requirements will open doors to holding company structures where investors prefer safeguarding sensitive information and trade secrets and same time prefer a regional holding company. ADGM has made substantial development in collaborating with the big-wigs both - domestically as well as overseas. Collaboration with prominent authorities including the Economic Department in Abu Dhabi, the UAE's Central Bank, Insurance Authority, the Securities and Commodities Authority, Abu Dhabi Municipality, the Financial Services Commission in Jersey have set a benchmark. TOPIC DETAIL Limited by Shares 1. At least two directors (minimum one should be a natural person); 2. At least one secretary. Limited by Shares (Limited by Guarantee, Unlimited with Shares, Unlimited without Shares, Restricted Scope, Protected Cell Company & Incorporated Cell Company) 1.At least two directors; 2. Secretary is not mandatory. Court Uncourt 35 ADGM has evolved to be the pivotal point for investors who are looking to undertake financial activities in Abu Dhabi. The dedicated Financial Services Regulatory Authority (the FSRA) regulates and overlooks the licensing of all the entities that are engaged in the financial sector and are looking to establishing their presence in the free zone. The FSRA has endeavored to provide the investors with an ineffable experience by adopting international standards employed in global financial centers in Hong Kong, London, and Singapore. Ergo, the risk-based financial sector would be governed by the FSRA while conducting various activities such as Branch of (non-ADGM Company) Partnerships (General Partnerships, Limited Partnerships & Limited Liability Partnerships) Applicants looking forward to setting up a company in the ADGM must submit an application form (online) along with the following documents to expedite the application process: i. copy of passport, visa page or immigration entry stamp and Emirates ID of director(s), authorized signatory, secretary and shareholder(s); ii. application form for reservation of proposed name of the company; iii. the business plan of the proposed company; iv. statement of capital and initial shareholding (for companies limited by share capital); banking, hedge funds, wealth and asset management and other financial services. Further, investors in ADGM have the option of setting up one of the following types of companies to conduct their activities in the free zone: Suitable for establishing presence or representative office. * Varies depending on the type of partnership v. statement of guarantee (for companies limited by guarantee); vi. statement of proposed officers of the entity;vii. tradename reservation document; viii. a statement with the intended address of the proposed company; ix. a copy of proposed articles of association; x. a copy of the resolution of Board of Directors;xi. a copy of lease agreement for office space; xii. confirmation of restricted scope of the company; xiii. duly filled and signed data protection form (DP-01) xiv. duly filled and signed beneficial or ultimate owner form (BO-01); and xv. any other document(s) that may be required by the authorities based on the scope of activities that the company proposes to undertake. Branch of (a non-ADGM General Partnership, a non-ADGM Limited Partnership & Limited Liability Partnership) * Varies depending on the partnership model 36 Court Uncourt However, companies looking to conduct financial activities in the free zone may have to undergo a strict company formation process since the FSRA would review their application. Further, the relevant authority (FSRA for financial services and ADGM Registration Authority for non-financial and retail services) would issue a license once the application form has been submitted and reviewed by them. Subsequently, the applicant would have to apply for the FAWRI account (e-visa online application system) and an establishment card to apply for the visas of the investors and officers who would be working in the proposed company. Company formation in ADGM could be an elaborate process (especially for entities undertaking financial activities) with extensive documentation and compliance procedures. Ergo, investors are advised to take assistance from a law firm that provides bespoke legal advice while setting up a company in the ADGM due to the lengthy regulatory procedures and documentary compliances that have been established by the free zone to conform to international corporate norms. Court Uncourt 37 2 hour seminar followed by drinks, canapés and networking When? Dates to be advised soon Where? Dubai, United Arab Emirates (Venue to be advised soon) Fees Free – by invitation only (RSVP mandatory). More about the Event With our innovative and insightful approach to legal developments and prevalent topics, STA welcomes this opportunity to share our knowledge, recent legal and regulatory advancements and provide an opportunity for seasoned counsels, business heads and members of legal profession to meet, network, and update themselves. Serial Topic of Discussion 1 Dubai Property Law 2 ESOPs 3 Bankruptcy Law 4 Arbitration 5 IP Law Seminar Topics Particulars The topic will cover recent regulations in property sector, recent court cases, JVs, and more STA’s team will discuss the possibility of raising ESOPs in light of new regulations and amendments to companies law The most awaited Bankruptcy Law is finally here. The topic will cover the new law, CFR, its role and more Criminal Sanction against arbitrators and court experts in light of Federal Decree Law Number 7 of 2016. Understanding the GCC framework and international treaties, one window applications and more. RSVP- email@example.com Court Uncourt 39 STA (the Firm) represents a group of internationally qualified counsels. STA Law Firm Limited is a company incorporated pursuant to Abu Dhabi Global Market Companies Regulations. STA Legal Consultants FZC is incorporated pursuant to applicable federal and local laws of Ras Al Khaimah.