The United Arab Emirates has taken a significant step in fostering a business-friendly environment that promotes growth and development. The country’s latest Resolution places a significant emphasis on the governance of family companies, ensuring their smooth transition across generations in line with global best practices. This legal framework has been designed to help family businesses overcome obstacles, safeguarding their continuity and sustainability.

Fostering a Favorable Business Environment

The Family Companies Law offers greater flexibility to family businesses, allowing them to flourish in a favorable environment that offers incentives for sustainable growth. This is achieved by addressing a variety of factors that could impact the long-term sustainability and stability of family businesses.

The Committee for Resolving Disputes

The Committee for resolving disputes related to family companies and family properties is a key component of this Resolution. The Committee is responsible for reviewing and examining all disputes related to family companies and family properties while safeguarding the ongoing operations, reputation, and financial standing throughout the resolution process. The committee’s structure is made up of a presiding judge with a rank not lower than that of a Court of Appeal judge, accompanied by two experts proficient in law, finance, and family business management. Their collective knowledge allows the committee to mediate disputes arising from family property contracts, conflict among partners, and disagreements between both partners and family members.

Focus on Dispute Resolution

The committee’s core focus is to examine disputes arising from family property contracts, conflicts among the partners, or disputes the partners and family members. They have authority to take expedited precautionary measures necessary to preserve the continuity of family properties and family companies, protecting their reputation and financial status.

Legislative Synergy

The formation of the committee aligns with Federal Decree-Law No. 37 of 2022 regarding Family Companies and Law No. 9 of 2020 on regulating Family Property in the Emirate of Dubai. This synergy reinforces the intended impact of these legislations, striking a balance between justice requirements and the preservation of the economic interests within these companies and properties.

Scope of the Committee’s Authority 

According to the Resolution, the Committee is authorized to address and resolve a variety of disputes that may arise, including the termination of family property contracts, the dissolution of family company status, or the removal of a family company from the Family Company Register in accordance with Family Company Law. The Committee is also responsible for the distribution of shares among partners and addressing issues related to changes in share categories within these companies. To promote family cohesion, the Resolution specifies that if family property contracts, a family company’s Memorandum of Association (MOA), or its bylaws include provisions for an amicable dispute resolution through a Family Council, the Committee must first refer these disputes to the Family Council for reconciliation and an amicable settlement before considering them. Additionally, the Resolution emphasizes the activation of the Amicable Settlement Centre associated with the Dubai Courts, which play a key role in resolving family company and family property disputes through amicable reconciliation. The Resolution restricts the Committee from addressing these disputes until they have been referred to the Centre and unsuccessful attempts at resolution have been made.

Precautionary Measures 

The Resolution allows the Committee the authority to take expedited precautionary measures as it deems appropriate to protect the continuity of family property and family companies. It primary objective in intervening in conflicts is to prevent disruptions to their operations and mitigate any adverse impact on their reputation or financial standing during the dispute resolution process.

Ensuring Fairness and Integrity  

To ensure fairness and uphold the integrity of the justice system in Dubai, the Resolution allows the Committee with the means to achieve just outcomes and manage the progression of litigation effectively. It also outlines the possibility of appealing the Committee’s decisions and judgments before the appropriate court, in accordance with the conditions and procedures outlined in the Civil Procedures Law.

Oversight and Reporting   

The Resolution mandates the Committee to regularly submit reports on its activities to the Ministry of Economy. This requirement ensures ongoing oversight and facilitates the implementation of measures and steps to enhance the Committee’s effectiveness.

Conclusion    

The Resolution is a cornerstone in the UAE’s mission to become a competitive global business and financial hub. By establishing this Committee and harmonizing legislation, the UAE demonstrates its commitment to empowering family businesses and fostering an environment for economic growth and development.

This Galadari Insight was authored by Advocate Ibtisam Jaafar Ali Al-Raisi and Trainee Advocate Meera Al Khamis Al Ali.
Ibtisam is a qualified Emirati advocate with full rights of audience before all levels of the UAE Courts. She has a proven track record of mediating disputes between family businesses. Her deep understanding of laws and regulations governing family businesses in the UAE ensures she successfully negotiates favorable outcomes for her clients.
Meera is a trainee advocate with a strong focus on UAE disputes, possessing valuable expertise in navigating the intricacies of the UAE Court System.
To learn more about Galadari’s Litigation practice or family businesses disputes in the UAE, please contact Ibtisam or Meera.

Ibtisam Al-Raisi Advocate ibtsam.jaffar@galadarilaw.com

Meera Al Khamis Al Ali Trainee Lawyer meera.alali@galadarilaw.com