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Consultation Paper No. 7 Law Relating To Application Of DIFC Laws
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Consultation Paper No. 7 Law Relating To Application Of DIFC Laws

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January 2003

THIS DRAFT LAW IS PUBLISHED FOR CONSULTATION PURPOSES ONLY. THE REGULATORY AUTHORITY RESERVES THE RIGHT TO AMEND THIS DRAFT AT ITS SOLE DISCRETION. THE ENACTMENT OF THIS DRAFT LAW IS CONDITIONAL UPON THE OFFICIAL PUBLICATION OF A FEDERAL DECREE, THE AMENDMENT OF DUBAI DECREE NO. 3 OF 2002, AND THE ISSUANCE OF THE LAW BY THE CHAIRMAN OF THE DIFC.

Law Relating To Application Of DIFC Laws Of The Dubai International Financial Centre

Primary Purposes

1. To provide for freedom of contract in the choice of governing law.
2. To provide for effective contractual arbitration clauses.
3. To provide governing law provisions workable in a context of multinational, multi-party dematerialised Securities transactions.
4. To provide for the Recognition of foreign trust structures.

Summary

Part 1: General & Part 2: Scope

Establish the title, authority, application, enactment, commencement and scope of the law relating to the application of DlFC laws.

Part 3: Contract

Establishes as the governing law of contracts, the law chosen by the contracting parties or in default of express choice, the law of the DIFC; establishes that the law governing a contract between an agent and a third party also governs relations between the principal and that third party; establishes that the law governing a contract which gives rise to a right of subrogation also governs the relations between the third party subrogator and the debtor.

Part 4: Submission to Jurisdiction in Contracts

Provides for the validity of express submission to jurisdiction and to arbitration.

Part 5: Property

Establishes as the law governing rights in Property, classification of Property and validity of transfer of Property, the law of the jurisdiction where the Property is located; establishes that where Property is in transit or its location is unknown, validity of transfer is governed by the law governing the transfer; establishes with respect to Securities that the validity of a Security, the rights and duties of its Issuer, the validity of its registration or transfer and of any third party interests in the Security are governed by the location of the issuer; establishes with respect to the acquisition of Security entitlements from a Securities intermediary, that the rights and duties of the intermediary and entitlement holder and any third party interests in the Security entitlement are governed by the law of the jurisdiction of the Securities intermediary.

Part 6: Trusts

Provides for the Recognition of trusts constituted in other jurisdictions, whether created expressly or arising by operation of law; establishes that the existence validity and interpretation of express trusts is to be determined by reference to the Instrument constituting the trust and that the existence validity and interpretation of trusts arising by operation of law is to be determined by reference to the law under which the trust arose.

Submission of Comments

Please note, that although each draft is in near final form, it is still 'work in progress' and may therefore undergo further amendments prior to enactment. However, it is anticipated that any amendments would be technical in nature rather than substantive and therefore the Regulatory Authority believes it is a sensible time to engage in consultation.

Any persons wishing to submit comments should, where applicable, provide details of the organizations they represent. In addition, persons suggesting alternative approaches are encouraged to submit the proposed text of possible amendments that would be necessary to incorporate their suggestions.

Please note that the names of the commentators and the content of their submissions may be published on the Regulatory Authority website and in other documents to be published by the Regulatory Authority. If you wish your name to be withheld from publication by the Regulatory Authority, please indicate this when you make your submission.

Any comments should be addressed to Ms. Roberta Calarese, Legislative Counsel, Regulatory Authority, P.O. Box 74777, Dubai, u.a.e. All comments should be provided in writing no later than 28 February 2003.