G - The New FDI Law and the Constant Approach Towards Dispute Resolution

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The UAE Government has enacted the Federal Decree-Law No. 19/2018 (the Foreign Direct Investment Law) as part of its objective to allow an increased level of foreign ownership in UAE registered companies.

Introduction

Up until now, foreign investors who wanted to own UAE businesses beyond the current restriction of 49% were limited to operating in a free zone or as a branch/representative office. Federal Decree-Law No. 19/2018 introduces a framework under which the UAE may designate certain sectors of the economy, deemed to be ‘priority' economic sectors for the purpose of diversification, in which greater levels of foreign investment will be permitted.

ADR as an alternative method of dispute settlement

Article 12 of Federal Decree-Law No. 19/2018 relates to the settlement of disputes arising from a Foreign Direct Investment Project and raises some uncertainty. It states as follows.

  1. Without prejudice to the right to litigation, disputes and [disagreements] that may arise from the Foreign Direct Investment Project may be settled by all alternative means of dispute settlement.

  2. Cases relating to Foreign Direct Investment Projects shall be dealt with on an urgent basis by the competent courts of the State.*[1]

In addition, the statutory exclusion of 'right to litigation' disputes seems to take into account the different mechanisms of resolution of foreign direct investment disputes involving court jurisdiction under the BITs.