WHAT IS DUBAI INTERNATIONAL FINANCIAL CENTRE
WHAT IS DUBAI INTERNATIONAL FINANCIAL CENTRE( ‘DIFC’) ?
The Dubai International Financial Centre (‘DIFC’) was established in September 2004 and is a 110 acre zone within the Emirates of Dubai. The DIFC is a self-contained jurisdiction created with a view to establishing an onshore financial centre in Dubai. The DIFC represents a vision of creating an international financial hub in the Middle East that can operate between the time zones of other leading centre such as Hong Kong and London, and operate along similar lines to those and other kinds of financial centres. As such, DIFC has its own institutions,, laws and court system clearly separate from those of the Emirate of Dubai and the federal institutions of the UAE.
The principal governing institutions within DIFC are the DIFC Authority and the Dubai Financial Services Authority (DFSA), both of which were established in 2004 with authority to self-regulate civil and commercial matters within the DIFC. The DIFC Authority oversees the operation and administration of DIFC and is responsible for developing laws and regulations governing non-financial services activities within DIFC. The DFSA is a regulatory body responsible for financial services activities within DIFC. The principal role of the DFSA is to grant licenses and regulate the activities of financial institutions and individuals who are operating within DIFC. In civil and commercial matters UAE federal law does not apply within DIFC but the federal laws governing criminal activity and anti-money laundering apply.
The UAD and each of the Emirates is essentially a civil law jurisdiction drawing on features from Ottoman and Islamic law. Unlike Common law jurisdiction, there is no tradition of binding precedent but the inferior courts will generally follow the rulings made by superior courts.
At national level, the federal judiciary in the UAE consists of the federal Supreme Court and the Courts of First Instance. The independence of the federal judiciary is protected under the terms of the constitution of the UAE adopted by each of the Emirates in 1996. Each of the Emirates has secular courts to rule about criminal, civil and commercial matters and Islamic courts to review family and religious disputes. Only Muslims would normally appear in the Syariah Courts that have jurisdiction to hear matters such as family disputes, divorce, inheritance and children issues.
The DIFC has established its own court system to adjudicate on the civil and commercial laws of the DIFC. The DIFC Judicial Authority, consisting of the Court of First Instance and the Court of Appeal, was established by DIFC Law No.12 of 2004. The official language in the DIFC Courts is English. The DIFC Courts will recognize and enforce judgments or arbitral awards handed down by other courts or recognized bodies. The jurisdiction of the DIFC Courts governs trusts established under DIFC law.
In November 2005 the government of the Emirate of Dubai enacted the UAE’s first trusts law. The DIFC Trust Law of 2005 introduced a comprehensive framework for the creation and administration of private trusts (charitable and non-charitable) in the DIFC. The 2005 Law has been repealed with effect from the date of the enactment of DIFC Law No.4 of 2018.
There is also the Investment Trust Law (DIFC Law No.5 of 2006) that governs the position in relation to unit trusts and other forms of collective investment schemes.
The details of the Trust Law of DIFC will be further discussed in future article.