What Kind of Legal Framework is in Dubai for Starting a Business

by Zaara 17, Sep 2021

What Kind of Legal Framework is in Dubai for Starting a Business

Do you know that entrepreneurs face several choices to make while starting a business in Dubai?

Founders have to select the right location and structure of the company, form a company and its ownership, recruit people, set foot into contractual arrangements with customers and suppliers, sort out disputes, and so on.

You must have a basic understanding of the legal framework of the UAE.  This will help you to make the correct decisions and future-proof your startups. Starting a startup is a difficult task. The basics of starting a business in UAE will remain the same internationally, but the differences rise from the business practices specific to the region you have selected and the laws that rule it.

This is applicable to the UAE region as well, whereas the entrepreneurial environment and legal framework form a positive outlook for emerging startups in the region. In this blog, we will discuss it in detail.

The UAE Federal Constitution

The United Arab Emirates consists of Dubai, Ajman, Abu Dhabi, Fujairah, Sharjah, Ras Al Khaimah, and Umm Al Quwain. The UAE federal constitution offers the issuing of powers between the federal government and each emirate's government.

Dubai is under the federal law of the UAE but holds the right to administer its own internal affairs and enjoys certain other special rights.

Dubai’s Legal System

In this world of globalization and advancing markets, Dubai’s economic and cultural growth is strengthened by a legal framework that has developed abundantly to encourage vital local and international businesses in Dubai and is still developing.

A recurring theme when finalizing were to perform business activities is the appropriateness of the legal and regulatory framework in the specific local jurisdiction. The readiness of international businesses to establish and operate in Dubai, and the success of local Dubai businesses, is clear evidence to Dubai’s strong and dynamic legal framework.

The Foundations of the Legal System

Dubai's legal system is formed upon civil law principles and Islamic Shari'a law that constitutes the guiding principles and sources of law. In Dubai, legislation tends to be hatched into a number of major codes offering for general principles of law with a vital amount of subsidiary legislation.

There are federal codes of law that administer in Dubai and the other emirates dealing with the most vital and fundamental principles of law. Therefore, many of the laws passed by the Ruler of Dubai relate to matters which are more ruling in nature.

The Court System

Although the UAE federal constitution allows each emirate to have its own judicial authority, all emirates except Dubai and Ras Al Khaimah have placed their judicial systems into the UAE Federal Judicial Authority. Dubai has kept back its own independent courts, which are not a piece of the UAE Federal Judicial Authority.

One or more judges hear the matters coming before Dubai's courts. There is no need of Juries to be used. There is no system of a model in Dubai or the UAE. However, judgments of some higher courts are issued to offer useful evidence of future judicial interpretation and practice.

You must know that Dubai’s courts perform in the Arabic language, and so legal representation needs legal advocates who are suitably licensed to appear before the courts.

Free Zones

Any legal or regulatory framework of Dubai is as superior as its ability to adjust and develop as the world changes and the needs of local and international businesses become more worldly. There have been some leading developments in Dubai with respect to law and regulation.

 The most notable developments are the creation of the many Dubai Free Zones, which have varying laws and regulations as compared to non-free zone areas. Some of the more well established Dubai Free Zones include

  • Dubai Academic City
  • Dubai International Financial Centre,
  • Dubai Media City
  • Dubai Internet City
  • Dubai Outsource Zone
  • Dubai Design District
  • Technopark Dubai
  • International City Dubai

Dubai Free zones have been vital in developing fame and reputation as an attractive place to set up a business in Dubai. The circumstances for doing business in free zones are highly attractive. The businesses planning to set up in the free zones must set up their business within the geographical boundaries of the particular free zone.

Corporate Governance

Dubai has accepted the need to grow and develop principles of good corporate governance in the Middle East. This can help in attracting foreign direct investment. Hawkamah Corporate Governance Institute is the first institute of such type in the UAE. It helps the countries and businesses of the Middle East region to expand and implement globally well-integrated corporate governance frameworks.

The attitude of Dubai to develop corporate transparency, principles of good corporate governance, and anti-money laundering is a lighthouse for the Middle East region and is a vital attraction to the financial community and international investment.

Why us?

We, at Commitbiz, have been one of the business consultant players in the UAE region. We provide services for companies and business people interested in establishing their progress in the UAE. If you have any further queries, you can contact us.

We will be delighted to help.

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