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Abu Dhabi financial free zone means opportunities for common law-qualified lawyers
Abu Dhabi has designated Al Maryah Island its first financial free zone. As such ‘Global Marketplace Abu Dhabi’ (GMAD) at the heart of the business district will be able to develop a new legal and regulatory framework under which firms within the jurisdiction will function.
The introduction of the zone immediately drew comparisons with the Dubai International Financial Centre (DIFC) and its evolution, and has raised questions as to GMAD’s role as another financial centre with potentially separate regulation and legal status.
The DIFC was established in 2004 as a regional hub for financing and capital markets transactions. The difference between this, and a number of other competing mixed-use mega projects in the UAE, was that the DIFC was designated as the first financial free zone in the UAE.
In the context of the UAE, a free zone is a geographical area where businesses may operate under more favourable business conditions, such as 100 per cent foreign ownership. However, these areas largely remain subject to the commercial and civil laws of the relevant Emirate in which they are based, such as Dubai Media City, Abu Dhabi Airport Free Zone and twofour54 Media Zone. However, financial free zones are different in that they are able to create their own laws and regulations and disapply UAE laws (other than criminal law).
Following the DIFC’s designation as a financial free zone, laws were passed to recognise its financial and administrative independence. Since then the Dubai Financial Services Authority (DFSA), the DIFC Authority, the DIFC Judicial Authority and the DIFC Courts of First Instance and of Appeal have been established. The DIFC enacted laws relating to companies, contracts, arbitration, insolvency, data protection, employment and property. The DFSA was also empowered to oversee, administer and regulate activities undertaken in the DIFC. Many of the laws issued in the DIFC are based on English law.
GMAD appears to be following a similar pattern, having announced the establishment of the GMAD’s Courts, Registrar and Regulator. The laws identifying the functions of such establishments have not yet been clarified; however, it would appear there will be further opportunities for common law qualified lawyers in the region (and a number of English law firms are already present on Al Maryah Island) as it a new legislative framework for GMAD seems likely.
We expect further laws to be issued in due course to set out the legal and regulatory structure in more detail.
It is not yet known how GMAD’s regulator will fit in with current regulators in the UAE; whether there will be a securities exchange along the lines of the NASDAQ Dubai; or to what extent the courts will have jurisdiction. One interesting difference between GMAD and DIFC is that when the latter was announced it was a green field site (well yellow actually). Al Maryah Island, the location of GMAD, already has a number of international and local businesses operating there. Get set for an interesting transitional period ahead.