Header graphic for print

Al-Mirsal

Insights and commentary on legal developments in the Middle East

Middle East and Africa Technology, IP and Sourcing Focus – Volume 5

By Justin Cornish, Brian Meenagh and Alice Marsden on Posted in Intellectual Property, Technology

Latham & Watkins’ Middle East Technology, IP and Sourcing team has just published the fifth edition of Middle East and Africa Technology, IP and Sourcing Focus.

This edition includes articles on the running of a competitive RFP process, a note on the use of warranties, indemnities and undertakings in English, South African and UAE law and a Middle East Regional Telecommunications update.

Please contact Justin Cornish, Alice Marsden or Brian Meenagh if you would like to automatically receive this newsletter in future.

Photo: Dreamstime Stock Photography

US$2.2 billion Drydocks World Restructuring Approved in First Test Case under Dubai Decree No. 57

By Christopher Hall, Christopher Lester, Christian Adams and Salam Alsmadi on Posted in Restructuring & Insolvency

On August 28, 2012, the Special Tribunal related to Dubai World (the “Tribunal”) formally approved the restructuring of more than US$2 billion of debt of Drydocks World LLC and Drydocks World – Dubai LLC (together, “Drydocks”) under a syndicated term loan facility and separate hedging agreements, in the first restructuring approved under Dubai Decree No. 57 for 2009 (“Decree 57”).

Decree 57 creates an unprecedented insolvency regime applicable to Dubai World and its subsidiaries. Decree 57 gives the Tribunal exclusive jurisdiction over claims against Dubai World and its subsidiaries and the administration of formal company reorganisation proceedings. Decree 57 also provides Dubai World and its Subsidiaries with the opportunity to implement a restructuring without the support of all creditors; provided that certain minimum thresholds are met, the Tribunal has the discretion to bind dissident creditors to a restructuring deal approved by the majority.

The Tribunal is a special-purpose court comprised of three judges of the DIFC Courts with substantial experience in insolvency matters. Decree 57 served as the foundation for the successful restructurings of more than US$40 billion of debts of Dubai World and Nakheel PJSC. Latham & Watkins LLP represented the Government of Dubai and Dubai Financial Support Fund in connection with the restructurings of Dubai World and Nakheel and the drafting of Decree 57.

The Tribunal’s public approval of the Drydocks restructuring represents the first major regional restructuring concluded through a judicial process with the support of a majority of creditors and public transparency.  The key terms of the Drydocks restructuring reflected in the public record include:

  • Restructuring and amendment of the US$2.2 billion syndicated term loan facility, with support of a majority of creditors.
  • Hold-out creditors (representing approximately 2% of the total claims) bound by the support of the majority and the approval of the Tribunal.
  • Extension of multiple new credit facilities to support the restructuring.
  • Sale of Drydocks’s operations in Southeast Asia in consultation with, and subject to approval of, a majority of creditors under the amended US$2 billion syndicated term loan.

The Tribunal’s handling of the Drydocks restructuring is a ground-breaking development for Dubai and the Middle East as a whole. The fallout from the global financial crisis has placed insolvency and restructuring law reform initiatives firmly in the sights of the region’s policy makers; it remains to be seen whether Decree 57 and the successful restructurings of Dubai World, Nakheel and Drydocks will be used as a template for law reform in the UAE and the wider region.

Further information regarding the Drydocks restructuring and Middle East insolvency law reform initiatives can be accessed via the following links:

Photo: Dreamstime Stock Photography

UAE’s New Investment Funds Regulation Adopted

By Kai Schneider and Oliver Simpson on Posted in Investment Funds

The final text of the UAE’s long-awaited new Investment Funds Regulation (the Regulation) has been approved by the Board of the UAE Securities and Commodities Authority (the SCA). The Regulation will take effect as SCA Board Resolution No. 37 of 2012 on the Regulation of Investment Funds following publication in the Official Gazette in late August or early September. The Regulation, substantially revised since a first draft was issued for public comment in January 2011 (the Draft Regulation), retains several provisions that significantly alter the regulatory regime governing investment funds.

Highlights of the Regulation include:

  • Primary responsibility for overseeing the licensing, regulation and marketing of investment funds in the UAE has been transferred from the Central Bank of the UAE to the SCA
  • SCA approval is now required for the establishment of a local fund and for the marketing of a foreign fund to investors in the UAE
  • The marketing of a foreign fund to investors in the UAE requires the appointment of a locally licensed placement agent

The Regulation marks a significant step in the development of the regulatory framework governing investment funds in the UAE — both in terms of establishing local funds and the marketing within the UAE of interests in foreign funds — and forms part of the UAE’s drive towards a “twin peaks” regulatory model.

More details are provided in the Client Alert published 9 August 2012 and an earlier Client Alert about the Draft Regulation published in 2011.

Photo: Dreamstime Photostock Photography

Key Expected Changes to the UAE’s Draft Commercial Companies Law

By Christopher Lester, Jade Laktineh and Saad Khanani on Posted in Regulatory

The UAE’s Draft Commercial Companies Law (CCL) introduces some significant changes to the existing CCL (Federal Law No. 8 of 1984). Already approved by the UAE Cabinet, the Draft CCL is expected to become law in the next few months.

Chris Lester, Jade Laktineh and Saad Khananiof the Abu Dhabi office and Charles Fuller of the Dubai office have prepared a five-part briefing series highlighting some of the key expected changes to the Draft CCL which covers changes to:

 Photo: Dreamstime Photostock Photography

Reforms to Banking Disputes in Saudi Arabia

By Mahmoud Abdel-Baky on Posted in Banking and Finance, Islamic Finance, Project Development and Finance, Regulatory

Several new laws have taken effect in recent months in the Kingdom of Saudi Arabia from arbitration to the establishment of a centre for registration of lien and the long awaited mortgage law. As part of the restructuring underway in the Saudi Arabian judiciary system, long standing regulations for the resolution of banking disputes in the Kingdom of Saudi Arabia also have been revised. These new reforms represent a welcome step toward achieving greater certainty and predictability in the resolution of banking disputes in the Kingdom of Saudi Arabia.

The various reforms include the following:

  • The Banking Disputes Resolution Committee of the Saudi Arabian Monetary Agency will be renamed the Banking Disputes Committee (the “Committee”). The Committee will adopt decisions by majority vote and decisions will be subject to appeal within thirty (30) days.
  • A Banking Disputes and Violations Committee (the “Appeal Committee”) has been created to hear appeals from the decisions of the Committee and the Banks Supervision Dispute Resolution Committee. The decisions of the Appeal Committee are final and are not subject to further appeals.
  • The creation of one or more Committee and Appeal Committee circuits comprised of four members each, three standing members and one standby member. Members are required to have expertise in the field of finance, with at least one member being specialized in Shari’ah.
  • The introduction of a five-year statute of limitation on banking disputes. The five years start to run from the date of knowing the incident that gave rise to the dispute or from the date the amount in dispute falls due.
  • Increased avenues for enforcement, as the Committee and Appeal Committee may now (i) sequester debtor’s accounts, (ii) prohibit a debtor’s dealings with governmental authorities, and (iii) ban debtors from leaving the Kingdom of Saudi Arabia.
  • An enhancement of the binding effect of decisions of the Committee and Appeal Committee, as other governmental authorities now must recognize and enforce decisions made by them.

Photo: Dreamstime Photostock Photography

 

Middle East and Africa Technology, IP and Sourcing Focus – Volume 4

By Justin Cornish, Brian Meenagh and Alice Marsden on Posted in Intellectual Property, Technology

Latham & Watkins’ Middle East Technology, IP and Sourcing team has just published the fourth edition of Middle East and Africa Technology, IP and Sourcing Focus.

This edition includes articles on the importance of due diligence in an outsourcing transaction and on maintaining competitive pricing in a long-term services arrangement and updates on the amendments to the Saudi Arabian Telecommunications Law, the GCC Unified Trade Marks System and regulation of “daily-deals” websites in the UAE.electronic microchip

The edition also includes a link to the Latham & Watkins IP Primer for the UAE, which is a very useful document for organisations and industry sectors across the Middle East that deal with intellectual property rights.

Please contact Justin Cornish, Alice Marsden or Brian Meenagh if you would like to automatically receive this newsletter in future.

Photo: Dreamstime Stock Photography

New Markets Law Regime Takes Effect in the DIFC

By Oliver Simpson, Kai Schneider and Andrew Tarbuck on Posted in Capital Markets

A number of significant changes to the securities and capital markets regime in the Dubai International Financial Centre (DIFC) came into force on 5 July 2012. The changes represent the policy of the DIFC’s regulator, the Dubai Financial Services Authority (DFSA) to more closely align the DIFC with leading benchmark jurisdictions and the requirements of the EU Prospectus Directive (the PD).

The changes include a new DIFC Markets Law (DIFC Law No. 1 of 2012) and an all-new Markets Rules (MKT) module of the DFSA Rulebook, which replaces the now obsolete Offered Securities Rules (OSRs). MKT incorporates the new DFSA Listing Rules, which reflect the recent transfer of listing authority functions from NASDAQ Dubai to the DFSA. NASDAQ Dubai has retained authority for setting admission and disclosure standards for entities seeking to have their securities admitted to trading on its exchange.

Triggers for a Prospectus. The previous Markets Law regime employed a three-way classification of all offers of securities in or from the DIFC into “public offers”, “exempt offers” or “unregulated offers”. MKT adopts a structure that is more closely aligned with the PD regime and focuses on two types of activities, each of which triggers the requirement to publish a prospectus in the DIFC (a Prospectus). These are (i) an “Offer of Securities to the Public” made in or from the DIFC; and (ii) an application is made to have securities admitted to trading on an “Authorised Market Institution” (AMI) situated in the DIFC. Note that this is an either/or test – even where an offer is not an “Offer to the Public” for the purposes of MKT (i.e. it is an “Exempt Offer”), a Prospectus will still be required where the securities are being admitted to trading on an AMI situated in the DIFC.

Abolition of the requirement for a “DIFC Exempt Offer Statement”. The OSRs required a Prospectus relating to an “Exempt Offer” in the DIFC to include a “DIFC Exempt Offer Statement”. The wording for this statement was stipulated in the rules and had to be followed verbatim and included on the front page of a Prospectus. Interestingly, there is no such requirement under the new rules. Going forward, an appropriate legend should still be included in an offering document to make clear that the prospectus relates to an “Exempt Offer” in the DIFC. However, there is no longer any prescribed wording. Practice is likely to closely follow the previous wording but without using the now defunct term “DIFC Exempt Offer Statement”.

Approval and validity of a Prospectus. Another notable feature of the previous regime was that, although the DFSA reviewed the contents of a Prospectus, it did not formally approve its publication. This differed from the position in many comparable jurisdictions. In line with the PD, the new Markets Law now requires the DFSA’s formal approval for a Prospectus. In addition, whereas the OSRs were silent on the validity period for a Prospectus, MKT, again in line with the PD, provides that a Prospectus will have a validity period of 12 months from the date of approval.

See our Client Alert (No. 1358 dated 5 July 2012) for more in-depth coverage of the changes, or contact Oliver Simpson, Andrew Tarbuck or Kai Schneider with any questions.

 
Photo: Dreamstime Stock Photography

 

 

 

 

Middle East and Africa Technology, IP and Sourcing Focus – Volume 3

By Justin Cornish, Alice Marsden and Brian Meenagh on Posted in Intellectual Property, Outsourcing, Technology

The April edition of Middle East and Africa Technology, IP and Sourcing Focus, a newsletter from Latham’s Middle East Technology, IP, and Sourcing team, is now available. The new issue considers several topics, including the challenges that organisations looking to implement an outsourcing strategy must consider in their outsourcing agreements, updates on the eGovernment strategy of the United Arab Emirates, and ictQatar’s radio spectrum policy.

The newsletter provides know-how, updates and commentary on the technology, IP and sourcing sectors in the Middle East and Africa and is published every two months.

To be added to the distribution list for the newsletter, contact Justin Cornish, Alice Marsden or Brian Meenagh.

Image: Dreamstime

New Rules Issued by Qatar International Center for Arbitration

By Dr. Ferris Nesheiwat on Posted in Arbitration

The Qatar International Center for Arbitration (the “QICA”) has published its rules of arbitration (the “Arbitration Rules”).  The New Arbitration Rules provide a new administrative structure for the QICA, established in 2006 by an Emiri Decree (number 5/8) as part of the Qatar Chamber of Commerce and Industry.

The QICA is an optional forum for commercial arbitration, offering an appropriate mechanism to resolve disputes among national companies themselves or between national companies and other foreign companies. There are two legal arbitration jurisdictions in Qatar: the State of Qatar and the Qatar Financial Center (the “QFC”). The QFC is a separate jurisdiction with its own laws, including those that govern arbitration of commercial disputes in relation to contracts that have been concluded under QFC Law. To date, no cases have been brought under the QFC Rules. Until now, no independent arbitration law exists in Qatar, rather articles 190-210 of Law No. 13 of 1990 The Civil and Commercial Code of Procedure (the “CCP”) regulate arbitrations.

The Arbitration Rules’ new administrative structure includes a board of governors composed of 11 members, an arbitration committee composed of nine members, and QICA management. The rules will be effective for all arbitration requests presented to the QICA from the date of their publication. The UNCITRAL rules, as modified in 2010, are the main basis for the Arbitration Rules.  The Arbitration Rules also provide a model arbitration clause to be included in contracts and agreements and provides for QICA arbitration using either a single arbiter or a panel of three arbitrators.

Main Features

Some of the main features of the Arbitration Rules are below:

  1. Allowance for electronic communication between the arbitration panel and the parties.
  2. The opening statement must be provided within thirty days of the defendant receiving the request for arbitration, and the defense statement must be provided within thirty days from the date of receipt of plaintiff’s opening statement.
  3. The arbitration panel itself is charged with settling any disputes about its jurisdiction.
  4. If the parties do not agree on the number of arbitrators, then three arbitrators will be appointed.
  5. If the parties do not agree on the appointment of arbitrators from the QICA list, the QICA will appoint the arbitrators.
  6. The parties can ask for an arbitrator to be disqualified within 15 days from the appointment for the arbitrator, and a financial bond determined by the arbitration panel must be submitted.  If the panel decides against the disqualification request, it can be finally appealed to the QICA’s arbitration committee.
  7. The default time period for the arbitration proceedings is six months, unless the parties agree for a longer period.
  8. The governing law for the arbitration proceedings is the law chosen by the parties, and if the parties have not agreed to a governing law, the panel will apply the law that is most closely related to the dispute.
  9. Amiable Compositeur, in which a panel is empowered to decide a dispute in accordance with notions of fairness, is expressly prohibited by the Arbitration Rules unless specifically requested by the parties.
  10. All panel decisions are in writing and final, and must be accompanied by the arbitration agreement and all the evidence considered.
  11. The losing party is responsible for the arbitration fees.

A Positive Development:

Market observers will see this as a positive step by Qatar to reach out and serve as a reliable and trusted arbitrator on the international stages, especially since the QICA has already presided, since its inception, over the resolution of hundreds of arbitrations disputes.  The challenge will be to see if Qatar manages to produce a modern and effective arbitration law.  It remains to be seen if the continued success of the QICA will be to the detriment of the QFC forum, but more importantly, the continued success of the QICA will be based on its ability to administer arbitration disputes in a transparent and professional standard.

Photo: Dreamstime Stock Photography

Japanese Tax Law Reforms Facilitate Issuance of Sukuk by Japanese Companies

By Craig R. Nethercott and Chirag Sanghrajka on Posted in Capital Markets, Japan

The Japanese Financial Services Agency has issued a document (see Taxation of J-Sukuk Q&A) highlighting reforms to Japanese tax laws implemented in 2011 that facilitate the issuance of sukuk by Japanese companies (J-Sukuk).

Following these reforms, distributions paid on J-Sukuk benefit from the same favourable withholding tax treatment as interest or coupons paid on corporate bonds issued by Japanese companies. In addition, if certain conditions are fulfilled, transfers and re-transfers of real estate that constitute the assets referenced in a J-Sukuk issuance will not give rise to real estate acquisition taxes and the registration of such transfers will not give rise to registration and licence taxes.

When taken together with additional reforms implemented in early April 2012 to allow J-Sukuk to be cleared through the Japan Securities Depository Centre, it seems evident that a concerted effort is being made to attract new Shari’ah compliant sources of capital to Japan. In this respect Japan joins a number of other financial centres, including the United Kingdom, Hong Kong and Singapore, in implementing legislative changes to provide a legal environment in which Islamic finance can flourish.

For more information on this topic, click here to view a news release from Islamic Finance News.

Photo: Dreamstime Stock Photography